The first action to take when adopting an organization-wide variable pay plan is to:

Before implementing a variable pay plan, the most critical strategic step is determining if the plan will achieve the intended result — that is, improve employee and organizational performance. All other decisions (like goal-setting or benchmarking) are secondary to establishing justification for the program.

Extract from HRCI-aligned HR knowledge (Total Rewards and Leadership and Strategy domains):

SPHR requires HR to “evaluate compensation initiatives for alignment with strategic goals and performance improvement.” The decision to implement variable pay must begin with a cost-benefit and impact analysis, verifying that performance incentives lead to measurable productivity or behavioral outcomes.