Building a Rewards Package (AQA A Level Business): Revision Note

Influences on the type of rewards package offered

• Motivating employees is essential to business success. However, there’s no single method that works for every team

• The most effective strategies depend on several key factors

• Businesses must carefully choose and assess financial and non-financial rewards based on their workforce, industry, and strategic goals

Key influences on the choice of motivational methods

1. Nature of the work and workforce

• In labour-intensive or production-based roles, like in factories, piece-rate pay or bonuses may boost output

• In creative or professional roles, like designers or software engineers, non-financial rewards like flexible working and job enrichment tend to be more effective

2. Cost and financial position of the business

• Businesses with tight budgets may prefer non-financial methods (like job rotation or team-building)

• Firms with strong cash flow might offer bonuses or profit sharing to reward loyalty and boost morale

  • A fast-growing fintech start-up might offer bonuses to retain top talent, while a small café might provide extra holidays or flexible hours instead

3. Workforce demographics and preferences

• Younger workers may value career progression and lifestyle flexibility

• Older workers might be more motivated by job security and pension schemes

• Cultural expectations and personal values also influence what staff find motivating

4. Organisational culture and leadership style

• Authoritarian organisations may favour clear, measurable financial incentives (e.g. commission)

• People-centred or flat-structure businesses may prefer empowerment, recognition, and teamwork-based motivation

5. Industry norms and competitive pressure

• Businesses often align their reward strategies with what competitors are offering to attract and retain talent

• Falling behind the industry standard may lead to higher staff turnover and recruitment difficulties

  • A supermarket like Aldi offers higher-than-average pay and clear promotion pathways to compete with rivals like Tesco and Lidl

Assessing the effectiveness of the rewards package

• To assess if a strategy is working, a business may track:

  • Productivity and output levels

  • Absenteeism and punctuality

  • Employee satisfaction surveys

  • Staff turnover rates

  • Customer service outcomes

• Effective motivation schemes should lead to higher engagement, lower recruitment costs, and better business performance