Variable pay refers to compensation that is not fixed and can change based on performance or results. This type of pay is often used to motivate employees to achieve specific goals or targets. Examples of variable pay include bonuses, commissions, and profit-sharing plans, which reward individuals or teams for their contributions to the company's success. Employers implement variable pay to align employee interests with organizational objectives. By linking compensation to performance, companies aim to enhance productivity and encourage a results-driven culture. This approach can be beneficial for both employees and employers, as it provides financial incentives for high performance while allowing for flexibility in payroll expenses.