Employee motivation and retention

Overview

Pay, bonuses, profit sharing and fringe benefits, praise, awards and the working environment, why retention matters, and worked profit-sharing and staff turnover calculations.

What you need to know

Answer each one before you reveal it.

Questions from this subtopic

Each one with the model answer underneath.

1. 1

   What is employee motivation?

   Model answer

   Motivation is the drive employees have to work hard and do their job well.

2. 2

   Name four financial methods of motivation.

   Model answer

   Financial methods include pay, bonuses, profit sharing and fringe benefits.

3. 3

   How can pay motivate employees?

   Model answer

   Higher pay, or pay linked to performance, rewards employees for their effort. Commission pays sales staff a percentage of what they sell.

4. 4

   What is a bonus?

   Model answer

   A bonus is an extra payment on top of normal pay, usually for meeting a target.

5. 5

   What is profit sharing?

   Model answer

   Profit sharing gives employees a share of the business's profits, often paid once a year.

6. 6

   A firm shares 5% of its £200,000 profit equally among its 40 employees. How much does each employee receive?

   Model answer

   Each employee receives £250. £200,000 × 5% = £10,000, and £10,000 ÷ 40 = £250.

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