Incentives - Financial and Non-Financial

• What are financial incentives?

  Rewards or payments given to employees in return for their labour or improved performance.
• what are 5 types of financial incentives?

  • piecework
  • commission
  • bonuses
  • profit sharing - (John Lewis)
  • performance related pay
• what is piecework? 


  the idea is that in order to stimulate greater levels of productivity and make workers produce more work in a given time period they are paid by the pieces of work they produce NOT by the hour.
• what is commission? 


  Stimulate staff to want to sell the business products by cutting them in on a percentage of each sale they make possibly posed to or a lower salary.
• what is bonuses?


  if workers achieve certain thresholds ( or sell certain amounts of products) of output for their organisation they receive an additional financial reward on top of their basic wage.

  Bonuses can also be given for workers who have been there for long durations of time almost as a reward for loyalty.
• what is profit sharing ?

  Dedcating a certain amount of the profits and sharing that between staff - an example is John Lewis do this every year.
• what is an issue with profit sharing?

  Is it really that effective to motivate staff through all months or the year.
• what is performance related pay?

  this is when we use performance reviews to set targets for the workforce. If achieved it will reward employees with some sort of paid progression ( bonus or even the next level up of a companies pay structure).
• What is an issue with performance related pay?

  They may not focus as intently on other aspects of their role as they may purel focus on their targets set to receive their money.