Section 2 - People in business

● Motivation is the reason people work and why they want to work hard and effectively
for the business.

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● A well motivated workforce can -
● Be willing to accept change
● Will be having high output
● Will lead to two way communication
● Low labour turnover
● Low rates of absenteeism
● Higher output = higher profits
● Theories -

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● Motivating factors can either be financial or non financial.
● Financial methods of motivation are wage salary, bonus, commission, profit sharing.
● Wages -
1. It is a payment for work, usually paid weekly
2. + of wages
3. Overtime
4. Paid Regularly
5. - of wages
6. Wage clerks
7. Wages have to calculated weekly
● Piece rate -
1. Amount paid for each unit of output
2. The more they make the more they get
3. +
4. Encourages workers to work faster
 5. Encourages them to make more goods
6. -
7. Quality might be affected
8. If machinery breaks down then workers may earn less
● Salary -
1. Not paid in cash, usually paid monthly and sent straight to the bank as a
payment for work
2. Is calculated by dividing money per year by 12
3. + of salary
4. Calculated once per month rather than 4 times a month similar to wages
5. Employees have money in their bank for longer as they are only paid once a
month
6. - of salary
7. Worker may prefer being paid weekly
8. No payment for overtime
● Bonus - A bonus is an additional amount of payment above basic pay as a reward for
good work.
1. A business can pay bonuses if a worker has crossed certain targets and has
been performing well
2. A bonus acts as positive motivation to the worker
3. Workers feel recognised and special if they are paid a bonus
4. - of salary
5. Bonuses can become expected every year
6. If they are not paid then this could demoralise the employees
7. If only a certain number of employees receive a bonus the others might feel
demotivated
● Commission - Commission is payment relating to the number of sales made
1. Often paid to sales staff
2. Encourages staff to sell as many as possible
3. Paid as an addition to wage or salary as a form of reward
4. Motivation to the employee
5. - of salary
6. If the sales staff is good at what they do and encourage people to buy
products they don’t like which might lead to bad reputation for the business
7. Excess competition between employees
8. Stressful for staff
● Profit sharing is a system whereby a proportion of the company’s profits is paid out to
employees.
1. Motivates employees
2. Token of appreciation
3. -
4. No profit sharing could lead to employee disappointment
5. Higher paid workers receive more profits which could lead to demotivation in
lower paid workers as they’ve worked so hard
● Job satisfaction is the enjoyment derived from feeling that you have done a good job.
● There are also non financial methods to motivate employees which can be done to
improve employee job satisfaction
● Job rotation - Job rotation involves workers swapping around and doing each specific
task for only a limited time and then changing around again
1. Increases variety in work
2. Makes it easier for managers to move employees around the factory when
there are unexpected circumstances
3. - however the task does not get more interesting
● Job enrichment - Job enrichment involves looking at jobs and adding tasks that
require more skill and/or responsibility.
1. Helps fulfil higher human needs
2. Raises productivity
3. Workers get more satisfied w their job
4. - could require extra training which can be expensive
● Team Working - Team Working involves using groups of workers and allocating
specific tasks and responsibilities to them.
1. Workers take responsibility
2. Become more involved
3. Feel as if they have full control
4. Helps increase productivity
● Training - is the process of improving a worker’s skills.
1. Workers feel a great sense of achievement
2. Receive more challenging work
3. If they are selected for training they feel recognised
4. Overall it helps them increase productivity
● Opportunities for promotion - Promotion is the advancement of an employee in an
organisation, for example, to a higher job/ managerial level
1. Leads to motivated workers
2. Workers feel recognised
3. Business benefits as they promote workers who already know how everything
works

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● Organisational structure refers to the levels of management and division of
responsibilities within an organisation.
● Organisational chart refers to a diagram that outlines the internal management
structure.
● Hierarchy refers to the levels of management in any organisation, from the highest to
the lowest.
● A level of hierarchy refers to managers/supervisors/ other employees who are given
a similar level of responsibility in an organisation.

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● Chain of command is the structure in an organisation which allows instructions to be
passed down from senior management to lower levels of management.
● Organisation chart -
1. +
2. Chart shows how everyone is linked and makes it easy to communicate as
employees understand which communication channel to use
3. Individuals can identify their position and understand who they have authority
over and who they don’t
4. Shows link and relationships between different organisations
5. Gives employees a sense of belonging

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● Business A has a tall structure and a long chain of command.
● Business B has a wide structure and a short chain of command.
● Hence the span of control is way different and span of control means - the number of
subordinates working directly under a manager.
● Short chain of command -
1. Communication = quicker and accurate
2. Top managers are better in contact with lower level workers
3. Managers have to manage more people then this will encourage managers to
delegate their work
4. This helps build trust between managers and employees
5. -
6. However the managers may not be able to supervise all employees and loose
control over them
● Directors are senior managers who lead a particular department or division of a
business.
● Line managers have direct responsibility for people below them in the hierarchy of an
organisation.
● Supervisors are junior managers who have direct control over the employees below
them in the organisational structure.
● Staff managers are specialists who provide support, information and assistance to
line managers.
● Roles and functions of management -
● Planning -
1. Setting aims or targets
2. Gives the organisation a sense of direction and purpose
3. Also planning for the resources required to achieve these targets
● Organising -
1. Delegating tasks
2. Organise people and resources effectively
● Coordinating - bringing people together
1. Make sure all departments work together to achieve goals and targets set
2. Build communication between different departments
● Commanding - guiding, leading and supervising people!
1. Make sure all supervisors are keeping to their targets and dea/dlines
2. Instruction and guidance must be provided
3. Responsible to make sure tasks are carried out
● Controlling - measure and evaluate work of all individuals and groups to make sure
they are on target
1. Managers have to take actions if targets are not being met
2. Discipline staff
3. Find the problem and provide the solution
● Without clear management -
1. A sense of control and direction
2. Coordination between departments
3. Control of employees
4. Organisation of resources
5. All of this might not be there or might not be effective
● Delegation - Delegation means giving a subordinate the authority to perform
particular tasks.
1. If the job is not done well then the managers will have to take responsibility
 2. + for managers
3. Gives managers more time to do other things
4. Managers are less likely to make mistakes if the work is delegated
5. Managers can measure success of the staff easily
6. + for subordinate
7. Work becomes interesting and rewarding
8. Employee feels recognised and important
9. Trains workers
● A manager might not delegate -
● If they worry the subordinate might not do well
● Worried if the subordinate does better than himself
● A good manager -
1. Motivates employees
2. Give guidance
3. Inspire employees
4. Manage resources effectively
5. Increase profits
● Leadership - a good leader can inspire and get the best out of their workforce
● Leadership styles are the different approaches to dealing with people and making
decisions when in a position of authority – autocratic, democratic or laissez-faire
● autocratic leadership
● democratic leadership
● laissez faire leadership.
● Autocratic leadership is where the manager expects to be in charge of the business
and to have their orders followed.
1. + quick decision making
2. - no employee input which demotivates the employee
● Democratic leadership gets other employees involved in the decision making process
1. + better decision are made communicating with employees
2. - unpopular decisions cannot be mad effectively
● Laissez-faire leadership makes the broad objectives of the business known to
employees, but then they are left to make their own decisions and organise their own
work.
1. + encourages employees to show creativity and responsibility
2. - not recommended for businesses where clear communication is required.
● Different situations require different styles of leadership

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 ● A trade union is a group of employees who have joined together to ensure their
interests are protected.
1. + collective bargaining
2. Improved conditions of employment
3. Improved working environment
4. Improved benefits for employees
5. -
6. Costs money to be a member
7. Workers may be required to take industrial action if nothing works
● Advantages for employers -
1. Improve communication between workers and management
2. Wage agreements become easier to discuss
3. -
4. Trade unions can organise strikes
5. Wages are likely to be interesting
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● Recruitment is the process of identifying that the business needs to employ someone
up to the point at which applications have arrived at the business.
● Employee selection is the process of evaluating candidates for a specific job and
selecting an individual for employment based on the needs of the organisation.

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● Recruitment happens when -
1. An employee leaves their job
2. A new business needs employees as they have just started
3. It is a successful business and wants to expand by employing more people
● The process of recruitment

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● The process of recruitment -
 1. A job analysis is carried out which identifies and records the responsibilities
and tasks relating to a job.
2. A job description is produced which outlines the responsibilities and duties to
be carried out by someone employed to do a specific job.
3. A job specification is drawn up which is a document which outlines the
requirements, qualifications, expertise, physical characteristics, etc., for a
specified job.
● A job description consists of these four things and many more
1. the level of educational qualifications
2. the amount of experience and type of experience
3. special skills, knowledge or particular aptitude
4. personal characteristics, such as type of personality
● Inter recruitment is when a vacancy is filled by someone who is an existing employee
of the business.
1. +
2. Quicker
3. Cheaper
4. Person and their potential or abilities or already known
5. Person already knows how the organisation works
6. Receiving a promotion motivates the employees as they want to receive a
promotion too
7. -
8. No new ideas or experience
9. Rivalry and Jealousy to the workers who gain promotion
10. Quality of internal candidates maybe low
● External recruitment is when a vacancy is filled by someone who is not an existing
employee and will be new to the business.
● Advertising for the job can be done in several ways such as -
1. Local and National newspaper
2. Specialist magazine
3. Online recruitment sites
4. Recruitment agencies
5. Government run centres
● Curriculum vitae - A CV is a summary of a person’s qualifications, experience and
qualities, and is written in a standard format which in further detail includes
1. Name , address , number , work experience , points of responsibility ,
education and qualifications
2. Why the applicant wants the job and what makes them suitable should also
be answered in detail
● After shortlisting CV’s a series of interview is held to help identify
1. Applicants ability to do the job
2. Personal qualities which can either help or worsen matters
3. Character and personality of the applicant
● Along with interviews businesses may also hold tests such as aptitude, skill,
personality and group situation
● Which worker is hired depends on a couple of things such as -
1. Work experience
2. Education and Qualification.
 3. Age
4. How well the applicant has a good understanding of how the business
operates
5. If the applicant has experience and skills gained from outside businesses
● Unsuccessful applicants are rejected
● Full-time employees will usually work 35 hours or more a week
● Part-time employment is often considered to be between 1 and 30–35 hours a week.
1. Part time employee + are (to a business)
2. Flexible working hours
3. Can be asked to work in busy times
4. Helps reduce costs
5. They can be made redundant easily
6. -
7. Less likely to seek training
8. Longer to recruit 2 part times than 1 full time
9. Part timers are less committed
10. Difficulties in communication
11. No promotion
● Training is important to a business as it may be used to:
1. introduce a new process or new equipment
2. improve the efficiency of the workforce
3. provide training for unskilled workers to make them more valuable to the
company
4. decrease the supervision needed
5. decrease the chances of accidents.
● Benefits of training to employees are -
1. To increase skills.
2. To increase knowledge.
3. To improve employees’ attitudes to encourage them to accept change and
raise awareness, for example, a need to improve customer service.
● Induction training is an introduction given to a new employee, explaining the
business’s activities, customs and procedures and introducing them to their fellow
workers.
1. + helps employee settle in quick
2. Health and safety during job will be informed
3. Workers are less likely to make mistakes
4. - time consuming
5. Wages are paid but no work is done during the training
6. Delays employee starting their job
● On-the-job training occurs by watching a more experienced worker doing the job
1. + Worker does not need to travel and that saves money
2. Work is done by worker while training
3. Costs less
4. - trainer won’t be as productive
5. Trainer may have bad habits which may be passed onto the trainee
6. Training qualifications may not be recognised outside the business
● Off-the-job training involves being trained away from the workplace, usually by
specialist trainers -
 1. Broad range of skills is taught
2. Expert trainers provide up to date information of business practices
3. Employees become more versatile
4. - costs are high
5. Wages will be paid but there is no output by the worker
6. Training qualification makes it easy for the employee to leave the job and find
another easily.
● Workforce planning is establishing the workforce needed by the business for the
foreseeable future in terms of the number and skills of employees required.
1. Can be done because of -
2. Introduction of automation
3. Closure of factory/shop or office branch
4. A business has been merged
● Number of employees can reduced by dismissal or redundancy
● Dismissal - when employment is ended against the will of the employee, usually for
not working in accordance with
● Redundancy is when an employee is no longer needed and so loses their job. It is
not due to any aspect of their work being unsatisfactory
1. Can be made redundant due to -
2. Length of time employed by business
3. Employment history of the workers
4. Which department the business needs to lose workers in
● Employment issues affected by legal control
1. Employment contracts
2. Unfair dismissal
3. Discrimination
4. Health and safety
5. Legal minimum wage
● A contract of employment is a legal agreement between an employer and employee,
listing the rights and responsibilities of workers.
1. Provides security to employee
2. If employee doesn’t meet criteria he can be made redundant
3. Employee’s can get legal compensation is employer doesn’t match criteria
● An industrial tribunal is a type of law court (or in some countries, a legal meeting) that
makes judgments on disagreements between companies and their employees, for
example, workers’ complaints of unfair dismissal or discrimination at work
● Unfair dismissal - when employer terminates the employees contract without a valid
reason
● Discrimination is when the employer makes a decision based on unfair reason such
as race or sex
● An ethical decision is a decision taken by a manager or a company because of the
moral code observed by the firm.
● Legal minimum wage is the minimum amount an employer has to pay and anything
below it will be considered illegal
1. Prevents exploitation of workers
2. Unskilled workers may now receive better wages
3. Encourage people to seek work
4. Increases business costs.
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● Communication is the transferring of a message from the sender to the receiver, who
understands the message.
● A message is the information or instructions being passed by the sender to the
receiver
● Internal communication is between members of the same organisation.
1. For example
2. Please do not smoke in this area
3. Keep this door locked at all times
● External communication is between the organisation and other organisations or
individuals.
1. For example
2. Orders for goods and supplies
3. Advertising goods or services
● Effective communication is done with the help of
1. The transmitter or sender of the message is the person starting off the
process by sending the message.
2. The medium of communication is the method used to send a message, for
example, a letter is a method of written communication and a meeting is a
method of verbal communication.
3. The receiver is the person who receives the message.
4. Feedback is the reply from the receiver which shows whether the message
has arrived, been understood and, if necessary, acted upon.
● One-way communication involves a message which does not call for or require a
response.
● Two-way communication is when the receiver gives a response to the message and
there is a discussion about it.
1. Both people are involved in the communication process and the receiver can
give inputs which motivates the receiver.
● Communication methods
1. Verbal
2. Written
3. Visual
● Choosing the appropriate method depends on:
1. How quickly the message must reach the receiver
2. Cost
3. How detailed the message is
4. Leadership style ( an democratic leader will use a different method compared
to an autocratic)
5. Importance of the written content
● Verbal communication -
1. Face to face/ conferences/ video calling
2. +
3. Information can be given out quickly
4. Two way communication and immediate feedback
5. Body language can put the message out clearly
6. -
 7. A permanent record cannot be made or stored
8. In a big meeting = no way of telling whether the message has been
understood or if everyone is listening
● Written communication -
1. memos/letters/reports/email/text messages
2. +
3. Hard evidence as it can be stored and referred to in the future
4. Complicated details can be sent which may be misunderstood with verbal
communication
5. Cheap
6. Copied and can be sent to many
7. -
8. Direct feedback not always possible
9. Cannot be checked if message has been read or understood
10. No body language can be used
● Visual communication -
1. PPT’s, Videos,Posters, Charts and Diagrams.
2. +
3. Information presented = attractive and appealing way
4. Makes written statement clearer with the help of diagrams and illustrations
5. -
6. No feedback
7. Charts and diagram maybe difficult to interpret fro some
● Formal communication is when messages are sent through established channels
using professional language.
● Informal communication is when information is sent and received casually using
everyday language.
● Communication barriers are factors that stop effective communication of messages.
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