Chapter 6 - Motivating employees

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^^Why work?^^

• Money → To pay for necessities & some luxuries
• security → A sense of security. E.g. knowing that you aren’t likely to lose your job & will have a constant pay
• Job satisfaction → Enjoyment is derived from feeling that you’ve done a good job
• Esteem need (self-importance) → Feeling important, feeling that the job you do is important
• Social Needs (affiliation) → Feeling that you are part of a group or org, meeting people & making friends at work

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^^Benefits of a well-motivated workforce^^

1. High output per worker → helps keep costs low & increase profits
2. Willingness to accept change → e.g. new modes of work & new machinery
3. Two-way communication → e.g. Suggestions for improving quality
4. Low labor turnover → a loyal workforce → reduces the costs if re-recruiting
5. Low rates of absenteeism
6. Low rates of strike action → Avoiding damage to customer relations

Well-motivated workers → high productivity → increased output → higher profits

^^unhappy workers^^ → don’t work very effectively → low output → ^^lower/no profit^^

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Maslow’s hierarchy

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Physiological needs → Wages high enough to meet weekly bill, food, rest, recreation & shelter

Safety needs → Job security, protection against danger & poverty & receive fair treatment

Social needs (belongingness & love needs) → Friendship, a sense of belonging ti a team & work colleagues who support you at work

Esteem needs → having status & recognitions, achievement, independence & being given recognition for a well done

Self-actualization → being promoted & given more responsibility, succeeding to your full potential, feeling that you have done a good job not just fir financial & personal reward

• Higher levels of the hierarchy must be available to employees → Money alone will not be the single route to increased productivity

• Each level in the hierarchy must be achieved before an employee can be motivated by the next level → However, some levels don’t exist for uncertain individuals

• Managers must identify the level of the hierarchy that a particular job provides & then look for ways of allowing to benefit from the next level up the hierarchy

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Motivation theories

• When people work for themselves, e.g. entrepreneur, they tend to work hard & effectively as they see the directs benefits of their work
• However, when a person works for someone else, they don’t work as effectively. Management has to then encourage the workforce to contribute fully to the success of the business

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Frederick Taylor’s theory

• His theory was based around the assumption that all workers are motivated by personal gain:

  @@“If workers are paid more, they will work more effectively”@@

• He broke down the workers’ tasks & calculated how much output they can produce in a day. If the employees met this goal then they would be paid more money

• This theory doesn’t always work as :

  • Treats employees like machines
  • Pay cab be increased bur if workers are unsatisfied, their effectivity & productivity will not increase
  • Employees are motivated by many various factors & not just money
  • This can’t work if an employee’s output cannot be measured

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Herzberg’s theory

→ According to Herzberg, humans have 2 sets of needs :

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‘Hygiene’ factors must be satisfied, otherwise they can act as demotivators. They aren’t motivators as once satisfied, the effects of them wear off.

Methods of motivation - financial rewards

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1. Wages = payment for work, paid weekly

• Often paid every week (can be in cash or directly in bank)
• Workers get paid regularly. This tends to be paid to manual workers
• Overtime is also paid. Overtime = an incentive to work additional hours

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==The drawbacks :==

• Must be calculated every week & are time taking. Wages clerks are also hired to calculate wages, which also costs extra money

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2. Time rate = Payment based on hours worked

• Easy to calculate

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==The drawbacks :==

• Hours worked are recorded on a time-sheet, this system is time taking
• Good & bad workers are paid the same
• Supervisors are needed to make sure the workers keep working & produce good quality products, which also costs extra-money

A clocking-in system is required to determine hours worked, this system is expensive

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→ Time Rate is used for services & when it is difficult to determine the output per worker

3. Piece rate = payment depending on the quantity of products made

• A basic rate is paid + extra money, depending in the amount of products
• This system can also be used as a bonus system, when the actual output has exceeded the target output
• Encourages workers to work faster
• Only possible when the performance of an individual / team can be easily measured

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==The drawbacks :==

• Employees ignore quality & focus solely on quantity
• Quality control system is required & it is expensive
• bad products could tarnish the reputation of the business
• Workers who produce quality products will earn lesser than those who rush ( & don’t produce good quality) → causing friction between the employees
• If machinery is breaks down, employees won’t be able to make products, therefore they must be paid a minimum fixed amount

4. Salary = Payment for work, paid monthly

• Paid monthly & straight into the bank account
• Calculated as : Money per year for the job performed, the divided by 12
• Easy to calculate & has to be calculated once per month ( & not 4 times per month like with wages)

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==The drawbacks :==

• Workers might prefer weekly pay
• No payment for extra-time worked → Demotivating for employees

5. Bonuses + an additional amount of money paid above basic pay as a reward

• A lump sum paid to workers when worked well. Can be given at the end of the year or at intervals during the year
• Not necessary → Can be paid to just 1 or few selected workers or even all
• Has a positive motivating effect on workers as they feel ‘recognized’ & ‘special’

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==The drawbacks:==

• Can become ‘expected’ → Employees are disappointed & unhappy if not received
• Bad feelings amongst workers can be caused if paid only to one or selected few

6. Commissions = payment relating to the number of sales paid

• Paid to sales staff → similar to piece rate but for sales staff
• Sales may increase
• Paid in addition to existing salary

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==The drawbacks :==

• If customers are persuaded into buying unwanted goods, sales may fall in the long run as they get a bad reputation
• very stressful for workers → Bad month = lower pay
• Too much competition between workers

7. Profit sharing = a system in which a proportion of the company’s profit is paid to employees

• Received in addition to basic salary
• Should motivate workers to work hard
• Rest of the profits are paid as dividends or retained by the business
• Often used in the service sector, where it is difficult to recognize an individual employees work

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==The drawbacks :==

• If loss making or little profit making, then no profit share is possible, disappointing employees
• Calculated on basis of existing salary → higher paid workers get higher profit share, leaving lower paid workers unhappy

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Fringe benefits

→ In addition to financial reward, business may give other employee benefits, These vary according to the seniority of the posting. E.g. :

• Chauffeur driven car
• Discounts on the business’ products
• Healthcare paid for
• Children’s education fees
• free accommodation
• Share options (where company shares are given to employees)
• Generous expense accounts (for food & clothing)
• Pension paid for by the business
• Free trips abroad / holidays

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Non-financial motivating factors

Job rotation

• Job rotation involves workers swapping around & doing each specific task for a limited time & then changing around again.
• Though, this doesn’t make the job more satisfying, or interesting, it helps covering for absentees.

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Job enrichment

• Job enrichment involves looking at jobs and adding tasks that require more skill and/or responsibility

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Autonomous work groups or teamworking

• Teamworking involves using groups of worker & allocating specific tasks & responsibilities to them
• They are allowed to choose, within the team, their tasks. This increased involvement in their work, and having the freedom of choice, increases job satisfaction
• Working as a group helps boost morale as well as giving a a greater sense of belonging to the company

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Training

• Workers can feel a great sense of achievement if they successfully gain & apply new work-based skill. Then they could now be given more challenging & rewarding work to perform.
• Workers can also feel selected by the management for training courses and this can make them feel that their good work has been recognized

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Opportunities for promotion

• Many businesses prefer to fill posts of responsibility with existing workforce, rather than recruiting new managers.
• This internal recruitment offers opportunities for advancement to existing workers.
• The business benefits by promoting employees to managerial postings , as they already know how the business operates at base-level.
• By promoting employees, the business gains a motivated manager, and motivated workers who wish to be promoted.
• Promoted employees feel recognized & have higher status, which gives job satisfaction & motivation the employee.

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