6.4b Financial vs Non-Financial Rewards Flashcards
Ways to improve engagement and motivation
- Good quality environmental conditions
- Appropriate training, development and support
- Good communication
Financial incentives examples
- Wages
- Salaries
- Bonus system
Non-financial incentives
- Promotion
- Job enrichment
- Job enlargement
How does piece rate payment work?
It is based on the number of items produced
Advantage of piece rate payment
- Requires low levels of manager supervision
- Encourages high speed production
Disadvantages of piece rate payment
- Workers are focused on quantity not quality
- Repetitive
- Workers are not entitled to sick pay, holiday pay or company pensions
Commission definition
Financial incentive linked to achievement of sales
How does commission work?
Workers are paid a bonus on top of their salary for achieving targets
Advantages of performance related pay
- Employees can easily be monitored and assessed
- Targets can be set
Disadvantages of performance related pay
- Discourages a team based approach
- Difficult to accurately measure performance
- Incentives may not be enough to motivate employees
Profit sharing definition
A system whereby employees receive a proportion of business profits
Advantages of profit sharing
- Creates direct link between pay and performance
- Team spirit
- Improve employee’s loyalty
Share ownership definition
Companies give shares to their employees or sell them at favourable rates below market price
Job enlargement definition
Giving workers more tasks to do of a similar nature or complexity
Job rotation definition
Systematic programme of switching jobs to provide greater variety
Job enrichment definition
Giving workers more interesting and challenging tasks
Empowerment definition
Giving employees control over their work, and a greater role in decision making
Advantages of team working
- Productivity
- Flexible workforce
- Improved quality
Influences on the choice of rewards
- Organisational design
- Size of business
- PESTLE
Advantage of commission:
Increases motivation and performance of sales staff
Disadvantages of commission:
- Can lead to overselling
- Customers feel like they are overwhelmed by staff
- Business doesn’t know how much labour costs will be each month
How do salary schemes work?
Employees have to work a minimum number of hours and produce a certain amount of work - if they do not do work required they are expected to work longer
Advantage of salary schemes:
Motivates workers to work quickly while not compromising quality
Disadvantage of salary schemes:
Workers cannot earn extra money by working harder
Flexible working definition
When working hours and patterns are adapted to suit employees
Types of flexible working:
- Flexi-time
- Compressed hours
- Annual hours
- Job-sharing
- Home-working
What is flexi-time?
When employees work full time hours but can decide when to work, around fixed core hours
How do compressed hours work?
Employees work a set number of hours per week, but over fewer days
How do annual hours work?
Employees work a certain number of hours over the year, but they choose when to work
How does job-sharing work?
Two people share one job e.g. alternate weeks
Advantages of flexible working:
- Motivation and productivity
- Helps employees with children
- Home working suits families, disabled workers and those who live in remote places
Disadvantages of flexible working:
- Impractical for businesses that need to serve the public during normal working hours
- Home workers distracted at home
- Job-sharing leading to confusion of responsibilities
