Edexcel Business A Level Revision

Performance-related pay - is a scheme where wages or salaries are linked to performance in the workplace. There are many different schemes... KEY FEATURES An appraisal (review of performance) is conducted by senior managers Payment may be based on specific targets Goals and/or targets are set for the next appraisal ADVANTAGES Senior managers can easily monitor and assess individual employee performance during appraisal process Setting of targets for employees can ensure they are all closely focused to company objectives DISADVANTAGES Discourages a team based approach - can create unhealthy rivalry between managers Can be difficult to accurately measure performance of some workers e.g. in service sector firms Incentives may not be large enough to motivate employees Employees may disagree with the appraiser

Profit share -  means that an agreed share of the profits is paid to employees. KEY FEATURES Employees have an incentive to be as productive as possible Can take the form of cash or share options ADVANTAGES Creates a direct link between pay and performance Creates a sense of team spirit - helps remove 'them and us' barrier between managers and workers if all employees are involved May improve employee's loyalty to the comany Employees more likely to accept changes in working practices if they can see that profits will increase overall DISADVANTAGES Not linked to individual performance External factors can reduce profit through no fault of the employees.