The organizational behavior 15th edition book offers descriptions of variable pay methods and discusses flexible benefits as motivators. As engineers, most of us will be salaried, but the compensation (pay raises, bonuses) will be done by one of the methods described (though not likely piece-pay). Government workers have a pretty established pay scale, but we do have an opportunity to get a bonus (time or money) based on appraisals (assuming tax-payer funding is available). It’s not really a merit based system (which I refer), although the Government tried that a few years ago and may try it again. Thankfully money isn’t my biggest motivator. We also have a flexible benefit option which is a huge motivator for me.

I have two questions: How does a company determine the best variable method of payment? And which method do the class members desire the most?