FINANCIAL REWARDS

Question 1

What are Financial Rewards?

Answer 1

Financial Rewards are given to employees by employers, typically as part of a extrinsic motivation scheme, typically with a specific monetary value.

Question 2

Salary

Answer 2

A fixed regular compensation payed on a periodic basis to employees, usually monthly.

Question 3

Advantages of Salaries

Answer 3

• Job Security
• Workers know that they will recieve regular income

Question 4

Disadvantages of salaries

Answer 4

• Employees might not always be maximally motivated and productive.
• They know that if they do more or less the same amount of work every month, they will recieve the fixed salary. This can lead to a reduced productivity.

Question 5

Wages (Time Rate)

Answer 5

Employees are payed on an hourly rate, or for a number of hours per week.

Question 6

Wages (Time Rate) Advantages

Answer 6

• If the employees have to stay wokring extra hours, they will recieve extra payment.
• Employees feel like their work is being valued.

Question 7

Wages (Time Rate) Diadvantages

Answer 7

• The pay workers recieve is not linked to the amount of output they produce, therefore they might go slow to recieve more money.

Question 8

Wages (Price Rate) Advantages

Answer 8

• Boosted productivity because workers know that the more productive, the more reward.
• Employees see that their work has monetary value

Question 9

Wages (Price Rate) Disadvantages

Answer 9

• Employees might focus more on quantity over quality

Question 10

Wages (Price Rate)

Answer 10

Employees are payed for each unit produced.

Question 11

Comissions

Answer 11

Staff is payed with respect to their sales results - An employee gets a percentage for each unit sold.

Question 12

Advantages of Comissions

Answer 12

• Workers will try to achieve the best sale results as possible, which would result in a higher financial reward, while the business benefits from higher sales.

Question 13

Disadvanatges of Comissions

Answer 13

• External factors affecting the sales can affect the income of workers. This can lead to them feeling demotivated.

Question 14

Performance Related Pay

Answer 14

A bonus payed in addition to the employee’s ordinary compensations.

Question 15

Examples of Performance Related Pays

Answer 15

• Pay Rise
• Performance Bonus
• Gratuity

Question 16

Advantages of Performance Related Pay

Answer 16

• Motivated Workers
• Helps to develop a performance culture
• Creates Incentives

Question 17

Disadvantages of Performance Related Pay

Answer 17

• Targets can be unrealistic
• Stressful
• Inappropriate for jobs where quality overrides quantity

Question 18

Employee Share - Ownership Schemes

Answer 18

Permit employees to purchase shares at a discounted price or awarding them for free. This works well because that way, success of the company has direct financial benefit to shareholders.

Question 19

Advantages of Employee Share - Ownership Schemes

Answer 19

• Keeps employees enganged
• Helps retain staff
• Incentive for employees to work harder

Question 20

Disadvantages of Employee Share - Ownership Schemes

Answer 20

• The basis to awarding the bonus has to be clear and measureable to avoid favoritism.
• Might not yield direct profits

Question 21

Profit Related Pay

Answer 21

The income of the employee depends on the prfitability of the company.

Question 22

Advantages of Profit Related Pay

Answer 22

• Motivating for the workforce
• If the business shares the profit of the whole organization with the staff, this gives them a sense of ownership over the business.
  Their success = The success of the company

Question 23

Disadvantages of Profit Related Pay

Answer 23

• External Factors can affect sales and demotivate employees.

Question 24

Fringe Payments

Answer 24

The extras that businesses offer in addition to their wage or salary

Question 25

Advantages of Fringe Payments

Answer 25

• Employee loyalty
• Workers feel valued
• Help meet employee’s safety needs

Question 26

Disadvantages of Fringe Payments

Answer 26

• Costly
• Division of staff can happen if benefits are not equal