Rewards – Monetary and Non-monetary, Individual or Group, Performance Pay

  • Monetary

    • Monetary rewards are additional monetary payments that are given to employees and are beyond the employee’s minimum legal entitlements.
    • Direct benefits such as wage increase, bonuses, commissions
    • Indirect such as fringe benefits, company car, insurance, medical and health


    • Includes intrinsic rewards such as interesting and challenging work, responsibility and fringe benefits such as entertainment allowance, company credit card, product discount plan
    • Some employees are motivated by other work benefits associated with the job itself or working for the company.
    • Can be categorised as fringe benefits, status-related benefits and intrinsic rewards.
    • Come from the nature of the work rather than the wages, and include:
      • Interesting and challenging work
      • Socialisation
      • Recognition
      • Titles
      • Fringe benefits

    Individual or group

    • Rewards for individual performance can lead to conflict and rivalry
    • Increasing use of group-based rewards for tasks has increased need for cooperation but makes it difficult to distinguish performance of individuals within teams.
    • Reward packages are designed to align the performance of individual employees to business goals. This includes a competitive wage/salary, recognition, training development etc. This then leads to being valued by the business and building a long-term relationship.
    • Benefits:
      • Encourages a greater sense of team work
      • Employees become more motivated as they are working not only for themselves but also for others
      • Improves communication between staff.
    •  Disadvantages:
      • Not all employees may apply equal effort to the work process
      • Employees may have different personal goals that do not become recognised through team achievement
      • Conflict may occur within the group, restricting the ability of individual performing employees to be recognised

    Performance pay

    • When a portion of an employee’s wage is based on performance, as they reach targets and demonstrate improved performance their pay increases
    • For example: commissions, piece rates, production related incentives.
    • The benefits of performance pay:
      • Financial rewards will motivate employees and cause them to work more effectively
      • Good employees are attracted to work for the organisation, as they will be paid in accordance to their performance
      • Encourages unmotivated and inefficient individuals to improve their performance
    • The disadvantages of performance pay:
      • Some occupations are difficult to measure the performance of employees due to external factors that may influence it for example the attitude of consumers, health and cultural concerns, and general economic conditions.
      • Performance of employees may be difficult to measure
      • Possibility of conflict may emerge due to the process of measuring performance.
      • Performance pay assumes that individuals are motivated by money, whereas some employees seek non-financial rewards.

Extract from Business Studies Stage 6 Syllabus. © 2010 Board of Studies NSW.