Edexcel Business A Level Revision

Bonus - designed to motivate employees by rewarding them for achieving particular targets or standards set by the employer. KEY FEATURES  Can help to recruit, motivate and retain staff Can increase employee commitment to the business ADVANTAGES A bonus payment to an employee can be used as an incentive, especially in a field where employees must make sales or meet specific goals. Bonus payments do not have to be awarded on a holiday, at the end of the year or as an incentive. A bonus payment can also be used as a means of appreciation for an employee’s hard work throughout the year or in a specified amount of time in the year. Receiving a bonus payment will not only show the employee he was appreciated for his hard work, but it will motivate him to continue to work hard for further rewards. DISADVANTAGES Not all jobs show a clear link between performance and productivity or profit Employees may neglect other goals to concentrate on bonus targets. Because bonus...

Commission - based on the percentage of business generated by an employee such as a salesperson. Commission is a payment made to employees based on the value of sales achieved. KEY FEATURES An incentive to increase worker productivity Knowing that extra effort means more pay can motivate Depends on selling price of product ADVANTAGES  Enables high performing sales people to earn huge amounts.  The payroll cost is related to the value of business achieved rather than just the amount produced. Increased sales due to it being a motivator DISADVANTAGES No incentive to build relations with customers Income can be unreliable, especially in a recession May lose customers if employees are using aggressive sales techniques in order to secure commission which damages the business' reputation