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
