Remuneration and fringe benefits: the package the job comes with

1. Remuneration is the basic wage or salary, and it is the reward every other financial method is added on top of.
   1. It motivates because earning money is why most people work at all, and a rate set above the going rate in the area attracts stronger applicants and keeps existing staff from leaving for a rival.
   2. Its weakness is that a pay rise is treated as normal within a few months, and no hourly rate makes a repetitive job interesting to do.
2. Fringe benefits are the non-cash extras, such as a staff discount, a company vehicle, a pension contribution, free meals or private healthcare.
   1. They motivate because they improve daily life in a way the employee notices every week, and a discount card or a subsidised canteen is often valued at more than it costs the employer to provide.
   2. Their weakness is that they cost money whether or not that particular employee wants them, and a benefit that has been there for years is taken for granted rather than felt as a reward.

Rewards tied to results: bonus, commission and promotion

1. Bonus: an extra payment on top of normal pay for hitting an agreed target or for a strong performance review.
   1. It motivates because the employee can see exactly which effort earns the extra money, so attention goes straight to the thing being measured.
   2. Its weakness is that staff chase the target at the expense of everything else the job needs, and a bonus people expect and then do not receive causes more resentment than never offering one.
2. Commission: a payment for each item sold, or a percentage of the value sold, paid on top of or instead of a basic wage.
   1. It motivates because earnings rise directly with effort, so a hard week shows up in this month's pay rather than in a review a year away.
   2. Its weakness is that it pushes staff to talk customers into a purchase that does not suit them, which costs the business repeat custom, and it leaves take-home pay unpredictable in a quiet month.
3. Promotion: moving an employee up into a more senior, better paid role carrying more responsibility.
   1. It motivates because good work is rewarded with a permanent rise rather than a one-off payment, and everyone below can see a route upwards worth working towards.
   2. Its weakness is that a business has only so many senior posts, so most of the workforce cannot be promoted this year, and promoting the wrong person costs twice by losing a good worker from the old job and putting a weak manager over a team.

Matching the method to the job

What sets each payment off is what decides the behaviour the business is buying, and the role each method fits follows from that.

1. Bonus and commission are the only two an employee can raise by themselves this month, which is why they shift daily effort hardest and why they bend behaviour towards whatever is counted.
   1. Promotion depends on a post existing, so a firm growing quickly, as Gymshark did after Ben Francis started screen-printing gym clothing in a Birmingham garage in 2012, can offer it far more often than a business whose size has been steady for years.

The limits of paying people more

1. Every financial method raises the wage bill straight away, and pay is difficult to cut back, so the cost carries on into years when trading is weaker.
2. The effect usually fades because the higher pay becomes the new normal, leaving the business paying permanently more for effort that lifted only for a while.
3. Money also does nothing about work that is dull or a manager who never says thank you, so a firm that answers every complaint with a rise ends up paying to keep staff who still dislike the job.
4. The methods that reach those problems, job rotation, job enrichment and autonomy, are non-financial and are covered in the next guide.