What employees need to know about the “piece rate system”?

Most people work hourly or salaried jobs. Hourly workers are paid for their time spent performing job duties, and salaried employees are paid for a year of their labor. They get the same paycheck regardless if they work more or fewer hours in any given week. What many people do not realize is that there is another way that you can be compensated for your work – piece-rate system. 

The piece-rate system of wage payment compensates employees based on the units of something they have produced. Time is not considered. That way, the more productive you are, the higher your paycheck is. If you are considering the acceptance of a piece-rate system for payment, make sure to keep these advantages and disadvantages in mind:

Advantages:

• Ultimately, you determine your own paycheck. Quick, efficient work with little idle time is rewarded. 
• You will be more invested in your output since it determines your pay. 
• You are less likely to be micromanaged on your output efficiency.

Disadvantages:

• If you are sick or injured, you do not continue to make a paycheck.
• The quality of your output may suffer if you focus only on speed and efficiency.

This is certainly a different way to work. If you can manage yourself and your production well and have the ability to work quickly and efficiently, it may be a good set up for you! Before you take a piece-rate system job, make sure to do some deep and honest self-examination on whether or not your internal motivation is strong.