BUSINESS IG:

2.1.2 Methods of Motivation

Chapter 6
 • Managers can motivate workers in several ways
- Financial rewards; “cash and non-cash rewards paid to
workers which are often used to motivate workers to increase
their efforts.”
 Taylor’s view of “economic man” argues that money is the
METHODS OF most important motivator.
MOTIVATION:  Herzberg’s theory argues that money is only seen as
important….. to ensure job satisfaction, but not a motivator.
- Non-financial rewards; “methods used to motivate workers
that do not involve giving any financial reward.”
 METHODS OF MOTIVATION
CONTINUED…

Financial rewards: Non-financial rewards:

Hourly wage rate Job rotation
Salary Job enlargement
Piece-rate and commission Job enrichment
Bonus schemes Quality circles
Fringe benefits Team working
Profit-sharing Delegation
 FINANCIAL REWARDS…

Financial Rewards: Description: Advantages: Disadvantages:

Hourly wage rate; “payment to workers Most common method used for Business only pays for the Workers’ pay is linked to time instead of how
based on a fixed amount for each hour production workers and non hours worked much they produce.
worked.” managerial staff.

Salary; “fixed annual payment to certain Usually paid monthly Best method Workers do not receive more Salary is not linked to worker effort or amount
grades and types of staff not based on hours for workers whose effort is not pay if they have-to work produced.
worked or output.” directly linked to production. longer hours.
(supervisors, managers)

Piece-rate; “payment to workers based on Only used to reward production Workers only paid for the The quality of goods produced may be poor,
the number of units produced.” workers. number of items they work too quickly to increase output and pay
produce.

Commission; “payment to sales staff based No guarantee of money to be earned Pay is linked to the value of Workers ae never certain about how much they
on the value of the items they sell." the month (demotivation). goods sold. will earn.
 FINANCIAL REWARDS CONTINUED…
Financial Rewards: Description:
Bonus; “an additional reward paid to Performance-related pay.
workers for achieving targets set by Used to reward any individual worker or group of
managers” workers where performance targets are set by
managers.
Performance-related pay; "a bonus scheme Performance-related pay.
used to reward staff for performing to the Used to reward any individual worker or group of
required standard.” workers where performance targets are set by
managers.
Fringe Benefits; ”non-cash reward often An alternative to cash payments.
used to recruit or retain workers and to Include; discount on products, company cars, health
recognize the status of certain employees.” insurance and pension received by the workers in a
business.
Profit-sharing; “an additional payment to Paid once a year.
workers based on the profit of the business” May be in the form of cash, calculated as a percentage the business.
of a worker’s wage or salary, or workers may be given
shares in the company.
Advantages: Disadvantages:
Linked to performance targets. If the targets are set unrealistically then workers could
Only awarded a bonus if they become demotivated.
increase their productivity. If target is group based and the target is reached, all
workers receive the bonus even if they did not perform
as the others.
Linked to performance targets. If the targets are set unrealistically then workers could
Only awarded a bonus if they become demotivated.
increase their productivity. If target is group based and the target is reached, all
workers receive the bonus even if they did not perform
as the others.
They can help in the recruitment Often linked to status and not performance.
and retention of workers.
Directly linked to performance of Any profit given to employees might reduce the
dividends to shareholders or reduce the amount
available to be reinvested into the business.
 NON-FINANCIAL REWARDS:
Non-financial rewards: Description:

Job rotation; “increasing variety in the workplace by allowing workers  Instead of doing the same task, workers switch from one job to another.
to switch from one task to another.”  Work becomes more interesting, help prevent boredom
 Workers become multi-skilled, more flexible workforce

Job enlargement; “increasing or widening tasks to increase variety for • Given greater variety of similar-level tasks
workers.” • Jobs become more interesting, reduces boredom

Job enrichment; “organising work so that the workers are encouraged to  Herzberg, work is organised, workers able to use more of their skills and abilities.
use their full abilities.”  More involved in decision making
 Feel more valued by employer

Job satisfaction; “how happy and content a person is with their job.” The above all affect the Increased job satisfaction, efficiency and motivation

Job redesign; Increased variety or difficulty of tasks workers do, using any of the above methods.
 DEFINITIONS:

Delegation; “passing responsibility

Team-working; “oganising to perform tasks to workers lower
production so that groups of workers down in the organisation.”
complete the whole unit of work.” -Managers passing authority for the
-Given responsibility for the performance of tasks to lower-level
completion of the whole task. workers.
Quality circles: “groups of workers - Combined with empowerment.
who meet regularly to discuss work-
related problems.”
- They find solutions to problems or
suggest how improvements can be
made.
-The result of this is presented to
managers and good ideas and solutions
are introduced into the workplace.