HR Practice For Payroll Practitioners

HR Practice for Payroll Practitioners

Selecting the method to suit the workplace

Base and variable pay methods will be a major cost to your business whatever method is used. The important point to make here is you should choose the method that is best for your type of workplace but still gives flexibility to the employer and ensures employees stay motivated and focussed on achieving the organisation’s objectives.

Factors to consider:

• The types of different workers in your workplace • The strength of unions • The history of the work environment • Industry trends

Types of workers

In some workplaces one type of pay method will only work for one type of employee group. This may mean that an employer will have to use a variety of pay methods to manage the remuneration needs of employees and the organisation.

For instance:

In a manufacturing plant process workers use the time-based method to be paid for hours actually completed (which includes a lot of overtime). They also have a variable pay component that allows them to get a bonus on a monthly basis if they meet productivity targets for their group. In the administration office all staff are paid a salary and are expected to only work the standard office hours. They also are part of a profit-sharing scheme that will see them get a payment if the company meets its yearly targets.

Strength of unions

The strength or weakness of unions in the workplace will have a big impact on the employer developing and implementing pay methods. A strong union may reduce the effectiveness of the pay method because of trying to share the benefits across all members instead of allowing a higher payment to go to an individual because of his or her performance.

© New Zealand Payroll Practitioners Association, Sep 2024, Ver 12

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