CIMA E2 Syllabus B. Managing people performance - Rewards - Notes ^{12 / 19}

1. Intrinsic rewards - These rewards arise from the job. For example, Status conveyed by position held or the feeling of satisfaction from doing a job well.

2. Extrinsic rewards - These include pay, incentive schemes, working conditions and benefits.

Types of incentive schemes:

1. Performance related pay (PRP) - Part of the payment received by employees relates to the overall performance of the company.

2. Piecework -  A fixed amount for every sale that the employee makes or every unit they produce, the employee may not receive a basic salary. The faster the employee works, the higher the output and the greater the reward.

3. Points system - Rewards are based on points that employees receive for improvements made.

4. Commission - It is paid on the performance of an individual and typically paid to salaried staff in sales functions

5. Bonus scheme - One off rewards which can be paid to individuals if they meet certain targets.

6. Profit sharing - Employees are paid based on the profitability of the organisation. Profit sharing is the most appropriate incentive scheme for staff working in the HR department.