Unit 2.4 and 2.5 Business Management HL

Motivation

Motivation

Motivation refers to the desire, effort, and passion to achieve something. It is the willingness to complete a task or job with intent and purpose

Demotivation

Demotivation refers to a lack of interest and enthusiasm about work

Generic benefits of increased workers’ motivation

• Better industrial relations (reduce the chance of conflict in the workplace)

• Lower absenteeism (more incentive for workers to go to work)

• Lower staff turnover (reduce the cost for business in replacing those people)

Taylor's scientific management theory of motivation

• advocated the use of piece-rate payment systems suggesting that “what the workmen want from employers beyond anything else is higher wages.”

• Differentiated piece rate- workers are paid a standard level of output and receive a higher rate if they exceed that level

Criticism/ Limitation on Taylor’s theory

• Ignores non-fiancial factors

• Does not recognize that people can be independent thinkers

• Difficult to measure the output of professionals that focus on mental output, rather than physical output

• can lead to repetitive and monotonous

Maslow’s hierarchy of needs

• Maslow focused on the psychological needs of workers as he believed people are motivated than just their pay

• he suggested that people would need to be satisfied with their lower level needs before they could progress to higher-level needs.

Criticisms of Maslow's Hierarchy of Needs

• Identification of workers needs is difficult

• Not everyone have the same five needs

• Self actualization are rarely permanently achieved

Herzberg two factor theory

• Herzberg focused on the sociological and psychological aspect of work

• He investigated the factors that caused satisfaction and dissatisfaction at work

• Hygiene factors (mainly physical aspects)

• Motivators (mainly sociological aspects)

Criticisms of Herzberg

• Hygiene factos can be taken for granted

• Does not apply to low skilled jobs (the study was limited to engineers and accountants)

• Employees may not want the extra responsibility and stress from having enriched/more demanding jobs

McClelland’s acquired needs theory

• Suggests that there are three types of needs that must be satisfied to boost motivation and productivity

• Need for achievementt, power, affiliation

Deci and Ryan’s self-determination theory

• Suggests that the drive to flourish relies on three requirements:

  1. Autonomy - means having control over our own lives and decision

  2. Competence - having the knowledge and confidence to learn and do things well

  3. Relatedness - is about our connections with other people in society

Equity Theory by Adams

• Equity theory and expectance theory are both examples of process theories of motivation. This category of motivation theory considers how motivation occurs, rather than what motivates people

• Suggests what motivates employees is whether they feel outputs are equal or relative to their input and/or remuneration equitable.

Expectancy theory by Vroom

• Suggests that people only put in the effort to do a task if they expect they will achieve the required results

• Vroom suggests when faced with options, people choose the one with the greatest motivation consisting of three parts:

  1.expectance

  2.instrumentality

  3.valence

Labor turnover

• Labor turnover measures the percentage of the workforce that leaves the organization in a given time period (usually one year)

• amount of number of people in an organization

Cost of high labor turnover

• Negative corporate image

• Negative impact on remaining workforce ex. poor morale, lower productivity and overburdening exisitng staff

• Lost productivity during the time between the loss of employees and hiring replacement workers

Types of appraisal

An appraisal is the formal assessment of an employee’s performance in fulfilling a job based on the tasks and responsibilities set out in the job description.

Performance management using Appraisal are conducted in order to…

• Help the employee improve their performance at work

• Hold employees accountable

• Improve the employee’s motivation and job satisfaction

• Identify specific training and develop needs to support the employee

Methods of appraisal

• formative appraisal

• summative appraisal

• 360-degree feedback

• self-appraisal

advantages of appraisal

• lead to professional development with goal-setting

• allows for objective praise of staff

• provide constructive feedback

• identify common strength

• managers can use the appraisal to think about numeration and salary

disadvantages of appraisal

• time-consuming and costly

• appraisers may lack skills, experience and confidence in carrying out appraisals effectively

• employees can experience unnecessary anxiety if appraisals are linked to pay

• may cause anxiety or stress

Recruitment and selection process

1. Vacancies become available

2. Advertise the vacant pst

3. check applications and create a shortlist

4. conduct interviews

5. perform aptitude testing

6. conduct interviews

7. check references

8. offer jobs to the best candidates

9. issue and sign employment contract

10. Carry out new employee induction

External recruitment

• hiring people from outside the business

• methods used to recruit externally include

  -Newspaper advertising

  -headhunting

  -job centers

advantages and disadvantages of external recruitment

advantages

• new blood from people hired to bring in new ideas

• a wider range of experience

• larger pools of applicants

disadvantages

• time-consuming

• expensive

• greater degree of uncertainty

Types of financial rewards

• Salaries

• wages (time and piece rates)

• Commission

• profit related pay

• Performance related pay

• Employee share ownership schemes

• Fringe benefits

Salaries

are financial rewards set at a fixed annual rate but paid on a regular basis

Wages

• wages are the rewards for labor services usually expressed as an hourly rate (time) or as a measurable quantity of output (piece rate).

• Wages earners are often paid an overtime rate for the hours they work over and above their contracted hours

Wages (piece rate)

• Piece rate is a payment system that can get around the problem of time based wages by rewarding more productive workers

• Payment systems reward workers based on their output or productivity

Commissions

• Pays workers based on a proportion (percentage) of sales or output contributed by a worker

• For example, real estate agents might get paid 1% (the commissions) a $500,000 property would earn $5000 in commission.

Performance-related pay (PRP)

• rewards employees (as individuals, teams, or as a whole workforce) who meet certain goals

• PRP can be paid in various ways:

• Pay rise - an increase in a person’s remuneration due to meeting or exceeding pre-determined and pre-agreed performance targets

• Performance bonus - paid as a one-off reward to workers who have reached or exceeded output or quality targets

• Gratuity - paid to staff who complete their employment contracts

Profit-related pay (PRP)

• is a type of financial reward system which remunerates workers a certain percentage of the annual profits that the business earns. It is rewarded on top of an employee’s normal pay (wages or salaries)

• Profit-related pay is usually paid as an annual bonus

Employee share ownership scheme

• An employee share ownership scheme is a type of financial payment system that involves giving workers shares in the company they work for.

• This comes in two main forms:

• The company gives employees a number of shares, freely without any charge

• Employees are offered the opportunity to purchase shares at a discounted price

Fringe payments

(also known as financial perks) are the monetary benefits to employees in addition to their wages or salaries.

TYPES OF NON FINANCIAL REWARDS

▪Job enrichment

▪Job rotation

▪Job enlargement

▪Empowerment

▪Purpose/the opportunity to make a difference ▪Teamwork

Job enrichment

About enhancing the experiences of workers, giving workers a wide range of challenging tasks and more responsibility at work

Job rotation

Workers switching between jobs (tasks) for a period of time

Job enlargement

When more tasks or activities are added to a worker’s job description.

Empowerment

Is the delegation of decision-making power to workers, thereby helping to boost their morale. It involves granting workers the autonomy and authority to be in charge of their own jobs and to execute their own ideas.

Teamwork

refers to the combined efforts of a group of workers to achieve of an organizational goal.

Purpose/ the opportunity to make a difference

Is an intrinsic, non-financial type of motivation because people believe what they do genuinely meaningful work. non-financial motivation often involves to having opportunities to make a difference, be it on a personal, professional or social level.

Induction training

▪is a type of training aimed at introducing new employees to the organization.

▪the purpose of induction training is to help new recruits to settle in quicker so they feel self-assured and supported in their new job

On the job training

refers to training carried out whilst at the workplace.

Off the job training

refers to training conducted offsite, such as at a tertiary college or hotel conference center.

Organizational culture

Corporate culture (or organizational culture) refers to an organization’s set of core values and beliefs. It shapes the firm’s attitudes and norms.

3 main aspecs Organizational culture

• Attitude

• Beliefs

• Values

Benefits of strong organizational structure

• Reduce mistakes and misunderstandings

• Minimizes problems when conflict occurs

• Create sense of belonging and security for staff

• Promote cohesion so people do the right thing

Zeus (Power)

• Power radiates from just a few individuals

• Few rules and little bureaucracy

• Flat structure with quick decision-making

Advantage - fast decision-making and less bureaucracy

Disadvantages - more negative to employees, they have the freedom to make their own decisions

Apollo (Role)

• People have clearly delegated authority within a highly defined structure.

• A tall bureaucratic structure with slow decision-making

• More bureaucracy (more administrative work)

Advantage: employees have a clear direction of their roles

Disadvantages: they might not be ready in terms of radical changes or external changes outside the organization

Athene (Task)

• Emphasizes the achievement of goals

• Team-based organization with no single power source

• Employees are highly empowered

Disadvantage: hard to maintain, managers have to make sure they have a team with people with its own ability and talent

Dionysian (Person)

• These cultures exist in firms where staff are in similar positions with similar expertise (e.g accountants or doctors)

• They only exist for the benefit of the individuals involved.

Cultural Clash

Culture clash exists when there is conflict between two or more cultures within an organization

Cultural gap

Cultural gap happens when there are differences between the desired culture of a business and the culture that actually exists

Common causes of cultural clash

• Growth of firm - more employees may lead to a formal structure and hierarchy that can lead to bureaucracy (long process) and cause power power-oriented culture

• Mergers and acquisition - two companies combine but with different culture, and those who cannot adapt leaves the company

• Changes in leadership

Consequences of cultural clash

• Misunderstanding and miscommunication

• Discontented staff

• Resistance to change

• Compromises need to be reached

• High cost implementing change

• National culture clashes

Hofstede’s cultural dimension

1. Power distance

2. Collectivism vs individualism

3. Femininity vs masculinity

4. Uncertainty avoidance

5. Short term vs long term orientation

6. Restrain vs indulgence

Power distance

Power distance refers to the extent to which a culture accepts and respects authority and status. A high degree of power distance exists if an organizaton has centralized decision-making, hierarchical structures, and high regard for position or ranking within the organization, such as in the military (the Army, Navy, Air Force, Marines, and Coast Guard).

Collectivism vs individualism

This cultural dimension refers to the degree to which people are integrated into groups in society. Individualism vs collectivism is about whether a society values the individual over a team or collective group of individuals in a specific community. Hence, this cultural dimension is sometimes referred to as the “I” vs “we” cultural dimension.

Femininity vs Masculinity

Masculinity refers to societies or cultures defined by a focus on achievement, competition, status, power, and wealth. Society is generally more competitive and driven by material rewards. Such cultures are highly competitive and may come across as overly aggressive by others.

Uncertainty avoidance

The uncertainty avoidance cultural dimension of Hofstede's model refers to the rating or index of a society’s tolerance for ambiguity, i.e. whether the community is generally comfortable with uncertainty and ambiguity. It is about whether a society feels its should try to control the future or just let it happen. Essentially, uncertainty avoidance measures society’s tolerance for uncertainty or vagueness

Short term vs long term orientation

Long-term vs. short-term orientation is the cultural dimension that connects the past with attitudes towards the future. All society maintain some links with their past in reference to dealing with the challenges of the present as well as the future. Different societies prioritize these two approaches in different ways.

indulgence vs Restrain

An indulgent culture refers to a society or organization that fosters the natural human drive to be free, to have fun, and to generally enjoy life. By contrast, a restraining culture means there is a tendency for society to suppress people's personal needs and desires by a system of strict social norms and self-regulation. As this sixth element of the model was only included by Hofstede in 2010,there are less data about the indulgence vs restraint cultural dimension of different nations.