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