UNIT 2 People in business

What is motivation?

The willingness of employees to work hard and achieve the objectives of the business.

What is a well-motivated workforce?

A workforce where employees are willing to put effort into their work and are committed to achieving business goals.

What is the difference between motivation and satisfaction?

Motivation is willingness to work hard and achieve objectives; satisfaction means being content with a job. An employee can be satisfied without working particularly hard.

Why do people work for money?

Employees need income to pay for food, housing, transport, leisure and other living expenses. Higher wages may encourage harder work.

Why is job security a reason people work?

Employees may want a stable job and regular income, especially when unemployment is high or they have significant financial responsibilities.

What are social needs at work?

Friendship, teamwork, a sense of belonging and social interaction.

Why is recognition a reason people work?

Employees may want their work to be appreciated, recognised and respected.

Why is achievement a reason people work?

Employees may be motivated by challenging work and achieving goals.

Why is career progression a reason people work?

Employees may want promotion, greater responsibility, professional development and better future career opportunities.

Why is job satisfaction a reason people work?

Employees may value interesting work, responsibility, creativity, variety and feeling that their work is meaningful.

Do all employees respond to the same motivational methods?

No. Different employees are motivated by different things, so one motivational method will not necessarily work equally well for everyone.

Why might a young employee value different rewards from another employee?

A young employee may value training and promotion opportunities, while another employee may prioritise job security and predictable income.

What are the four major benefits of a well-motivated workforce?

Improved labour productivity, reduced absenteeism, lower labour turnover and greater willingness to accept change/new working methods.

What is labour productivity?

The amount of output produced per worker or per unit of labour input.

How does motivation improve labour productivity?

Higher motivation → greater effort → higher output per employee → higher labour productivity.

How can higher productivity increase profit potential?

More output from the same workforce → lower average labour cost per unit → potentially higher profit.

What is absenteeism?

When employees are frequently absent from work.

How does motivation reduce absenteeism?

Higher motivation → fewer unnecessary absences → more employees available to work → higher productivity.

Why is absenteeism costly to a business?

The business may need to pay overtime, hire temporary workers, accept lower output or rearrange shifts.

What is labour turnover?

The rate at which employees leave a business and are replaced.

How does motivation reduce labour turnover?

Higher motivation → employees more satisfied/committed → fewer employees leave → lower labour turnover.

Why is low labour turnover beneficial?

The business saves recruitment, selection and training costs and retains experienced employees.

What is the A* labour turnover chain?

Higher motivation → lower labour turnover → fewer recruitment/training costs + retention of experienced workers → lower costs/higher productivity.

Why do businesses need employees to accept change?

Businesses need to respond to new technology, competitors, changing customer preferences, new production methods and changes in demand.

How does motivation increase willingness to accept change?

Higher motivation → greater commitment to the business → less resistance to change → easier implementation of new methods → improved efficiency.

What is the overall motivation chain?

Motivation ↑ → effort ↑ → productivity ↑ → costs per unit ↓ → profit potential ↑.

What is the absenteeism motivation chain?

Motivation ↑ → absenteeism ↓ → labour availability ↑ → productivity ↑.

What is the labour turnover motivation chain?

Motivation ↑ → labour turnover ↓ → recruitment/training costs ↓ → experienced workforce retained.

What are the three motivational theories in IGCSE Business Studies?

Frederick Taylor, Abraham Maslow and Frederick Herzberg.

What is Taylor's theory of motivation?

Taylor believed workers are mainly motivated by money and developed scientific management based on efficiency, specialised tasks and payment according to output.

What is scientific management?

Taylor's approach of breaking jobs into specific tasks, finding the most efficient way to perform them and rewarding employees according to output.

What is piece-rate pay?

A system where employees are paid according to the number of units they produce.

How does piece-rate pay work?

Employees receive a fixed amount for each unit produced, e.g. £2 per product.

How much would an employee earn for producing 100 units at £2 per unit?

£200.

How much would an employee earn for producing 150 units at £2 per unit?

£300.

What is Taylor's motivational logic?

Higher output → higher pay → stronger financial motivation → greater effort.

What are the advantages of Taylor's approach for a business?

It can increase productivity, provides a clear financial incentive, links labour costs to output and suits measurable production jobs.

What are the advantages of Taylor's approach for employees?

Hard-working employees can earn more and pay directly reflects output.

What is a disadvantage of Taylor's approach regarding quality?

Employees may rush to produce more units, causing output to increase while quality potentially falls.

Why is Taylor's approach not suitable for all jobs?

Piece rates are difficult to use for jobs such as teaching, management, design and customer service where output is difficult to measure.

How can Taylor's approach affect employee stress?

Constant pressure to produce more can increase stress and reduce job satisfaction.

What does Taylor's theory ignore?

Non-financial motivation such as recognition, achievement, relationships, responsibility and promotion.

What is the key memory link for Taylor?

Taylor = MONEY.

What is Maslow's hierarchy of needs?

A theory suggesting people have five levels of needs, with lower-level needs generally needing to be satisfied before higher-level needs become stronger motivators.

What are Maslow's five levels of needs in order?

Physiological → Safety → Social/Belonging → Esteem → Self-actualisation.

What are physiological needs?

Basic physical needs such as food, water and shelter.

How can employment satisfy physiological needs?

Pay provides income that helps employees afford basic necessities.

What are safety needs?

Job security, safe working conditions and stable income.

How can a business satisfy employees' safety needs?

Employment contracts, safe working conditions, job security and reliable wages.

What are social needs?

Friendship, belonging, teamwork and relationships.

How can a business satisfy social needs?

Teamworking, social events and good relationships with colleagues.

What are esteem needs?

Recognition, respect, status and achievement.

How can a business satisfy esteem needs?

Praise, Employee of the Month, promotion, awards and greater responsibility.

What is self-actualisation?

A desire to achieve one's full potential through challenging work, creativity, personal growth and development.

How can a business satisfy self-actualisation needs?

Training, job enrichment, promotion and greater responsibility.

Why might Employee of the Month fail to motivate an employee with poor pay and job security?

Their basic financial and security needs may not be satisfied, so higher-level recognition may be less motivating.

What is Herzberg's Two-Factor Theory?

A theory suggesting there are two groups of factors affecting employees: hygiene factors and motivators.

What are hygiene factors?

Job factors that can cause dissatisfaction if they are poor.

Give examples of Herzberg's hygiene factors.

Pay, working conditions, job security, company policies and relationships with managers and colleagues.

What happens when hygiene factors are improved?

Improving them can reduce dissatisfaction, but does not necessarily create strong long-term motivation.

What are Herzberg's motivators?

Factors that can create job satisfaction and motivation.

Give examples of Herzberg's motivators.

Achievement, recognition, responsibility, promotion, interesting work and personal growth.

Why might increasing pay not strongly motivate employees according to Herzberg?

It may reduce dissatisfaction caused by poor pay, but employees could still find their work boring.

How could a business create stronger motivation according to Herzberg?

Give employees more responsibility, interesting work, recognition, achievement and opportunities for growth.

How do Taylor, Maslow and Herzberg differ?

Taylor: employees are mainly motivated by money. Maslow: employees have a hierarchy of needs. Herzberg: hygiene factors prevent dissatisfaction while motivators create satisfaction.

What is the memory trick for Taylor, Maslow and Herzberg?

Taylor = £; Maslow = pyramid of needs; Herzberg = hygiene + motivators.

When may Taylor's theory work well?

When work is repetitive, output is easy to measure and employees respond strongly to financial incentives.

When may Maslow's theory be useful?

When employees have different levels of needs and the business wants to use a range of motivational methods.

When may Herzberg's theory be useful?

When the business wants long-term job satisfaction and jobs can be redesigned to provide greater responsibility.

Give an A* evaluation of Taylor's theory.

Taylor may work well in a factory producing identical products because output is easy to measure, but is less suitable for creative work where job satisfaction and creativity are important.

What are the two broad categories of motivation methods?

Financial motivation and non-financial motivation.

What is financial motivation?

Motivation where employees receive money or financial benefits.

What is non-financial motivation?

Motivation through benefits that are not directly financial, such as responsibility, recognition or development.

What is time-based pay?

A payment system where employees are paid according to the amount of time they work.

Give an example of time-based pay.

An employee earns £12 per hour.

How much does an employee earn for 30 hours at £12 per hour?

£360.

What are the advantages of time-based pay?

Simple to calculate, provides predictable income, suits jobs where output is difficult to measure and employees are less likely to rush work.

What are the disadvantages of time-based pay?

It does not directly reward higher output, provides little financial incentive to work faster and labour costs increase as hours worked increase.

When is time-based pay best suited?

When quality is more important than quantity or output is difficult to measure.

Give examples of jobs suited to time-based pay.

Teachers, receptionists and some office workers.

What is piece-rate pay?

Pay based on the number of units an employee produces.

What are the advantages of piece-rate pay?

It creates a strong incentive to increase output, links labour costs to production and can increase productivity.

What are the disadvantages of piece-rate pay?

Quality may fall, employees may feel pressured, it is unsuitable when output is difficult to measure and can encourage competition instead of teamwork.

When is piece-rate pay best suited?

Repetitive production jobs where output can be accurately measured.

What is a salary?

A fixed amount of pay received, usually annually and paid in regular instalments.

Give an example of a salary.

£30,000 per year.

What are the advantages of salary?

Predictable income, suitable for professional/office jobs, employees know their regular income and it can provide job security.

What are the disadvantages of salary?

Employees may lack a direct incentive to increase output, high salaries increase fixed labour costs and salary alone may not motivate employees.

What is a bonus?

An additional payment given for achieving a target or good performance.

Give an example of a bonus.

Employees receive £500 if monthly sales exceed £100,000.

What are the advantages of bonuses?

They provide a clear incentive, can increase productivity/sales and can be linked to business objectives.

What are the disadvantages of bonuses?

Employees may focus only on the target, quality could fall, unrealistic targets can demotivate employees and bonuses can encourage competition rather than teamwork.

What is commission?

Payment based on the amount or value of sales made by an employee.

Give an example of commission.

A salesperson receives 5% of their sales value.

How much commission is earned on £10,000 of sales at 5%?

£500.

What are the advantages of commission?

It strongly encourages sales, directly links employee pay to revenue and is particularly suitable for sales employees.

What are the disadvantages of commission?

Employees may pressure customers, competition between salespeople may increase, income can be unpredictable and it is unsuitable for non-sales roles.

What is profit sharing?

A system where employees receive a share of the business's profits.

What are the advantages of profit sharing?

It encourages employees to improve overall business performance, consider costs and revenue and can encourage teamwork.

What are the disadvantages of profit sharing?

Employees may receive little/no reward if profit is low despite working hard, individual contribution is difficult to measure and employees cannot control all factors affecting profit.