Financial methods of motivation
Businesses can use a range of methods to motivate their employees. Financial The reasons an employee has for working - how driven and happy they are in their role. involves motivating employees with money and things associated with money. The main methods of financial motivation used in business are wages, salaries, performance related pay, profit sharing, and financial An employment benefit offered by a business. It has a monetary value but does not affect the employee’s wage or salary. .
Wages
Wages are an amount of money paid to an employee based on a number of factors, such as time rate, piece rate and overtime. It is important that a business pays a fair wage, which is similar to competitors, in order to keep good employees. Wages are used in a range of different roles such as retail employees, manufacturing employees and restaurant employees.
- Time rate is where an employee is paid based on the amount of hours they work.
- Piece rate is where an employee is paid based on the amount of products they produce.
- Overtime is where an employee is paid an additional amount of money for working beyond their contracted hours.
Salaries
A salary is set amount of money paid to employees. Employees are paid a set amount per year, which is split into equal amounts each month. Salaries are usually paid in professional positions such as managers, teachers, doctors and pilots.
Profit sharing
Profit sharing is where a business gives employees a share of the business profits. This means that employees are likely to work harder - if the business makes more profit then each employee will gain more money.
Performance-related pay
Performance-related pay is payment that is based on the performance of employees - the better an employee performs, the more they are paid.
- A bonus is a form of additional Remuneration is the money employees are paid in return for working in a business, this is money paid to an employee for excellent performance. For example, in an electronics shop, a salesperson might be awarded a £500 bonus at the end of the year for selling a large number of TVs, or a customer services operator may get a bonus for having high customer satisfaction ratings.
- Commission is money paid in addition to a normal wage or salary to help motivate employees, or for hitting targets. Commission is usually given as a percentage of a sale or a specified amount of money per sale. For example, if a salesperson sells a car, they might receive 25 to 30 per cent of the profit as commission.
Fringe benefits
Many businesses use fringe benefits as a form of financial motivation. Fringe benefits are additional employment perks awarded to employees, such as staff discounts, a company car, a company mobile phone, free holidays, additional holiday allowance, free parking or transport, or free food and drink. Fringe benefits are often ways of saving employees money rather than providing them with additional money.
