Unit 2

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Human resources

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123 Terms

1

Human resources

All the people working in a business

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Workforce/HR planning

A process that identifies current and future HR needs to ensure that staffing is sufficient, qualified, and competent enough to achieve the organization’s objectives.

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Key parts of HR planning

  • Recuritment

  • Training

  • Appraisal

  • Termination or dismissal

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Recruitment

Hiring the right person for the right job

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Training

Rnsuring an employee receives proper professional development

  • Example: acquires the necessary set of skills needed to complete the tasks efficiently

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Appraisal

Evaluating an employee’s job performance

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Termination or dismissal

Managing the situation of employee’s voluntary or involuntary leave

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Labour turnover

A measure used in HR planning of how many people leave a business over a given period of time, usually expressed as a percentage of the total labour force.

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Labour turnover formula

(Numbeber of staff leaving over a year/Average number of staff employed in a year) x 100

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High labour turnover

  • This means that there is a reason why staff do not stay in the firm for a long period of time

  • Perhaps there is an aspect of the business that demotivates the workforce and lowers their productivity (resulting in extra costs for the business as it constantly needs to be on a lookout for new staff)

  • High labour turnover suggests that staff may only be staying for a short time for a certain reason

  • There may be a key factor such as motivation, packages etc. that are affecting retention

  • Staff hired may be incompetent

  • Remuneration packages might not be competitive

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Low labour turnober

  • Fresh blood may encourage innovation and new ideas\

  • Existing employees are loyal to the business, and likely more motivated to work.

  • Managers have recruited the right people for the right job.

  • A very low labour turnover means that the business is stable but also lacks progress; ‘fresh blood’ in the business is important to stimulate innovations and new ideas

  • Suggests good workforce planning and recruitment

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Reasons why people leave their jobs

  • CLAMPS

    • Challenge, Location, Advancement, Money, Pride, (Job) Security

  • Poor morale, which is seen in:

    • Militant workforce

    • Frequent union representation to management

    • Low suggestion rates

    • Widespread rumours

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External factors that influence human resource planning

Can impact the size and availability of the pool of potential employees for the business

  • Technological change

  • Demographic change

  • Changes in labour mobility

  • The state of the economy

  • New communication technologies

  • Government

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Internal factors that influence human resource planning

The changes from within the business itself

  • Changes in business organisation

  • Changes in labour raltions

  • Business finance

  • Structure of business

  • Morale of workforce

  • Leadership style of managers

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Steps of recruitment

  • Identification

  • Application

  • Selection

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Identification

  • Recruitment starts with defining the job description

  • Details the basic roles and responsibilities of a job and a person specification

  • To communicate what skills, qualifications and experience candidates need for the job

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Application

  • To find the best applicants, businsesses make a job advert

  • Communicating the job description and person specification to inform potential canditdates

  • The job advert should be placed so that it reaches its target audience

  • The business can decide to process the applications externally - Hire a recruitment agency to handle the application process for them

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Selection

  • After some time the applicants may be shortlisted based on how well they fit the job

  • Interviews may be schedules in order to select the best applicant

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Internal recruitment

Hiring people from within the firm to fill a new position

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External recruitment

The process of hiring people from outside the organisation

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Internal recruitment pros

  • Cost effective

  • Less time needed to acclimate to company culture

  • Less risk

  • Motivational

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Internal recruitment cons

  • Fewer applicants

  • Time consuming

  • No new ideas

  • Internal politics

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External recruitment pros

  • New blood (wide range of experiences)

  • Larger pool of applicants

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External recruitment cons

  • Even more time consuming

  • Expensive

  • Uncertainty

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Training

  • Process of providing opportunities for workers to acquire skills and knowledge

  • Training is the improvement of task-specific skills

  • Development involves enhancing personal skills that improve workforce flexibility

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Training benefits

  • Improve efficiency and effectivity

  • Less wastage

  • Higher morale

  • Adapt to change easily

  • Flexible workforce

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Training drawbacks

  • Cost

  • Employees may leave since they are qualified for better jobs

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Types of training

  • Induction

  • On the job

  • Off the job

  • Mentoring

  • Cognitive

  • Behavioural

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Induction training

  • The training received when first starting a job, this is a type of on the job training

  • Introduction to company policies, general info

  • May involve meeting other personnel, touring the premises, etc.

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Induction training advantages

  • Establishes expectations and good working habits from the start

  • Helps new workers understand the corporate culture

  • Speeds up settling in process

  • Morale is boosted when new recruits feel more confident

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Induction training disadvantages

  • Can be time consuming

  • Key staff need to be freed from their duties

  • Information overload for new recruits

  • Induction can be lengthy in large firms

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On the job training

  • Done while the employee is doing their normal job while at the workplace

  • Learn from coworkers by experience

  • May involve being mentored by or shadowing senior managers

  • Example: A senior employee helps the junior employee comprehend all the

    tasks and acquire new skills needed to carry out the job efficiently

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On the job training advantages

  • Cost effective: using in-house specialists

  • Training is more relevant as it is specifically for the firm

  • Reduces disruption to daily operations as it is on site

  • Helps establish relationships and promote teamwork

  • The location is convenient for workers and trainers

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On the job training disadvantages

  • Trainees may pick up bad practices

  • Internal trainers may lack up to date training

  • Trainers cannot complete their own work whilst training new workers

  • May be incomplete due to a lack of resources

  • Productivity may be low until all skills are learnt

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Off the job training

  • Happens outside working hours, where the employees are being trained away from the job

  • This could involve workshops, conferences etc

    Learn from specialists from third party

    • Example: university, speakers

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Off the job training advantages

  • Experts who may not exist internally are able to be used

  • A wider range of training can be provided

  • There are no distractions from colleagues at an offsite venue

  • Networking can take place, so employees can meet new people

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Off the job training disadvantages

  • There is a potential loss of output whilst workers attend the offsite training course

  • Hiring specialist trainers can be very expensive, and transport/accommodation costs may add cost

  • It is debatable whether all skills are transferable to the business

  • Finding time for staff to get off work can be difficult

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Mentoring

  • Another type of OTJ training involving a dyad of a mentor and a mentee

  • The mentor shares their experiences with the mentee to help them gain skills and knowledge

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Mentoring advantages

  • Synergy is created as it shares personal experiences

  • Mentoring can be informal/formal

  • Good mentors create a positive environment for mentees to act without fear of punishment

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Mentoring disadvantages

  • There is a potential loss of output whilst workers attend the offsite training course

  • Hiring specialist trainers can be very expensive, and transport/accommodation costs may add cost

  • It is debatable whether all skills are transferable to the business

  • Finding time for staff to get off work can be difficult

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Cognitive training

  • Focuses on helping employees develop their thinking and processing skills

  • This type of training is of crucial importance for businesses that require their employees to make quick, wise and effective decisions, link investment banking, marketing departments of companies etc.

  • Theoretical training in the hopes of improving overall intelligence

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Cognitive training advantages

  • Helps workers improve their mental processes acquire new knowledge, aid decision-making and solve work-related problems

  • Improves brain function (memory, reasoning, etc.)

  • Knowledge may apply to a wide variety of situations

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Cognitive training disadvantages

  • May not cater for workers with different goals

  • Can be expensive

  • Might not meet the needs of an organisation

  • Difficult to measure effects of the training

  • May not be immediately practical/applicable

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Behavioural training

  • Focuses on helping employees develop certain interpersonal skills such as stress management, communication, dealing with emotions etc.

  • Practical training in order to improve employee attitudes/behaviours

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Behavioural training advantages

  • May make for more competent and assertive employees

  • Improves customer and intra-company relations

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Behavioural training disadvantages

  • Costly

  • Difficult to track progress

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Staff appraisal

The processes of reviewing the performance of employees against pre-set objectives

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Reasons for appraisal

  • Assess performance in line with job description and targets

    • Identify hindrances

    • Identify training needed

  • Reflect on performance (areas for improvement)

  • Praise good performance

  • Set new goals/targets

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Drawbacks of appraisal

  • May be costly and time consuming (thus isn’t done often), subjective, offensive, and biased (especially when appraising someone higher up)

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Appraisal methods

  • Formative

  • Summative

  • 360 degree

  • Self-appraisal

  • Essay

  • Rating system

  • Peer

  • MBO (Management by objectives)

  • Upwards

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Formative appraisal

  • An ongoing process that focuses on giving the employees recognition for what they have done well and indicating possible mistakes so that they can learn from them

  • Appraisal during a specific job process

  • Used to get feedback to guide improvement

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Summative appraisal

  • Measures an employee’s performance based on standards set by the business, making it easy for the business to sum up how a particular employee performed against the standards

  • Usually done at the end of a particular project

  • Compares the performance of an employee to a benchmark

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360 degree appraisal

  • Feedback on the employee’s performance is not only received from the manager, but also from co-workers (appraisal from multiple perspectives)

  • This type of appraisal is usually combined with one of the previous two to give another perspective on the performance

  • Subjective, influenced by group norms, time consuming

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Self-appraisal

  • Employees reflect on their own performance by rating themselves on various performance indicators

  • Need for employees to set targets for improvement

  • This type of appraisal is usually combined with those explained earlier

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Essay appraisal

  • Written appraisal on employee’s strengths and weaknesses

  • Flexible and more applicable when employees are put in different situations

  • Open-ended, subjective and takes a lot of time to train appraisers, and to appraise each employee

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Rating system

  • Highly structured scale of employee performance

  • Faster to carry out, structured, equal treatment

  • Some traits assessed may not be relevant, perceived meaning of scale descriptors may not be universal

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Peer appraisal

  • Same level employees on the business hierarchy appraises you

  • Appraiser and appraisee are familiar with requirements for job

  • Might be reluctant to criticize peers

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Upwards appraisal

  • Employee appraises seniors

  • Subjective, appraiser afraid of appraisees

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MBO (Management by Objectives)

  • Base all appraisal on how well employee has met his own objectives as determined by employer and appraiser

  • Objectives must be realistic

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Termination

  • Happens when employees leave the business at the end of their contract because they want to work on their professional development, change career, retire etc.

  • These employees expect to receive a reference from their ex-employer

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Dismissal

  • Happens when an employee has broken some of the terms of their contract, which could be due to missing work, poor discipline, dishonesty etc.

  • These employees do not receive a reference from their ex-employer

  • Must have valid reason which is included in the contract

    • Otherwise, unfair dismissal – company may be sued

  • Valid reasons include:

    • Employee incompetence or misconduct

    • Breach of legal requirements/contract

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Redundancy

  • Happens when a job is no longer required, making the employee redundant through no fault of her own

  • Causes can be, e.g., a drop in production, a merger or takeover, automation etc.

  • Occurs when there is a change in company structure, downsizing, etc.

  • Company cannot afford to pay employee or job stops existing

    • Voluntary – employee volunteers to be made redundant in exchange for a redundancy package (compensation)

    • Involuntary – may be done through LIFO or retention by merit

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Common steps in the process of dismissal

  • Issue advisory letter

  • Counselling – strategies for improvement

  • Dialogue concerning consequences

  • Dismissal and Redundancies

  • Monitor (paper trail)

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Work practices

  • Teleworking

  • Flexitime

  • Migration for work

  • Portfolio working

  • Part-time employment

  • Migration of workers

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Teleworking

Employees work a set amount of hours at the office and the remainder from home

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Flexitime

Employee has to work a set amount of hours per week, the allocation of time spent completely depends on employee’s preferences

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Migration for work

Due to better infrastructure and better connectivity of the whole world, people can easily migrate daily, sometimes even great distances, for work

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Portfolio working

A person employed in a number of different jobs, carried out simultaneously, usually on a part-time or temporary basis

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Migration of workers

A person who works in a country or state of which he/she is not a national

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Flexible work structures advantages

  • Increased flexibility for both

    • Work from afar

    • Flexible and extended work hours

  • Company needs only to train core employees

  • Employees exercise more autonomy

  • Less office overhead expense

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Flexible work structures disadvantages

  • Requires investment in ICT, which may be unreliable

  • Employees are harder to control

  • Less job security for employees

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Outsourcing

The process of trnsferring internal business activities to an external firm in order to reduce costs

  • e.g. business outsources bookkeeping duties to accounting firms

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Outsourcing reasons

  • Activities are not the core function of the business

  • Business lacks the specific skills

  • Cost reduction

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Outsourcing advantages

  • They may carry out work to higher quality standards

  • They will bid for work (i.e., try to give you the best price)

  • Reduces labour costs when workers are outside the business

  • Allows the business to concentrate on core functions

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Outsourcing disadvantages

  • To cut costs, subcontractors may ‘cut corners’ (unethical)

  • Quality management can become more difficult (Quality inconsistency)

  • Subcontractors must be monitored to ensure quality standards are being met

  • Outsourcing may cause redundancies

  • May be unethical due to the exploitation of workers in LEDCs

  • Requires effective two-way communication, coordination and mutual trust

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Offshoring

  • Relocating business activities and processes abroad

  • Usually done in countries with low minimum wage

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Offshoring reasons

  • Cut down labor costs

  • Enter new markets in growing countries

  • Overcome political limitations and regulations

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Offshoring advantages

  • Companies can benefit from external factors such as currency exchange

  • Cheaper wage costs overseas

  • Overseas locations may have better access to raw materials

  • Stimulate host country’s economy (job opportunities, trade, etc.)

  • Help the business expand and gain exposure

  • Business has access to large talent pool

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Offshoring disadvantages

  • To cut costs, subcontractors may be ‘cutting corners’ (unethical)

  • Quality management can become more difficult.

  • May be unethical due to the exploitation of workers in LEDCs.

  • Companies have been seen to evade tax by doing this.

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Reshoring

The transfer of business operations back to their countries of origin

Bringing back offshore/outsourced personnel and services back to the original location

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Reshoring reasons

  • Foreign labor costs are increasing

  • Problems with delivery/logistics

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Reshoring advantages

  • Greater control

  • Increased proximity to customers/shorter supply chain

  • Product quality may increase

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Reshoring disadvantages

  • May still be more costly

  • Local country may lack the labor supply

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Innovation

  • Company must hire innovative people and foster the environment for innovation

  • Involves training and development costs

  • Innovation also affects HR itself

    • Outsourcing, offshoring, Shamrock organization

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Cultural differences

  • HR must manage cultural diversity within the company

    • Productivity may be affected due to conflicts arising from culture

  • Need to raise awareness on cultural differences between employees

  • May imply behavioral training is needed

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Ethical considerations

  • Need to follow anti-discrimination laws

    • e.g. racial, sex, disability, etc.

  • Equal pay

  • Health and safety at work

    • Costs for training employees and ensuring a safe environment

    • May benefit from lower absenteeism, better image, and fewer compensation claims

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Motivation

  • Desire, effort, and passion to achieve something

  • Classified as intrinsic or extrinsic

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Employer objectives

  • Motivation

  • Minimize cost

  • Prestige

  • Better recruitment

  • Reduced labour turnover

  • Control

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Employee objectives

  • Purchasing power

  • Recognition

  • Compensation – high direct earnings, pensions, fringe benefits

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Taylor’s theory

  • Employees are primarily motivated by money

  • Productivity can be improved by aligning output and efficiency targets with remuneration

  • Division of labour (scientific management): breaking down different aspects of a job or task and assigning different people to each particular part of the work.

  • Piece rate system: workers are paid a standard level of output and receive a higher rating they exceed that level.

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Taylor’s theory drawbacks

  • Ignores the non-physical contributions of workers

  • Hard to measure in some professions

  • Ignores non-financial factors that motivate people

  • Fails to acknowledge that workers can be innovative and independent

  • Entails monotonous tasks, leading to employee dissatisfaction

  • Sets clear goals for the workforce and the consequences of their work are transparent

  • Gives workers a sense of target

  • Does not take into account individual differences

  • Views workers as machines with only financial needs

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Maslow’s Hierarchy of Needs

  • Physiological/basic

    • Satisfied by payment

  • Security/safety – predictability and order

    • Satisfied by job security, maternity leave, fringe benefits

  • Social/love/belonging

    • Satisfied by teamworking, anti-discrimination

  • Esteem/ego – recognition and self-respect

    • Satisfied by training and development, delegation, promotion

  • Self-actualisation

    • Satisfied by giving freedom to employees

Needs must be satisfied from the bottom up (basic to self-actualisation)

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Maslow’s Hierarchy of Needs advantages

  • Based on the level an employee is on, business can see what rewards are suitable for him

  • Workers feel like they are being taken care of, which increases productivity and motivation.

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Maslow’s Hierarchy of Needs disadvantages

  • Difficult for business to decide on a specific reward

  • Difficult to determine when a particular level of needs has been satisfied

  • Not feasible for all jobs to provide all levels of the hierarchy

  • The levels of the hierarchy are difficult to quantify

  • Freelance workers do not have many of these things, but can still be motivated and successful

  • The model neglects to suggest what happens to people with all of these things, such as Bill Gates

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Herzberg’s Theory

Two factors affected motivation

  • Hygiene/maintenance factors (physical)

    • Factors that meet basic needs

    • Does not motivate but demotivates if not met

  • Motivators (psychological)

    • Achievement, recognition, responsibility, and advancement leads to higher satisfaction

    • Democratic management style must be used

    • Involves job enlargement, enrichment, empowerment (see below)

Movement vs. motivation

  • Movement – doing something because it needs to be done

    • Based on extrinsic motivation

  • Motivation – doing something because you want to

    • Based on intrinsic motivation

    • More important

  • Individualism in terms of motivation

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Herzberg’s Theory advantages

  • Job enrichment

  • Makes clear for the business what needs to be done in order to remove dissatisfaction and improve motivation

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Herzberg’s Theory disadvantages

  • Job enrichment may be expensive and difficult to organise

  • Workers may get used to improved pay/conditions and take these things for granted

  • Does not apply to all occupations such as low skilled/ paid jobs

  • Research sample included only high skilled workers, therefore findings don’t necessarily apply

  • Not all employees want extra responsibility or stress

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Adam’s Equity Theory

  • Workers naturally compare their efforts/rewards to others in the workplace

  • Employees should receive remuneration that reflects his efforts and competence

  • Workers will be motivated if their remuneration is fair relative to others

  • Inequality is by caused poor job analysis and evaluation

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Degrees of equity

  • Equity norm: workers expect an equitable remuneration for their contribution in their jobs

  • Social comparison: workers determine what is fair based on comparisons of their inputs and outcomes with those of their peers

  • Cognitive distortions: workers who feel undercompensated become demotivated so might withdraw any goodwill, resulting in altering their effort or outputs

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Adam’s Equity Theory drawbacks

  • Equity is subjective

  • Some people may be more sensitive to equity

  • Neglects to include demographic, psychological, and cultural variables

  • Scale of equity can only be so useful

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