6.4b - Financial vs Non-Financial Rewards Flashcards
How can a business improve employee engagement and motivation?
- Clearly defined vision
- Training and support
- Good communication
- Incentive programmes
What are the different financial incentives a business can offer?
- Wages
- Salaries
- Bonus system
- Commission
- Performance related pay
- Share option
What are the different non-financial incentives a business can offer?
- Empowerment
- Promotion
- Job enrichment
- Job enlargement
Piece rate payment definition
Payment based on the number of items produced
Advantages 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
Disadvantages of commission:
- Can lead to overselling
- Customers feel overwhelmed by staff
- Business doesn’t know how much labour costs will be each month
Wages definition
Payment paid by hour with a pay packet at the end of each week
Salaries definition
Payment set on an annual basis with payment made at the end of each month
Performance related pay definition
Payment related to targets met by an employee
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 loyalty
Share ownership definition
When 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
A 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
Advantages of teamworking:
- Productivity
- Flexible
- Improved quality
- Reduce wastage
- Higher job satisfaction
What are the influences on a business’s choice of rewards?
- Organisational design
- Nature of the job
- Size of business
- Timescale
- PESTLE
Flexible working definition
When working hours are adapted to suit employees
What are the different types of flexible working?
- Flexi-time
- Compressed hours
- Annual hours
- Job-sharing
- Home working
Flexi-time definition
When employees work full time hours but can decide when to work, around fixed core hours
Compressed hours definition
When employees work a set number of hours per week, but over fewer days
Annual hours definition
When employees when a certain number of hours over the year, but choose when to work
Job sharing definition
When two people share one job
Advantages of flexible working:
- Motivation and productivity
- Helps employees with children
- Home working suits families and disabled workers
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
