Motivational Theories (Fynn)

wages (time)

Advantages

Straight-forward method

Disadvantage

1.Workers are not rewarded for their efforts but their time
2.May encourage laziness and poor productivity
3.National minimum wage

Salary

Advantage

1. Gives security of income
2.Aids in costing
3.Where output or productivity is not easy to measure

Disadvantage

1.Difficult to reward those who are more productive
2. No incentive to work hard (may encourage slack or
procrastination.
3.Performance appraisal may be needed

commission

Advantage

1.Still earn a basic salary
2.Overcomes problems of time-based systems, such as wages

Disadvantage

1.Speedy production/service vs. quality
2.Added pressure to workers to sell more
3.Repetitive and monotonous tasks 4.Difficult to meet security needs
5.Need to hire more quality controllers

profit-related pay

Disadvantage

1,Often too small
2.Individual efforts are not recognized

Advantage

1.Promotes employee loyalty and team spirit
2.Managers and employees work together to achieve
higher levels of profit

employee share ownership schemes; fringe payments (perks)

Advantage

Promotes lower rates of absenteeism and staff turnover

Disadvantage

Tends to be used to reward those in the senior
management team

performance-related pay (PRP)

Advantage

1.Creates incentives for people to work better
2.Fair system (Adams)
3.Helps to develop a performance culture

Disadvantage

1.Unrealistic targets; Pressure can cause stress
2. Not appropriate for all sectors (quality over quantity)
3. May not encourage team work
4. Non-financial motivators are ignored

Wages (piece rate)

Advantages

• Employees have an incentive to work hard

• The labour cost of each unit is determined in advance and

helps set a price for the product

• Increase motivation; Extra productivity

Disadvantages

Quantity versus quality

• Provides little security over pay level

• Added pressure