1. Motivation in Practice Monetary Methods PEOPLE MOTIVATION AND LEADERSHIP

2. Payment Methods Definition and Explanation Time Based Where workers are rewarded according to the time they spend at work, as opposed to output or performance.

3. Payment Methods Definition and Explanation Time Based Workers paid set amount per hour, week, month or year. Rates fixed in relation to standard hours worked per week, written into contract of employment. Workers paid set amount per hour, week, month or year. Rates fixed in relation to standard hours worked per week, written into contract of employment.

4. Common to this system is overtime pay – where workers are often paid a higher rate if they work longer than their contracted / agreed hours. Payment Methods Time Based Overtime

5. Overtime payments more common to manual workers. White collar workers often expected to put in additional hours without extra pay, but may receive time off in lieu. Overtime payments more common to manual workers. White collar workers often expected to put in additional hours without extra pay, but may receive time off in lieu. Payment Methods Time Based Overtime

6. Overtime can be cheaper and more flexible than recruiting new staff in the short-term, but if used repeatedly … may prove less cost-effective in the long-term. Payment Methods Time Based Overtime

7. Overtime can be cheaper and more flexible than recruiting new staff in the short-term, but if used repeatedly … workers may depend on it as extra pay and conflict may occur if opportunities for overtime suddenly withdrawn. Payment Methods Time Based Overtime

8. Relative Advantages Relative Disadvantages Payment Methods Time Based

9. Relative Advantages Relative Disadvantages Employees have guaranteed income which may promote feelings of job security. Payment Methods Time Based

10. Relative Advantages Relative Disadvantages Total wage bill for the year (excl. overtime) is known in advance - helps budgeting, forecasting, decision making. Payment Methods Time Based

11. Relative Advantages Relative Disadvantages High quality products/services may be more likely – as workers focus on quality first, quantity second. Payment Methods Time Based

12. Relative Advantages Relative Disadvantages Relative Disadvantages Little incentive to work hard, supervisors may be required to ensure workers working at acceptable level. Payment Methods Time Based

13. Relative Advantages Relative Disadvantages Relative Disadvantages Staff who work particularly hard may resent being paid at the same rate as those less productive or conscientious. Payment Methods Time Based

14. It is difficult to measure output or performance of individual workers, for example, teachers or nurses; Quality matters rather than quantity. Time rate payment systems are most appropriate when: Payment Methods Time Based - Appropriateness

15. The business is subject to significant changes in demand, for example: situations where an employee may be idle from 2 or 3pm every day but still get paid for a full day ’ s work. Least appropriate when: Payment Methods Time Based - Appropriateness

16. Merit Based Where payment is made for each quality good produced to encourage workers to increase productivity. Eg if I make 10 pens I get twice as much as someone who only makes 5 pens Piecework - Definition and Explanation

17. Relative Advantages Relative Disadvantages Merit Based Piecework - Definition and Explanation

18. Relative Advantages Relative Disadvantages Increased incentive to work hard - increased productivity. Less supervision required to ensure workers work at an acceptable rate. Group schemes may encourage teamwork and minimise potential conflict. Merit Based Piecework - Definition and Explanation

19. Relative Advantages Relative Disadvantages Relative Disadvantages No basic pay to fall back on if machinery breaks down, supplies aren ’ t delivered on time, quality isn ’ t acceptable - may cause resentment, lead to feelings of insecurity, adversely affect motivation and productivity. Merit Based Piecework - Definition and Explanation

20. Relative Advantages Relative Disadvantages Relative Disadvantages More supervision may be required to ensure quality and safety does not decline. Group schemes may be perceived as unfair if one or two members are not seen to put in as much effort as others. Merit Based Piecework - Definition and Explanation

21. Where individual or group output can easily be measured, such as in the manufacturing industry. Merit Based Piecework - Appropriateness

22. Performance-related Pay A payment system whereby staff whose work is considered above average are rewarded. Definition and Explanation

23. Performance-related Pay Used for staff whose work cannot be assessed easily numerically (eg volume/value of units/products sold). Common to white collar workers where annual salary is linked to performance during the year. Definition and Explanation

24. Used widely by banks, in some schools, some Gov. workers, hotel industry etc Definition and Explanation Performance-related Pay

25. 1.Establish targets at an appraisal interview for employees involved in the scheme. 2.Review and discuss employee ’ s achievements against those targets over the year. Performance-related Pay Method for Determining PRP

26. 3.Award outstanding achievements with pay rise or bonus worth perhaps 5% of their salary. In some cases the entire salary will be reviewed and may depend upon this process. Performance-related Pay Method for Determining PRP

27. Relative Advantages Relative Disadvantages Performance-related Pay Method for Determining PRP

28. Relative Advantages Relative Disadvantages Chance to earn more money may increase employees motivation and thus performance. Performance-related Pay Method for Determining PRP

29. Relative Advantages Relative Disadvantages Relative Disadvantages Rewards individuals, does little to promote teamwork. Can cause unhealthy rivalry between those involved. Performance-related Pay Method for Determining PRP

30. Relative Advantages Relative Disadvantages Relative Disadvantages Staff often suspect those awarded maximum bonus / pay rise have secured this through favouritism – may damage relationships and team spirit. Performance-related Pay Method for Determining PRP

31. Financial Incentive Schemes Can be regarded as an extension of a group payment by results scheme, where employees receive a bonus based on the business ’ s profits. Can be regarded as an extension of a group payment by results scheme, where employees receive a bonus based on the business ’ s profits. Can represent a substantial bonus on top of basic earnings. Profit Share

32. Relative Advantages Relative Disadvantages Financial Incentive Schemes Profit Share

33. Relative Advantages Relative Disadvantages May encourage employees to consider whole business rather than concentrating on their own job May encourage cost saving / revenue generating ideas. Financial Incentive Schemes Profit Share

34. Relative Advantages Relative Disadvantages May encourage employees to work harder and smarter but not stop them working as a team. Focus on profitability may make it easier to accept change / lessen resistance to change. Financial Incentive Schemes Profit Share

35. Relative Advantages Relative Disadvantages Relative Disadvantages May seem meaningless, have no effect at all, if only small proportion of profit awarded. May create conflict with shareholders and / or reduce the amount of capital available for long- term investment. Financial Incentive Schemes Profit Share

36. Relative Advantages Relative Disadvantages Relative Disadvantages Employees may not be motivated by such a scheme if they feel their own efforts are not likely to have much effect on the organisation as a whole, and its profitability. Financial Incentive Schemes Profit Share

37. Provide employees with the added incentive of being part owners of the business in which they work. Share Option Schemes Financial Incentive Schemes Share Ownership

38. Staff usually save about £ 50 a month, over 5 year period. At end of the period can convert savings into shares at the price the shares were at the start of the 5 year period. Financial Incentive Schemes Share Ownership

39. Share Option Schemes Senior managers are given the opportunity to buy a substantial number of company shares at a discounted price, at an agreed date in the future. Financial Incentive Schemes Share Ownership

40. May encourage employees to increase work effort in order to help the business build up and grow. Encourages employees to remain loyal to firm for several years, minimising labour turnover and associated costs. Financial Incentive Schemes Share Ownership Relative Advantages

41. One-off payments to recognise contribution to sales/profits. Bonuses to boost pay at certain times of year, eg Christmas. One-off payments to recognise contribution to sales/profits. Bonuses to boost pay at certain times of year, eg Christmas. Financial Incentives Cash Bonus Payments

42. Relative Advantages Relative Disadvantages Financial Incentives Cash Bonus Payments

43. Relative Advantages Relative Disadvantages may lead to a short-term increase in motivation or loyalty. Financial Incentives Cash Bonus Payments

44. Relative Advantages Relative Disadvantages Relative Disadvantages Regular bonuses may simply be accepted as employee ’ s ‘ right ’ and have no motivational affect at all. Financial Incentives Cash Bonus Payments