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Methods of Motivation - Financial Rewards

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Arooj Abid
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50 views11 pages

Methods of Motivation - Financial Rewards

Uploaded by

Arooj Abid
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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Methods of motivation-

financial rewards
Learning intention: to understand the main
features of financial rewards
• Success criteria;
• Read slides 3-11 or pages 79-82 in your text books
• Create a single page poster (using the computers or paper) outlining the
different methods of financial reward for employee;
• Wages (time and piece rate)
• Salaries
• Bonus
• Commission
• Profit sharing
• Include 2 advantages/disadvantages
• This will be printed and placed into your books for revision
• Extension: Complete activity 6.4 on page 81
Methods of motivation- Financial rewards
• Methods of payment or financial reward are used to provide incentives
to employees to encourage them to work hard and effectively.
• We will look at the 5 most common on the next slides
Wages
• Paid weekly (don’t have to wait long for money)
• Either in cash or into a bank account
• Usually paid to manual workers (warehouse in a factory)
• If you work longer hours then will be paid overtime (regular amount plus
extra)
– E.g if normal hourly rate is $10 an hour, overtime could be $15 an hour
• Drawbacks of wages;
– Have to be calculated weekly- takes time and money
– Usually employ wage clerks
Calculating wages-Time rate

• Time rate
• Payment by the hour, e.g. $10 an hour
• Easy to calculate wages, just need to know the number of hours worked
• Problems;
• Hours are recorded on a time-sheet which must be filled in. This system
takes time
• Good and bad workers get paid the same amount of money
• Supervisors are needed to make sure workers keep working and
produce good quality work
• A clocking in system is needed to determine the number of hours
worked
Calculating wages-piece rate
• Workers are paid depending on the quantity of products made, the more
they make, the more they get paid
• A basic rate is paid with additional money paid according to how many
products have been produced
• Can only be used where it is possible to measure the performance of an
individual or a team
• Encourages workers to work faster and produce more goods
Calculating wages-piece rate
• Problems;
• Focus on number of products rather than quality , which can have a
negative affect on sales and the reputation of the business. A quality
control system is expensive to install.
• Workers who are careful in their work will not earn as much as those who
rush which is not fair. Can cause friction within the employees
• If the machinery breaks down, the employees will earn less money. This is
why they are paid a guaranteed minimum amount of money
Salaries
• Paid monthly, normally straight into bank account
• Usual for office staff/management to be paid salaries
• Calculation: amount per year/12 months. Very easy to complete the
calculation. Completed only once a month
• The employer has the money in their bank account longer than if they were
paid wages. What is the benefit of this?
• Problems;
– Workers may want to be paid weekly
– No payment for extra time worked. Therefore no incentive to work longer hours than the
contract states
Commission
• This type of payment is paid to sales staff
• The more sales they make, the more money they are paid
• Encourage sales staff to sell as much as possible, very good for the
business
• Commission is paid in addition to the existing wage or salary
• Problems;
• Sales staff are very persuasive and could encourage customers to buy
products they don’t need/want. The increase in sales will only be in the
short term and the business may get a bad reputation in the long term
• Stressful for sales staff, what if they don’t make a lot of sales in a
month?
• Too much competition within the staff
Bonuses
• This is a lump sum paid to workers when they have worked well
• Paid at the end of the year or at intervals during the year
• They don’t have to be paid! The business can decide to give it to a
worker/s who have performed exceptionally well
• Bonus can have a positive motivating effect
• Problems;
– What if they are expected every year? If the business has a bad year
and couldn’t pay a bonus, what would happened to employee
motivation then?
– How would you feel if your work colleague got a bonus and you didn’t?
Profit sharing
• The employees receive a share of the profits as well as their basic salary
• This should motivate employees to work hard as they will receive a
share of the profit
• Often used in the service sector where it is difficult to identify an
individual employees contribution.
• Problems;
– If the business makes very low profits/loss then what happens to
motivation?
– The calculation for profit share is based upon the employees salary.
Therefore the higher the salary the more you receive. This can cause
bad feeling within the business

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