Define motivation
The internal and external factors that stimulate people to take actions that lead to achieving a goal
Why is motivation important to business?
- Low labour turnover
- Low absenteeism (deliberate absence for which there is not a satisfactory explanation, follows a pattern)
- High productivity
- Offer suggestions for improvements
- Seek promotion and responsibility
Taylor’s theory of motivation - scientific management
- Aim: reduce level of inefficiency that existed in manufacturing industry
- Scientific approach:
1. Select workers to perform a task
2. Observe them performing the task and note the key elements of it
3. Record the time taken to do each part of the task
4. Identify the quickest method recorded
5. Train all workers in this quickest method and do not allow them to make any changes to it
6. Supervise all workers to ensure that this best way is being carried out and time them to ensure that set time is not being exceeded
7. Pay workers on the basis of results
Mayo’s theory of motivation - the human relations theory
- Changes in working conditions and financial rewards have little or no effect on productivity
- When management consult with workers ad take an interest in their work then motivation is improved
- Working in teams and developing a team spirit can improve productivity
- When some control over their own working lives is given to workers (e.g. deciding when to take breaks) can have a positive motivational effect
- Groups can establish their own targets or norms and these can be greatly influenced by the informal leaders of the group
Limitations of Maslow’s approach
- Not everyone has the same needs as assumed by the hierarchy
- In practice, it is difficult to identify the degree to which need has been met and which level a worker is on
- Money is necessary to satisfy all physical needs yet it might also play a role in satisfying the other levels of needs - esteem needs
- Self actualisation is never permanently achieved. Jobs must continually offer challenges and opportunities for fufilment
Herzberg’s motivation theory - the two-factor theory
*Job dissatisfaction is influenced by (mostly extrinsic factors):
- working conditions
- coworker relations
- policies and rules
- supervisor quality
- base wage, salary
These factors are termed as hygiene factors
*Job satisfaction is influenced by (mostly intrinsic factors):
- achievement
- recognision
- responsibility
- work itself
- advancement
- personal growth
These factors are termed as motivator factors
*Pay and working conditions can be improved to help remove dissatisfaction but they will on their own to provide conditions for motivation to exist
McClelland’s theory of motivation - Three Needs Theory
- Need for achievement (nAch): people with high need for achievement seek to excel and thus tend to avoid both low-risk and high-risk situations. Avoid low-risk situations because easily attained success isn’t a genuine achievement. Avoid high-risk situations because they might be too challenging/realistic to achieve. Constant need for feedback to monitor progress
- Need for affiliation (nAff): need for friendly relationships and is motivated by interaction with people.Tend to conform to the norms of their work group. Perform well in customer service
- Need for power (nPow): the desire to control others is a powerful motivating force. The need to be influential, effective and to make an impact
Vroom’s theory of motivation - Expectancy theory
- Workers will be motivated if:
+ Positive link between effort and performance
+ Favourable performance -> desirable reward -> satisfy important needs
+ Desire to satisfy needs -> work effort worthwhile - 3 beliefs:
+ Valence - measures the value of a person attaches to a given reward = depth of the employee’s needs for extrinsic or intrinsic awards
+ Expectancy - measures the person’s confidence in being able to get the results expected. Purely subjective. Measures the individual’s belief in themselves
+ Instrumentality - measures the extent to which an individual belief that the manager/organisation will deliver the rewards that were promised
If they have none of these beliefs => no motivation
What are the different payment methods?
- Hourly wage rate: payment to a worker made for each hour worked
- Piece rate: a payment to a worker for each unit produced
- Salary: annual income that is usually paid on a monthly basis
- Commission: payment to a sales person for each sale made
- Performance related pay: a bonus scheme to reward staff for above average work performance
- Profit sharing: bonus for staff based on the profits of the business
Advantages of piece rate
- Acts as an incentive to employees to produce higher level of output
- The labour cost for each unit is determined in advance and this helps to set a price for the product
Disadvantages of piece rate
- It requires output to be measurable and standardised
- Lead to falling quality and safety levels as workers rush
- Provides little security over pay level. e.g. production breakdown
- Workers may settle for a certain pay level and will therefore not be motivated
Advantages of salary
- Gives security of income
- Gives status compared to time rate or piece rate payment systems
- Suitable for jobs where output is not easily measurable
- Salary will not vary for one year -> sets out budget
Disadvantages of salary
- An employee who works on salary has little external motivation to go above and beyond
- Income is not related to effort levels or productivity
- Lead to complacency of the earner
Advantages of performance related pay
- Acts as an incentive to improve performance
- Target setting helps to give purpose and direction to the work
- Annual appraisal offers opportunity for feedback
Disadvantages of performance related pay
- There’s rivalry => team spirit can be damaged
- Requires higher management skills due to the increased control over staff
Advantages of commission
- Encourages greater effort and faster working
- Helps set a price for the product
Disadvantages of commission
- Teamwork is not encouraged
- Sales staff could put pressure on customers to buy => bad view on the company
Advantages of profit sharing
- Workers can directly see the link between performance and result
- Potential conflict between owners and workers is reduced as everyone now has an interest in higher profits
- As bonuses are paid out of profits, the scheme does not add to business costs
Disadvantages of profit sharing
- Reducing dividens => shareholders will invest less capital due to dissatisfaction
- Reducing retained profits => less source of capital for development and growth
- The schemes can be costly to set up and operate in large firms with many employees
What are the different types of non-financial motivators?
- Job rotation
- Job enlargement
- Job enrichment
- Team working
- Quality circles
- Delegation and empowerment
- Participation
- Target setting
Define job rotation
Increasing the flexibility of the workforce and the variety of work they do by switching from one job to another
Define job enlargement
Attempting to increase the scope of a job by broadening or deepening the tasks undertaken. Can include both job rotation and job enrichment
Define job enrichment
Involves organising work so that employees are encouraged and allowed o use their full abilities and effort. Process involves a reduction of direct supervision 3 key features (links to Herzberg):
- Complete units of work so that contribution of the worker can be identified and more challenging work offered
- Feedback on performance
- Challenging tasks offered - require training and learning of new skills - self actualisation
Define quality circles
Voluntary groups of workers who meet regularly to discuss work-related problems and issues
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2. Business structure31
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1. Enterprise17
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4. Business Objectives19
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5. Stakeholders30
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3. Size of business38
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8. Management and leadership46
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9. Motivation26
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10. HRM37
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14. What is Marketing?48
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15. Market research30
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20. The nature of operations22
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21. Operations planning46
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22. Inventory management16
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26. Business finance35
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28. Costs12
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29. Accounting fundamentals38
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27. Forecasting cash flows27
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16. Marketing mix - product26
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16. Marketing mix - price30
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17. Marketing mix - promotion20
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17. Marketing mix - place11
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16&17. Marketing mix as a whole2
