People in business

2.1 – Motivating Workers

Motivation
People work for several reasons:

 Have a better standard of living: by earning incomes they

can satisfy their needs and wants
 Be secure: having a job means they can always maintain or
grow that standard of living
 Gain experience and status: work allows people to get
better at the job they do and earn a reputable status in
society
 Have job satisfaction: people also work for the satisfaction
of having a job
Motivation is the reason why employees want to
work hard and work effectively for the
business. Money is the main motivator, as explained
above. Other factors that may motivate a person to choose
to do a particular job may include social needs (need to
communicate and work with others), esteem needs (to
feel important, worthwhile), job satisfaction (to enjoy
good work), security (knowing that your job and pay are
secure- that you will not lose your job).
Why motivate workers? Why do firms go to the pain of
making sure their workers are motivated? When workers
are well-motivated, they become highly productive
and effective in their work, become absent less
often, and less likely to leave the job, thus
increasing the firm’s efficiency and output, leading
to higher profits. For example, in the service sector, if
the employee is unhappy at his work, he may act lazy and
rude to customers, leading to low customer satisfaction,
more complaints and ultimately a bad reputation and low
profits.

Motivation Theories
 F. W. Taylor: Taylor based his ideas on the assumption
that workers were motivated by personal gains,
mainly money and that increasing pay would increase
productivity (amount of output produced). Therefore he
proposed the piece-rate system, whereby workers get
paid for the number of output they produce. So in order, to
gain more money, workers would produce more. He also
suggested a scientific management in
production organisation, to break down labour (essentially
division of labour) to maximise output
However, this theory is not entirely true. There are various
other motivators in the modern workplace, some even
more important than money. The piece rate system is not
very practical in situations where output cannot be
measured (service industries) and also will lead to (high)
output that doesn’t guarantee high quality.

 Maslow’s Hierarchy: Abraham Maslow’s hierarchy of

needs shows that employees are motivated by each
level of the hierarchy going from bottom to top. Mangers
can identify which level their workers are on and then take
the necessary action to advance them onto the next level.

One limitation of this theory is that it doesn’t apply to

every worker. For some employees, for example, social
needs aren’t important but they would be motivated by
recognition and appreciation for their work from seniors.
 Herzberg’s Two-Factor Theory: Frederick Herzberg’s
two-factor theory, wherein he states that people have two
sets of needs:
Basic animal needs called ‘hygiene factors’:
 status
 security
 work conditions
 company policies and administration
 relationship with superiors
 relationship with subordinates
 salary
Needs that allow the human being to grow
psychologically, called the ‘motivators’:

 achievement
 recognition
 personal growth/development
 promotion
 work itself
According to Herzberg, the hygiene factors need to be
satisfied, if not they will act as de-motivators to the
workers. However hygiene factors don’t act as motivators
as their effect quickly wear off. Motivators will truly
motivate workers to work more effectively.

Motivating Factors
Financial Motivators
 Wages: often paid weekly. They can be calculated in two
ways:
 Time-Rate: pay based on the number of hours
worked. Although output may increase, it doesn’t mean
that workers will work sincerely use the time to produce
more- they may simply waste time on very few output
since their pay is based only on how long they work. The
 productive and unproductive worker will get paid the
same amount, irrespective of their output.
 Piece-Rate: pay based on the no. of output
produced. Same as time-rate, this doesn’t ensure that
quality output is produced. Thus, efficient workers may
feel demotivated as they’re getting the same pay as
inefficient workers, despite their efficiency.
 Salary: paid monthly or annually.
 Commission: paid to salesperson, based on a percentage
of sales they’ve made. The higher the sales, the more the
pay. Although this will encourage salespersons to sell more
products and increase profits, it can be very stressful for
them because no sales made means no pay at all.
 Bonus: additional amount paid to workers for good work
 Performance-related pay: paid based on performance.
An appraisal (assessing the effectiveness of an employee
by senior management through interviews, observations,
comments from colleagues etc.) is used to measure this
performance and a pay is given based on this.
 Profit-sharing: a scheme whereby a proportion of the
company’s profits is distributed to workers. Workers will be
motivated to work better so that a higher profit is made.
 Share ownership: shares in the firm are given to
employees so that they can become part owners of the
company. This will increase employees’ loyalty to the
company, as they feel a sense of belonging.
Non-Financial Motivators
 Fringe benefits are non-financial rewards given to
employees
 Company vehicle/car
 Free healthcare
 Children’s education fees paid for
 Free accommodation
 Free holidays/trips
 Discounts on the firm’s products

 Job Satisfaction: the enjoyment derived from the

feeling that you’ve done a good job. Employees have
 different ideas about what motivates them- it could be pay,
promotional opportunities, team involvement, relationship
with superiors, level of responsibility, chances for training,
the working hours, status of the job etc. Responsibility,
recognition and satisfaction are in particular very
important.
So, how can companies ensure that they’re workers are
satisfied with the job, other than the motivators mentioned
above?

 Job Rotation: involves workers swapping around

jobs and doing each specific task for only a limited time
and then changing round again. This increases the variety
in the work itself and will also make it easier for managers
to move around workers to do other jobs if somebody is ill
or absent. The tasks themselves are not made more
interesting, but the switching of tasks may avoid boredom
among workers. This is very common in factories with a
huge production line where workers will move from
retrieving products from the machine to labelling the
products to packing the products to putting the products
into huge cartons.
 Job Enlargement: where extra tasks of similar level of
work are added to a worker’s job description. These extra
tasks will not add greater responsibility or work for the
employee, but make work more interesting. E.g.: a worker
hired to stock shelves will now, as a result of job
enlargement, arrange stock on shelves, label stock, fetch
stock etc.
 Job Enrichment: involves adding tasks that require
more skill and responsibility to a job. This gives
employees a sense of trust from senior management and
motivate them to carry out the extra tasks effectively.
Some additional training may also be given to the
employee to do so. E.g.: a receptionist employed to
welcome customers will now, as a result of job enrichment,
deal with telephone enquiries, word-process letters etc.
 Team-working: a group of workers is given
responsibility for a particular process, product or
 development. They can decide as a team how to
organize and carry out the tasks. The workers take part
in decision making and take responsibility for the process.
It gives them more control over their work and thus a
sense of commitment, increasing job satisfaction. Working
as a group will also add to morale, fulfill social needs and
lead to job satisfaction.
 Opportunities for training: providing training will make
workers feel that their work is being valued. Training also
provides them opportunities for personal growth and
development, thereby attaining job satisfaction
 Opportunities of promotion: providing opportunities for
promotion will get workers to work more efficiently and fill
them with a sense of self-actualisation and job satisfaction

2.2 – Organization and Management

 Organizational Structure

Organizational structure refers to the levels of

management and division of responsibilities within a
business. They can be represented on organizational charts
(left).

Advantages:
 All employees are aware of which communication
channel is used to reach them with messages
 Everyone knows their position in the business. They
know who they are accountable to and who they are
accountable for
 It shows the links and relationship between the
different departments
 Gives everyone a sense of belonging as they appear on
the organizational chart

The span of control is the number of subordinates

working directly under a manager in the organizational
structure. In the above figure, the managing director’s
 span of control is four. The marketing director’s span of
control is the number of marketing managers working
under him (it is not specified how many, in the figure).
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The chain of command is the structure of an organization

that allows instructions to be passed on from senior
managers to lower levels of management. In the
above figure, there is a short chain of command since there
are only four levels of management shown.
Now, if you look closely,there is a link between the span of
control and chain of command. The wider the span of
control the shorter the chain of command since more
people will appear horizontally aligned on the chart than
vertically. A short span of control often leads to long chain
of command. (If you don’t understand, try visualizing it on
an organizational chart).
Advantages of a short chain of command (these are also
the disadvantages of a long chain of command):
 Communication is quicker and more accurate
 Top managers are less remote from lower
employees, so employees will be more motivated and top
managers can always stay in touch with the employees
 Spans of control will be wider, This means managers have
more people to control This is beneficial because it
will encourage them to delegate responsibility (give
work to subordinates) and so the subordinates will be more
motivated and feel trusted. However there is the risk that
managers may lose control over the tasks.

Line Managers have authority over people directly below

them in the organizational structure. Traditional
marketing/operations/sales managers are good examples.
Staff Managers are specialists who provide support,
information and assistance to line managers. The IT
department manager in most organisations act as staff
managers.
 Management
So,, what role do manager really have in an organization?
Here are their five primary roles:

 Planning: setting aims and targets for the

organisations/department to achieve. It will give the
department and it’s employees a clear sense of purpose
and direction. Managers should also plan for resources
required to achieve these targets – the number of people
required, the finance needed etc.
 Organizing: managers should then organize the
resources. This will include allocating responsibilities to
employees, possibly delegating.
 Coordinating: managers should ensure that each
department is coordinating with one another to
achieve the organization’s aims. This will involve effective
communication between departments and managers and
decision making. For example, the sales department will
need to tell the operations dept. how much they should
produce in order to reach the target sales level. The
operations dept. will in turn tell the finance dept. how much
money they need for production of those goods. They need
to come together regularly and make decisions that will
help achieve each department’s aims as well as the
organization’s.
 Commanding: managers need to guide, lead and
supervise their employees in the tasks they do and
make sure they are keeping to their deadlines and
achieving targets.
 Controlling: managers must try to assess and evaluate
the performance of each of their employees. If some
employees fail to achieve their target, the manager must
see why it has occurred and what he can do to correct it-
maybe some training will be required or better equipment.

Delegation is giving a subordinate the authority to

perform some tasks.
Advantages to managers:
 managers cannot do all work by themselves
 managers can measure the efficiency and effectiveness of
their subordinates’ work
However, managers may be reluctant to delegate as they
may lose their control over the work.

Advantages to subordinates:
 the work becomes more interesting and rewarding-
increased job satisfaction
 employees feel more important and feel trusted–
increasing loyalty to firm
 can act as a method of training and opportunities for
promotions, if they do a good job.

Leadership Styles
Leaderships styles refer to the different approaches
used when dealing with people when in a position of
authority. There are mainly three styles you need to
learn: the autocratic, democratic and laissez-faire styles.
Autocratic style is where the managers expects to be in
charge of the business and have their orders followed.
They do all the decision-making, not involving
employees at all. Communication is thus, mainly one way-
from top to bottom. This is standard in police and armed
forces organizations.
Democratic style is where managers involve
employees in the decision-making and communication is
two-way from top to bottom as well as bottom to top.
Information about future plans is openly communicated
and discussed with employees and a final decision is made
by the manager.
Laissez-faire (French phrase for ‘leave to do) style makes
the broad objectives of the business known to employees
and leaves them to do their own decision-making and
organize tasks. Communication is rather difficult since a
clear direction is not given. The manger has a very limited
role to play.
 Trade Unions
A trade union is a group of workers who have joined
together to ensure their interest are protected. They
negotiate with the employer (firm) for better conditions and
treatment and can threaten to take industrial action if their
requests are denied. Industrial action can include overtime
ban (refusing to work overtime), go slow (working at the
slowest speed as is required by the employment contract),
strike (refusing to work at all and protesting instead)
etc. Trade unions can also seek to put forward their views
to the media and influence government decisions relating
to employment.
Benefits to workers of joining a trade union:
 strength in number- a sense of belonging and unity
 improved conditions of employment, for example,
better pay, holidays, hours of work etc
 improved working conditions, foe example, health and
safety
 improved benefits for workers who are not working,
because they’re sick, retired or made redundant (dismissed
not because of any fault of their own)
 financial support if a member thinks he/she has been
unfairly dismissed or treated
 benefits that have been negotiated for union member such
as discounts on firm’s products, provision of health
services.
Disadvantages to workers of joining a trade unions:

 costs money to be member- a membership fee will be

required
 may be asked to take industrial action even if they don’t
agree with the union- they may not get paid during a
strike, for example.
 2.3 – Recruitment, Selection and Training of Workers
The Role of the H.R. (Human Resource) Department
 Recruitment and selection: attracting and selecting the
best candidates for job posts
 Wages and salaries: set wages and salaries that attract
and retain employees as well as motivate them
 Industrial relations: there must be effective
communication between management and workforce to
solve complaints and disputes as well as discussing ideas
and suggestions
 Training programmes: give employees training to
increase their productivity and efficiency
 Health and safety: all laws on health and safety
conditions in the workplace should be adhered to
 Redundancy and dismissal: the managers should
dismiss any unsatisfactory/misbehaving employees and
make them redundant if they are no longer needed by the
business.

Recruitment
Job Analysis, Description and Specification
Recruitment is the process from identifying that the
business needs to employ someone up to the point where
applications have arrived at the business.

A vacancy arises when an employee resigns from a job or is

dismissed by the management. When a vacancy arises, a
job analysis has to be prepared. A job analysis identifies
and records the tasks and responsibilities relating to
the job. It will tell the managers what the job post is for.
 Then a job
description is prepared that outlines the
responsibilities and duties to be carried out by
someone employed to do the job. It will have
information about the conditions of employment (salary,
working hours, and pension scheme), training offered,
opportunities for promotion etc. This is given to all
prospective candidates so they know what exactly they will
be required and expected to do.
Once this has been done, the H.R. department will draw up
a job specification, a document that outlines the
requirements, qualifications, expertise, skills,
physical/personal characteristics etc. required by an
employee to be able to take up the job.

Advertising the vacancy

Internal recruitment is when a vacancy is filled by an
existing employee of the business.
Advantages:
 Saves time and money- no need for advertising and
interviewing
 Person already known to business
 Person knows business’ ways of working
 Motivating for other employees to see their colleagues
being promoted- urging them to work hard
Disadvantages:
 No new skills and experience coming into the business
 Jealousy among workers
 External recruitment is when a vacancy is filled by
someone who is not an existing employee and will
be new to the business. External recruitment needs to
be advertised, unlike internal recruitment. This can be
done in local/national newspapers, specialist magazines
and journals, job centres run by the government (where
job vacancies are posted and given to interested people;
usually for unskilled or semi-skilled jobs) or
even recruitment agencies (who will recruit and send
along candidates to the company when they request it).
When advertising a job, the business needs to decide what
should be included in the advertisement, where it should
be advertised, how much it will cost and whether it will be
cost-effective.

When a person is interested in a job, they should apply for

it by sending in a curriculum vitae (CV) or resume, this
will detail the person’s qualifications, experience, qualities
and skills.The business will use these to see which
candidates match the job specification. It will also include
statements of why the candidate wants the job and why
he/she feels they would be suitable for the job.
Selection
Applicants who are shortlisted will be interviewed by the
H.R. manager. They will also call up the referee provided
by the applicant (a referee could be the previous employer
or colleagues who can give a confidential opinion about the
applicant’s reliability, honesty and suitability for the job).
Interviews will allow the manager to assess:
 the applicant’s ability to do the job
 personal qualities of the applicant
 character and personality of applicant
In addition to interviews, firms can conduct certain
tests to select the best candidate. This could include
skills tests (ability to do the job), aptitude tests
(candidate’s potential to gain additional skills), personality
tests (what kind of a personality the candidate has- will it
 be suitable for the job?), group situation tests (how they
manage and work in teams) etc.
When a successful candidate has been selected the others
must be sent a letter of rejection.

The contract of employment: a legal agreement

between the employer and the employee listing the
rights and responsibilities of workers. It will include:
 the name of employer and employee
 job title
 date when employment will begin
 hours to work
 rate of pay and other benefits
 when payment is made
 holiday entitlement
 the amount of notice to be given to terminate the
employment that the employer or employee must give to
end the employment etc.
Employment contracts can be part-time or full-time. Part-
time employment is often considered to be between 1
and 30-35 hours a week whereas full-time
employment will usually work 35 hours or more a week.
Advantages to employer of part-time
employment (disadvantages of full-time employment to
employer):

 more flexible hours of work

 easier to ask employees just to work at busy times
 easier to extend business opening/operating hours by
working evenings or at weekends
 works lesser hours so employee is willing to accept lower
pay
 less expensive than employing and paying full-time
workers.
Disadvantages to employer of part-time
employment (advantages of full-time employment to
employers)
 less likely to be trained because the workers see the job as
temporary
 takes longer to recruit two part-time workers than one full-
time worker
 can be less committed to the business/ more likely to leave
and go get another job
 less likely to be promoted because they will not have
gained the skills and experience as full-time employees
 more difficult to communicate with part-time workers when
they are not in work- all work at different times.
Training
Training is important to a business as it will improve the
worker’s skills and knowledge and help the business
be more efficient and productive, especially when new
processes and products are introduced. It will improve the
workers’ chances at getting promoted and raise their
morale.
The three types of training are:

 Induction training: an introduction given to a new

employee, explaining the firm’s activities, customs and
procedures and introducing them to their fellow workers.
Advantages:


 Helps new employees to settle into their job quickly
 May be a legal requirement to give health and safety
training before the start of work
 Less likely to make mistakes
Disadvantages:

 Time-consuming
 Wages still have to be paid during training, even though
they aren’t working
 Delays the state of the employee starting the job
 On-the-job training: occurs by watching a more
experienced worker doing the job
Advantages:

  It ensures there is some production from worker whilst
they are training
 It usually costs less than off-the-job training
 It is training to the specific needs of the business
Disadvantages:

 The trainer will lose some production time as they are
taking some time to teach the new employee
 The trainer may have bad habits that can be passed onto
the trainee
 It may not necessarily be recognised training
qualifications outside the business
 Off-the-job training: involves being trained away from
the workplace, usually by specialist trainers
Advantages:

 A broad range of skills can be taught using these
techniques
 Employees may be taught a variety of skills and they
may become multi-skilled that can allow them to do
various jobs in the company when the need arises.
Disadvantages:

 Costs are high
 It means wages are paid but no work is being done by
the worker
 The additional qualifications means it is easier for the
employee to leave and find another job

Workforce Planning
Workforce Planning: the establishing of the workforce
needed by the business for the foreseeable future in terms
of the number and skills of employees required.
They may have to downsize (reduce the no. of employees)
the workforce because of:

 Introduction of automation
 Falling demand for their products
 Factory/shop/office closure
 Relocating factory abroad
 A business has merged or been taken over and some jobs
are no longer needed
They can downsize the workforce in two ways:

 Dismissal: where a worker is told to leave their job

because their work or behaviour is unsatisfactory.
 Redundancy: when an employee is no longer needed and
so loses their work, through not due to any fault of theirs.
They may be given some money as compensation for the
redundancy.
Worker could also resign (they are leaving because they
have found another job) and retire (they are getting old
and want to stop working).

Legal Controls over Employment

Issues
There are lot so government laws that affect equal
employment opportunities. These laws require businesses
to treat their employees equally in the workplace and when
being recruited and selected- there should be no
discrimination based on age, gender, religion, race etc.

Employees are protected in many areas including

 against unfair discrimination

 health and safety at work (protection from dangerous
machinery, safety clothing and equipment, hygiene
conditions, medical aid etc.)
 against unfair dismissal
 wage protection (through the contract of employment
since it will have listed the pay and conditions). Many
countries have a legal minimum wage– the minimum
wage an employer has to pay its employee. This avoids
employers from exploiting its employees, and encourages
more people to find work, but since costs are rising for the
business, they may make many workers redundant-
unemployment will rise.
An industrial tribunal is a legal meeting which considers
workers’ complaints of unfair dismissal or discrimination at
work. This will hear both sides of the case and may give the
worker compensation if the dismissal was unfair.
 2.4 – Internal and External Communication

Effective Communication
Communication is the transferring of a message from
the sender to the receiver, who understands the
message.
Internal communication is between two members of the
same organisations. Example: communication between
departments, notices and circulars to workers, signboards
and labels inside factories and offices etc.
External communication is between the organisation
and other organisations or individuals. Example: orders of
goods to suppliers, advertising of products, sending
customers messages about delivery, offers etc.
Effective communication involves:
 A transmitter/sender of the message
 A medium of communication eg: letter, telephone
conversation, text message
 A receiver of the message
 A feedback/response from the receiver to confirm that the
message has benn received and acknowledged.
One-way communication involves a message which does
not require a feedback. Example: signs saying ‘no smoking’
or an instruction saying ‘deliver these goods to a customer’
Two-way communication is when the receiver gives a
response to the message received. Example: a letter from
one manager to another about an important matter that
needs to be discussed. A two-way communication ensures
that the person receiving the message understands it and
has acted up on it. It also makes the receiver feel more a
part of the process- could be a way of motivating
employees.
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Downward communication: messages from managers to

subordinates i.e. from top to bottom of an organization
structure.
 Upward communication: messages/feedback from
subordinates to managers i.e. from bottom to top of an
organization structure
Horizontal communication occurs between people on
the same level of an organization structure.

Communication Methods
Verbal methods (eg: telephone conversation, face-to-face
conversation, video conferencing, meetings)
Advantages:

 Quick and efficient

 There is an opportunity for immediate feedback
 Speaker can reinforce the message- change his tone, body
language etc. to influence the listeners.
Disadvantages:

 Can take long if there is feedback and therefore,

discussions
 In a meeting, it cannot be guaranteed that everybody is
listening or has understood the message
 No written record of the message can be kept for later
reference.

Written methods (eg: letters, memos, text-messages,

reports, e-mail, social media, faxes, notices, signboards)
Advantages:

 There is evidence of the message for later reference.

 Can include details
 Can be copied and sent to many people, especially with e-
mail
 E-mail and fax is quick and cheap
Disadvantages:
 Direct feedback may not always be possible
 Cannot ensure that message has been received and/or
acknowledged
 Language could be difficult to understand.
 Long messages may cause disinterest in receivers
 No opportunity for body language to be used to reinforce
messages

Visual Methods (eg: diagrams, charts, videos,

presentations, photographs, cartoons, posters)
Advantages:

 Can present information in an appealing and attractive way

 Can be used along with written material (eg: reports with
diagrams and charts)
Disadvantages:

 No feedback
 May not be understood/ interpreted properly.

Factors that affect the choice of an appropriate

communication method:

 Speed: if the receiver has to get the information quickly,

then a telephone call or text message has to be sent. If
speed isn’t important, a letter or e-mail will be more
appropriate.
 Cost: if the company wishes to keep costs down, it may
choose to use letters or face-to-face meetings as a medium
of communication. Otherwise, telephone, posters etc. will
be used.
 Message details: if the message is very detailed, then
written and visual methods will be used.
 Leadership style: a democratic style would use two-way
communication methods such as verbal mediums. An
autocratic one would use notices and announcements.
 The receiver: if there is only receiver, then a personal
face-to-face or telephone call will be more apt. If all the
staff is to be sent a message, a notice or e-mail will be
sent.
 Importance of a written record: if the message is one
that needs to have a written record like a legal document
or receipts of new customer orders, then written methods
will be used.
 Importance of feedback: if feedback is important, like for
a quick query, then a direct verbal or written method will
have to be used.
Formal communication is when messages are sent
through established channels using professional language.
Eg: reports, emails, memos, official meetings.
Informal communication is when information is sent and
received casually with the use of everyday language. Eg:
staff briefings. Managers can sometimes use the
‘grapevine’ (informal communication among employees-
usually where rumours and gossips spread!) to test out the
reactions to new ideas (for example, a new shift system at
a factory) before officially deciding whether or not to make
it official.

Communication Barriers
Communication barriers are factors that stop effective
communication of messages.