Remuneration
Remuneration is a payment for a service for employment. This includes any salary, bonuses or any other benefit whist in the employment of the business.
Different types of remuneration are:
Time rate system:
A time rate system refers to an hourly rate or weekly wage or annual salary. The Employees are given a rate and it will be used for that group of work. Advantages of this system are that it is simple to use and administer. Also, it is economically viable for the company to use the time rate system. The disadvantages of using this system is that it is unfair to the Employees as the pay is irrespective of how much work has been done. It also may cause conflict between Employers and Employees as the Employer want to maximise the work but the Employee wants to maximise the wage.
Payment by Results:
There are four types of payment by results. These are straight piece work system, differential piece work system, Gantt task and bonus system and Emerson’s efficiency system.
Straight piece work system;
This system is used when an Employee works and the wage is dependent on what they achieve. The wages is measured depending on how much has been done in the given time allocated to that task.
Differential piece work system;
This system is used for Employees’ who are more efficient at work. The more efficient the Employee are, the more wages that are received. There are different rates for the Employees’ who is above or below the standard of work.
Gantt task and bonus system;
In this system the Employee is guaranteed a minimum wages but if the job is completed in less than the reasonable standard time then the wages can increase from 25% to 50%. Advantages of this are that the Employee is guaranteed a minimum wage and is suited to efficient workers. A disadvantage of this is that it emphasises too much on high speed and high production rates.
Emerson’s efficiency system;
The Emerson’s efficiency system has 12 principles of efficiency that should increase the Employees’ motivation to work.
1. Clearly defined ideals.
2. Common sense
3. Competent counsel
4. Discipline
5. The fair deal
6. Reliable, immediate and adequate records
7. Despatching
8. Standards and schedules
9. Standardized conditions
10. Standardized operations
11. Written standard-practice instructions
12. Efficiency-reward The system guarantees a national minimum wage but the Employees are rewarded depending on how efficient they are working. A simple bonus scheme is as follows;
Up to 66.67% to 80% of work effort will rewarded with a 4% bonus.
66.67% to 90% of standard output will be rewarded with an extra 10% bonus.
80% to 90% of work efficient Employees’ will be rewarded also with a 10% bonus.
90% to 100%of standard output will be rewarded with a 20% bonus.
Above 100% of standard of work will receive a bonus of 20% plus a 10% output above standard output.
Advantages of this system are that the efficient worker is rewarded greatly and the Employee is guaranteed a minimum wage. A disadvantage of this system is that it encourages Employees’ to work fast but it could then harm the quality of work.
Incentive schemes;
An incentive scheme rewards the Employee when they have achieves a certain goal. * Financial incentive;
A financial incentive is when the Employee receives profit for the goal reached or even shares in the company if available. Also, bonuses could be