2.4.6—Financial rewards

Financial rewards include pay, bonuses, commission, profit-related pay and benefits. They can attract staff or focus effort, but the metric rewarded may distort behaviour.

Ask whether the reward is individual or team-based, short- or long-term, and whether performance is measurable without encouraging unsafe or low-quality shortcuts.

A sales commission can increase volume, yet a customer-retention bonus may better support a subscription business.

Higher pay does not guarantee motivation, and an incentive that changes one metric can damage another.

Distinguish the syllabus reward types. Salary is fixed annual pay; wages are based on time or output (piece rate); commission links pay to sales; performance-related pay links it to assessed targets; profit-related pay shares organizational profit; employee share ownership gives employees an ownership stake; fringe payments are benefits such as insurance or a company car. Match the measure to controllable performance: piece rates or commission can sharpen effort but may sacrifice quality, cooperation or customer fit, while profit or shares align longer-term interests but weakly connect one employee's effort to the final reward.