Motivation in Theory and Practice

Flashcards reviewing financial and non-financial methods of motivation in business, including piecework, commission, bonuses, profit sharing, performance-related pay, delegation, empowerment, job rotation, job enrichment, job enlargement, team working, and flexible working.

Piecework

A method of pay where employees are paid an agreed amount for each item produced. Suitable for jobs where individual contribution is easily identified.

Commission

A payment made to a worker based on the percentage of the value of sales that the worker has made. Commonly used in sales and marketing and calculated as a percentage of total sales.

Bonus

A sum of money added to an employee's wages or salary as a reward for a good performance in their job, or exceeding their targets. Used as an incentive or reward for good performance, such as a loyalty bonus to reward long-term employees.

Profit Sharing

A financial incentive given to employees, where part of the profits of a business is given to employees, to reward them if the business performs well.

Performance Related Pay (PRP)

A financial reward given to employees whose work is considered to have reached a target level or high standard, typically involving performance appraisals and categorization into performance groups.

Delegation

The act of passing authority down to employees, giving them responsibility for tasks, which can increase motivation but requires capable and willing employees.

Empowerment

Giving official authority to employees to make decisions and control over their own work activities. It can be a powerful motivator but requires careful management to avoid potential misuse of power.

Job Rotation

The switching of employees onto different tasks in order to improve labour flexibility and reduce worker boredom & demotivation which can facilitate multi-skilling but requires training and may initially reduce productivity.

Job Enrichment

Giving employees greater responsibility and recognition by making their work more challenging, vertically extending their work role.

Job Enlargement

Adding extra, similar tasks to a job to reduce repetition and boredom, horizontally extending their work role but typically does not involve acquiring new skills and may be viewed as more work for the same pay.

Team Working

Organizing workers into teams that have a common aim/task to complete to meet social needs, promote multi-skilling, and share responsibility, potentially increasing productivity but can lead to conflict if members don't contribute equally.

Flexible Working

Allowing workers a degree of choice in how and when they work to balance personal needs with business needs, including options like multi-skilling, part-time work, flexible hours, and home working.

Advantages of Piecework

Directly links pay to output, motivating employees to produce more. It can lead to higher productivity and efficiency, and is easy to calculate.

Disadvantages of Piecework

May encourage poor quality work as employees rush to produce more. It can also lead to stress and dissatisfaction if targets are unrealistic.

Advantages of Commission

Highly motivating for sales staff, aligns employee interests with company goals, potential for high earnings based on performance.

Disadvantages of Commission

Income can be unpredictable, may create unhealthy competition among employees, potentially neglecting non-sales aspects of the job.

Advantages of Bonus

Encourages high performance and meeting targets, can boost morale and loyalty, aligns individual goals with company success.

Disadvantages of Bonus

May lead to entitlement if not tied to specific performance measures, can cause stress if targets are perceived as out of reach.

Advantages of Profit Sharing

Encourages teamwork and collaboration, aligns employees' interests with shareholders, can increase employee retention.

Disadvantages of Profit Sharing

Dependence on overall company performance, which can be impacted by factors outside employee control, can lead to dissatisfaction during poor performance periods.

Advantages of Performance Related Pay (PRP)

Directly ties rewards to performance, can motivate employees to improve, supports a culture of accountability.

Disadvantages of Performance Related Pay (PRP)

Can create competition instead of collaboration, potential for bias in appraisals, may demotivate employees who feel their work isn't appreciated.

Advantages of Delegation

Empowers employees, enhances job satisfaction, stimulates development of skills, can lead to increased productivity.

Disadvantages of Delegation

Requires trust in employees' capabilities, risk of overloading employees, potential loss of control for managers.

Advantages of Empowerment

Increases motivation and job satisfaction, encourages innovation and ownership, can improve decision-making at all levels.

Disadvantages of Empowerment

Requires effective communication and training, risk of misusing authority, may not be suitable for all employees or situations.

Advantages of Job Rotation

Enhances skills and flexibility, reduces monotony and boredom, helps employees understand the entire business.

Disadvantages of Job Rotation

Requires training and can initially disrupt productivity, may lead to employee frustration if rotations are not handled well.

Advantages of Job Enrichment

Increases motivation and job satisfaction, leads to greater responsibility and recognition, encourages development of new skills.

Disadvantages of Job Enrichment

Can overwhelm some employees, may require increased training, could lead to unrealistic expectations if not managed properly.

Advantages of Job Enlargement

Reduces boredom by increasing variety, can enhance job satisfaction, may improve productivity.

Disadvantages of Job Enlargement

Can be perceived as additional work without additional pay, may not develop new skills, potential for role confusion.

Advantages of Team Working

Fosters collaboration and communication, encourages shared responsibility, can lead to increased creativity and problem-solving.

Disadvantages of Team Working

Can create conflict if roles are unclear, may lead to social loafing, can reduce individual accountability.

Advantages of Flexible Working

Improves work-life balance, increases employee satisfaction and retention, can help attract top talent.

Disadvantages of Flexible Working

Can blur boundaries between work and personal life, may complicate team collaboration, requires reliable technology and management