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Labour Payment Systems

Labour Payment Systems. Operations Management Intermediate Business Management. Labour Payment Systems. Time Rates. Piece Rates. Bonus Rates. PAYMENT SYSTEMS. Overtime. Flat Rates. Commission. Flat Rate. Employee paid a set salary per annum

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Labour Payment Systems

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  1. Labour Payment Systems Operations Management Intermediate Business Management

  2. Labour Payment Systems Time Rates Piece Rates Bonus Rates PAYMENT SYSTEMS Overtime Flat Rates Commission R Alexander

  3. Flat Rate • Employee paid a set salary per annum • Salary divided into 12 equal monthly payments • Managers, supervisors, office staff paid this way Advantage • Guarantees monthly income for employee Disadvantage • Doesn’t reward increased effort R Alexander

  4. Piece Rate • Worker is paid per item they produce. • Paid a low basic rate with additional earnings. • Tends to be used in factories • More worker produces, more they get paid Advantages • Acts as an incentive to work hard Disadvantages • Close supervision of output is required • Employees may need to be penalised if quality not maintained R Alexander

  5. Time Rate • Workers are paid by the hour (e.g. £6.50 per hour) eg £6.50 X 20 hours = £130.00 • Service sector and manual workers often paid this way Advantages • Simple to calculate for employer • Rewards time spent at work for employee Disadvantages • Doesn’t provide any incentive to produce quality work R Alexander

  6. Overtime • Overtime is extra hours worked over and above their set number of hours. • Normal hourly time rate usually rises for overtime worked e.g. double-time. R Alexander

  7. Bonus Rate • Additional payments received on top of basic wage. • Paid when employee meets targets: • Productivity • Time-keeping • Efficiency • Bonus is added to their basic pay R Alexander

  8. Commission • Used in many organisations e.g. car showrooms, double-glazing etc. • Is calculated as a percentage of the products’ sales value. • Eg a car sells for £15,000 and the commission rate is 5%. The salesman would earn £750. • May be the only method of paying employees or added on to basic wage/salary Advantage • Used as an incentive by employers for employees to sell more Disadvantage • Supervisors must keep an eye on staff to ensure they aren’t using dodgy selling techniques. R Alexander

  9. TASK • You have been asked to come up with a suitable payment system for the following organisations: Strathclyde Police -patrol car -detective -receptionist KFC (manager and staff) Audi Car Showroom R Alexander

  10. TASK What does each person want? • The employee wants to be rewarded for the work they do and to feel valued by the organisation. • The employerwants to motivate their staff but keep the costs of labour low. However, they also want to be seen as good payers to help them recruit staff! Prepare a recommendation for each organisation detailing which payment system(s) you would recommend and WHY! R Alexander

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