1. Motivating & Rewarding Employees
GCSE Business Studies
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Revision Presentations 2004

2. 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)

3. 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

4. Four Main Motivational Theorists
Taylor
Mayo
Maslow
Herzberg

5. Taylor’s 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

6. Taylor - 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

7. Mayo’s 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 live
Working in groups
In practice therefore businesses should introduce team working and personnel departments to look after employees interests

8. Maslow’s 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

9. Maslow’s Theory of Motivation

10. Herzberg’s 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).

11. 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

12. Democratic Management Style
Managers trust employees
Encourage employees to make decisions
Delegate authority/power to employees and listen to their advice

13. McGregor’s - 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.

14. Take a Step Back….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

15. 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 company’s 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

16. Wages and Salaries Wages Salaries
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

17. 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)

18. Overtime and Bonus Pay Overtime Bonus pay How bonuses are used:
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

19. 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

20. Financial Motivator - 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

21. Profit Sharing What it is: Advantages
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 employee’s loyalty to company
Employees more likely to accept changes in working practices if can see that profits will increase overall

22. 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

23. Motivational Theorist Views on Pay
Taylor was only theorist to emphasis pay, in particular piece-rate, 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

24. 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 (Herzberg) - 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

25. Job Enrichment and Job Enlargement
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

26. 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