Topic 6 - Improving Human Resource Performance

Question 1

What are some HR objectives ?

Answer 1

Employee engagement
Talent development
Training
Diversity
Aligning values
Location and skills

Question 2

What is employee engagement as a HR objective ?

Answer 2

Employee engagement involves listening to staff, involving staff in decision making processes and building relationships between staff and managers.

For example, Google allows its employees to spend 20% of their working time on a project of their choice

Question 3

What is talent development as a HR objective ?

Answer 3

Talent development involves a business developing their current employees so that they can support the business’s future success.

Question 4

What is training as a HR objective?

Answer 4

A way of developing skills

Question 5

What is diversity as a HR objective ?

Answer 5

Having people from different cultures, personalities, gender to religion

Question 6

What is aligning values as a HR objective ?

Answer 6

Aligning values involves ensuring employees have similar values and beliefs to a business’.

For example, a business may seek to change an employee’s values, through training, or may only recruit individuals who have demonstrated at interview that their values are similar to those of the business.

Question 7

What is location and skills as a HR objective ?

Answer 7

Human resources (HR) are responsible for recruiting so can determine the number of employees available and the skill set of each of these individuals. HR may also employ staff to work at different locations within the business, for example across several factories or stores.

Question 8

What are some internal influences on HR objectives ?

Answer 8

Objectives of the business - as objectives at a functional or departmental level must support the overall business.

of internal funding - as this may determine how many vacancies are advertised.

Objectives of the other business functions - For example, if the operational objectives are focussed on flexibility and require the recruitment of additional temporary staff for the festive period, the human resources department will need to support this through focussing on recruitment.

Question 9

What are some external influences on HR objectives?

Answer 9

Legal considerations - as HR departments will have to comply with laws around recruitment and employment.

Technological advancements - For example, developments in technology may require HR to organise training on new technologies used in the business

Ethical considerations - as HR departments may need to consider whether to pay the National Minimum Wage, or whether to use zero-hours contracts.

Question 10

What is hard HR management?

Answer 10

employees are seen simply as a resource to be used.
employees are not trusted and will be closely supervised, with little training given.

Question 11

What is the benefit of hard HR ?

Answer 11

Hard HR allows managers to retain full control of employees

Question 12

What is the disadvantage of hard HR ?

Answer 12

does not allow employees to contribute their full potential to the business

Question 13

What is soft HR management ?

Answer 13

employees are recognised as the most important resource within the business.
employees are trusted and given opportunities to develop.

Question 14

What is the benefit of soft HR management ?

Answer 14

empowers employees which can increase production and efficiency.

Question 15

What a disadvantage of soft HR management?

Answer 15

Soft HR gives employees more freedom so mistakes may occur if employees make poor decisions

Question 16

What is labour turnover ?

Answer 16

Labour turnover refers to the percentage of staff that leaves the business per year

Question 17

What is retention ?

Answer 17

Retention refers to the percentage of staff that stays at the business per year.

Question 18

How do you calculate labour turnover ?

Answer 18

Labour turnover is expressed as a percentage. It is calculated using the following formula:
Labour turnover = (Total number of staff leaving ÷ Average number of total staff) × 100

To calculate the average number of total staff, use the following formula:
Average number of total staff = (Number of staff at the beginning of the year + Number of staff at the end of the year) ÷ 2

Question 19

How do you calculate average number of total staff ?

Answer 19

Average number of total staff = (Number of staff at the beginning of the year + Number of staff at the end of the year) ÷ 2

Question 20

In January 2017 a business employs 100 staff and in December 2017 the business employs 90 staff. During the year, 10 of these staff left.
Calculate the labour turnover.

Answer 20

Total number of staff leaving the business is 10.
The average number of employees throughout this time is calculated by adding the number of staff at the beginning of the year with the number of staff at the end of the year and dividing by two. 100 employees at the beginning of the year plus 90 employees at the end of the year equals 190 employees, divided by 2, equals an average of 95 employees.
Therefore, 10 staff leaving divided by 95 average staff multiplied by 100 gives 10.53% labour turnover. 10.53% of the business’ staff left during the period of one year.

Question 21

What are reasons labour turnover may be high ?

Answer 21

The higher the labour turnover percentage, the higher the number of staff leaving during the period calculated. This could be because:

If competitors offer higher wages and salaries, employees may leave.
If employees are demotivated, they may leave.

Question 22

What are the advantages of low staff turnover ?

Answer 22

Low staff turnover means that experienced employees remain within the business.

Low staff turnover means that training and recruitment costs are low as there are fewer vacancies to be filled

Question 23

What is the disadvantage of a low staff turnover?

Answer 23

Low staff turnover means that there are fewer opportunities for the business to recruit new talent, skills, and ideas.

Question 24

How do you calculate retention rates ?

Answer 24

Retention rates are expressed as a percentage. They are calculated using the following formula:
Retention rates = (Total number of staff who worked at a business for the whole period of time ÷ Total number of staff at the beginning of the period of time) × 100

Question 25

In December 2016, a business employs 90 staff. During the year, 15 of these staff left.
Calculate the retention rate ?

Answer 25

Total number of staff leaving the business is 15.
Total staff at the end of the year = 75.
Total staff at the start of the year = 90.
Staff at the end of the year ÷ staff at start of the year = 0.833.
0.833 X 100 = 83.33%.
A retention rate of 83.33% shows that the business retained 83.33% of its staff during the time period.

Question 26

What are the reasons for high retention rates ?

Answer 26

High retention rates could be because the business pays a higher salary or wage than its competitors.
High retention rates could be because employees are motivated, empowered and valued.

Question 27

A business has 1,600 staff. The total number of staff leaving the business is 45. What is the average number of employees?

Answer 27

Total staff at the beginning and end of the year.
1,600 + 1,555 = 3,155

Find the average of the total staff.
3,155 ÷ 2 = 1,577.5

Question 28

At the start of the year, a business employed 45 staff. During the year, 5 people leave. What is the retention rate?

Answer 28

89.9%

Question 29

What is labour productivity?

Answer 29

Labour productivity is a measure of the units produced by an employee in a given period of time.
HR managers use this as a measure of an employee’s performance during appraisal reviews to inform decisions about employee pay and any possible training requirements

Question 30

How do you calculate labour productivity?

Answer 30

Labour productivity is expressed as a number of units. It is calculated using the following formula:

Labour productivity = Total output ÷ Total number of employees

Question 31

If a business has 1,000 employees, and during a one month period, produces 250,000 bottles of orange juice, what is the labour productivity?

Answer 31

The labour productivity can be calculated by dividing 250,000 units by 1,000 employees to give 250 units per employee.

Question 32

Once a HR manager finds labour productivity what can it be used to do ?

Answer 32

A Human Resources manager could compare a labour productivity calculation with previous years to assess how productive the current workforce is.
HR managers may reward employees if productivity is increasing, though may plan training for employees if productivity is decreasing.

Question 33

A business has 3,000 employees. They produce 600,000 pencil cases. What is the labour productivity?

Answer 33

200 units per employee

Question 34

How do you calculate employee costs as a percentage of turnover ?

Answer 34

Employee costs as a percentage of turnover = (Total employee costs ÷ Total revenue) × 100

Question 35

Why is employee costs as a percentage of turnover important ?

Answer 35

Calculating employee costs as a percentage of turnover allows HR managers to assess, as a proportion of total revenue, or turnover, the amount that is spent on staffing costs.

Question 36

If a newsagent had staffing costs of £105,000 in 2017, and had total revenue of £1,100,000, employee costs as a percentage of turnover is what ?

Answer 36

Calculated by dividing £105,000 by £1,100,000, to get 0.095, multiplied by 100 gives 9.55%. This means that the business spends 9.55% of its total revenue on employee costs.

Question 37

Why is knowing employee costs as a percentage of turnover important ?

Answer 37

A Human Resources manager could compare their employee costs as a percentage of turnover with data from previous years, with data from competitors, if it is available, or with data from the industry.

If employee costs as a percentage of turnover are higher than they have been in previous years, a Human Resources manager may decide to try and reduce their total employee costs.

Question 38

Why is having lower employee costs as a percentage of turnover important ?

Answer 38

Some businesses, for example, Aldi, have much lower employee costs as a percentage of turnover, because they place emphasis on cutting costs by operating minimum numbers of checkouts and limited numbers of shop floor staff, compared with supermarkets such as Sainsbury’s and Marks and Spencer.

Question 39

What does labour cost per unit allow ?

Answer 39

Labour cost per unit allows a business to calculate the cost of labour for every one unit produced.

Question 40

How is labour cost per unit calculated?

Answer 40

Labour cost per unit can be calculated using the following formula:
Labour cost per unit = (Total labour costs ÷ Total units produced)

Question 41

If a business has total labour costs of £250,000 and produces 1,500 products, what is the labour cost per unit ?

Answer 41

The labour cost per unit can be calculated by dividing £250,000 by 1,500 products to get £166.67.
For every one unit produced by the business, there is a labour or employee cost of £166.67.

Question 42

Why is known the labour cost per unit important ?

Answer 42

HR managers may use the calculation of labour cost per unit to compare data to previous years, to competitors and to the wider industry.
If HR managers are unhappy with their current labour cost per unit, they may decide to increase productivity, so that employees produce more, or they may reduce employee costs.

Question 43

What improves labour cost per unit ?

Answer 43

Increasing productivity or reducing employee costs would improve the labour cost per unit.

Question 44

A business has total labour costs of £100,000 and produces 8,000 products. What is the labour cost per unit?

Answer 44

£12.50

Question 45

What does job design refer to ?

Answer 45

Job design refers to an employer’s creation and planning of a job considering the job’s aspects

Question 46

What are the aspects of job design ?

Answer 46

Job design includes the roles and responsibilities of the job itself.

Job design includes the systems and methods used by an employee to carry out their role.

Job design includes the relationships between the employer and the employee, and between other managers, subordinates and stakeholders.

Question 47

How do business objectives effect job design ?

Answer 47

The overall business objective may influence job design as all jobs within the business should contribute to the overall business objectives and they should be designed in such a way to do so

Question 48

How do individuals effect job design ?

Answer 48

The performance of individual employees may influence job design. If employees are demotivated and there is a problem with productivity, managers may use job design to motivate employees and improve productivity.

Question 49

How do available resources influence jobs design ?

Answer 49

The resources available within the business may influence job design. Major changes to job design may require the additional support of resources such as labour and capital, and these resources must be available for the change to be successful.

Question 50

How does market research influences job design ?

Answer 50

Market research and changes in trends and tastes may influence job design. If an HR manager is expecting there to be a change in the external environment, jobs may be designed or redesigned to reflect the demands of a changing external environment.

Question 51

What are approaches an employer can to take to job design (the forms of jobs design) ?

Answer 51

Job Enlargement
Job enrichment
Job empowerment
Job rotation

Question 52

What is job enlargement ?

Answer 52

When a business is considering the motivation and productivity of its employees, it may use job enlargement.
Job enlargement is when an employer increases the number of jobs an employee is responsible for in order to increase the challenge of their role. Additional jobs assigned to employees are usually at a level similar to their original duties.

For example, a receptionist may be given responsibility for the collection of customer questionnaire feedback in addition to their existing roles of managing customer appointments and complaints.

Question 53

What is job enrichment ?

Answer 53

When a business is considering the motivation and productivity of its employees, it may use job enrichment.
Job enrichment is when an employer provides an employee with jobs which are more complex and challenging. Jobs assigned to employees are usually at a level above their original duties in terms of complexity and challenge.

For example, a sole trader who manages their own marketing activities may ask their sales assistant to lead a marketing project.

Question 54

What is job empowerment ?

Answer 54

When a business is considering the motivation and productivity of its employees, it may use empowerment.
Empowerment is when an employer gives an employee more control over their job, including the ability to decide the best way to fulfill their duties.

For example, Disney empowers its staff by providing them with opportunities to define their own approach to working as long as their duties and responsibilities are still fulfilled.

Question 55

What is job rotation ?

Answer 55

When a business is considering the motivation and productivity of its employees, it may use job rotation.
Job rotation is an example of job enlargement and refers to an employer allowing an employee to move from one role or duty to another, regularly.

For example, some postal workers spend a period of time doing delivery rounds and will then spend a period of time working in a sorting office.

Question 56

What do Hackman and Oldham sate about job design ?

Answer 56

Hackman and Oldham state that there are five core characteristics of a job which motivates employees

Question 57

What are the five core characteristics of a job which motivates employees according to Hackman and Oldham ?

Answer 57

Skill variety
Task identity
Task significance
Autonomy
Feedback

Question 58

Hackman and Oldham’s first core characteristic of a job which motivates is skill variety, how does this motivate employees?

Answer 58

Skill variety refers to employees being given opportunities to use a range of skills as part of their normal duties and responsibilities.

Question 59

Hackman and Oldham’s second core characteristic of a job which motivates is task identity, how would this motivate employees ?

Answer 59

Task identity refers to employees being given a sense of conclusion or completion, for example closing an outstanding case or handing their completed work over to a manager.

Question 60

Hackman and Oldham’s third core characteristic of a job which motivates is task significance, how oils this motivate employees ?

Answer 60

Task significance refers to employees feeling as though their duties and responsibilities contribute to the overall business success.
Hackman and Oldham state that jobs which offer skill variety, task identity, and task significance will allow employees to experience meaningfulness of work, which will result in high motivation.

Question 61

Hackman and Oldham’s fourth core characteristic of a job which motivates is autonomy, how would this motivate employees ?

Answer 61

Autonomy refers to employees having some independence within their duties and responsibilities.
Hackman and Oldham state that jobs which offer autonomy will allow employees to take responsibility for outcomes which will result in high job satisfaction.

Question 62

Hackman and Oldham’s fifth core characteristic of a job which motivates is feedback, how would this motivate employees?

Answer 62

Feedback refers to employees receiving feedback, whether oral, written or verbal, on the work they have completed.

Hackman and Oldham state that jobs which offer feedback will allow employees to develop knowledge of their own results which will result in lower absenteeism and lower turnover.

Question 63

What does organisation design involve ?

Answer 63

Organisational design involves making sure that an organisation is designed appropriately to increase its chances of meeting its aims and objectives.

Question 64

When leaders are planning the design of their organisation, what factors will they consider ?

Answer 64

Authority
Spans of control
Hierarchies
Delegation
Centralisation and decentralisation

Question 65

When leaders are planning the design of their organisation, why do consider authority ?

Answer 65

Authority is linked to delegation. Delegation involves passing authority to employees further down in the hierarchy.
Authority can motivate and empower employees and therefore increase productivity.

Question 66

When leaders are planning the design of their organisation, why do the consider spans of control ?

Answer 66

Spans of control are the number of people who report directly to a supervisor or manager.
Businesses with tall hierarchies have narrower spans of control so employees can be monitored more closely.

Businesses with flat hierarchies have wider spans of control and it can be harder to monitor employees as closely as each manager will manage and lead a larger group of employees than in a business with a tall hierarchy.

Question 67

When leaders are planning the design of their organisation, why do they consider hierarchies ?

Answer 67

Hierarchies are the levels and layers of management. Tall hierarchies have many layers of management and flat hierarchies have few levels.

Communication can be more difficult in a tall hierarchy as there are more layers for the communication to pass through.

Tall hierarchies provide promotional opportunities for employees as there are more layers and therefore a greater number of promotional opportunities throughout the business.

Delayering involves reducing the number of layers in the hierarchy of a business, usually by removing middle managers.

Question 68

When leaders are planning the design of their organisation, why do they consider delegation ?

Answer 68

Delegation refers to a manager passing responsibility or authority to an employee below them in the hierarchy.

Delegation can reduce the workload of managers which allows them to focus on their own tasks.
Delegation can empower and motivate employees and prepare them for promotional opportunities in the future.
Delegation may require a business to invest in and provide employee training to ensure that employees have the necessary skills to complete a task.

Question 69

What are the Human Resources jobs ?

Answer 69

Choosing the right employees
Training
Redeployment
Redundancy

Question 70

Why is HR choosing the right employees important for a business ?

Answer 70

The human resources plan ensures the business has the right number of employees, with the correct skills, working at the right location within the business.

Recruitment can be used to recruit or employ new employees when the human resources plan identifies a gap in the number of or skillset of current employees.

Question 71

Why is HR implementing training important for a business ?

Answer 71

Training can be used to improve and develop the skills of employees so that productivity and quality can increase which can support a business’ objective.

Question 72

Why is HR implementing redeployment important for a business ?

Answer 72

Redeployment can be used to move, or redeploy, staff around the business according to business needs and demands and this can support business objectives.

Question 73

Why is HR implementing redundancy important for a business ?

Answer 73

Redundancy can be used when the skills of current employees are no longer required by the business and the role no longer exists, and this can support the business’ objectives through reducing cost.

Question 74

What is amazons organisational design ?

Answer 74

Amazon uses job enrichment to motivate its employees. Jeff Bezos, the founder of Amazon advocates using 2-pizza teams (small autonomous teams with their own goals that can be fed by 2 pizzas). This means that employees have lots of different responsibilities and are tasked with solving a complex problem. Employees also get job empowerment from being able to decide what the best ways to achieve their mission is.

Amazon decentralises responsibility for solving problems to its 2-pizza teams. They will have autonomy and 1 project manager who will be ultimately accountable for the project. The hierarchy is flat and the top managers will probably have fewer levels of managers underneath them than in bureaucracies.

Question 75

Who says that ‘big teams usually wind up just wasting everybody’s time.’?

Answer 75

Richard Hackman

Question 76

Supermarkets, such as Sainsbury’s, are using delayering as a method of cost-cutting. To what extent will this increase the competitiveness of the business?

Answer 76

Explain delayering
Delayering occurs when a level of hierarchy, usually middle management, is removed from the organisational structure. Although these middle managers’ jobs don’t exist anymore, often the employees are redistributed to another part of the business. If this is unable to happen, then they are made redundant. In the current climate, supermarkets are planning to significantly cut costs over the next few years. Delayering appears to be a popular strategy, which has been used by Tesco, Morrisons and Sainsbury’s in the last couple of years.

Arguments that delayering will increase Sainsbury’s competitiveness
Discount grocery stores, such as Aldi and Lidl, have become more popular and now pose a threat to well-established supermarket brands like Sainsbury’s. Increasing costs cause profit margins to fall. This will reduce total profits. Delayering will reduce costs for Sainsbury’s as they will save a substantial amount by no longer paying middle management salaries. This could allow Sainsbury’s to reduce prices and become more price competitive.

Arguments that delayering will not increase Sainsbury’s competitiveness
Delayering and redundancies can reduce employee’s trust and motivation. The remaining workforce could worry about job security. As a result of this, employees might meet the minimum requirements of their role, but refuse to do any more or may work slowly. This could result in customer complaints from empty shelves, long queues or poor customer service. Furthermore, the managers of the redundant middle managers will have wider spans of control. The majority of workers in-store at Sainsbury’s are low paid and low skilled. Combined with the lack of motivation or fear of redundancy themselves, not having as much supervision could have a negative effect on the productivity of the employees and the competitiveness of Sainsbury’s.

Judgment
In an industry where demand is increasing for discount grocery stores, delayering will support Sainsbury’s to meet its objective of cutting operating costs to increase its competitiveness. The success of this will depend on how employer-employee relationships are managed during this process to ensure that the culture, employee motivation and morale are not negatively affected too much during the cost-cutting process.

Question 77

When leaders are planning the design of their organisation, why do the consider spans of control ?

Answer 77

Centralisation and decentralisation refer to the decision making power within the business and how this power is held by different individuals in the business.

In centralised businesses, decision making power is held by a small number of people who make decisions and then share these with other staff.

In decentralised businesses, decision making power is distributed throughout the business to staff with appropriate skills and expertise.

Question 78

What are the advantages of having motivated and engaged employees ?

Answer 78

Greater productivity
Promoting the business
Trust between employer and employee

Question 79

How is greater productivity an advantage of having motivated and engaged employees ?

Answer 79

Motivated and engaged employees are likely to work harder and produce more than employees who are not motivated and engaged
Reduce unit costs as more is produced

Question 80

How is promoting your business an advantage of having motivated and engaged employees ?

Answer 80

Motivated and engaged employees are likely to share their experiences with other people which may attract workers to the business.

Motivated and engaged employees are likely to share their experience with others which will give the business a good reputation

Question 81

How is trust between employer and employee an advantage of having motivated and engaged employees ?

Answer 81

Motivated and engaged employees are likely to trust their employer and may, therefore, have fewer absences.

Question 82

What is Taylor’s theory on motivation ?

Answer 82

Taylor called his approach piece-rate pay and found that if employees were paid more for being more productive, they would, in turn, become more motivated and engaged with their job as there was an opportunity for employees to increase the amount they earnt.

For example, a factory may pay its employees £2 for every complete unit produced, or £1 for every item added to a product on an assembly line.

Question 83

What are the advantages of Taylor’s theory ?

Answer 83

Taylor’s theory may improve productivity which means a business can reduce its costs by employing fewer employees.

Question 84

What are the disadvantages of Taylor’s theory ?

Answer 84

Taylor’s theory means that employees may rush during the production process leading to mistakes and errors.

Taylor’s theory means that employees may become bored with completing the same task over and over again.

Question 85

What is Maslows theory on motivation ?

Answer 85

Maslow’s hierarchy of needs provides five categories of needs which a business must cater to if its employees are to be as engaged and motivated as possible.

Question 86

In Maslow’s hierarchy of needs provides what are the five categories of needs which a business must cater to if its employees are to be as engaged and motivated as possible ?

Answer 86

1. Physiological needs
2. Safety
3. Belonging and love
4. Esteem
5. Self-actualisation

Question 87

In Maslows heirarchy of needs what are physiological needs ?

Answer 87

Basic physiological needs are addressed when a business offers pay to employees so that they are able to purchase food and accommodation.

Question 88

In Maslows hierarchy of needs what are safety needs ?

Answer 88

Safety needs are addressed when a business offers employees job security and a safe working environment.
For example, McDonalds offering employees a guaranteed number of hours and moving away from zero hours contracts gives employees an opportunity to satisfy their safety needs.
Basic physiological needs are addressed when a business offers pay to employees so that they are able to purchase food and accommodation.

Question 89

In Maslows hierarchy of needs what is belongingness ?

Answer 89

Belonging and love are addressed when a business gives employees opportunities to build relationships through teamwork and social interactions. For example, a business offering a social club event that allows employees to socialise once a month could meet these social needs.

Question 90

In Maslows hierarchy of needs what are esteem needs ?

Answer 90

Esteem needs are addressed when a business gives employees access to opportunities for promotion and through recognising and celebrating successes. For example, recognising the successes of an employee’s work during an appraisal review could boost their esteem.

Question 91

In Maslows hierarchy of needs what are self-actualisation ?

Answer 91

Self-actualisation occurs when a business gives employees the opportunity to meet their full potential through achievement, responsibility and the development of new skills and knowledge. For example, offering an employee an opportunity to access a management training programme which challenges and develops them could allow an employee to realise their true potential.

Question 92

What are the advantages of Maslows hierarcy of needs ?

Answer 92

Maslow’s hierarchy offers businesses with a structured approach to try and improve employee motivation.

Question 93

What are the disadvantages of Maslows hierarcy of needs ?

Answer 93

Maslow’s hierarchy assumes that employees will place the same importance on each of their needs as ordered within the hierarchy and this may not apply to all staff.

Question 94

What does Herzbergs theory suggest ?

Answer 94

Herzberg’s theory suggests two groups of factors which impact upon an employee’s motivation

Motivating factors
Hygiene factors

Question 95

What are Herzbergs motivating factors ?

Answer 95

Herzberg states that a business should offer motivating factors, such as opportunities for recognition, achievement, and responsibility.
According to Herzberg, offering motivating factors will motivate employees.

Question 96

What are Herzbergs hygiene factors ?

Answer 96

Herzberg states that a business should offer hygiene factors, such as safe working conditions, pay, relationships, and clear policies.
According to Herzberg, offering hygiene factors will not motivate employees but will stop them from becoming demotivated

Question 97

What are the advantages of Herzberg’s theory ?

Answer 97

Herzberg’s theory offers businesses with a structured approach to try and improve employee motivation.

Question 98

What are the disadvantages of Herzberg’s theory ?

Answer 98

Herzberg’s theory assumes that employees will place the same importance on each of the hygiene and motivating factors as Herzberg did and this may not apply to all staff.

Question 99

What’s an example of Herzberg’s theory ?

Answer 99

For example, if Tesco offers all employees hygiene factors such as safe working conditions and guaranteed pay, this will not motivate staff but will stop them being demotivated.

However, if Tesco offers motivating factors such as access to promoted posts and training courses, employees will be motivated.

Question 100

What are financial methods of motivation ?

Answer 100

Include strategies which impact upon or influence the financial benefit employees receive from working within a business

Question 101

What are the financial methods of motivation ?

Answer 101

Payment
Salary schemes
Performance-related pay

Question 102

How is payment a financial incentive ?

Answer 102

Employees may be paid commission, which is a payment, usually based on the amount of goods an employee sells. Commission may be a percentage of sales made or can be a flat fee according to the volume of goods sold.

For example, call centres often use commission to motivate employees. Using commission, employees may be paid a percentage of the revenue they make through securing sales.

Question 103

How are salary schemes a financial incentive ?

Answer 103

Employees may be invited to take part in salary schemes. A salary scheme gives employees pension benefits usually based on their earnings and length of employment or membership of the scheme.

Question 104

How is performance-related pay a financial incentive ?

Answer 104

Employees may be paid using performance-related pay. Performance-related pay is used to pay employees based upon their performance. Performance-related pay could be based on whether employees meet objectives or on how many products are made or sold within a period of time.

Question 105

What are non-financial methods of motivation ?

Answer 105

Healthcare - free private healthcare
Gym memberships
Child care

Question 106

When deciding whether to use financial or non-financial methods of motivation what should businesses look into ?

Answer 106

Financial position
Demands of the employees
Competitors

Question 107

When deciding whether to use financial or non-financial methods of motivation, why do business need to consider the financial position of the business?

Answer 107

The financial position of the business must be strong if financial methods of motivation are used to motivate employees, as these will directly increase the business’ costs.

Question 108

When deciding whether to use financial or non-financial methods of motivation, why do business need to consider the demands of the employees of the business ?

Answer 108

The values and demands of employees should be considered as in some cases employees may value financial methods of motivation whilst in other cases employees may prefer non-financial methods of motivation.

Question 109

When deciding whether to use financial or non-financial methods of motivation, why do business need to consider competitors of the business ?

Answer 109

The actions of competitors may affect whether a business should use financial or non-financial methods of motivation as the business may need to compete with what competitors are offering their staff.