The remuneration system - get to know its models!

Service Business

When we start hiring employees, we need to consider what the remuneration system should look like. Of course, the model we adopt should be precisely matched to the positions held in our company and the tasks performed by the people who hold them. What models of the remuneration system can be used in the enterprise?

Remuneration system - models

After determining the model used, the remuneration system should be included in the contract in a clear and understandable manner, additionally it is important to confirm it by the employee and the employer.

The remuneration system has 3 basic models:

  1. Time system

  2. Piecework system

  3. Commission system

Each of these systems can be used in the company, as already mentioned, its choice depends primarily on what tasks are performed in a given position.

Time system

The unit on the basis of which the remuneration is determined is the time worked in the settlement period, which may be e.g. a month or a week. Accordingly, the employee receives an hourly wage. In such a remuneration system, working time is more important than results and effects. Therefore, other, motivating extras are often used, such as, for example, bonuses for a job well done, etc.

Piecework system

In this case, it is not so much the time of work that counts, but its results, and most of all the tasks that have been performed. People working in such a model usually have to perform a clearly defined work standard, but if they exceed it, they can receive a corresponding bonus. Such a system is used, for example, in the production of goods - employers care about the amount of work performed, there is no time devoted to it.

Commission system

In this case, it is not the time of work that counts, but the results achieved and the amount of work performed, with the difference that commissions are added to the basic salary. This remuneration system works perfectly in trade and real estate brokerage. The more goods or services sold, the higher the commissions the employee receives.

The remuneration system is a motivation system

Although employees more and more often mention a good atmosphere as the strongest motivator to work, it cannot be denied that additional money also affects how willingly and effectively they perform their tasks.

So how to enrich your remuneration system with bonuses and commissions so that it is also one of the strongest motivating factors? First of all, the main salary should be appropriate to the requirements of the position, not including bonuses and allowances.

It is also important to clearly define the incentive system and make sure that each employee knows it, is aware of what they need to do to receive a bonus or commission for their performance, for example. The better the communication and information flow, the better. If an employee for some reason does not deserve extra pay, he or she needs to know why. Otherwise, he may feel that he has been treated unfairly, which may lower his commitment and effectiveness.

Employees should also not wait too long for additional remuneration for their work. The shorter the period between a perfect task completion and receiving a bonus for it, the more it motivates employees to act.

It is also important that money is not the only motivating factor in the company. Yes, the remuneration system is very important, and people work because they have to earn, but money is often not enough. In order to increase commitment and identification with the workplace, you need to focus on diversity.

Is the selected remuneration system final?

Should the remuneration system once selected be continued regardless of the situation? There are several factors to consider when it comes to making a change.

Let's check whether the current remuneration system works and whether employees feel that it is appropriate. Perhaps in the course of work it turns out that work accounted for from the time the tasks are performed should be accounted for in a different way. In addition, some positions may change their specificity along with the development of the company or tasks. If employees notice and report certain inaccuracies, it is worth taking a closer look at them.

The remuneration system is not final. We can change it at any time and adapt it to the situation in the company.

Salary is a very important issue. It is no secret that many times it is the main factor for which you take up a job. No wonder, after all, every person wants to ensure a decent life, and for that to be the case, they simply have to earn. However, if the employee remuneration system is well selected and its model allows for increasing motivation and commitment to work, the identification of the employee with the company will certainly increase, and this will make them treat the company's problems as their own - thus they will be more involved in their solution.