Building the business

Question 1

5 key financial methods

Answer 1

• Remuneration
• Bonuses
• Commission
• promotion
• fringe benefits

Question 2

Remuneration

Answer 2

• Money that is paid to an employee for working
• To retain employees, the employer has to pay a satisfactory amount
• Employees could be remunerated with a wage for the hours they work
• People are paid with a salary which is a fixed amount paid directly to their bank account monthly. Additional hours are paid for.

Question 3

Bonuses and commision

Answer 3

• Additional amounts of money paid to an employee if they perform a higher quality of work compared to others or if they reach a target
• Commision is an amount of money distributed to an employee if they make a certain number of sales. May be a percentage.
• Using bonuses and commision to motivate employees can result in higher levels of productivity and sales but can put pressure on customers to achieve sales

Question 4

Promotion

Answer 4

• Promotion is when an employee is given a more senior role in the business
• It can be offered as a form of financial motivation as it usually comes with an increased salary

Question 5

Fringe benefits

Answer 5

• Fringe benefits are other benefits offered by a business that financially benefit employees
• For example; a company car, free health insurance and free gym membership
• However businesses need to be careful that these don’t come with extra tax