The salary-only approach is useful when an organization emphasizes serving and retaining existing accounts.
Variable pay plans attempt to provide tangible rewards, or incentives, to employees for performance beyond normal expectations.
The total rewards package includes all forms of compensation, the monetary and nonmonetary rewards provided by a company to attract, motivate, and retain employees.
The reason for giving compensation in the form of incentives is that it is thought to be effective in motivating employees and increasing corporate performance and stock values.