Q&A - What are the main methods of financial reward?

There is a wide variety of ways in which a business can offer money (or “financial rewards”) as part of the “pay package”, including:

• Salaries: fixed amounts per month or year for performing a role; these are common for most managerial positions (e.g. Accountant, Payroll Manager)

• Benefits in kind (“fringe benefits”) – very common in businesses of all kinds; these include staff discounts, contributions to travel costs, staff uniforms etc

• Time-rate pay: pay based on time worked; very common in small businesses where employees are paid per hour.

• Piece-rate pay: pay per item produced – becoming less common

• Commission: payment based on the value of sales achieved. This is common in the pay packages of employees who are targeted with generating business & revenue (e.g. a salesman might be paid a mixture of a low basic salary and tiered commission depending on whether his/her sales targets are achieved)

• Other performance-related pay: e.g. bonuses for achieving targets

• Shares and options: less common in small businesses, but popular in businesses whose shares are traded on stock markets

• Pensions – becoming less common and generous. Small businesses tend not to offer pension benefits.

In most cases, an employee might expect to have a mixture of the above in a pay package.