Learning objective
Explain financial methods of motivation, including salary, wage, commission and profit sharing.
Read the explanation, check the common trap, then practise with flashcards and questions.
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Topic
Motivating employees
Subtopic
Motivation methods
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Quick explanation
Explain financial methods of motivation, including salary, wage, commission and profit sharing
- This point belongs to Motivating employees, especially Motivation methods.
- You need to be able to explain financial methods of motivation, including salary, wage, commission and profit sharing.
- The key ideas to know are wage, profit sharing, and commission.
- Use the linked flashcards and practice questions to check recall, then practise applying the idea in an exam-style answer.
Key concepts
Why it matters
This objective helps connect Motivation methods to exam-style questions, flashcards, and revision notes for Motivating employees.
Quick student answer
Explain how commission can motivate employees in an online service business.
Direct answer
Commission motivates employees by giving them a direct financial reward for each sale or service they generate. This creates a clear link between effort and earnings, encouraging employees to focus on customer acquisition and upselling. In an online service business, where sales can be tracked digitally, commission structures can be tailored to reward high-value clients or repeat business, further aligning employee incentives with the company’s revenue goals.
How it works
The answer identifies the cause (direct link between effort and earnings) and effect (increased sales focus), and explains how digital tracking supports the commission system.
Key terms
- Profit sharing: A financial incentive where employees receive a share of the company’s profits, usually expressed as a percentage of net profit, to encourage them to improve performance and reduce costs.
Common trap
Confusing salary and wage: Salary is a fixed annual or monthly amount, while wage is paid per hour or per unit of work.
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