Motivating employees
Motivated workers are more productive and less likely to leave. Motivation theories and financial and non-financial methods explain how businesses encourage people to work well.
📌 Key points
- Motivation is the reason why employees want to work hard and work effectively; motivated workers raise productivity and reduce labour turnover and absenteeism.
- Taylor believed workers are motivated mainly by money, so he favoured piece rates and breaking work into simple tasks.
- Maslow’s hierarchy of needs, from the bottom: physiological needs, safety (security) needs, social needs, esteem needs and self-actualisation. Lower needs must be met first.
- Herzberg: hygiene factors (pay, working conditions, security, supervision, company policy) prevent dissatisfaction; motivators (achievement, recognition, responsibility, promotion, the work itself) motivate.
- Financial rewards include wages (time rate), salary, piece rate, commission, bonus, profit sharing and performance-related pay.
- Fringe benefits are extra rewards that are not cash, such as a company car, health insurance, discounts or a pension.
- Non-financial methods include job rotation, job enlargement, job enrichment, teamworking, training and opportunities for promotion.
- Job satisfaction depends on pay, working conditions, colleagues, management style, training, promotion chances and the nature of the work.
📖 Key terms
- Motivation
- The reasons why employees want to work hard and work effectively for the business.
- Piece rate
- A payment to a worker for each unit produced.
- Commission
- A payment based on the value or number of sales made.
- Fringe benefits
- Non-financial rewards given to employees, e.g. a company car.
- Job rotation
- Workers swap round doing different, often similar, tasks.
- Job enlargement
- Extra tasks of a similar level are added to a worker’s job.
- Job enrichment
- Giving workers more challenging tasks and more responsibility.
- Hygiene factors
- In Herzberg’s theory, factors that cause dissatisfaction if they are poor, such as pay and working conditions.
✏️ Worked example
A factory pays workers $0.80 for each item they make. Leila makes 450 items in a week. Calculate her weekly pay and give one problem with this method of payment.
- Piece rate pay = rate per item × number of items.
- $0.80 × 450 = $360.
- Problem: workers may rush to make more items, so quality may fall.
- Answer: $360 a week; quality could suffer, so the firm may need extra quality checks.
Do not say Herzberg thought pay motivates. In his theory pay is a hygiene factor: poor pay causes dissatisfaction, but good pay alone does not motivate.
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