Methods of Remuneration (How we reward staff)

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Methods of Remuneration (How we reward staff)
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What you will learn

• Time rate
• Piece rate
• Commission
• Bonus
• Full-time versus part-time work
• Permanent/Freelance/temporary work
• Fringe benefits

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Remuneration How Employees are Rewarded at Work

• Decisions
• Full time or Part time?
• Permanent contract or Temporary contract
• Pay Piece Rate or Time Rate
• Offer Bonus or Commission
• Fringe Benefits

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Full-Time and Part-Time Contracts

• Full-time
• More than 15 hours a week
• Part-time
• Less than 15 hours a week

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Permanent and Temporary Contracts

• Permanent Contract
• No end date to the contract
• Temporary Contract
• A finish date is stated on the contract. eg 6
  months

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Time Rate and Piece Rate

• Time Rate
• Employees are paid for each hour they work.
• eg 5 per hour
• Piece Rate
• Employees are paid based on how many products
  they produce. eg 3 for every product produced

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Commission and Bonus

• Commission
• Employee receives a reward for every sale made.
  eg 5 of every sale or 2 for every sale
• Bonus
• Employee receives a set amount in recognition of
  their hard work. eg a bonus of 60 at Xmas.

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Fringe Benefits

• Other benefits provided by the firm
• Company car Staff uniform
• Subsidised meals Staff discounts
• Health insurance Pension scheme
• Child care facilities Staff parties
• Gym membership

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Full-Time and Part-Time Contracts

• Full-time
• More than 15 hours a week
• Part-time
• Less than 15 hours a week

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Full-Time and Part-Time Contracts
Advantages and Disadvantages for the business Advantages and Disadvantages for the employee
Full Time staff more committed may need worker for all those hours May be costly paid more than part time may not want to work long hours
Part Time only employ the person for the hours you need (reduces wage costs) employee may not be as motivated wage will be lower than a full time post more flexibility as to the hours you work
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Permanent and Temporary Contracts

• Permanent Contract
• No end date to the contract
• Temporary Contract
• A finish date is stated on the contract

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Permanent and Temporary Contracts
Advantages and Disadvantages for the business Advantages and Disadvantages for the employee
Permanent Contract reduces need to keep re-employing staff may appoint someone who is poor Job security. Entitled to redundancy pay if made redundant Less flexibility
Temporary Contract Gives business more flexibility, reduces redundancy costs Employees less motivated More flexibility No long term job security less likely to get a mortgage
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Commission and Bonus

• Commission
• Employee receives a reward for every sale made.
  eg 5 of every sale or 2 for every sale
• Bonus
• Employee receives a set amount in recognition of
  their hard work.

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Commission and Bonus
Advantages and Disadvantages for the business Advantages and Disadvantages for the employee
Commission Staff more motivated Encourages more sales Increases business costs Increases wage each week De-motivated if dont sell any products
Bonus Encourages workers to work harder Increases business costs Reward for hard work De-motivated if dont receive bonus
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Exam Question

• Cheryl has just opened a bakery in Brighouse.
  She has two temporary staff one manager and one
  baker. She is considering changing her methods
  of remuneration.
• Using the information provided, explain the
  difference between time rate and piece rate.
• 4 marks
• Cheryl is thinking of offering permanent
  contracts to her staff. Analyse whether or not
  this is a good idea.
• 8 marks

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Why offer a permanent contract?

• Effect on motivation
• Effect on quality of work
• Effect on labour turnover
• Effect on sales and profit
• Effect on costs
• Effect on redundancy payments if she needed to
  reduce her workforce