Page 116 - BA1 Integrated Workbook STUDENT 2018

Chapter 8

3.2 Types of incentive schemes

 Performance related pay (PRP) – part of the payment received by the
individuals relates to the performance of the company.

 Piecework – reward related to the pace of work or amount of effort. The faster
the employee works, the higher the output and the greater the reward.

 Points system – where a range of rewards is available based on a point
system derived from the scale of improvement made.

 Commission – paid on the performance of an individual and typically paid to
salaried staff in sales functions

 Bonus schemes – normally a one off as opposed to PRP schemes which are
usually a continual management policy. Bonuses may also be awarded to
teams or groups that have met or beaten certain targets.

 Profit sharing – usually available to a wide group of employees (often
companywide) where payments are made in the light of the overall profitability
of the company.

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