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What is the best way to pay an employee?

What is the best way to pay an employee

  • Salary

    Votes: 3 75.0%
  • Hourly

    Votes: 1 25.0%

  • Total voters
    4

NolaMan

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Salary or by the hour?

If you are paying by the hour, would that encourage people to drag out projects in an attempt to make more money?

However, if you are paying salary, does that encourage people to limit their production since they are going to get paid the same amount either way? Even with a bonus structure, wouldn't they work just enough to get the bonus, and then nothing more?

Any idea of which system generates the higher level of productivity?
 

RightinNYC

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Really depends on the type of work that's being performed.

Law firms handle some cases on a hourly basis and others on a flat-fee basis. The most important cases are usually handled on an hourly basis.
 
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Lord Tammerlain

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Salary or by the hour?

If you are paying by the hour, would that encourage people to drag out projects in an attempt to make more money?

However, if you are paying salary, does that encourage people to limit their production since they are going to get paid the same amount either way? Even with a bonus structure, wouldn't they work just enough to get the bonus, and then nothing more?

Any idea of which system generates the higher level of productivity?

It entirely depends on the situation and the person

A low motivation person

With an hourly wage a person will work the 40 hr per week and expect OT for any more time, they wont care about how productive they were during the 40 hr other then to ensure they dont get fired

A salaried employee can often expect to put in more then 40 hours a week, and wont get paid for OT, and again they wont care about how productive they were other then to ensure they dont get fired

Highly motivated, will work hard either way, they want to be promoted to get a better wage, and for personal pride in their work

If the concern is poor motivation, the best method is piece work, pay the employee for how much they produce, not for the time they put in. I think Lincon Electric follows these method of compensation, it is fair about and does not shortchange its productive employee's by reducing the amount paid for each piece they produce as they get better at the job
 

justabubba

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read about the open book pay plan nucor uses
How Nucor Steel Rewards Performance and Productivity

employees get a base amount which is less than its counterparts
but they have an incentive program that rewards them with a portion of the profits they earn for the company
essentially, the employees start working for themselves
if they slack off, they not only hurt their own paycheck but the profitability distribution of their co-workers
the employees make sure their cohort carry their own weight, minimize waste and maximize profitability
 

Gipper

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For production workers, hourly pay with minimal levels of per-unit compensation of completed product and stock options.

For pretty much anything else, salary.

Oh...and for fast food workers, pay them 50 cents an hour.
 

Gardener

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I pay by the hour.
 

Tucker Case

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Salary or by the hour?

If you are paying by the hour, would that encourage people to drag out projects in an attempt to make more money?

However, if you are paying salary, does that encourage people to limit their production since they are going to get paid the same amount either way? Even with a bonus structure, wouldn't they work just enough to get the bonus, and then nothing more?

Any idea of which system generates the higher level of productivity?
Depends on the type of business.

I paid my employees hourly, but I was always on the job working right next to them (carpentry). If someone dragged ass, they were told to drag their ass over to the unemployment line.

I gave raises based primarily on production. Which provided an incentive to work harder and faster. The raises weren't regular (such as every six months) or at set increments (such as $1 per hour raise). If a guy was outperforming everyone else on the job, his raise would reflect that.

Generally, I'm of the belief that someone's pay should reflect their competency at the job, not their "time-served" at the job. This is regardless of whether it's a salaried position or hourly.

One thing to think about when making the decision is how the business makes its money.

Is it a steady supply of predictable income or is it going to be sporadic and varied? In construction, the payouts are based on certain points of completion, but are really dictated by how long it takes the title company to release the construction-loan funds to the contractor. Some would be easy as pie to work with, others would be a ****ing nightmare. I often had to wait 6 months or so before I got a payout for a job (and that's for instances where I didn't have to place liens on the property in order to get paid).

Plus, in lean times, jobs weren't always forthcoming (like now, for instance) or there was downtime while we had to wait for the job to be ready for the carpenters. If I were paying a salary, I'd have had to pay them during these downtimes, which would have lowered my profits or lowered their income, because Its impossible to predict exactly when they would crop up.

Instead of paying the guys to sit around, I would call around to other guys I knew in the industry and see if they were busy enough and if they needed a guy for a couple of weeks. Most of my best guys would then go out on loan to these guys. Other times, I'd be busy as **** while one of these guys would be slow and they'd send their guys over to me on loan. With the guys on loan, we'd just 1099 them and that was that. So while I might be dealing with some down time, my guys rarely had to deal with it. I'd usually have an idea whether downtime was on the way within a month of it happening so I'd have time to prepare for it.

Now, since construction work is so scarce, these approaches wouldn't work for construction. But they might be useful in a field that hasn't been totally devastated by the recession or they might be useful some time in the future.

But they wouldn't be useful in an office setting or a business that has a different dynamic.

Essentially, I'm just saying all this to truly illuminate exactly how much the business will determine the way that you pay your workers. It's not nearly so simplistic as deciding on which style of paying will get the most productivity. You really need to look at all of the factors involved and how pay-style will affect profitability and the viability of the company.
 
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ReverendHellh0und

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I pay most of my employees salary, + commission + performance bonus + health care payout...


I have a couple on hourly..... (secratary, etc)
 

spud_meister

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Yeah, but real money, not that Austrailian Monopoly-money bull****. If I wanted to see some limey bitch on my money, I'd go to an English whore house. :2razz:
:rofl if i wanted american men on my money, i'd go to an English whore house too :2razz:

but our money can go through a washing machine unharmed, so neeerrr :2razz:
 

tacomancer

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I like my method. I get paid salary but there is rarely anything to do.
 

Harry Guerrilla

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Salary or by the hour?

If you are paying by the hour, would that encourage people to drag out projects in an attempt to make more money?

However, if you are paying salary, does that encourage people to limit their production since they are going to get paid the same amount either way? Even with a bonus structure, wouldn't they work just enough to get the bonus, and then nothing more?

Any idea of which system generates the higher level of productivity?
Pay me in Pizza Rolls, with a little rent money on the side and I'll work my ass of for you.
 

tacomancer

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Pay me in Pizza Rolls, with a little rent money on the side and I'll work my ass of for you.
Until the pizza rolls ruin your health so badly that you cannot work to full capacity.
 

rivrrat

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I have only worked one TRUE salary position and I loved that. My time was not even documented. Mostly, though, I work salary-exempt positions, which kind of sucks. What it means is that if I work 40 - 100 hours a week, I get paid the same. But if I work UNDER 40hrs, I get docked pay. I never really have understood it, but I've only found one employer so far who didn't operate that way. However, in these positions I'm mostly free to come and go as I please. I do have to put my time in a time card, but I just put 8 hrs for each day, no matter how many I worked. My boss has told me to do this. If I have to leave for half the day, he doesn't expect me to change my hours. If I have to take a full day off, though, I do have to use my paid leave time for that. The only time the whole "getting docked" thing would bite me in the ass is if I wasn't getting my work done, was taking advantage of what my boss allows, and he feels a need to crack down on me because technically he *can*. Most places I have worked do this. The exception was when I was a contractor for the DOD. They were very rigid about putting down EXACT hours worked and I *was* docked if I worked less than 40hrs and I was NOT given OT if I worked more.

I think salary is better and more flexible. I'm ALL about more flexible. I hate rigidity. (is that even a word?) Yes, it can mean that an employer takes advantage of an employee, but it also means that an employee can take advantage of an employer. Works both ways. Personally, I like the freedom that salary positions offer.
 
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tacomancer

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I have only worked one TRUE salary position and I loved that. My time was not even documented. Mostly, though, I work salary-exempt positions, which kind of sucks. What it means is that if I work 40 - 100 hours a week, I get paid the same. But if I work UNDER 40hrs, I get docked pay. I never really have understood it, but I've only found one employer so far who didn't operate that way. However, in these positions I'm mostly free to come and go as I please. I do have to put my time in a time card, but I just put 8 hrs for each day, no matter how many I worked. My boss has told me to do this. If I have to leave for half the day, he doesn't expect me to change my hours. If I have to take a full day off, though, I do have to use my paid leave time for that. The only time the whole "getting docked" thing would bite me in the ass is if I wasn't getting my work done, was taking advantage of what my boss allows, and he feels a need to crack down on me because technically he *can*. Most places I have worked do this. The exception was when I was a contractor for the DOD. They were very rigid about putting down EXACT hours worked and I *was* docked if I worked less than 40hrs and I was NOT given OT if I worked more.

I think salary is better and more flexible. I'm ALL about more flexible. I hate rigidity. (is that even a word?) Yes, it can mean that an employer takes advantage of an employee, but it also means that an employee can take advantage of an employer. Works both ways. Personally, I like the freedom that salary positions offer.
I prefer salary too. My current job is weird. I have my base salary and I get overtime, and by the end of the year, I end up doing pretty well. However, if I decide to leave early, my boss doesn't care, I just take that much out of overtime if I have any that week.

I love my hours though because I can just go home with my laptop and log back in if I am not done, but not be stuck in the office and I get paid for that too. It often happens because I have to do things as they come in this job and it can mean periods with nothing to do and than something happens at 7 pm and I work for a while and log it as overtime (which I was instructed to do by HR).
 
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Goshin

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Commission (being paid according to production) usually results in the most profitable scenario.

If you're being paid on the basis of making 24 widgets an hour, no problem.

If you're being paid on the basis of making a big sale once every month or two, in a biz where dry spells can run for months, straight commission can be rough. Lots of sales jobs are draw-commission or salary-plus.
 

Telecaster

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Salary or by the hour?

If you are paying by the hour, would that encourage people to drag out projects in an attempt to make more money?

However, if you are paying salary, does that encourage people to limit their production since they are going to get paid the same amount either way? Even with a bonus structure, wouldn't they work just enough to get the bonus, and then nothing more?

Any idea of which system generates the higher level of productivity?
A meager salary will suffice as long as the employer includes lots of praise, pats on the back, and a free lunch every month.
 

rivrrat

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Commission (being paid according to production) usually results in the most profitable scenario.

If you're being paid on the basis of making 24 widgets an hour, no problem.

If you're being paid on the basis of making a big sale once every month or two, in a biz where dry spells can run for months, straight commission can be rough. Lots of sales jobs are draw-commission or salary-plus.
I worked a commission job one season. Never. Again. That ****ing blew big ole camel dicks. I spent hours on the mountain, in sub zero temps taking pictures of asshole New Yorkers only to not make any sales on pics. I would work all day for essentially.... nothing.
 

Gipper

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Be thankful you don't work in public accounting then. If I take a piss or go get a cup of coffee, it's part of a billable hour to someone.

This is why public domain accountants and lawyers get screwed. So far a local business has paid for a bit of my time on DP.
 

RightinNYC

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In terms of the best way to pay people, I think law firms have a pretty good model. Most attorneys at large firms bill clients by the hour but are paid lockstep salaries/bonuses according to class year. It's a nice little hybrid system, because you have the stability of a salaried paycheck, but a strong incentive to be productive for the office, as it plays heavily into your prospects for partnership. There is also much less infighting or backstabbing than there would be if salaries varied across employees.

For firms that do certain types of litigation, there's an even better way to pay employees - allow them to elect to be paid partially on a contingency fee basis for certain cases. The attorney gets a somewhat smaller than normal regular paycheck for their non-contingency cases, but if they win a contingency fee case, they end up getting a chunk of the award. For big cases, that can turn out to be a huge windfall.
 
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