1. 3.4.4 Remuneration How much is Billy worth?
Alan’s salary is £2250 a month.
If Alan’s salary is 50% larger than Colin’s, and Billy’s is 25% larger than Colin’s, then what is Billy’s salary?
Alan is 1.5 Colin, and Billy is 1.25 Colin. Therefore, Colin’s salary is £2250/1.5 = £ Billy’s is £1500 x 1.25 = £1875.
3.4.4 Remuneration
3.4.4 Remuneration

2. Remuneration
Remuneration is the financial motivation for working. It can take a variety of forms:
Wages or salaries
Workers may be paid hourly or monthly. As firms grow these labour costs will increase
Piece rate
Payment per unit of output
Commission
Payment as a percentage of the product sold
Wages are a variable cost and salaries a fixed cost. Can you explain this?
3.4.4 Remuneration

3. The impact of payment strategies on staff
3.4.4 Remuneration
The impact of payment strategies on staff
There are a number of different methods by which a business pays its employees
Time based pay – wages (quoted hourly and paid weekly) and salaries (quoted annually and paid monthly). This type of pay often occurs with manual workers such as those that work at the check-out in Asda. They will often work longer hours than they are contracted for as pay tends to be low. Overtime work, such as working at weekends or on Bank Holidays, is likely to lead to a higher hourly rate.
Piece rate – payment based on the number of items (pieces) produced. The more a worker produces the greater their pay. This is likely to motivate the employee to produce more but can be demotivating as they have to work hard to maintain their pay levels. Quality may suffer as they seek to produce large numbers as quickly as possible.
Commission – payment based on the number of units sold. This is often a percentage figure of the goods sold. This benefits both the business and the individual. This is common in the car sales and property sales markets.
How would you pay the following people?
Head Chef Waiter Car sales person Trolley collector Dentist
Fork lift truck driver Machinist in a knickers factory Travel agent

4. The impact of payment strategies on staff
3.4.4 Remuneration
Full time salary versus freelance or temporary workers
Full time workers is what most people are and they are likely to work at least 30 hours a week although most work more than 35 hours. They tend to be more committed to the business and are available when there is increased demand at the firm. Full time workers will spend more time in the job and will therefore have more scope to build up their knowledge base and working practices
Temporary employees will have fixed term contracts and will work for a set period of time. They may be full time or part time but they do not have the security that a permanent employee has. Often, they are agency workers and are brought in to fill gaps at peak times e.g. seasonal work or to cover peak holiday periods. They are likely to be cheaper than permanent employees. Temporary staff help a business meet operational targets by increasing flexibility, helping match supply to demand
Freelance workers tend to be self-employed. They are likely to run their own business and have a number of different customers at the same time. They decide when and where they want to work and reputation is important if they are to get repeat custom. They may be specialists and can be called in to the business to help with issues where there is not the appropriate expertise. Therefore, they may be expensive
A business is likely to use a mixture of workers in order to operate on a day to day basis.
BBC
John Lewis' bumper profits
The John Lewis Partnership has reported a huge increase in profits, with staff in line for a bumper bonus
Within your school can you identify someone for each category?
Permanent Temporary Full time Part time Freelance

5. Which of these fringe benefits would motivate you?
3.4.4 Remuneration
Fringe benefits
Which of these fringe benefits would motivate you?
Can you explain the likely relationship between fringe benefits and levels within a hierarchy?
Fringe benefits are payments in kind. This means that they do not take the form of money but they do have a money value.
There are a number of fringe benefits but the main ones include:
Company car
Private Health Care e.g. BUPA
Gym membership
Pension scheme
Discounts for buying company products
Sports facilities
Social facilities e.g. company bar

6. Question time
As Paul Davis’ chain of computer repair shops has grown he has found it increasingly difficult to keep track of all the shops. He has decided to appoint a manager to each shop who will have responsibility for staff rotas, maintaining stock records and general day to day decision making. He plans to pay managers a salary with a bonus for meeting targets, at present all employees receive a wage and no bonus. Paul has a very loyal and experienced work force who are paid above average for their line of work. Paul invites all his current workers to apply for the posts of managers rather than advertise externally. His daughter, Miranda, who works for the business, as office manager ,believes that promotion is more important than pay. She warns him that staff who do not get promoted may be upset and retention levels may fall.
Question time:
Explain the difference between a wage and a salary. (4 marks)
Identify two benefits to Paul of paying staff bonuses. (4 marks)
What is meant by the term “retention”? (2 marks)
Is Miranda right to be more worried about promotion than pay? Justify your view (9 marks)
3.4.4 Remuneration