MOTIVATING EMPLOYEES

SECTION 6

BENEFITS OF A WELL MOTIVATED WORKFORCE

➔ High output worker - helps keep costs low and increases profits

➔ Willingness to accept change - new methods of working

➔ Two-way communication with management - suggestions for improving

quality

➔ Low labour turnover - loyal workforce reduces the cost of recruiting new
workers

➔ Low rates of absenteeism - reducing disruption

➔ Low rates of strike damage - avoid damages

 MOTIVATION THEORIES

MASLOW’S HIERARCHY

○ Business managers recognise that higher levels of the hierarchy

must be available to employees

○ Each level in the hierarchy must be achieved in order to achieve the

next level.

○ Manager must look at the level of hierarchy a particular job

provides, and look for ways that the employee can benefit from the
next level.

F.W TAYLOR

○ Assumption that individuals are motivated by personal gain and

therefore, if they are paid more, they will work more effectively.

○ When an employee is working hard, their productivity will be high

and therefore labour costs would be low for each unit produced.

○ SEVERAL CRITICISMS:
■ Too simplistic - employees are motivated by many things
■ Can pay employees more money, but if they are unfulfilled,
there will be no increase in effectiveness.
■ Cannot easily measure employees output
 HERZBERG

○ Humans have two sets of needs; one is for basic needs (hygiene
factors) and the other is to be able to grow psychologically
(motivational needs)

○ Motivational Needs
■ Achievement
■ Recognition
■ Personal growth/development
■ advancement/promotion
■ Work itself

○ Hygiene Factors
■ Status
■ Security
■ Work conditions
■ Company policies
■ Relationship with supervisor and subordinates
■ Salary
 METHODS OF MOTIVATION - FINANCIAL

➔ Wages
➔ Salary
➔ Bonus
➔ Commission
➔ Profit sharing

WAGES

● Workers get paid on a regular basis

● Tend to paid to manual workers
● If employees work after hours, they can usually be paid overtime.

DRAWBACKS:
- Calculating wages every week takes time and money
- Wage clerks are often employed

TIME RATE:

- Payment by hour
- Makes it easy to calculate
- Can take time - recorded on time sheet
- Good and bad workers get the same amount
- Supervisors are often needed to make sure work is being done
- Clocking in system is needed to determine number of hours

PIECE RATE:

- Workers are paid depending on the quantity of products made.

- The more they make, the more they get paid.
- Basic rate paid, with additional money paid
- Encourages workers to work faster and produce more.

- Possible Limitations:
- May ignore quality when producing large numbers
- Careful workers will not earn as much
- If machinery breaks, employees will earn less
 SALARIES

- Paid monthly
- Usual for office staff or management
- Calculated as amount of money per year for the job performed - divided
into 12 monthly amounts
- Easy to calculate, only needs to be calculated once a month
- Employer has the money in the bank for longer

Possible limitations:
- Some workers may prefer weekly payments
- No payment for extra-time worked - may be reluctant to work
longer

BONUSES

- A lump sum of money paid to workers when they have worked well.
- Can be paid at the end of year or at intervals during the year.
- Do not have to be paid - business can decide if employees have
performed well
- Paid in addition to standard salary or wage
- Positive motivating effect

Possible limitations:

- Become ‘expected’ every year - if business has a poor year,

employee disappointed can be hard to manage
- If only a small number of workers are given a bonus - may upset
other workers

COMMISSION

- Additional payments for sales staff

- More sales they make, the more money they are paid
- Encourages staff to sell as many products as possible
- Paid in addition to wage or salary

Possible limitations
- Staff can be persuasive and encourage people to buy goods they
don't really want - income increases in the short term but not the
long term
- Can be stressful
- Competition between sales staff
 PROFIT SHARING

- Employees receive a share of the profits

- In addition to wage or salary
- Motivates workers to work hard as they receive part of the profits
- Often used in the service sector

Possible limitations:
- Low profits or loss - no profit share
- Usually calculated on the basis of an additional percentage of a
workers existing wage or salary - higher workers, higher profit share

FRINGE BENEFITS

- May give other employee benefits

- Usually according to seniority of job

- Examples include
- Company vehicle
- Discounts on products
- Health care paid for
- Children's education paid
- Free accommodation
- Share options
- Generous expense account
- Pension paid for
- Free trips/holidays

METHODS OF MOTIVATION - NON - FINANCIAL

JOB ROTATION
- Involves the workers swapping around and doing each specific task for a
limited time.
- Increases variety in work
- Makes it easier for managers to move workers around

JOB ENRICHMENT

- Involves looking at jobs and adding tasks that require more

skill/responsibility
- Additional training may be needed
- Workers will often become more committed when jobs provide scope for
fulfilling higher human needs.
- More satisfaction from job = raise in productivity

AUTONOMOUS WORK GROUPS

- Team Working involves a group of workers being responsible for a

particular process, product or development.
- Can decide how to complete tasks - become more involved in decision
making and take on responsibility - increasing job satisfaction
- Gives greater sense of belonging to the company

TRAINING
- Improving workers level of skills - beneficial effects on motivation
- Greater sense of achievement
- Can be given more challenging and rewarding work
- Feeling that their good work has been recognised

OPPORTUNITIES FOR PROMOTION

- Internal recruitment offers opportunities for advancement in the existing

workforce.
- Better motivated workers - employees offered promotions will feel more
recognised, have a higher status and be given more challenging work to
perform.
 EXAM STYLE QUESTIONS: SHORT ANSWER AND DATA RESPONSE

1.

a) A piece rate is where workers are paid depending on the quantity of

products that they produce. The more they make, the more they get
paid.

b) Joe could implement job rotation in his factory where workers swap
around and do specific tasks for a limited time only. He could also
offer to implement autonomous work groups where groups of
workers become responsible for a specific process or product. This
could make workers feel more involved, ultimately increasing job
satisfaction.

c) A possible reason for many employees leaving their job is that their
wages are being paid at a time rate meaning that both the good
and bad workers are being paid the same amount which could
cause workers to get annoyed and frustrated into quitting their jobs.
Another possible reason for many employees leaving their job is
that there are not many other financial motivating factors for them
to work towards such as bonuses, commission, profit sharing or
fringe benefits..

d) In order to improve job satisfaction, Joe can look at implementing

more financial motivating factors such as bonuses, commission,
profit sharing or fringe benefits. This will motivate workers to stay
and to work harder as there is a reward in both working and
working harder for Joe’s company.

e) I do think that a piece rate is a more suitable method than time rate
for Joe’s employees who work in the Production department as they
will be paid for the quantity of products they have produced. If the
business is successful that year, I think that workers should receive
it. However, I do think that Joe’s workers who work in the offices
should be paid through a different method as their work is not
based on producing products. They should have set salaries and
also receive bonuses. If they have performed well, the business will
most likely be more successful that month/year which means they
should receive the benefits of the hard work they have done,
ultimately motivating them to continue working hard.

2.

a) A bonus is a lump sum of money paid to workers when they have

worked well.
b) People work to earn money to pay for basic necessities like food
and shelter, and occasionally some luxuries. However people also
 work for their esteem needs where they feel like the job that they
are doing is important, making them feel important.
c) The physiological needs of the workers are being met through the
income they are making in the business which is allowing them to
pay for their food, recreation, rest and shelter. The two hotel
receptionists are having their self actualisation needs met by being
trained by Sasha. This gives them more responsibility and the ability
to succeed to their fuller potentials.

d) By having well motivated workers, the customer service of her

business will be much better as well motivated workers are more
likely to take ownership of their job and provide better services to
their customers which is important for her business since a new
hotel has opened nearby, so the business needs to keep customers
as happy as possible. Having motivated workers is also very
important during this time of the new hotel business opening as her
competition will also be looking for workers in the area so she needs
to ensure that her employees are happy in order to ensure they do
not leave.

e) I do not think that introducing a bonus or increasing salaries is the

best way to improve the motivation of employees. It may be a short
term solution, but eventually they will aim for a higher salary.
Therefore the financial factors are not enough to keep the
employees motivated forever. It is more important than the working
environment, such as relationships between employees and
recognition for work. Even if another job offers more money if they
have a reputation of a bad working environment then people might
still choose the lower paying job as they will most likely be happier.