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  • Subject area(s): Marketing
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  • Published on: 14th September 2019
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Payment systems

Human being are the most important resources that needed by a company to run their businesses. Although in the era of the technology, most of the labor resources can be replace by the machinery, however it cannot replaced completely. There are still the demands of the labor needed by the markets. Thus, in the environment that full of competing, there are very important for a company to attract talent workers and also to avoid outflow of talents. A good payment system not only benefits the company and the company itself, but also do benefit the whole country (Aminuddin, 2014). Why do say so?

In the motivator-hygiene model that had been introduced by Frederick Herzberg, one of the hygiene factors that consist of salary is the primary causes of the job dissatisfaction. It will lead to the negative feeling of the employees towards the job (John W.Slocum & Hellriegel, 2011). When an employee received wages or salaries that are corresponded to their efforts, they will not create more satisfaction; however, if they do not receive the reasonable wages and salary, this will lead to their dissatisfaction towards the jobs. When employees receive wages or salaries that correspond to their work, this will reduce their job dissatisfaction, and help to increasing the productivity. Thus, good payment system which able to provides reasonable wages and salaries to the employees will help the company to increase their productivity.

With a suitable payment system, the employees can receive reasonable wages or salaries. This will increase their purchasing power and help in improving the growth of the economics. Besides that, with a good payment systems can avoid unreasonable incremental of the salaries which will lead to the incremental of the cost of the products and services because the additional cost that bear by company will transfer to the consumers by increasing the selling prices (Aminuddin, 2014). Thus, good payment systems are playing very important role.

There are few type of payment systems that used by the businesses. According to the nature of the jobs and the situation of the companies, different type of payment systems will be used in order to create biggest outcomes with the least inputs. In order to decide most suitable payment systems for the companies, the companies should first do the job evaluation for the jobs offer by them. One company not necessary been limited to only one type of the payment systems, it can use several types of payment systems according to the type of jobs available in the company. Purpose of using job evaluation is to measure how much how much should the company rewards for the efforts done by the employees towards the company in term of salaries and wages scales (Tyson & York, 2000).

Generally, there are two major types of employees which called blue-collar and white-collar employees that have two different natures of the jobs covered by them. Blue-collar employees are the employees that mostly contribute physically while the white-collar employees refer to those who work as professional work (Scott). The payment systems used for these two types of employees are always differing from each others. As in the Sutera Harbour, there are white-collar employees such as the officers, managers and the blue-collar employees such as technicians, cleaners and so on. The payment systems that used would not be the same as their jobs are differ from each others; the amounts that the company rewards them are different. There are five major systems that normally used by the companies to reward their employees.

Time rates is the most common payment systems that used by the businesses to reward their employees. Generally, time rate systems are based on the number of times that the employers had work for the companies (Tyson & York, 2000). It might be based on hourly, daily, weekly, or monthly. Traditionally, the full-time employees will receive a monthly basic amount of salary. According to the post holding, the employees will receive different amount of monthly salary and they might have different amount of incremental scale in their salaries throughout the years until the time it reached the maximum amounts of the incremental scales.

In 2010, Malaysia had enforced the law and fixed the minimum wages that given by the employers should not less than RM900 for PeniFpenisular Malaysia and RM800 for Labuan, Sabah and Sarawak (ZAINUL, 2015).  Sutera Harbour not only a resort which provides lodging but also having banquet services. Although there are a lot of full-time employees there but there also hire part-time employees in the peak seasons or for the banquet services. Normally, the part-time employees are pay in hourly rate. Based on the amount of time that the banquet had run, the part-time employees will have their salary after the event. Although doing for the same banquet services, but it do have two different hourly rate had been used which is for the part-time employees who help inn setting up the banquet's ball room and for those serve for the banquet. However, compared to those only help in setting up, those who serve the customers will been given higher rates.

This type of payment systems which based on the time rates are more on rewarding the employees based on their experiences instead of the performances. No matter how good the employees had done for their jobs, but they will be given the same time rates. However, if the employees had work long time for the company, his/her monthly salary will be higher than those fewer experiences. The longer period the employees work, then the higher the salary he/she will get due to the yearly incremental scales. This will helps in increasing the stability of the employees and reduces the rate of employees turn over since the salaries will be increase from time to time.

Besides that, this is also the easier systems that been administer and easier the prediction of the labor costs that will spend which enable the company to know their costs faster and more accurate. However, it will also causes the employees to be less motivate on the jobs because what even they had done, they will receive with the same amount of salaries. Although they may do an excellent works but it would not affect his/her monthly salaries. When the time passed, the employees will become less motivate to work and rarely want to improve them. Thus, in order for the companies to raise the motivation of the employees, the companies should also provide reasonable benefits and allowances for the employees.

In order to prevent the employees less motivated to work by using the time rate based system, some of the companies had introduced the payment system based on the outcomes of the employees, called payment by result (PBR) scheme (McKenna & Beech). This scheme also had been known as piece-rated systems (Aminuddin, Human Resource Management, 2009). For PBR scheme, the wages rate will first being fixed after take into consideration of the tasks will be done by the employees at a certain amount of time taken (McKenna & Beech). After that, the gross salaries of the employees will be calculated by multiplying the fixed rates with the outputs of the employees.

Since this PBR relies very much in the outcomes of the employees, this had helps to motivate the employees indirectly. Without any pressures from the management, the employees will work their best to produce more so that they can earn additional incomes. Related to the outcomes provided by the employees, this payment system is normally used in the manufacturing fields. Based on the outcomes that able to be produces by the employees, they can get their salaries. Besides manufacturing fields, PBR scheme also being used for those work as sale representative. Depending on the total amounts of sales that get by the sales representative, they can get their commission which is also a form of PBR.

If the salaries of the employees only depend on their production of the month, there are less guarantee for the employees seen they cannot 100% confirm their production will be the same for every months. Thus, PBR scheme will normally conducted together with the time rates system. Such as in Sutera Harbour, the company had first provides the basic monthly salary for their marketing employees. If the employees had made their sales, then they are able to earn additional incomes. Using PBR can helps the companies to reduce their cost, since the labor cost are directly proportional to their outcomes (McKenna & Beech). Thus, the companies can avoid to spend more than what they can afford.

Besides PBR systems, there are also other types of payment systems which used simultaneously with the time rate systems. In order to motivate employees and improving the outcomes of them, the companies will choose to conduct performance-related pay (PRP) together with the basic time rate systems for calculating the wages and salaries for their employees. PRP can be considered as a reward for the employees which linked to their job's performance and also as one of the ways for the companies to appraise their employees (Performance Related Pay, 2009). It does not have any fixed structure that the companies must follow; the companies can adjust the ways they given out the rewards in PRP scheme according to the needs of the companies.

In general, the companies will practice the PRP scheme in term of the bonus for their employees which the amount of bonus will be decides by the employers according to their appraisal towards the employees. The more satisfaction the employers towards their employees, then the bonus given out will also higher. Sometime, it will also give out as an incentive for the workers. For examples, the employers had provides a lump sum number amount for the employees who can successfully done the tasks given. PRP will lead the employees with excellent performance to get incentives, but it will not affecting the employees with poor performance, they will only remain at the current state. PRP not only can be practicing in the individual level but also can be conducts in the group level. The lump sum amount of the pay will be shared among the group of employees who work together to achieve the excellent performances.

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