Resource allocation is defined as how things can be distributed. In a business sense, this typically refers to business assets such as cash, goods and services; however, it can also refer to things like time, space and responsibility.
There are four methods by which a business can allocate its resources: by merit, by need, by social worth and by random assignment. Merit allocation rewards those who are the most productive. This reflects in salary increases where the most productive employees get a raise while the others do not. Need allocation focuses on providing resources to those who need them. An example of this would be allocating funds to repair electrical hazards in a warehouse. Social worth allocation rewards those who have the most to offer the greater good. An example of this can be seen in layoffs. Generally, senior employees benefit the company more than new employees. Random assignment allocation randomly distributes the assets when there is no other allocation type that works.