- Wages could be paid as piece rate (upon finishing the agreed piece work) or time
rate based on the number of hours. - Incentives: payments made for the achievement of the previously set and agreed
targets – result oriented. - Bonus rewards for the successful performance and paid out as a lump sum. Paid for
recognition of outstanding performance – result oriented. - Additional allowance – e.g. responsibility.
- Premium – paid due to inconveniences, shifts, etc.
- Overtime – paid for extra time spent.
- Competence pay – paid due to achievement of defined levels of competence.
- Profit sharing based on profit generated.
Non-financial rewards (intrinsic and extrinsic rewards)
Although there is a general consensus in the literature that the task done by a worker can
be the source of reward, there are also those who believe that the environment within
which a task is performed can be a source of reward. For decades, now the centre of the
debate is the extent to which intrinsic and extrinsic motivation are a source of rewards
for different professions and staff. Intrinsic rewards are attached to the direct relation-
ship between the work and the task done including the feeling of achievement, accom-
plishment, challenges met and competence derived from performing the job. On the
other hand, extrinsic rewards are achieved through motivation from factors outside the
job itself. Apart from financial rewards, as already explained, the others are fringe bene-
fits, company policies, supervision, office and a comfortable working environment.
Pay structure
The development of an effective pay structure is not an easy task because it involves
systematic data collection, careful analysis and interpretation and prudent decision mak-
ing (Redman & Wilkinson 2009). It involves the following processes:
- Selecting an area of industry, a firm or an organisation. Listing key jobs and posi-
tions common to most firms in the survey for comparison. - Preparing a schedule of information required, for example, salaries, scale/grades,
supplementary pay etc. - Collecting data through instruments such as interviews, questionnaires and suchlike.
- Compiling the data for each job.
Factors for consideration
- Ability to pay: An organisation cannot afford to pay more than what is earned from
labour, total costs of production and the profit margin. - Cost of living: This is based on the cost of living index usually computed by a
country. Sometimes, indices may be computed based on the data collected from the
area where the organisation is located. - Government regulations: Government policies and regulations on income do change
from time to time. Organisations cannot afford to go against national policies and
laws on minimum wage and employees’ entitlements to retirement benefits. - Internal and external Equity: Salaries and wages have to be seen to be fair for each
employee working in the organisation depending on the job category, rank and
competencies required and disposed.