Q&A - What is “piece-rate” pay?
Piece-rate pay gives a payment for each item produced – it is therefore the easiest way for a business to ensure that employees are paid for the amount of work they do. Piece-rate pay is also sometimes referred to as a “payment by results system”.
Piece-rate pay encourages effort, but, it is argued, often at the expense of quality. From the employee’s perspective, there are some problems. What happens if production machinery breaks down?
What happens if there is a problem with the delivery of raw materials that slows production? These factors are outside of the employee’s control – but could potentially affect their pay.
The answer to these problems is that piece-rate pay systems tend, in reality, to have two elements:
• A basic pay element – this is fixed (time-based)
• An output-related element (piece-rate). Often the piece-rate element is only triggered by the business exceeding a target output in a defined period of time
Join Jim Riley and the tutor2u BUSS4 team for an intensive day designed to prepare students for the challenges of BUSS4 in June 2015. Each of the five workshop sessions introduces and builds effective essay planning and writing technique. We do this in the context of looking at both Manufacturing in the UK (Section A) and core topics for Section B including leadership, change management, technology, strategic choice and globalisation.