2.1:  Motivating Employees

BENEFITS OF A WELL-MOTIVATED WORKFORCE:

• Motivation is the reason why employees want to work hard and efficiently for a business
• Well motivated workforce –> high productivity –> increased output –> higher profit
• Benefits of having a well-motivated workforce: 

1. High output per worker (helps keep the costs low and increase profits)
2. Willingness to accept change (new working method)
3. Two-way communication with management
4. Lower labor turnover (loyal workers)
5. Low rate of absenteeism  (reduces disruption from absent people)
6. Lowers the rate of strike action (avoiding damage to customer relations)

MOTIVATION THEORIES:

1. Abraham Maslow’s Hierarchy of Needs

• There are some problems in some levels. For example, money allows one to get their basic needs but high pay can reflect self worth

2. FW TAYLOR

• He based his ideas that workers were motivated by personal gains (example: money)
• The criticisms he faced over his theory: 

1. His ideas were simplistic – workers can be motivated by other factors (not money)
2. Employees can get paid more but don’t increase their output (no productivity gains)
3. A practical issue can arise if one cannot measure the output of the employee

3. HERZBERG

• He claimed that people have 2 sets of needs: hygiene (maintenance) and motivators
• Hygiene factors include status, security, work conditions, company policies, relation with supervisors, and salaries 
• Motivator factors include achievement, recognition, personal growth, promotion, and the work itself
• It is important to note that the hygiene should be satisfied. Otherwise, it will act as a demotivator

METHODS OF MOTIVATION:

FINANCIAL REWARDS

1. Wages:

• Often paid every week (usually paid to manual workers like in factories)
• Disadvantages: since they’re paid weekly, they take time and money to be calculated so wage clerks are often employed to perform this task
• Wages can be either in time rate (paid based on the number of hours worked) or piece rate (paid based on the number of output made)

TIME RATE:

• Based on the number of hours worked
• Limitations: 

1. Hours have to be recorded on a time sheet which is time consuming
2. Good and bad workers are paid the same amount
3. More supervisors are needed to make sure the workers are working efficiently (expensive)
4. Clocking-in system needed to determine the hours

• It is used when it is difficult to measure the output of the worker (example: being a driver)

PIECE RATE:

• When workers are paid based on the output made
• They are ONLY used to measure the performance of an individual/team
• Advantages: encourage workers to work faster and make more goods
• Limitations: 

1. Workers may concentrate more on making more products that they ignore the quality
2. It is also unfair for the workers who are careful with the quality of the products so they produce less output
3. If the machinery breaks down, employees earn less

2. Salary:

• It is paid monthly
• Since it is divided into 12 monthly payments, it is easy to calculate
• Limitations: 

1. Worker may prefer to be paid weekly
2. No payment for extra time worked so workers would be reluctant to work longer 

3. Bonus:

• Lump sum paid to workers when they worked well. In other words, additional money paid to workers
• It can be paid at the end of the year or at intervals
• Limitations: 

1. they can become expected; if they’re not paid, workers will become disappointed
2. Also, if 1 worker is paid, others will wonder why they didn’t get paid and resentment/jealousy can arise

4. Commission:

• Paid to the salesperson depending on the amount of sales made
• It encourages the staff to sell more products
• Limitations: 

1. The staff can force customers to invest in goods they don’t want so sales would fall due to bad reputation
2. It can also stress the sales staff because if their sales drop they would be paid less
3. Competition between the staff can arise (i.e. fighting over who will sell to the next customer)

5. Profit sharing:

• Employees share some of the company’s profit
• It should motivate the workers since they all receive a share
• Usually used more in service sector businesses where it is difficult to pay a single employee to increase profit
• Limitations: 

1. If a business makes lower profit, there won’t be profit to share therefore it will lead to employee disappointment
2. It is also calculated by the percentage of the workers’ salary (if one gets paid more, they get more share). So, this could cause a bad feeling amongst workers who get paid less and worked just as hard

NON-FINANCIAL REWARDS:

1. Job enrichment:

• Involves looking at jobs and ADDING tasks that require MORE responsibility/skill
• Workers will become more committed
• Example: a receptionist employed to welcome customers is now responsible for answering calls and printing important documents

2. Job rotation:

• Involves workers swapping round and doing a task for a limited amount of time
• Advantages: 

1. This increases the variety of work and easier for managers to move workers
2. It is easier for managers to move around workers to do other jobs if somebody is ill or absent
3. It decreases the boredom that can occur from doing 1 job

• Limitations: 

1. It doesn’t make the workers more interesting (same level of skill needed for each task)

3. Job satisfaction:

• The feeling of happiness as a result from doing a good job

4. Fringe benefits:

• They are rewards given to employees such as free transportation, discounts on the food in the cafeteria or firm’s products

5. Job enlargement:

• Adding tasks but of the SAME level of difficulty
• Makes the worker’s job more interesting
• Example: a restaurant server used to just take orders. now, s/he serves the food and beverages and manages the table sittings. 

6. Teamworking:

• Group of workers given responsibility for a certain task
• They decide as a team how to organize and carry out a task –> more control –> job satisfaction

7. Training:

• Workers feel achievement
• Can be given more challenging tasks to perform (job enrichment)

8. Opportunity for promotion:

• Providing that opportunity will get workers to work more efficiently and lead to job satisfaction