Business & Management Methods of Payment How a firms method of paying their workers can influence motivation.
Business & Management Common Pay Schemes A flat rate Piece rate Time rate BonusCommissionProfit-related
Business & Management Time-rate (flat rate) Schemes The employee receives a basic rate of pay per time period that they work (i.e. per hour or per week). Not related to output or productivity Employee is usually eligible for overtime payments if the agreed number of hours per week is exceeded. Effect on motivation?
Business & Management Piece-rate Schemes Employees are paid per unit they produce Care has to be taken to ensure that quality is not compromised. Effect on motivation?
Business & Management Commission The employee receives a percentage of the value of goods that they sell in a period of time. Common pay scheme for sales people. Effect on motivation?
Business & Management Performance Related Pay (PRP) Employees are paid according to their personal performance Often linked to targets set Common for managerial and professional workers. Effect on motivation?
Business & Management Profit Sharing Employees are paid a share of the profits each year. The better the company performs, the more the employee earns Can have a negative effect if the firm makes a loss
Business & Management Share Ownership (Share option) Employees receive a part of each month’s salary in the form of shares, normally at less than the current market rate. They have the option of selling their shares (for a higher or lower price depending on the value of them) after a certain period of time. Common for senior managers and directors.
Business & Management The Fringe benefits Firms often add “perks” to the various payment schemes including: health insurance; pension schemes; company cars; etc. Does everyone want the benefit? The total package of pay plus fringe benefits is known as the remuneration package.