Unit 2 – Leadership & Motivation

Motivation Refers to the desire, effort and passion to achieve something It is often referred to as the willingness to complete a task or job with enthusiasm “getting someone to do something you want or, on an individual basis, wanting to do something for yourself for a particular reason.”

Benefits of Increased Employee Motivation Higher morale and job satisfaction (leading to improved productivity) Improves corporate image (helps attract both customers and potential employees) Better industrial relations (in a unionized environment) Lower staff turnover Lower staff absenteeism Higher profits

Warning Signs of Poorly Motivated Employees High absenteeism rates High labour turnover rates High wastage level Low quality output Increasing number of customer complaints Poor punctuality Increasing number of discipline problems

Intrinsic Motivation People engage in an activity out of their own desire, such as enjoyment of pursuing a hobby or interest Activities are undertaken because the person finds them challenging, stimulating or satisfying Employees can see that their success is a result of something they have done

Extrinsic Motivation Occurs when people participate in an activity because of the benefits and rewards associated with the activity Rewards can be tangible (wages or bonuses) or intangible (recognition or praise) Can also come about from threats and pressure imposed by senior management

Satisfying Individual Need Identify the Need Incentive Satisfaction Result Revise Employee is involved in the decision making process Employee discuss with management about the goals and working practices Employee feels as if their contribution is valuable Employee works longer hours or takes on more responsibility

Motivation in Practice Financial Motivation Payment methods that are used by businesses to motivate their workforce Non-financial motivation All other forms, such as praise, recognition and team work

Financial Motivation Wages Piece Rate Salary Commission Profit-related Pay Performance-related Pay Employee Share Programs Fringe benefits

Wages, Piece Rate & Salary Wages are usually expressed as an hourly rate Some countries have minimum wage limits Amount is usually based on several factors Method is straight forward Piece rate rewards workers that are more productive (taxi drivers etc)

Wages, Piece Rate & Salary (continued) Salaries are a fixed annual rate Used when output and productivity cannot easily be measured Overtime is not usually paid Little incentive to work hard

Commissions An output based payment system Usually based on a percentage of output Often found in lower salary paying jobs or when the incentive to sell is a key component Creates added pressure in the workplace Tasks can be repetitive and monotonous

Profit Related Pay Linked to profit (success) of the firm Paid as an annual bonus Strengthens employee loyalty and foster a team effort Managers and employees are working together Share can be quite small and individual effort is not recognized

Performance Related Pay Rewards employees who meet certain goals Sales targets, job competence, contract completion Awarded during a performance appraisal Problems may arise of performance levels are unattainable PRP ignores non-financial motivators Exercise - Hong Kong Football Association

Employee Share Programs & Fringe Benefits Usually shares of a company sold at a discounted or company matched price Used primarily for senior management Fringe benefits (perks) are payments to an employee over and above their salary Potentially a huge cost to the company

Problems with Incentive Schemes Operating problems Fluctuating earnings Quality Changes in payment Quality of working life Jealousy Measured performance

Are Incentives Effective? According to research… Performance and merit pay had only a modest effect on employee commitment Use of bonuses for managers had a positive effect on the rate of return on capital employed in the business Profit sharing had a positive effect on productivity and company performance

Case: Incentives for Value Added Resellers Mini Case Study Case: Incentives for Value Added Resellers Source: Jones, Hall, Raffo, Business Studies,3rd Edition, Unit 60, page 434

Motivation in Practice – Non-Financial Rewards Used to improve productivity However, increasingly businesses have realized that: The chance to earn more money may not be an effective motivator Financial incentive schemes are difficult to operate Individual rewards may be not be effective as work is done in groups Other factors that employer does not know about

Job Enlargement Giving an employee more work to do of a similar nature This variety prevents boredom Problem of “horizontal loading” More efficient if the workers are organized into groups Leads to job rotation

Job Rotation Changing jobs or tasks from time to time May increase motivation, but a new learning curve for all jobs involved might decrease productivity Motivation is not guaranteed if worker moves from one boring job to another Should only be used if rotation involves a similar skill set Workers do not want to move into a hazardous job possibility

Team Work Higher productivity due to pooling of talent People can specialize Shared responsibility Flexible working Problems include: Too much emphasis on “harmony” Poor preparation Individualism Seeing teams as the solution for all problems

Job Enrichment “vertical extension” of an employers job responsibilities Planning a task Quality control Work supervision Ordering Maintenance Gives employees a challenge; develop “unused” skills

Multi-tasking Process of enhancing the skills of employees Giving an employee more skills and responsibilities can improve work performance Criticisms include an expectation that the employee will work harder for the same pay Training may also be an issue

Problems with Job Re-design Employee’s reaction Views and costs Technology Effects on output Employee involvement schemes have been used widely in recent years Success varies from company to company

Management by Objectives Coined by Peter Drucker (1954) Business objectives should be defined for a specific individual and revised after assessment of the performance of the individual Satisfaction comes from achieving certain goals The harder the goals, the greater the satisfaction Businesses should set specific goals (that are attainable) Saying “do your best” is not sufficient

Organization Behaviour Modification OBMod Assumes behaviour is a consequence of action Thorndike and Skinner studies Managers should observe behaviour not attitude, and how this behaviour relates to consequences Employee receives something he likes Something the employee dislikes is taken away Something the employee likes is taken away Something the employee dislikes is given

Employee Assistance Programs EAP’s have been around for 50 years Designed to help employees cope with difficulties Usually bereavement issues or job loss Now it can be anything from budget balancing to raising children

Mini Case Study Case: BET Source: Management 7th Ed., Schermerhorn