2.1 Motivating employees IGCSE Business

2.1.1 The importance of a well-motivated workforce:

• Why people work and what motivation means
• The benefits of a well-motivated workforce: labour productivity, reduced absenteeism and labour turnover
• The concept of human needs, e.g. Maslow’s hierarchy
• Key motivational theories: Taylor and Herzberg

2.1.2 Methods of motivation:

• Financial rewards, e.g. wage, salary, bonus, commission and profit sharing
• Non-financial methods, e.g. job enrichment, job rotation, teamworking, training, opportunities for promotion
• Recommend and justify appropriate method(s) of motivation in given circumstances

‌Why people work and what is motivation

‌People work to earn money and fulfil their basic necessities and wants.
To buy that car, house, clothes or holiday they want! This is why people work.

‌Motivation is getting someone to do what you want them to do, that is something they want to do and take pride in. getting someone to work to their best capacity and getting the best out of them.

Motivation is the reason why employees want to work hard and work effectively for the business.

Note: Money is always the main motivator.

Other factors that may motivate a person to choose to do a particular job may include: social needs, esteem needs – to feel important, worthwhile, job satisfaction – to enjoy good work, Job security – knowing that your job and pay are secure- that you will not lose your job

‌Benefits of a well-motivated workforce

‌When workers are well-motivated they become highly productive and effective in their work and thus increases the firm’s efficiency and output, leading to higher profits.

When workers are motivated they work to their best ability and enjoy their work environment. They get the job done.

For example, in the service sector, if the employee is unhappy at his work, he may act lazy and rude to customers, leading to low customer satisfaction, more complaints and ultimately a bad reputation and low profits.

‌Benefits of a well-motivated workforce

‌When staff are motivated in an organisation there is high possibility of reduced absenteeism – people enjoy coming to work and do not try to avoid it.

Low Staff turnover –low compared to organisation where staff are not motivated. At the end of the day no one wants to work where they are board and there is no pride in the job they do. Better labour turnover

I have prepared this lesson please watch as it will certainly help you out.

‌Motivation Theorist and Their Theories

‌F. W. Taylor
Maslow
Herzberg

These are the three well known motivation theorists.

‌F. W. Taylor

‌Taylor based his ideas on the assumption that workers were motivated by personal gains, mainly money so increasing pay would increase productivity (amount of output produced).

He proposed the piece-rate system, whereby workers get paid for the number of output they produce. So in order, to gain more money, workers would produce more.

‌Maslow

‌Abraham Maslow’s hierarchy of needs shows that employees are motivated by each level of the hierarchy going from bottom to top.
Mangers can identify which level their workers are on and then take the necessary action to advance them onto the next level.

‌One limitation of this theory is that it doesn’t apply to every worker. For some employees, for example, social needs aren’t important but they would be motivated by recognition and appreciation for their work from seniors.

‌Herzberg

‌Frederick Herzberg’s two-factor theory, states that people have two sets of needs- one basic needs called ‘hygiene factors’, the other needs that allow the human being to grow psychologically, called the ‘motivators’.

‌According to Herzberg, the hygiene factors need to be satisfied, if not they will act as de-motivators to the workers. However hygiene factors don’t act as motivators as their effect quickly wear off. Motivators will truly motivate workers to work more effectively.

I have covered this topic in the video below, if you would rather listen than read please watch.

‌Motivating Factors Financial

‌Wages: often paid weekly or monthly.

Can be calculated in two ways:

Time-Rate: pay based on the number of hours worked. No guarantee that workers will work sincerely to produce more outputs- they may simply waste time on very few output since their pay is based only on how long they work. The productive and unproductive worker will get paid the same amount of money, irrespective of their output.

Piece-Rate: pay based on the number of output produced. This doesn’t ensure that quality output produced is high. Efficient workers may feel demotivated as they’re getting the same pay as inefficient workers, despite their efficiency.

Salary: paid monthly or annually.

Commission: paid to salesperson, based on a percentage of sales they’ve made. The higher the sales, the more the pay. Although this will encourage salespersons to sell more products and increase profits, it can be very stressful for them because no sales made means no pay at all.

‌Bonus: additional amount paid to workers for good work or high productivity

Performance-related pay: paid based on performance. Looking at KPI’s to measure performance and a pay is given based on this.

Profit-sharing : a scheme whereby a proportion of the company’s profits is distributed to workers. Workers will be motivated to work better so that a higher profit is made. So they can have a share of it.

Shared ownership: shares in the firm are given to employees so that they can become part owners of the company. This will increase employees’ loyalty to the company, as they feel a sense of belongingness. Knowing you own part of the company you tend to put more effort into your work. resulting in motivated staff and increased profit.

‌Motivating Factors ‌Non-Financial

‌Company vehicle/car
Free healthcare
Children’s education fees paid for
Free accommodation
Free holidays/trips
Discounts on the firm’s products

‌Job Satisfaction- could be promotional opportunities, team involvement, relationship with superiors, level of responsibility, chances for training, the working hours, status of the job, Responsibility, recognition and satisfaction.

Job Rotation: involves workers swapping around jobs and doing each specific task for only a limited time and then changing round again.

Job Enlargement: where extra tasks of similar level of work are added to a worker’s job description.

Job Enrichment: involves adding tasks that require more skill and responsibility to a job.

Team-working: a group of workers given responsibility for a particular process, product or development.