IB Business Management 2.4 Motivation ADV/DIS Financial and Non-Financial Rewards

Job enrichment

Aims to use the full capabilities of workers by giving them the opportunity to do more challenging and fulfilling work

Three main features of Job enrichment

1. Assign workers complete units of work

2. Provide feedback on performance

3. Give workers a range of tasks

Hourly wage rate

Payment made to a worker for each hour worked

Piece rate

A payment to a worker fro each uniot produced

Salary

Annual income that is usually paid on a monthly basis

Commission

A payment to a sales person for each sale made

Performance-related pay

A bonus scheme to reward staff for above-average work performance

Profit-related pay

A bonus for staff based on the profits of the business - usually paid as a proportion of basic salary

Fringe benefits

Any financial extras beyond the regular pay cheque, such as health insurance, life insurance, paid vacation and/or retirement

Employee share ownership schemes

Employee benefit scheme intended to motivate employees by giving them a stake in the firm's success through equity participation.

Advantages of Piece-rate payment sytems

1. Encourages greater effort and faster working

2. The labour cost for each unit is determined in advance and helps set a price for the product

Disadvantages of Piece-rate payment sytems

1. It requires output to be measured and standardised (which is difficult if each product is different)

2. It may lead to falling quality and safety levels as workers rush to complete units

3. Workers may settle for a certain pay level and won't be motivated to produce more than a certain level

4. It provides little security over pay level

Advantages of Salary payment sytems

1. Gives security of income

2. Gives status compared to time rate or piece rate payment systems

3. Aids in costing (salaries won't vary for one year)

4. Is suitable for jobs where output isn't measurable

5. Is suitable for management positions where staff are expected to put in extra time to complete tasks and assignments

Disadvantages of Salary payment sytems

1. Income is not directly related to effort and productivity levels

2. It may lead to complacency of the salary earner

3. Regular appraisal may be needed to assess whether an individual should move up a salary band (can be an advantage if positive appraisal)

Advantages of Performance-related pay payment sytems

1. Staff are motivated to improve performance if they are seeking to increase financial rewards

2. Target setting can help to give purpose and direction to the work of an individual

3. Annual appraisal offers the opportunity for feedback on the performance of an individual

Disadvantages of Performance-related pay payment sytems

1. It can fail to motivate if staff are not driven by the need to earn financial rewards

2. Team spirit can be damaged by the rivalry generated

3. Claims of manager favouritism may undermine relationships

4. Less autonomy for workers as they need to conform to the system that generates bonuses

Non-financial methods of motivation:

+ Job enlargement

+ Job enrichment

+ Team working

+ Empowerment

Job enlargement

Attempting to increase the scope of a job by broadening or deepening the tasks undertaken

Team working

Production is organised so that groups of workers undertake complete units of work

Job redesign

Involves the restructuring of a job - usually with employees' involvement and agreement - to make work more interesting, satisfying and challenging

Delegation

Managers passing on tasks or responsibilities to their subordinates. This can motivate workers who wish to increase their responsibility and be recognised for their abilities

Empowerment

A non-financial motivator which involves a line manager giving her subordinates some autonomy in their job and the authority to make various decisions

Productivity

Measures the level of output per worker. It is a measure of motivation because employees tend to be more productive with increased levels of motivation

Remuneration

The overall package of pay and benefits offered to an employee

Job rotation

A form of job enlargement that involves giving workers a number of different tasks at the same level of complexity in a prescribed order. It helps reduce the problems of repetition and boredom in a job.

Advantages of teamworking

1. Workers are likely to be better motivated as social and esteem needs (c.f. Maslow) are more likely to be met

2. Better motivated staff should increase productivity and reduce labour turnover - both will help reduce business costs

3. Teamworking makes fuller use of the talents of the workforce. Better solutions to problems will be found as those most closely connected with the work participate in suggesting answers

4. Teamworking can reduce management costs as it is often associated with delayering an organisation - fewer middle managers will be required

5. Complete units of work can be given to teams - a key feature of job enrichment

Disadvantages of teamworking

1. Not everyone is a team player. Some individuals are more effective when working alone. Training may need to be offered to members who are not used to working collaboratively in groups.

2. Teams can develop a set of values and attitudes which may contrast or conflict with those of the organisation itself, particularly if their is a dominant personality in the group. Teams will need clear goals and assessment procedures to ensure that they are working towards the objectives of the organisation at all times.

3. The introduction of teamworking will involve training costs and there may be some disruption top production as the teams establish themselves.