Motivating Employees

Why people work

• Motivation is the reason why employees want to work hard and work effectively for the business.
• People might work because of:
  • money (to pay for necessities, luxuries)
  • social needs, affiliation (feeling part of a group)
  • esteem needs (self-importance)
  • job satisfaction (feeling that you’ve done a good job)
  • security (knowing that your job and pay are safe. unlikely to lose your job).

Benefits of a well-motivated workforce

• High productivity (output per worker) in a business usually comes from a highly motivated workforce that wants to work effectively, which results in profits. The main benefits are:
  • high output per worker, keeping costs low and increase profits
  • willingness to accept change
  • two-way communication with management
  • low labor turnover/a loyal workforce, reducing the cost of recruiting workers who leave
  • low rates of abstenteeism, reducing the disruption caused by absence from work
  • low rates of strike action, avoiding damage to customer relations.

The main motivational theories

Maslow

• Maslow’s hierarchy of needs covers the idea that money is not the only motivation to work. He produced a hierarchy of five needs.
  • The idea of this theory is that a lower level MUST be satisfied BEFORE a worker can be motivated by the next level up of the hierarchy.

F.W. Taylor

• F.W. Taylor’s assumption is that workers were purely motivated by money or personal gain. Therefore, if workers were paid more, they will work more effectively.
  • Taylor broke down factory workers’ jobs into simple processes and then calculated how much output they should be able to do in a day. If they produced this target output, they would be paid more money.
• Taylor saw employees rather like machines. When they were working hard, their productivity would be high, therefore labor costs would be low for each unit produced.
• THE ISSUE: Completely ignores the emotional and social sides of working. Makes jobs monotonous. Can cause high staff turnover and strikes in the long run.

Herzberg

• According to Herzberg, humans have two sets of needs:
  • one is for the basic needs (the ‘hygiene’ factors)
  • second is for a human being to be able to grow psychologically (the ‘motivatiors’).
• The ‘hygiene’ factors are things surrounding the job. This prevent dissatisfaction, but do NOT motivate. If these basic needs are not meant, workers will be deeply dissatisfied. Note that improving these will NOT make workers work harder, it stops them from complaining.
• The ‘motivators’ relate to the actual content of work itself. These factors help increase their productivity.

Methods of motivation (financial rewards)

Wages

• A wage is payment for work, usually paid weekly.
  • Wages are a variable cost for the business. This is because they depend on hrs. worked/pcs. made.

Time rate

• *Time rate is the amount paid to an employee for one hour of work.

Piece rate

• Piece rate is an amount paid for each unit of output.
  • Advantage: High output. Fast workers earn more.
  • Disadvantage: Workers rush, dropping quality. Friction if machinery malfunctions and can’t produce.

Salaries

• A salary is payment for work, usually paid monthly.
  • Salaries are a fixed cost for the business. It is calculated as an annual amount, split into 12 equal monthly payments, no matter how many hours are worked.

Bonuses

• A bonus is an additional amount of payment above basic pay as a reward for good work.

Commission

• Commission is payment relating to the number of sales made.
  • Advantage: Great for motivating sales staff to actively pursue customers.
  • Disadvantage: Can lead to pushy sales tactics that ruin customer relations. Unstab;e income for staff if economy drops.

Profit sharing

• Profit sharing is a system whereby a proportion of the company’s profits is paid out to employees.
  • Advantage: Aligns worker goals with company goals (everyone wants the business to succeed).
  • Disadvantage: Individual effort isn’t directly rewarded. Lazy staff receive same share as hard workers.

Fringe benefits

• Fringe benefits are non-cash perks that have financial value.

Methods of motivation (non-financial)

• Job satisfaction is the enjoyment derived from feeling that you have done a good job.

Job rotation

• Job rotation involves workers swapping aroud and doing each specific task for only a limited time and then changing around again.
  • Advantage: Reduces boredom. Creates a multi-skilled workforce, making it easy to substitute for absent staff.
  • Disadvantage: Does not actually increase the skill level of the job. It’s just moving from one boring task to another.

Job enrichment

• Job enrichment involves looking at jobs and adding tasks that require more skill and/or responsibility.
  • Advantage: Satisfies Maslow’s esteem/self-actualization needs. Prepares workers for promotion.
  • Disadvantage: Some workers do not want extra responsibility and may feel stressed or demand higher pay.

Autonomous work groups or teamworking

• Teamworking involves using groups of workers and allocating specific tasks and responsibilities to them.

Training

• Training is the process of improving a worker’s skills.

Opportunities for promotion

• Promotion is the advancement of an employee in an organization, for example, to a higher job/managerial level.