Motivating & Rewarding Employees tutor2u IGCSE Business Revision Presentations 2004 Studies Motivation What is it? Motivation is will to work Comes from enjoyment of work itself and/or from desire to achieve certain goals e.g. earn more money or achieve promotion Methods available to motivate employees
Financial methods (e.g. salary, bonus) Non-financial methods (passing on responsibility or praise) tutor2u IGCSE Business Advantages of a Well Motivated Workforce Better productivity (amount produced per employee) Better quality Lower levels of absenteeism Lower levels of staff turnover (number of employees leaving business) Lower training and recruitment costs
tutor2u IGCSE Business Four Main Motivational Theorists Taylor Mayo Maslow Herzberg tutor2u IGCSE Business Taylors Theory of Motivation Managers should maintain close control and supervision over
their employees. Autocratic style of management- managers make all decisions themselves Theory X approach to workers- believe workers are lazy and are only motivated by money Motivate by pay via piece-rate. tutor2u IGCSE Business Mayos Theory of Motivation Workers are not just motivated by money but by having their human/social needs met Concluded that increase motivation by: Better communication between managers and workers
Greater manager involvement in employees working lives Working in groups In practice therefore businesses should introduce team working and personnel departments to look after employees interests tutor2u IGCSE Business Maslows Theory of Motivation Maslow put forward a theory that there are five levels of human needs which employees need to have fulfilled at work. Only once a lower level of
need has been fully met, would a worker be motivated by the opportunity of having the next need up in the hierarchy satisfied. A business should therefore offer different incentives to workers in order to help them fulfill each need in turn and progress up the hierarchy tutor2u IGCSE Business
Herzbergs Theory of Motivation Believed in two-factor theory Motivators Factors that directly motivate employees to work harder Giving responsibility, recognition for good work, sense of achievement, opportunities for promotion Hygiene factors Factors that can de-motivate if not present but do not actually motivate employees to work harder Pay, working conditions, job security Motivate by using motivators plus ensuring hygiene factors are met Use job enrichment and empowerment (delegating more power
to employees to make their own decisions). tutor2u IGCSE Business Autocratic Management Style Description Senior managers make all important decisions Closely supervise and control workers Managers do not trust workers and simply give orders (one-way communication) When suitable When quick decisions are needed in a company E.g. in a time of crises When controlling large numbers of low skilled workers
tutor2u IGCSE Business Democratic Management Style Managers trust employees Encourage employees to make decisions Delegate authority/power to employees and listen to their advice tutor2u IGCSE Business McGregors - Theory X and Theory Y
McGregor believed that managers have two very different views of workers in terms of their attitudes to work and motivation Theory X view of workers: Workers dislike work and are lazy Workers must be controlled and punished were necessary Workers try to avoid responsibility Theory Y view of workers: Workers like to work and enjoy new challenges Workers like to make decisions and are creative and imaginative Workers seek responsibility. tutor2u IGCSE Business
Best Approach/Style for Management? Depends on circumstances Whether workers are skilled or experienced Level of genuine motivation Whether quick decisions are needed etc Best managers are those that are versatile and can call upon right style at right time tutor2u IGCSE Business Reasons Why People Go To Work
To earn money To feel a sense of achievement or job satisfaction To feel a sense of belonging to a group To achieve a sense of security To obtain a feeling of self-worth tutor2u IGCSE Business Main Types of Financial Incentives Wages Normally paid per hour worked and receive money at end of week Salaries - Normally an annual salary which is paid at end of each month Bonus system - Usually only paid when certain targets have been achieved Commission - Some workers, often salesmen, are partly paid according to
number of products they sell Profit sharing - A system whereby employees receive a proportion of companys profits Performance related pay - paid to those employees who meet certain targets Share options - common incentive for senior managers who are given shares in company rather than a straightforward bonus or membership of a profit sharing scheme Fringe benefits - Often known as perks, these are items an employee receives in addition to their normal wage or salary e.g. company car, private health insurance, free meals tutor2u IGCSE Business
Main Types of Non-Financial Incentives Empowerment - delegating power to employees so they can make their own decisions Praise - recognition for good work Promotion opportunities - promoting employees to a position of higher responsibility Job enrichment - giving employees more challenging and interesting tasks Job enlargement - giving employees more tasks of a similar level of complexity Better two-way communication - employees have a chance to give feedback and advice to managers Better working environment - providing a safe, clean, comfortable environment to work in Team working - offers employees an opportunity to meet their social needs and often accompanied by some form of empowerment for
team tutor2u IGCSE Business Fringe Benefits Known as perks Items an employee receives in addition to their normal wage or salary E.g. company car, private health insurance, free meals Often increases loyalty to company as these benefits are not always taxed or are taxed at a reduced rate More likely to recruit best people to company tutor2u
IGCSE Business Wages and Salaries Wages Paid by hour with pay packet normally received at end of each week Often paid to lower skilled workers or to temporary staff Any additional hours worked normally paid a higher rate on an overtime basis Salaries Often set on an annual basis but payment is made at end of each month Normally paid to managers or those higher up in a company A set number of hours is not normally agreed but employment contract requires enough hours worked to get job done
tutor2u IGCSE Business Gross and Net Pay Gross pay: Pay each month or week before any deductions have been removed E.g. before income tax, national insurance contributions Net pay: Pay after deductions have been taken off Sometimes known as take-home pay tutor2u
IGCSE Business Overtime and Bonus Pay Overtime Additional hours worked over and above normal working hours E.g. at weekends or on bank holidays Paid at a higher rate - often 1.5 or 2 times normal hourly wage Bonus pay Given out when certain performance targets have been met Normally applicable at manager level in a company How bonuses are used: By motivating employees to work harder in order to meet a realistic yet challenging target and therefore achieve a bonus payment
Would only be effective if bonus payments were a significant sum tutor2u IGCSE Business Profit Sharing What it is: A system whereby employees receive a proportion of business profits Advantages Creates a direct link between pay and performance Creates a sense of team spirit- helps remove them and us barrier between managers and workers if all employees involved May improve employees loyalty to company
Employees more likely to accept changes in working practices if can see that profits will increase overall tutor2u IGCSE Business Performance Related Pay Increasingly popular method of paying people Paid to those employees who meet certain targets Advantages Senior managers can easily monitor and assess individual employee performance during appraisal process Setting of targets for employees can ensure they are all closely focused to company objectives
Disadvantages Discourages a team based approach- can create unhealthy rivalry between managers Can be difficult to accurately measure performance of some workers e.g. in service sector firms Incentives may not be larger enough to motivate employees tutor2u IGCSE Business Motivational Theorist Views on Pay Taylor was only theorist to emphasis pay, in particular piecerate, as best way of motivating employees Mayo, Maslow and Herzberg all felt that non-financial rewards, such as teamworking, empowerment or job enrichment, acted as a better incentive for employees to work harder
tutor2u IGCSE Business Job Enrichment and Job Enlargement Job enrichment Giving workers more interesting and challenging tasks Seen as more motivating as it gives workers chance to further themselves Herzberg in particular recommended this approach Job enlargement Giving workers more tasks to do of a similar nature or complexity Job rotation is a part of this tutor2u
IGCSE Business Reasons for Pay Differentials Mainly due to supply and demand People with skills that are in demand, but are in short supply, get paid more Cost of living varies between regions Some jobs require qualifications (e.g. accountants, lawyers) tutor2u IGCSE Business Piece Rate Payment Now a relatively unusual and old-fashioned way of paying
people Pay per item produced in a certain period of time Advantages Requires low levels of manager supervision Encourages high speed production Provides good incentive for workers who are mainly motivated by pay Disadvantages Workers are focused on quantity not quality It is repetitive for workers and can be de-motivating Workers are only used to one set method of production and may resistant change tutor2u IGCSE Business
