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Study Notes: People ManagementFinancial motivation - piece rate pay Piece-rate pay gives a payment for each item produced – it is therefore the easiest way for a business to ensure that employees are paid for the amount of work they do. Piece-rate pay is also sometimes referred to as a “payment by results system”. Piece-rate pay encourages effort, but, it is argued, often at the expense of quality. From the employee’s perspective, there are some problems. What happens if production machinery breaks down? What happens if there is a problem with the delivery of raw materials that slows production? These factors are outside of the employee’s control – but could potentially affect their pay. The answer to these problems is that piece-rate pay systems tend, in reality, to have two elements: • A basic pay element – this is fixed (time-based) • An output-related element (piece-rate). Often the piece-rate element is only triggered by the business exceeding a target output in a defined period of time Case study: Piece-rate pay in practice in the UK – Home-based workers In the UK many thousands of people engage in what is known as “home-based work”. This refers to work: •
In the home, or near the home in premises that are not those of an employer Whilst there are many successful business people and well-paid professionals working from home, the use of piece-rate pay is focused is on those at the other end of the scale – home-based workers, mainly women, who earn only a subsistence level income. Subsistence level home-based workers fall into two broad categories: • Those who work for an employer, intermediary or subcontractor for a piece-rate, who are not responsible for designing or marketing the product, but simply contribute their labour. These workers are often called subcontracted or dependent home-workers • Workers who design and market their own products, but who cannot be considered to be running small businesses - known as own-account workers. The majority of home-based workers are women who do home based work in order to combine earning cash with other responsibilities, such as child-care and household management. Many earn well below the local minimum wage or average earnings. Most dependent workers work informally, without a proper employment contract. They are rarely organised or supported by formal trade unions. Home-based work is found in most sectors of the economy, both modern and traditional industries. Good examples include: •
Production of garments and shoes It used to be thought that home-based work was an old-fashioned form of employment that would die out with the rise of modern industry. However, over the last 20 years much large-scale industry has reorganised its production, subcontracting work to smaller companies, often in other countries. At the end of the chain there are often informal workshops and home-based workers. Subcontracted homework is a form of production which allows companies to reduce their costs by: • Outsourcing production to lower-paid workers, usually without formal contracts, employment and social protection or even a regular supply of work • Passing on some of the costs of heating, lighting and storage to the workers themselves • Avoiding responsibility for health and safety for these workers • Using home-based workers as a source of flexible labour Some of the problems faced by home-based workers include: •
Irregular work – and therefore irregular income
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Related Study Notes HRM Strategy Organisational Structure Motivation at work Recruitment & Training Workforce planning Communication
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HRM Strategy HRM introduction HRM objectives HRM influences Hard & Soft HRM Organisational Structure Org charts Delayering Span of control Centralisation & decentralisation Matrix structures Motivation at work What is motivation? Theory - Maslow Theory - Herzberg Theory - Taylor Theory - McGregor Financial motivation Pay Package Time rate Piece rate Commission Performance pay Share options Job rotation Job enlargement Delegation & empowerment Recruitment & Training Recruitment intro Internal / external Job descriptions Interviews Job analysis Job advertising Person specification Training - intro Induction training On-the-job training Off-the-job training Workforce planning Workforce planning Flexible working Benefits & issues Labour supply Workforce roles & workload Annual hours Job sharing Temporary staff Teleworking Flexible hours Communication Overview Barriers Benefits Employee Representation
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