Methods of Motivation

2.1.1. The importance of a well-motivated workforce

Learners should understand why people work.

Learners should be able to understand the concept of motivation, and the
importance of the various motivation theories.
Why people work and what motivation means
The benefits of a well-motivated workforce
The concept of human needs
Key motivational theories: Maslow, Taylor and
Herzberg
 Learning Outcomes
2.1.2. Methods of motivation

By the end of the lesson, students should be able to:

Identify and explain financial methods of
motivation.
 2.1.2. Methods of Motivation

Methods of motivation

Financial rewards: cash and non-cash

Non-financial rewards: methods used to
rewards paid to employees which are
motivate employees that do not involve
often used to motivate employees to
giving any financial reward.
increase their efforts.
 Methods of motivation

Non-financial rewards
Financial rewards Job rotation
Hourly wage rate Job enlargement
Salary Job enrichment
Piece-rate and commission Quality circles
Bonus schemes Team working
Fringe benefits Delegation
Profit sharing Training
Opportunities for promotion
 Financial rewards and methods

The theories agree that money is an important

reason why people work.
HOWEVER, they do not all agree on how important
money is as a motivator.
Financial rewards and methods
Key word
Hourly Wage Rate
The longer an employee is at work, the more they get Hourly wage rate: An hourly wage

paid. rate means that employees are paid

a fixed amount per hour worked.
Financial rewards and methods

Method Advantage Disadvantage

Business pays employees

Hourly wage rate Employees’ pay is not linked
only for the number of hours
An hourly wage rate means that to how much they produce.
they are at work
employees are paid a fixed It can also lead to a slow
Time rate can encourage
amount per hour worked. rate of work.
people to work for longer.
Financial rewards and methods
Method Advantage Disadvantage

Salary
A fixed annual payment to
certain grades and types of staff
Employees do not receive
not based on hours worked or Salary is not linked to
more pay if they have to
output. employee effort or the
work longer hours to
amount produced.
complete a task.
Employees are paid a fixed
amount per year, which is
usually paid monthly.
Financial rewards and methods

Method Advantage Disadvantage

Only paid for the number of

Piece rate items they produce
It can lead to poor quality as
Employees are paid by the Encourages employees to
employees might rush.
amount of output they produce. produce more and work
quicker

Piece-rate systems are only used to reward production employees.

Financial rewards and methods
Method Advantage Disadvantage

Fringe benefits
Non-cash rewards often used to recruit Helps in recruitment
or retain employees and to recognise and retention of
the status of certain employees. employees.
Often linked to status and not
Workers motivated to
performance
These are extra incentives given in work hard to keep job
addition to wages. and associated
Examples include discounts on benefits
products, insurance, or a company car.
Financial rewards and methods:
Performance-relative pay
Method Advantage Disadvantage

Unrealistic targets will

Bonus
Pay is linked to demotivate employees
An additional reward paid to employees
performance targets If group-based and the target
for achieving targets set by managers.
Productivity is higher  is reached, all employees in
An increase in that group will receive a
Employees receive extra money above
productivity will reduce bonus even if some worked
basic pay if they reach a certain
average costs harder than others to achieve
performance targets.
the target
 Financial rewards and methods:
Performance-relative pay
Method Advantage Disadvantage

If sales staff are very persuasive and

encourage people to buy goods they do not
Commission really want, then the business will see its sales
Sales will increase
A payment to sales staff increase in a short term and then fall.
because the sales team
based on the value of Business might get a bad reputation if sales
want a commission.
the items they sell team is forceful in persuasion
Stressful for sales staff because if they have
bad sales month, their pay will decrease.
Financial rewards and methods:
Performance-relative pay
Method Advantage Disadvantage

Profits given to employees

Profit sharing might reduce the dividends to
Better performance, the higher
an additional payment to shareholders
the profit  greater share of
employees based on the profits of reduce the amount available to
profit
the business. be reinvested into the
business.

It is usually paid once a year.

It can be in the form of cash payment, calculated as a percentage of an
employee’s wage or salary, or employees may be given shares in the company.