Cambridge IGCSE Business Studies 2.1 Motivating workers

2.1.1 – The importance of a well-motivated workforce

Motivated worker – A hard working employee who works effectively for a business.

Why do people work?

• Money – People need money to buy food, water and other items they need to live.
• Social needs – People just like us likes to feel part of a team, socialise and make friends.
• Esteem needs – Feeling important, feeling that they are contributing to a business.
• Job satisfaction – enjoyment from the work and achievements they have accomplished.
• Security – Feeling of having a secure job with a stable income. (not likely to lose job etc…)

Abraham Maslow’s hierarchy of needs

Abraham Maslow’s theory states that the more levels of needs achieved by the worker = the higher motivated they will become. This also means that each level of motivation must be achieved before an employee can move to the next level of motivation.

Criticisms

• These needs to not apply to all employees (all humans are different)
• Difficult for managers to determine which needs their employees need

 

F.W. Taylor’s theory

Employees are motivated by money.

More money = employees become more motivated

Criticisms

• Employees can be motivated by other factors not just money
• There is no guarantee that all employees will work harder if they are paid more
• There are many jobs where output cannot be measured easily (difficult to determine if employee actually works hard)

Federick Herzberg’s theory

There are 2 factors Hygiene & Motivation factors. Workers expect hygiene factors to be available to them otherwise they will become demotivated. Hygiene factors will not motivate the workers only motivation factors will make the employees work harder.

 

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2.1.2 – Methods of motivation

3 Ways to motivate employees

• Financial rewards
• Non-financial rewards
• Job satisfaction

Financial Rewards

• Wages (time rate) – Payment for a period of time such as amount per hour e.g. $10 per hour.

Cons –  Good & bad workers get paid the same, Recording every employee’s working hours may be complicated, costs business to hire an employee to calculate each workers’ wage.

• Wages (piece rate) – Workers paid depending on quantity of product produced e.g. $2 for every bicycle assembled.

Cons – Workers may rush and produced bad quality products, Workers that make slow high-quality products will get paid less.

• Salaries – Employees paid monthly, often used to pay office workers. Managers only need to calculate salaries once a month which uses less time.

Additional Payments (Money added to salaries)

• Commission – Sales staff are often paid a small percentage of the selling price of the product they are selling e.g. If a car salesman sells a car, the salesman might get 20% of the selling price of the car which is added to his salary.
• Profit sharing – Employees receive share of the company’s profit. This benefits the company because employees will want the company to have a higher profit.
• Bonus – Money paid to workers when they work well usually at the end of the year.
• Performance related pay – Employee’s pay is linked to the effectiveness of their work. This is often used with jobs where output cannot be easily measured.
• Share ownership – Employees are given some of the company’s shares. This makes them work hard as prices of shares may increase if the business is doing well. + This also makes the employee feel that they are part of the company.

Non-Financial Rewards

Non-financial rewards given to employees are also called perks or fringe benefits.

Some examples include

• Health care paid by company
• Company cars
• Free trips / company holidays
• Employee of the month
• Free meals
• Discount on company’s products
• Free housing
• Children’s education fees paid by company

Job Satisfaction

• Pay
• Promotion
• Working conditions
• The work itself
• Status of the job

Ways to improve job satisfaction

• Job Rotation – Workers swap roles to do different tasks. This stops the employee from getting bored.
• Job Enlargement – More extra tasks are given to the worker so they have a variety of things to do. However, these tasks should not be more difficult. e.g. supermarket cashier now adds price label on items.
• Job Enrichment – Adding tasks that require more skill and responsibility. e.g. receptionist employed to greet clients now deal with telephone enquiries.
• Autonomous work groups & team working – Working in teams make employees more interested in the tasks since they can organise themselves.