Financial Methods of Motivation Flashcards
All 12 cards in this deck
What is a salary?
A fixed yearly amount of pay, usually paid in equal monthly instalments, which does not change with the number of hours worked.
What is a wage?
Pay based on the number of hours worked (a time rate) or the amount produced (a piece rate), often paid weekly.
What is profit sharing?
A method of payment where employees receive a share of the business's profits when it is successful.
True or false? Fringe benefits are a financial method of motivation.
True. Fringe benefits, such as a company car or staff discount, are a financial method alongside pay, bonuses and profit sharing.
What is a bonus as a method of motivation?
An extra payment on top of normal pay, given for good performance or for meeting a target.
What are fringe benefits?
Extra rewards given to employees on top of pay, e.g. a company car, staff discount or private healthcare.
Name four financial methods of motivation.
Pay, bonuses, profit sharing and fringe benefits.
Give one drawback to a business of using financial methods of motivation such as bonuses.
They increase the business's costs, which reduces profit.
Give one drawback of paying employees a time rate.
Pay depends only on the hours worked, not on how much or how well they work, so it gives little reason to work harder.
How does paying more than competitors help a business keep and attract staff?
Employees are less likely to leave for better pay elsewhere, and higher pay attracts more applicants for vacancies.
Why must bonus targets be realistic?
If employees think a target cannot be reached, the bonus will not motivate them to try.
Give one drawback to the owners of a business of a profit-sharing scheme.
Profit paid to employees is not available to the owners, e.g. shareholders may receive lower dividends.