UNIT 2 – HUMAN RESOURCE MANAGEMENT

CHAPTER 2 – MOTIVATION.
Motivation refers to the internal and external factors that stimulate the desire in
workers to be continually interested and committed to doing a job well.
Extrinsic motivation: Comes from external rewards associated with working on a
task, for example pay, recognition, praise and other benefits.
Intrinsic motivation: Comes from the satisfaction derived from working on and
completing a task. Intrinsic motivation stems from the nature of the job itself. For
example, a large part of my motivation as a Business and Economics teacher comes
from the satisfaction of helping my students grow as learners and achieve stunning
results all the way through their years with me.

MOTIVATION AS A TOOL OF MANAGEMENT AND LEADERSHIP.

Well-motivated workers will help an organisation achieve its objectives as cost
effectively as possible in the following ways.
(a) Highly motivated workers have high productivity and this reduces unit costs
increasing the competitiveness of the business.
(b) Motivated staff will be keen to stay with the firm, reducing costs of labour
turnover and have low absenteeism rate.
(c) They will be more likely to offer useful suggestions and to contribute in ways
other than contractual obligations.
(d) They often actively seek promotion and responsibility.

Unmotivated or demotivated staff will not perform effectively, offering only the
minimum of what is expected. Indicators of demotivated staff include;
high absenteeism, lateness, poor performance, increase no of accidents, high labour
turnover, grievances, and poor response rate.

(a) Explain the possible long-term consequences for a business of low levels of employee motivation. [5]
(b) Explain why the motivation of employees is an important objective of managers. [8]
(c) Analyse the importance of employee motivation for the achievement of business objectives. [8]

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HUMAN NEEDS.
In this context, human needs can be defined as the elements required for survival
as well as normal mental and physical health. Human needs can also be regarded as a
force that compels action for its satisfaction. In the work place, workers desire the
following needs to be met.
1. Subsistence – Employment can provide an income sufficient to allow people to have
shelter, food and clothes sot that their lives are not threatened by the lack of these
basic items.
2. Protection – Work can satisfy this need in a number of ways. A permanent contract
of employment may provide the security of knowing that the income form
employment will be received for the foreseeable future.
3. Participation – this can be achieved through working in teams. It can also take the
form of responsibilities within an organisation. Belonging & Significance as well as
seeing that their contributions matter is also important.
4. Creation – Many working environment offer opportunities for creativity and some
may require this as an integral part of employment. Working in advertising or
architecture requires creativity. Creativity can take other forms including
developing teams and building brands. Competence & Mastery - Knowing how work
gets done and doing it well and being enabled to get work done.
5. Freedom – includes being empowered. Giving control over their working lives and a
high degree of freedom not only to take decisions but to decide which decisions to
take. This also refers to power & autonomy
6. Fun & Enjoyment – through leisure activities organised at the workplace.

MOTIVATIONAL THEORIES.
There are two basic theories of motivation; content theories and process theories.

1. CONTENT THEORIES - focus on what actually motivates people, they

study the needs that must be satisfied in order for the employee to be motivated.
The need is either satisfied by an extrinsic reward (e.g. pay) or an intrinsic reward
(e.g. recognition and praise). They include:

(a) Taylor and Scientific Management.

This method was developed in the USA in the early part of the 20th century by
Frederick Taylor, building on the earlier work of Henri Fayol. Taylor introduced a
piece-rate style of payment for the workforce - this meant that the workers
received an amount of money per 'piece' that they produced, thereby linking their
pay to their productivity.

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Taylor’s theory of economic man is the the view that man was driven or motivated
by money and the only factor that could stimulate further was the chance of earning
extra money. Taylor introduced a piece-rate payment system to link pay with
productivity levels.

Taylor believed that efficiency and productivity were the two greatest features of
a business. This was viewed by business as the route towards greater profits. The
workers were more suspicious as they believed that it would lead to more work but
no more pay or benefits. They did not necessarily believe that the fruits of higher
efficiency would be shared between workers and business owners. However, Taylor
failed to recognize was the high level of alienation and low levels of morale and
motivation that this system produces in the workforce.
(a) Discuss the view that Taylor’s theory fully explains employee motivation. [12]

(b) Mayo - the Human Relations Theories

The Human Relations management thought looks beyond mere financial and
productivity variables in deciding the best way to manage a workforce. Probably the
most famous study of Human Relations Management was carried out by Elton Mayo
at Hawthorne in Chicago, USA. He studied a group of six female workers over this
time, and tried to establish a link between their working conditions and their
productivity levels.

Based on the results, Mayo concluded that working conditions in themselves were
not that important in determining productivity levels and other motivational factors
needed to be investigated further before conclusions could be drawn. He found that
the only factor that was needed to consistently achieve a high level of productivity
was a strong level of social interaction and teamwork amongst the 6 employees. He
called this the 'Hawthorne Effect'.
Summary of conclusions of Mayo's work:
 Changes in working conditions and financial rewards have little or no effect on
productivity.
 When management consult with workers and take an interest in their work, then
motivation is improved.
 Working in teams and developing a team spirit can improve productivity.
 When some control over their own working lives is given to workers, such as
deciding when to take breaks, there is a positive motivational effect.
 Groups can establish their own targets or norms and these can be greatly
influenced by the informal leaders of the group.

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Implication of Mayo's work for businesses
 Since Mayo's research, there has been a growing trend towards giving workers
more of a role in business decision-making - this is called participation.
 Personnel departments were established to try and put the Hawthorne
effect into practice.
 Team working and group working can be applied in many types of modern business
organisation and these offer the greatest opportunities for workers and firms
to benefit from the Hawthorne effect.
 The idea of involving workers, taking an interest in their welfare and finding out
their individual goals has opened up new fields of research for industrial
psychologists.
 The development of the 'people' side of the business has taken industry away
from the engineer-focused and purely money-motivated views of Taylor.

(c) Abraham Maslow's 'Hierarchy of Needs'

A motivation theory that outlines the five levels of needs, from the requirement to
satisfy basic physiological needs through to self-actualization. We first need to
satisfy the basic requirements of continued existence (i.e. physiological needs). Once
these needs are satisfied, then we seek to satisfy the higher level needs. Maslow
argued that until a lower order need is met, people cannot progress onto the next
level of needs. Hence, once the lower level needs are satisfied, then further
motivation for the employee can only come by giving them greater scope for using
skill, initiative and creativity.

Hierarchy of needs by Maslow diagram.

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As per the diagrams, the different levels of needs are:
Physical/Physiological needs: Food, shelter, water, rest. Income from employment
high enough to meet essential needs.
Safety needs: Protection from threats, job security, health and safety at work. A
contract of employment with some job security - a structured organisation that gives
clear lines of authority to reduce uncertainty. Ensuring health and safety conditions
are met. Having a pension scheme could help.
Social needs: Trust, acceptance, friendship, belonging to the group and social
facilities. Working in teams or groups and ensuring good communication to make
workers feel involved.
Esteem needs: Respect from others, status and recognition of achievement. Give
employees recognition for work done well - status, advancement and responsibility
will gain the respect of others. e.g a company car, job title or size of office.
Self-actualisation: Reaching one's full potential; e.g. challenging work that stretches
the individual - this will give a sense of achievement. Opportunities to develop and
apply new skills will increase potential. This will depend on the individual employee,
whether he has achieved his full potential or not.

Most people reach the safety and social categories, some reach the ego category,
yet very few reach the self-fulfillment category and those that do reach it will not
remain at it for very long. As a result of this progression, the size of each of the
sections in Maslow's hierarchy diminishes the higher they get, as fewer and fewer
people reach them. According to his research our needs determine our actions – we
will always try to satisfy them and we will be motivated to do so. If work can be
organized so that we can satisfy some or all of our needs at work then we will become
more productive and satisfied.

Limitations of Maslow's theory:

1. Not everyone has the same needs as is assumed by the hierarchy.
2. In practice it can be very difficult to identify the degree to which each need has
been met and which level a worker is 'on'
3. Money is necessary to satisfy physical needs, yet it might also play a role in
satisfying other levels of needs such as status and esteem
4. Self-actualization is never permanently achieved - as some observers of the
hierarchy have suggested. Jobs must continually offer challenges and opportunities
for fulfilment otherwise regression will occur.

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(d) Herzberg and the 'Two Factor Theory'
Frederick Herzberg carried out several studies of management and motivation and
he attempted to identify the factors that motivate employees. His most famous
theory is called the 'Two-Factor Theory', in which he distinguished between what
he called
(a) Motivators - factors that increase job satisfaction and motivation levels, such
as praise, recognition and responsibility. Motivators are concerned with the content
of the job and include a sense of achievement, being given responsibility, using
initiative and creativity, and being involved in decision-making. Job satisfaction
resulted from five main factors – achievement, recognition for achievement, the
work itself, responsibility and advancement. Motivators equate with the ego and
self-fulfillment categories in Maslow's Hierarchy.
(b) Hygiene / Maintenance factors -parts of a job that do not increase job
satisfaction but help to remove dissatisfaction, such as reasonable wages and
working conditions. Hygiene factors do not give positive satisfaction, but their
absence will cause dissatisfaction. The Hygiene factors are concerned with the
context of the job and include such items as pay, working conditions, supervision,
company policy, bureaucracy ("red tape") and interpersonal relations.

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Consequences of Herzberg's Theory:
1. Pay and working conditions can be improved and these will help to remove
dissatisfaction about work; but they will not, on their own, provide conditions for
motivation to exist. Herzberg argued that it was not possible to encourage someone
to do a job by paying them - he called this movement. However, movement does not
mean that someone wants to do the job - that would require motivation. Motivation
to do the job and to do it well would only exist if motivators were in place. Herzberg
did not claim that pay did not matter, but that it moves people to do a job and does
not motivate them to do it well.

2. The motivators need to be in place for workers to be prepared to work willingly

and to always give of their best. Herzberg suggested that motivators could be
provided by adopting the principles of job enrichment - which aims to use the full
capabilities of workers by giving them the opportunity to do more challenging and
fulfilling work. There are three main features of job enrichment:
(a) Assign workers complete units of work – complete and identifiable work should
be assigned to workers and that this might involve teams of workers rather than
individuals on their own. Complete units of work could be a complete engine assembly
in a car plant. Herzberg said “if you want people to do a good job, give them a good
job to do”.
(b) Provide feedback on performance – to give recognition for work well done and
may provide incentives to achieve even more.
(c) Give workers a range of tasks – to give challenge and to stretch the individual,
some tasks may be beyond the workers current experience. This ties with “self
actualisation level in Maslow hierarchy.

3. A business could offer higher pay, improving working conditions and less heavy-
handed supervision of work. These would all help to remove dissatisfaction, but they
would all quickly be taken for granted. If work is not interesting, rewarding or
challenging, then workers will not be satisfied or will not be motivated to offer their
full potential whatever the pay level offered them.

Evaluation of Herzberg's work

 Team working is now much more widespread, with whole units of work being
delegated to these groups.
 Workers tend to be much more responsible for the quality of their own
work rather than being closely supervised by a quality-controlling inspectorate.

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 Most firms are continually looking for ways to improve effective communication,
and group meetings allowing two-way communication are often favoured.

(e) McClelland - Motivational Needs Theory

The mix of motivational needs characterises a person's or manager's behaviour, both
in terms of what motivates them and how they believe other people should be
motivated.
McClelland's three types of motivation:
N-ach (achievement motivation): A person with the strong motivational need for
achievement will seek to reach realistic and challenging goals and job advancement.
There is a constant need for feedback regarding progress and achievement and the
need for a sense of accomplishment. Research has suggested that this result-driven
attitude is almost always a common characteristic of successful business people and
entrepreneurs.
N-pow (power motivation): A person with this dominant need is 'authority
motivated'. The desire to control others is a powerful motivating force - the need
to be influential, effective and to make an impact. There is a strong leadership
instinct when authority is gained over others, it brings personal status and prestige.

N-affil (affiliation motivation): The person with need for affiliation as the strongest
motivator has a need for friendly relationships and is motivated towards interaction
with other people. These people tend to be good team members - there is a need to
be liked and popular and to be held in a high regard.

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 McClelland stated that achievement motivated people are generally the ones who
make things happen and get results. However, they can demand too much of their
staff in the achievement of targets and prioritise this above the many and varied
needs of their workers.

(a) Explain the differences between Herzberg’s hygiene factors and motivating factors. [8]
(b) Discuss the relevance to employees of a fast food restaurant of the motivational theories
of Maslow and Herzberg. [12]
(c) ‘Herzberg’s theory of motivation can ensure success for all private sector businesses.’
Discuss this statement. [20]
(d) Discuss how Maslow’s ‘hierarchy of needs’ theory could be used by the managers
of a retail business to motivate employees. [20]
(e) Analyse the methods managers might use to help employees satisfy their self-actualization
needs, as identified by Maslow. [8]
(f) ‘Maslow’s theory of motivation can ensure success for all businesses. ’Discuss this
statement. [20]

2. PROCESS THEORIES - Process theories of motivation look at why people

behave in a certain manner and how motivation can be maintained or stimulated.
These theories look at what people think about when deciding whether or not to put
in the effort to complete a task. They are concerned with the thought-processes
that influence workers' behaviour.
(i) Vroom and Expectancy Theory.
In Vroom's Expectancy Theory individuals choose to behave in ways that they believe
will lead to outcomes they value. Individuals will have different sets of goals and can
be motivated if they believe that:
- There is a positive link between effort and performance
- Favourable performance will result in a desirable reward
- The reward will satisfy an important need.
-The desire to satisfy the need is strong enough to make the work effort worthwhile.

Vroom's Expectancy Theory is based on 3 beliefs:

Expectancy - the degree to which people believe that putting effort into work will
lead to a given level of performance.
Instrumentality - the confidence of employees that they will actually get what they
desire regardless of what has been promised by the manager.
Valence - the depth of the want of an employee for an extrinsic reward, such as
money, or an intrinsic reward such as satisfaction.

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 (a) Define the term ‘motivation’. [2]
(b) Briefly explain two ways autocratic leadership might affect the motivation of employees.
[3]
(c) Discuss how the motivational theory of Maslow differs from that of Vroom. [20]
(d) Explain the possible long-term consequences for a business of low levels of employee
motivation. [5]

MOTIVATION IN PRACTICE.
Payment or Financial Rewards Systems.
The most common payment systems are:
1. Hourly wage rate
Refers to payment made to a worker for each hour worked.
Hourly or time wage rate is the most common way of paying manual, clerical and “non-
management” workers. An hourly “time rate” is set for the job –perhaps by comparing
with other firms or similar jobs – and the wage level is determined by multiplying
this by the number of hours worked; the total is usually paid weekly.

Advantages:
 Workers will not rush their work and this could lead to high quality.
 Gives workers some security of payment even if there are unavoidable
production hold ups.
 Most suitable when the output of individual workers cannot be identified or
measured.
 Fairer than piece rates in situations when employees have no control over the
speed at which they work.
 Wage rates can be adjusted easily to reflect different skill levels required to
do a job.

Disadvantages:
 Too much time may be taken to do a job as there is no additional reward for
extra effort or faster work. To prevent this, additional supervision of workers
may be required.
 Higher “overtime rates” are paid after a contractual number of hours has been
worked – these could encourage slow working to delay completing a job.
 Wages will still have to be paid even if production is halted – unless the
workers are on very flexible hours’ contracts.

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 2. Piece Rate Systems
A rate is fixed for the production of each unit, and the worker’s wages therefore
depend on the quantity of output produced; the piece rate can be adjusted to reflect
the difficulty of the job and the “standard” time needed to complete it; the level of
the rate could be very important – if set too low it could demotivate the workers but
if too high it could reduce the incentives because workers will be able to meet their
target wage level by producing relatively few units.

Advantages
 Encourages greater effort and faster working.
 The labour cost for each unit is determined in advance and helps set a price
for the product.

Disadvantages:
 It requires output to be measured and standardised (which is difficult if each
product is different)
 It may lead to falling quality and safety levels as workers rush to complete
units.
 Workers may settle for a certain pay level and won't be motivated to produce
more than a certain level.
 It provides little security over pay level.
 Discourages workers from accepting change at work as this might result in
loss of pay

2. Wages and Salary.

Salary refers to annual income that is usually paid on a monthly basis. It is the most
common form of payment for professional, supervisory and management staff; the
salary level is fixed each year and it is not dependent on the number of hours worked
(time rate) or the number of units produced (piece rate); the fixing of the salary
level for each job is a very important process because it helps to determine the
status of that post in the whole organization.
Wages – are paid weekly and employees are required to be at ork for a speicified
number of hours. Overtime is paid at a higher rate.

Advantages:
 Gives security of income
 Gives status compared to time rate or piece rate payment systems
 Aids in costing (salaries won't vary for one year).

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  Is suitable for jobs where output isn't measurable.
 Is suitable for management positions where staff are expected to put in extra
time to complete tasks and assignments.

Disadvantages:
 Income is not directly related to effort and productivity levels.
 It may lead to complacency of the salary earner.
 Regular appraisal may be needed to assess whether an individual should move
up a salary band (can be an advantage if positive appraisal).

3. Commission:
This is most frequently used in personal selling, where the salesperson is paid a
commission or a proportion of the sales gained; it has the same advantages and
disadvantages as piece rates used in production industries. Instead of the low quality
production, the sales staff can try too hard to convince a customer to buy and put
so much pressure on them that they have a bad view of the whole company. Teamwork
is not encouraged with commission-based pay – each individual salesperson will be
keen to grab each new customer for themselves to earn more commission.

(a) Distinguish between piece rate and commission payment methods. [2]
(b) Briefly explain two disadvantages of a piece rate payment method. [3]

4. Performance – related pay

This is a scheme to reward staff for above average work performance; it is usually
in the form of bonus payable in addition to the basic salary; it is widely used for
those workers whose ‘output’ is not measurable in quantitative terms, such as
management, supervisory and clerical posts. There are some problems with PRP
systems. The main issue is one that Herzberg would recognize – as there is no change
in the nature of the work being undertaken most of the ‘motivators’ would not be
satisfied by PRP. In addition, the concentration on individual performance can create
divisions within teams and groups, and this can work against the findings of the
Hawthorne effect. There is also a widely held view that PRP bonuses are often
inadequate, even to achieve short-term productivity gains or improvements in effort.
The last problem concerns the style of management that PRP can lead to. By giving
senior managers the power to decide which subordinates have achieved
performances above target, it can lead to claims of favoritism and the ability to
control staff by means of the “carrot” of extra rewards.

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 Advantages:
- Staff are motivated to improve performance if they are seeking to increase
financial rewards
- Target setting can help to give purpose and direction to the work of an individual
- Annual appraisal offers the opportunity for feedback on the performance of an
individual.

Disadvantages:
- It can fail to motivate if staff are not driven by the need to earn financial rewards
- Team spirit can be damaged by the rivalry generated
- Claims of manager favoritism may undermine relationships
- Less autonomy for workers as they need to conform to the system that generates
bonuses.
(a) Define the term ‘performance related pay’. [2]
(b) Briefly explain two disadvantages of ‘performance related pay’. [3]
(c) Analyse the advantages and disadvantages to an employer of using performance related pay. [8]

5. Profit sharing:
This scheme shares some of the company profit not just with the shareholders but
also with workers. Each employee receives a share of the profit of the business each
year, effectively representing an annual pay rise. The bonus for staff based on the
profits of the business - usually paid as a proportion of basic salary.
The essential idea behind these arrangements is that staff will feel more committed
to the success of the business and will strive to achieve higher performances and
cost savings. However, if the business makes low profits (or even a loss) then this is
likely to have a detrimental effect on the level of motivation of the employees. Some
shareholders claim that profits should be the return to the owners of the business
and are a reward for them for taking risk with their own capital.
Another common form of payment in many PLCs is what is termed 'share options'. This
basically involves each employee receiving a part of the company’s profit in the form of
shares (usually at a discounted price) rather than cash. It’s an employee benefit scheme
intended to motivate employees by giving them a stake in the firm's success through equity
participation. This is designed to establish the workers as part of owners of the business
and reduce the conflict that may exist between the owners and managers and the workers.
This should motivate the employees to work harder and increase their efforts, since the
share price may rise as the company becomes more profitable, therefore increasing the
capital gain on their shares. It forms a profitable savings-plan for the employees. However,

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 many workers sell the shares after a given period of time thus reducing the hope for long-
term impact on motivation.

Advantages and disadvantages of profit sharing and worker share ownership.

6. Bonus – is a payment made to employees in addition to their contracted wage or

salary. It may be paid in addition based on criterial agreed between managers and
workers (trade union) such as increase in output, productivity, annual turnover or net
number of additional customers required.

Many of these different methods of pay are likely to be supplemented by fringe

benefits (or 'perks'). Fringe benefits are any financial extras (non-cash rewards)
beyond the regular pay such as health insurance, life insurance, paid vacation,
retirement pension schemes, subsidised meals, discounts on holidays and travel,
cheap mortgages and loans, company cars and discounts when buying the company's
products. They are used by businesses in addition to normal payment systems in
order to give status to higher-level employees and to recruit and retain the best
staff. The total package of pay plus fringe benefits is known as the remuneration
package.

Explain how a business could use financial rewards to motivate its workers. [8]

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 NON-FINANCIAL METHODS OF MOTIVATION
It is now widely recognized that businesses cannot use money alone to create the
necessary motivation for employees to complete jobs efficiently.
Non-financial motivators include:

(a) Job redesign: involves the restructuring of a job i.e. changing the group of tasks
or duties that make up a specific job. Job redesign is usually with employees’
involvement and agreement – to make work more interesting, satisfying and
challenging – When this happens it is Job enrichment or Vertical Loading. For
example: journalists now have to be IT experts to communicate through the wide
range of technological media. Bank employees are trained to sell financial products
to customers not just serve at tills. Job redesign can take the form of job
enlargement where the employee is given duties of a similar level. It is known as
horizontal loading.

(b) Team working where production is organised so that groups of workers

undertake complete units of work. Teams involves a number of employees combining
to produce a product, with each employee specialising in a few tasks. Cell production
is an example of team working. It places each member of staff into a small team of
employees; team working leads to lower labour turnover, more and better ideas from
the workforce on improving the product and the manufacturing process, consistently
higher-quality, especially when TQM is incorporated.
Types of teams commonly found in businesses: Production teams (cells), Quality
circles teams and management teams.

(c) Quality circles: groups of experienced workers who meet regularly to discuss
work related problems and issues including quality, consider alternative solutions to
these problems, and then recommend to management the solution that they believe
will be the most successful. Workers are usually paid for attending and the most
successful circles may be rewarded with a prize. Quality circles allows the
participation of all staff and they fit in well with Herzberg’s ideas of workers
accepting responsibility and being offered challenging tasks.

(d) Delegation and empowerment: involves passing down authority to perform tasks
to workers. Empowerment involves a line manager giving her subordinates some
autonomy in their job and the authority to make various decisions. Empowerment
involves redesigning employee’s jobs to allow them greater control over their working
lives. Empowered workers can propose and implement new methods of working as

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they bring a new perspective to decision making. Employees require training if they
are to be empowered.

(e) Worker participation: workers are actively encouraged to become involved in

decision making at the team or work group levels. For example asking them for their
ideas on break times, job allocations, job redesign and ways to improve quality, cut
down wastage and improve productivity within the organization.
Participation may also be regular discussions between managers and representatives
of the workforce over such issues as how the business can improve its processes and
procedures (in production or marketing, for example).
Workers can be encouraged to participate through the election of worker director
- These are workforce representatives who participate in the meetings held by the
board of directors. Worker-directors are not very common in the UK, since
employers often believe that they can slow down the decision-making process, as well
as 'leaking' confidential information to employees.

(f) Training – where the skills of employees are improved and developed. Training
increases the chances of promotion to more challenging and probably better paid
jobs within the business. Training can lead to employees leaving a business as they
are now better qualified to gain employment within other companies. It can be very
expensive especially if it takes place away from work place.

(h) Promotion and status – promoting an employee to a more senior position within
the business is likely to prove motivational. Granting an employee higher status within
an organisation perhaps through giving them their own office or parking space may
motivate them by fulfilling their need for self-esteem.

For each of the above non-financial methods, analyse the advantages and
disadvantages.

Employee participation in management and the control of business activity

Opportunities for worker participation in a workshop or factory might include
involvement in decisions on break times, job allocations to different workers, job
redesign, ways to improve quality and ways to cut down wastage and improve
productivity.

At the level of strategic decision-making, workers could be encouraged to

participate through electing a worker director to the board of directors or speaking

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 for employees at works council meetings. Quality circle and employee shareholders
are alternative way of participation.
The benefits of participation include job enrichment, improved motivation and
greater opportunities for workers to show responsibility. In addition, better
decisions could result from worker involvement as they have in-depth knowledge of
operations, whereas some managers lack this.
The limitations of participation are that it may be time-consuming to involve workers
in every decision. Autocratic managers would find it hard to adapt to the idea of
asking workers for their opinions. Such managers may set up a participation system
but have no intention of actually responding to workers’ input. This approach could
eventually prove to be very demotivating for workers.

Evaluation of Financial and non-financial motivational methods.

Managers need to take a critical look at all of the payment and non-financial methods
of motivating staff. What works for some groups of workers will not be effective
with others. Managers need to be flexible and adapt the methods and approaches
that are available to motivate staff to the particular circumstances of their business
and their workforce.
The main factors that influence the different degrees of emphasis in pay and no-
pay factors include the leadership style of management and the culture of the
organisation. If the managers have the attitude that workers are naturally lazy and
cannot be trusted, then a payment by results system with close supervision will be
adopted. If the culture is to view workers as partners or associates in the business,
then production will be organised to give workers a chance to accept responsibility
and to participate – a monthly salary or profit sharing scheme is likely. The final
decision will greatly depend on attitudes and beliefs of senior managers – and the
business culture they adopt.
(a) Explain why a business could decide to use only non-financial rewards to improve the motivation of
its workforce. [8]
(b) ‘Money is the most important factor for motivating teachers in a school.’ Discuss this view. [20]
(c) ‘The most effective way to realise human potential in a manufacturing business is to give high rates
of financial rewards to the workforce.’ Do you agree? Justify your view. [20]
(d) The human resources manager of a hotel has said: ‘If we empower our employees, work
performance will definitely improve.’ Discuss this view. [20]
References:
1. P. Stimpson and A. Farquharson (2021) Cambridge International AS and A-level Business 4th edition Cambridge
university press.
2. M. Surridge and A. Gillespie (2021) Cambridge International AS and A-level Business 2nd edition by Hodder education.
3. I. Marcouse, A. Hammond, N. Watson (2019) Pearson Edexcel A-level Business by Hodder education.
Compiled by J. Musyoka.

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