Section Fourthe company becomes unprofitable.^40 Several recommendations
regarding measures are presented in the following:
Therefore, even though different goals are used,
it is best that these measures not pay off unless
the organization gains real bottom-line results.
This is central to new variable pay. Productivity
measures may be used at the team level as long
as they do not result in awards when the
organization’s profit performance and quality
have not improved... It is best for plans to
generate awards only if both profit and
productivity measures are satisfied.^41Aside from creating a feeling of shared destiny, another
potential benefit of such plans is better labor cost control.^42
Variable pay plans may help provide employment security
because with part of employees’ compensation being derived
from the company’s profitability, with declines in business
conditions and profits, total labor costs decline and employees
may not need to be laid off.