Variable pay is best described as:

Variable pay is best described as rewards that are dependent on a team's performance, which aligns with the concept of performance-based compensation. This type of pay structure is designed to incentivize employees to improve their performance by tying a portion of their compensation to specific outcomes, such as sales targets, project completion, or overall team success. Conditional upon performance metrics being met, variable pay can include bonuses, commissions, or profit-sharing arrangements that motivate employees to strive for higher levels of productivity or achievement.

This approach contrasts with fixed salaries, where compensation remains constant regardless of individual or team performance. Fixed structures provide stability but may not drive enhanced performance as effectively as variable pay does. Understanding that variable pay encourages a strong link between performance and reward is crucial in the context of overall compensation strategies used by organizations.