2.1.

Motivating Employees
2.1.1 THE IMPORTANCE OF A WELL-MOTIVATED WORKFORCE

Learning Outcomes:
• Why people work and what motivation means.
• The benefits of a well-motivated workforce: labor productivity, reduced absenteeism, and labor turnover.
• The concept of human needs, e.g. Maslow’s hierarchy.
• Key motivational theories: Taylor and Herzberg.

WHY PEOPLE WORK AND WHAT MOTIVATION MEANS

Motivation in business are the factors that influence the behavior of workers towards achieving set
business goals.
Factors of motivation may include, but are not limited to the following:

• Money (wages and salaries)

• Job security
• Training
• Recognition
• Responsibility
• Job enlargement (variety of work)
• Friendship (opportunity to socialize)
• Fringe benefits (non-monetary benefits the worker receives from the employer e.g. pension
plan, company car, health insurance).

BENEFITS OF A WELL-MOTIVATED WORKFORCE

Benefits Explanation
Better quality goods Motivated workers are determined to work efficiently and produce good
and services quality goods and services, therefore attracting more customers and
increasing their competitiveness.
Increased labor Labor productivity measures a worker’s efficiency by calculating the
productivity output per worker.
Motivated workers are more productive which will help a business to
reduce its average costs and therefore lower prices to remain competitive.
Reduced labor Labor turnover is the rate at which workers leave a business.
turnover
Motivated workers are less likely to leave therefore helping to reduce
recruitment costs.
Achieving objectives Motivated workers will want to work with management to help improve
the business and achieve its objectives.

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THE CONCEPT OF HUMAN NEEDS – MASLOW’S HIERARCHY
Abraham Maslow believed that humans have five levels of needs:

Self-Actualization

Esteem Needs
Respect, recognition,
status

Social Needs
Friendship, acceptance, belonging

Safety Needs
Job security, safe and healthy work environment

Basic Needs
Water, food, shelter

Maslow suggests that all humans want to become the best version of themselves, hence self-
actualization. They first start at the lowest level of need (basic needs) and will look for ways to satisfy
those needs before working their way up the hierarchy. Once the basic needs have been fulfilled, they
will no longer motivate the person and therefore he/she will be motivated the fulfill the next level
(safety needs) and so on until they reach the top.
Maslow’s hierarchy is important to managers because it provides them a framework to organize work
appropriately to motivate their workers, thus benefitting the business in many ways.
However, there are some limitations to Maslow’s theory of motivation:
• Not everyone has the same needs as the ones in Maslow’s hierarchy.
• The same motivator (e.g. money) can fall into more than one level (both esteem and safety)
making it difficult for managers to understand what their workers want.
• Motivational factors may differ across culture.

TAYLOR’S SCIENTIFIC MANAGEMENT THEORY

Taylor’s scientific management theory believed
that workers are motivated by money alone.
Therefore, the theory aimed to reduce inefficiency
in the workplace by finding the quickest method of
performing each task and having the workers
specialize in such tasks.

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HERZBERG’S TWO FACTORY THEORY
Herzberg’s two factor theory believes that two factors influence workers’ motivation:
• Hygiene factors: the factors that must be present at the workplace to prevent dissatisfaction
with their jobs.
• Motivational factors: the factors that managers can use to increase workers’ efforts at work.
These factors will not work unless an acceptable level of hygiene factors are present.
Hygiene factors Motivational factors

• Working conditions: clean and safe working • Responsibility: having more important tasks
environment, meals, facilities. and involvement in decision-making.
• Relationship with others: good working • Advancement: opportunity for promotion.
relationships with other workers. • Achievement: workers need challenging
• Salary or wage: acceptable level of pay tasks to develop their skills.
• Company policy: rules and procedures that • Recognition: recognition by management
needs to be followed at work. for their hard work.

2.1.2 METHODS OF MOTIVATION

Learning Outcomes:
• Financial rewards, e.g. wage, salary, bonus, commission, and profit sharing.
• Non-financial methods, e.g. job enrichment, job rotation, teamworking, training, opportunities for promotion.
• Recommend and justify appropriate method(s) of motivation in given circumstances.

FINANCIAL REWARDS
Financial rewards are monetary or related rewards paid to workers which are used to motivate and
increase workers’ efforts.
Financial Reward Description
Time rate wage Workers are paid a fixed amount per hour worked.
Piece rate wage Workers are paid based on the number of units of output produced.
Salary Workers receive a fixed pay per year, which is usually paid out monthly.
Commission Workers are paid based on the value of sales they make.
Performance-related Workers are paid an additional reward for achieving targets set by
pay managers.
Fringe benefits Workers are given non-cash rewards (e.g. discounts for buying company
products, health insurance, pensions.)
Profit sharing Workers are paid an additional bonus based on the profits of the
business.

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NON-FINANCIAL REWARDS
Non-financial rewards are methods used to motivate workers that do not involve giving any financial
reward.
Non-financial reward Description
Job rotation Allowing workers a greater variety of work by having them switch from
doing one task to another.
Job enlargement Allowing workers a greater variety of work by assigning them more tasks
to do.
Job enrichment Allowing workers a greater variety of work by assigning work with
greater responsibility and challenges that require optimal use of their
abilities.
Quality circles A cross-departmental group of employees who voluntarily meet to
discuss and suggest ways to improve on work-related problems.
Teamworking Workers have the opportunity to work together with others to achieve
work-related goals.
Empowerment Managers allow workers to make decisions to perform tasks.
(delegation)

CHOOSING APPROPRIATE METHOD OF MOTIVATION

• Choosing the most appropriate method to motivate workers depends on the following:
• Cost of method: all forms of financial rewards add costs to the business, but not all businesses
can afford to pay for them. Managers would look to use the most cost-saving method if the
business is not performing profitably.
• Individual differences: methods of motivation that works for some workers may not work for
others.

Master Your Definitions

Motivation: the factors that influence the behavior of workers towards achieving set business goals.
Labor productivity: measures a worker’s efficiency by calculating the output per worker.

Labor turnover is the rate at which workers leave a business.

Hygiene factors: the factors that must be present at the workplace to prevent dissatisfaction with their jobs.
Motivational factors: the factors that managers can use to increase workers’ efforts at work. These factors will
not work unless an acceptable level of hygiene factors are present.

Financial rewards: are monetary or related rewards paid to workers which are used to motivate and increase
workers’ efforts.

Non-financial rewards: are methods used to motivate workers that do not involve giving any financial reward.