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

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

Maslow’s hierarchy

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

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

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

Herzberg’s theory

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

‘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

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

The drawbacks :

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

2. Time rate = Payment based on hours worked

• Easy to calculate

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

→ 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

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)

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’

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

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

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

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

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.

Job enrichment

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

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

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

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.