Motivating employees
Contents: 8 sections
Why people work
Motivation is the reason somebody puts effort into their job. Pay is the obvious answer and it is not the whole answer, which is the point of the whole subtopic.
People work for money, because wages buy food, housing and everything else. They also work for security, because a steady job removes the worry about next month. They work for the company of other people, because most jobs are the largest social group in an adult's week. They work for status and recognition, because being known as the person who can fix the machine matters. And some work for the satisfaction of the job itself, because the work is interesting and they are good at it.
That list is not decoration. Every motivation theory below is an attempt to sort those reasons into an order, and every method of motivation is an attempt to satisfy one or more of them.
What a motivated workforce is worth
An answer that says motivated workers "work harder" earns the knowledge mark and stops there. The four benefits 0264 names each have a measurable effect on the business.
| Benefit | What it means | What it does to the business |
|---|---|---|
| Improved labour productivity | Output per employee per period rises | The same wage bill produces more goods, so the cost of making each unit falls and the business can cut its price or widen its profit margin |
| Reduced absenteeism | Fewer days lost to unexplained absence | Production is not disrupted, no agency staff have to be hired to cover, and other workers are not asked to do two jobs |
| Lower labour turnover | Fewer employees leave, so fewer have to be replaced | Recruitment and training costs fall, and the experience stays in the business instead of walking out to a competitor |
| Greater willingness to accept change | Employees take on new methods and new technology instead of resisting them | New machinery or a new system starts paying for itself sooner, and the business can respond to competitors faster |
A worked example of the first one. A factory employs 24 people and produces 4,800 units a week.
Labour productivity = output per period / number of employees = 4800 / 24 = 200 units per employee
After a bonus scheme is introduced, weekly output rises to 5,400 units with the same 24 employees.
Labour productivity = 5400 / 24 = 225 units per employee
The extra 25 units per employee are produced with no extra wages beyond the bonus, so the labour cost of each unit falls. That comparison is what turns a claim about motivation into an argument the examiner can award analysis marks for.
The three theories
0264 names Maslow, Taylor and Herzberg, so all three can be asked for by name.
| Theory | The idea | What a business does about it |
|---|---|---|
| Maslow | Human needs sit in a hierarchy of five levels. A need only motivates once the level below it is satisfied | Pay a fair wage (physiological), give a permanent contract and a safe workplace (safety), build teams and a staff room (social), give job titles, praise and promotion (esteem), give challenging work and the chance to develop (self-actualisation) |
| Taylor | People are motivated mainly by money. Break the job into simple repeated tasks, find the quickest way of doing each, then pay people for what they produce | Piece-rate pay, division of labour, close supervision, time and motion study of each task |
| Herzberg | Two separate sets of factors. Hygiene factors (pay, working conditions, supervision, company policy, relationships) cause dissatisfaction when they are wrong but do not motivate when they are right. Motivators (achievement, recognition, the work itself, responsibility, advancement) are what actually motivate | Fix the hygiene factors first so nobody is dissatisfied, then motivate through job enrichment, responsibility and recognition |
The disagreement between Taylor and Herzberg is the most useful thing in this section for a discussion question. Taylor says raise the pay and output follows. Herzberg says pay only removes a complaint, and once the employee has adjusted to the higher wage the effect fades. Both fit the evidence in different workplaces, which is why the answer to "would a pay rise motivate this workforce?" depends on what the case tells you about their present wage. If they are paid badly, Taylor and Herzberg agree that money is the first problem to solve. If they are already well paid and bored, only Herzberg explains why more money changes nothing.
Maslow is useful for a different reason: it explains why the same reward works on one person and not another. An employee who cannot pay the rent is on a different level from one who wants a job title.
Financial methods of motivation
| Method | How it works | Where it fits and where it fails |
|---|---|---|
| Time-based (wage) | Paid a set rate for each hour worked, with overtime for extra hours | Simple, and easy to work out. Pays the slow worker the same as the fast one, so it rewards attendance rather than effort. Suits work where quality matters more than speed |
| Piece-rate | Paid an amount for each unit produced | Directly rewards output, so productivity rises. Quality falls if nobody is checking, and earnings drop through no fault of the worker if a machine breaks. Only possible where output is countable |
| Salary | A fixed annual amount, paid monthly, whatever hours are worked | Gives security and status, and is easy for the business to budget. No direct reward for extra effort, and unpaid extra hours cause resentment. Normal for managers and office staff |
| Bonus | An extra payment for reaching a target, such as a sales figure or a completed project | Focuses effort on the target the business chose. Whatever is not in the target gets neglected, and a target seen as impossible motivates nobody |
| Commission | A percentage of the value of what the employee sells | Strong incentive for sales staff, and the cost only arises when the sale is made. Encourages hard selling that can lose the customer next time, and income is unpredictable |
| Profit sharing | A share of the year's profit is paid to employees | Links everybody to the success of the whole business and encourages cost saving. The link between one person's effort and the total profit is weak, and there is nothing to share in a bad year |
| Fringe benefits | Rewards other than pay: a company vehicle, health insurance, a staff discount, subsidised meals, a pension above the minimum, help with childcare | Attracts and keeps staff, and some are cheaper for the business to provide than the equivalent cash. Costs money whether or not effort rises, and an employee may not want the benefit they are given |
A worked example. A packer is paid a piece rate of $0.80 per box and packs 260 boxes in a week.
Weekly pay = rate per unit x units produced = 0.80 x 260 = $208
If a colleague packs 310 boxes: 0.80 x 310 = $248. The 50 extra boxes are worth $40 to that worker, which is exactly the incentive Taylor was describing, and exactly the pressure that makes a rushed job likely if quality is not inspected.
Non-financial methods of motivation
| Method | What it is | Why it motivates |
|---|---|---|
| Job enrichment | Adding more demanding and more responsible tasks to a job, giving the employee more decisions to take | Herzberg's motivators directly: responsibility, achievement and more interesting work |
| Job rotation | Moving employees between different tasks at the same level | Relieves boredom, and a multi-skilled workforce can cover absence and change jobs when demand shifts |
| Training | Teaching new skills | Employees feel invested in, do the job with more confidence, and see a route to promotion |
| Opportunities for promotion | A visible path to a better job inside the business | Meets the need for esteem and advancement, and holds ambitious staff who would otherwise leave |
| Praise | A manager saying, specifically and promptly, that a piece of work was good | Recognition costs nothing and works quickly. Vague or rare praise is ignored |
| Employee of the month | A named award, often with a small prize or a photograph on display | Public recognition, and it sets a standard others aim for. It can breed resentment if the choice looks unfair, or become meaningless if it simply goes round in turn |
Job rotation and job enrichment are the pair most often confused. Rotation is sideways, the same level of responsibility on a different task. Enrichment is upwards, more responsibility on the same job.
Recommending a method
0264 asks you to recommend and justify an appropriate method of motivation for a given situation, so the two lists above are the raw material, not the answer.
Three things in the case decide it. What the business can afford, because a small firm short of cash cannot fund profit sharing but can enrich a job or give praise. What the work is like, because piece-rate is impossible for a receptionist and commission is meaningless for a machine operator. And what is actually wrong, because the fix has to match the complaint: high labour turnover among skilled staff who are already well paid points at promotion and responsibility, while high absenteeism among low-paid workers points at pay and conditions.
A justified recommendation looks like this. Knowledge: job enrichment gives employees more responsibility. Application: the case says the eight assembly workers repeat the same task all day and three have left this year. Analysis: giving them responsibility for checking their own quality would make the day less repetitive and cut the turnover that is costing the business its training budget. Then the part that earns the evaluation marks: a pay rise would raise costs permanently for a workforce whose complaint is boredom rather than money, and employee of the month rewards one person out of eight while the other seven stay bored. Saying why those were rejected for this business is the difference between a recommendation and an assertion. "There are advantages and disadvantages to each method" earns nothing at all.
Common mistakes
- Saying motivated workers "work harder" without naming productivity, absenteeism, labour turnover or willingness to accept change.
- Writing that motivation increases profit, with no step in between. Say what it does first: more output per worker, so a lower cost per unit.
- Attributing the hierarchy of needs to Herzberg or the two-factor theory to Maslow.
- Saying Herzberg thought pay was unimportant. He said poor pay causes dissatisfaction; it just does not motivate once it is adequate.
- Confusing job enrichment with job rotation.
- Confusing a bonus with commission. Commission is a percentage of what is sold; a bonus is a payment for reaching a target.
- Saying piece-rate always raises output, without the quality problem or what happens when a machine breaks.
- Treating fringe benefits as free. They cost the business whether or not effort rises.
- Recommending "pay them more" for every situation, including one where the case says pay is already above the local rate.
- Ending on "it depends on the business" with nothing after it. Say what it depends on and which way the evidence in the case points.
What the syllabus asks for on this topicSyllabus points
Syllabus points
- Explain why people work.
- Explain the benefits of a well-motivated workforce: improved labour productivity, reduced absenteeism, lower labour turnover and greater willingness to accept change or new methods of working.
- Outline the main motivational theories of Maslow, Taylor and Herzberg.
- Describe financial methods of motivation: time-based, piece-rate, salary, bonus, commission, profit sharing and fringe benefits.
- Describe non-financial methods of motivation: job enrichment, job rotation, training, opportunities for promotion, praise and employee of the month.
- Recommend and justify an appropriate method of motivation for a given situation.
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