Financial and non-financial rewards
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Flip to reveal answersWhat is the difference between wages and salary?
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Question
What is the difference between wages and salary?
Answer
Wages are usually paid per hour/units; salary is a fixed annual amount paid monthly regardless of hours.
๐ก Hint
Hourly vs fixed.
Question
Salary is usually ______ (fixed/variable) pay.
Answer
Fixed.
๐ก Hint
Certainty.
Question
Give one factor to consider when choosing a reward system.
Answer
Nature of the work, employee preferences, business objectives, cost, culture, or motivational impact.
๐ก Hint
Match system to context.
Question
What is commission?
Answer
Pay linked to sales value or volume, common for sales roles.
๐ก Hint
Sales-linked pay.
Question
Why might salary suit quality-focused work better than commission?
Answer
Salary supports consistent standards; commission may encourage aggressive selling over quality.
๐ก Hint
Quality vs sales pressure.
Question
Commission is pay linked to ______.
Answer
Sales.
๐ก Hint
Sales-based reward.
Question
Profit sharing links employee reward to business ______.
Answer
Profit.
๐ก Hint
Align interests.
Question
What is profit sharing?
Answer
Employees receive a share of business profits, aligning employee interests with business performance.
๐ก Hint
Share profits.
Question
How can profit sharing support business objectives?
Answer
It aligns employees with overall business performance and encourages teamwork toward profitability.
๐ก Hint
Align incentives.
Question
Fringe benefits are ______ rewards with financial value.
Answer
Non-cash.
๐ก Hint
Benefits, not cash.
Question
What is performance-related pay (PRP)?
Answer
Pay linked to meeting specific performance targets (often set during appraisal).
๐ก Hint
Targets = pay.
Question
Why can variable pay reduce risk for the business?
Answer
Bonuses/commission can turn fixed labour costs into variable costs that fall when sales/profits fall.
๐ก Hint
Fixed โ variable.
Question
Exam tip: Best reward answers consider business costs AND employee ______.
Answer
Motivation.
๐ก Hint
Impact on people.
Question
Why should reward-system answers link to motivation theory?
Answer
Because rewards affect motivation differently (e.g., Herzberg: money prevents dissatisfaction but motivators create true motivation).
๐ก Hint
Use theory + apply.
Question
Give two examples of fringe benefits.
Answer
Company car, private healthcare, pension contributions, gym membership, subsidised housing.
๐ก Hint
Non-cash benefits.
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Full study notes for Financial and non-financial rewards
Topic 2.4 hub
Motivation and demotivation
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