• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

Financial methods of motivating and empowering employees

Extracts from this document...


Financial methods of motivating and empowering employees Financial motivation consists of motivating and empowering employees with methods that require a cost to the business. Most businesses see the need for financial motivation. The main methods are explained below. Performance related pay Performance-related pay is a financial reward to employees whose work is either considered to have reached a required standard, and/or is above average. Performance related pay is used in two different ways in business. Either, individual performance is reviewed regularly (usually once per year) against agreed objectives or performance standards. Or at the end of the appraisal, employees are categorised into performance groups - which determine what the reward will be (if any). The method of reward will change, but usually it involves a cash bonus and/or an increase in wage rate or salary. "Performance-related pay has grown widely in recent years - particularly in the public sector. This is part of a movement towards rewarding individual performance which reflects individual circumstances." - http://tutor2u.net/business/motivation_financial The advantages of performance related pay to the business are that it provides an incentive for employees to achieve defined work targets, as employees are more likely to focus on what they need to do to improve if this is directly linked to pay. This method is also good at dealing with poor performance employees and can push them to work harder. The advantages of performance related pay to the employees are that the contribution that the employees make is recognised and is rewarded usually with a cash bonus. This gives the high achievers to benefit from their hard work. ...read more.


The advantages of time rate to the employee would be that the employee is able to budget his or her personal finance within a good degree of accuracy. It is also very easy to understand for the employee as they will usually get the same pay each week or month. Another advantage is that employees have the option to work overtime at a higher hourly pay. "However, many employees who are paid a monthly salary do not get paid overtime. This is usually the case for managerial positions where it is generally accepted that the hours worked need to be sufficient to fulfil the role required." - http://tutor2u.net/business/people/motivation_financial_timerate.asp The advantages of time rate to the employee would be that it is relatively simple to calculate which in turn, keeps administration costs down. It is not dependant on calculating each employee's productivity and figuring a wage from that. Employees may be more motivated to work longer hours if they are getting paid for that. The disadvantages of time rate to the employee is that it doesn't do much to motivate, there is no incentive to do better, only to work longer. The disadvantages of time rate to the employer are that employees are only required to work longer in order to acquire more money; it doesn't look specifically at effort or goals etc. I believe that time rate is not very motivating in terms of financial methods of motivation. It is the most commonly used method of payment in the UK, I believe this is down to ease. It doesn't put emphasis on working harder or working towards a goal. ...read more.


I believe that profit sharing is a very effective method of financial motivation. It gives employees a reward for their hard work and efforts. Employees can directly see when the business does well due to their hard work as they receive a higher income. An employee who is well taken care of will perform better. His or her motivation to work will be higher. Profit related pay Profit related pay is a kind of pay that is directly related to the profits of the company. The advantage to the employee is that if the company does well and makes a high profit, the employees receive a higher salary. The advantage to the employer of profit related pay is that the employees would be motivated to work hard and see the business do well as they want to stay in reasonable comfort in terms of a wage. The disadvantage to the employee is that if the companies' profits decrease or if they lose money, then the employee would suffer because of this by receiving a decrease in pay. The disadvantage to the employer is that certain businesses can be susceptible to changes in the economy. If the business doesn't do well regardless of hard work, this can be de-motivating for the employees as they are receiving a lower wage even though they are working to the best of their ability. I believe that profit related pay is an okay method of financial motivation. It could put many employees off due to the stress with this method of payment. It is very uncertain and difficult to estimate. ?? ?? ?? ?? Andrew Sinnott - Unit 20 - task 3 ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our AS and A Level People & Operations Management section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related AS and A Level People & Operations Management essays

  1. Marked by a teacher

    Roles and Responsibilities of Staff Members at McDonalds.

    5 star(s)

    How do you overcome your weaknesses? * Question 2. What do you know about the company, and why do you want to work here? * Question 3. What do you bring to a team, and why would it be useful in a McDonald's branch? * Question 4. Where do you see yourself in ten years time?

  2. Recruitment. I am writing this report to describe how each organisation plans and conducts ...

    If the JCC didn't have a successful assessment centre it could cause them a lot of problems because they could hire the wrong employee and this would waste their valuable time trying to find the right employee, so the good thing about having an assessment centre is they can watch

  1. Teamwork. There are several reasons why a business may organise their staff into teams. ...

    Managers must take into account their employees opinions, views and needs. Managers are also responsible for their employees morale and motivation , ensuring that they have a good environment to work in. Meaning, that the are also responsible for the welfare of their employees and health and safety in the workplace.

  2. The main aim of this research is to evaluate the information on the human ...

    As an example, it is regular for the human resource departments to calculate the value of the organization by the method of calculating the employees that are employed, performance reviews completed, or the training courses delivered (Ulrich, 2000). The human resource should be able to efficiently manage the administrative side

  1. Presenting Business Information

    However the celebrity has to be chosen carefully so that the advert can put the message across before the advert is disliked by the public. After all the public is the main people who will be using the products or services.

  2. Unit 13 - Organising an Event

    and accommodation is 'fit for purpose' and that it is at a satisfactory standard. * To provide the event at a satisfactory price which students can afford, this is arranging a suitable trip that is at a reasonable price considering the things that are included in the trip.

  1. Motivation within a workplace - examples from Asda.

    ASDA clearly fulfils Taylor?s theory however; they do also take other factors into account in order to motivate staff. This is one of the motivational factors that ASDA use as a large majority of their staff are part-time students however, ASDA can?t presume that all workers are motivated by money.

  2. Describe the theory of Taylor. Explain how it would be implemented in Waitrose.

    in the company does not work effectively enough, than the salary of all the employees at Waitrose will be negatively affected, therefore the employees may not like the fact that they have to depend on other workers when it comes to their pay.

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work