Motivational Theory and Economies of Scale

Taylor

-principles of scientific management (employees primarily motivated by money

-piece-rate pay systems (a worker gets paid more if they produce more output)

-higher productivity can be accomplished by setting output and efficiency targets related to pay

-autocratic management style

-repetitive tasks - division of labor and specialization

-motivation is subjective but rewarding work is objective

examples of businesses that use Taylors work

-secondary sector

-low skilled jobs

-routine jobs

-20th century tasks

Maslow’s hierarchy of needs

-focused on the physiological (emotional and mental) needs of workers

-believed that people are motivated by more than just money

-needs must be met to motivate employees

-suggested that businesses offer incentives to workers in order for them to fulfill each level of need in sequence

Order of needs

survival/physiological needs —> security needs —> social needs —> self-esteem needs —> self-actualization

Herzberg’s two factor theory

-investigated factors that cause satisfaction and dissatisfaction at work

-focused on the psychological aspects of work

-studied high level jobs; engineers and accountants

-research concluded that there are two factors affecting the level of motivation in the workplace (hygiene and motivators)

hygiene factors

-mainly physical aspects

-hygiene factors do not motivate but must be met to prevent dissatisfaction

-the factors that meet people’s basic needs

-can cause dissatisfaction if they fall below an acceptable level

-examples: organizational rules, regulations, policies, supervision, pay

-hygiene factors become an expectation and are taken for granted, so they do not motivate an employee to work any harder

herzberg’s motivators

-intrinsic motivation

-job empowerment

-job enrichment

-growth opportunities (promotion, advancement)

-recognition/praise

McClelland’s Acquired Needs Theory

employees have 3 needs that influence motivation

-achievement (success)

-affiliation (social)

-power

all present in most people but intensity of each will differ

Deci and Ryan’s self-determination theory

two types of motivation exist

-autonomous (intrinsic - free will and choice in what you’re doing)

-controlled (extrinsic - motivated by a reward or avoidance of punishment)

three sets of needs

-competence (self-satisfaction when individuals feel competent, employees gain confidence to take on new challenges, managers should avoid putting employees in situations where they are likely to fail and nurture confidence by giving suitable and more challenging as competence grows)

-relatedness (individuals feel connected to other in workplace, managers should foster teamwork, collaboration, and a culture of mutual support)

-autonomy (having a sense of control over what you are doing, managers should give employees choices when possible)

Deci and Ryan conclusions

-when 3 needs are met, employees’ sense of autonomous motivation should increase

-intrinsic and extrinsic motivation do not always conflict (extrinsic can be internalized to boost autonomous motivation)

-employees only motivated through controlled methods tend to have less sense of purpose or motivation

-controlled motivators should be properly aligned with autonomous

Adams

-employees will be motivates when they perceive that balance exists between their inputs into a business and their outputs

-outputs > inputs = motivation

-inputs > outputs = demotivation

-input / output ratios are compared to others in the organization

-motivation is based on perception of fairness

vroom

employees are motivated when they believe their:

efforts lead to good performance which then should lead to a reward and that reward is worthwhile

Vroom key terms

-effort (expectancy)

-performance (instrumentality)

-rewards (valence)

economies of scale

lower average costs of production as a firm operates on a larger scale due to an improvement in productive efficiency

-competitive advantage over smaller rivals

internal economies of scale

-technical

-managerial

-financial

-purchasing

-marketing

-risk-bearing

technical EOS

-sophisticated technology

-high original fixed costs spread over huge scale of output, reducing the average costs of production

-technology may be too expensive for smaller business or the supply may be too much for their needs

-examples: mass production, larger vs smaller airplanes

managerial EOS

-specialization of management leads to higher productivity

-costs more money to employ specialist managers, but increased productivity means the average costs of production fall

financial EOS

-being able to borrow large sums of money at lower interest rates

-larger firms are less risky to creditors

-can shop around for best deals

purchasing EOS

-firms can lower their average costs by buying resources in bulk

-larger the order, the greater the bulk discount

-can be large firms with strong buying power or even smaller firms

marketing EOS

-spreading the high costs of advertising across larger audiences (same campaign; small costs to translate)

OR
-selling in bulk

Risk-bearing economies

-enjoyed by conglomerates (firms with a very diversified portfolio of product in different markets)

-can spread fixed costs (advertising, R&D) across their wide range of operations

-unfavorable trading conditions for certain products can be offset by favorable conditions in other sectors

-loss in one area doesn’t jeopardize the overall business

-example: proctor and gamble

internal diseconomies of scale

1. lack of control / coordination

2. poor working relationships

3. specialization / slack and complacency

4. bureaucracy

larger businesses tend to…

-lose control and coordination

-have worker alienation

-slower communication and decision-making

-poorer working relationships / detachment

-staff morale issues

-specialization can lead to boredom = slacking off

-bureaucracy = slower decision; chain of command

-complacency