business essentials - chapter 9 (b).ppt

Motivating & Rewarding Employees

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GCSE Business GCSE Business StudiesStudiesRevision Presentations 2004Revision Presentations 2004


GCSE Business GCSE Business StudiesStudies

Motivation

What is it?

Motivation is will to work

Comes from enjoyment of work itself and/or from desire to achieve certain goals e.g. earn more money or achieve promotion

Methods available to motivate employees

Financial methods (e.g. salary, bonus)

Non-financial methods (passing on responsibility or praise)



Advantages of a Well Motivated Workforce

Better productivity (amount produced per employee)

Better quality

Lower levels of absenteeism

Lower levels of staff turnover (number of employees leaving business)

Lower training and recruitment costs



Four Main Motivational Theorists

Taylor

Mayo

Maslow

Herzberg



Taylor’s Theory of Motivation

Managers should maintain close control and supervision over their employees.

Autocratic style of management- managers make all decisions themselves

Theory X approach to workers- believe workers are lazy and are only motivated by money

Motivate by pay via piece-rate.



Mayo’s Theory of Motivation

Workers are not just motivated by money but by having their human/social needs met

Concluded that increase motivation by:

Better communication between managers and workers

Greater manager involvement in employees working lives

Working in groups

In practice therefore businesses should introduce team working and personnel departments to look after employees interests



Maslow’s Theory of Motivation

Maslow put forward a theory that there are five levels of human needs which employees need to have fulfilled at work.

Only once a lower level of need has been fully met, would a worker be motivated by the opportunity of having the next need up in the hierarchy satisfied.

A business should therefore offer different incentives to workers in order to help them fulfill each need in turn and progress up the hierarchy



Herzberg’s Theory of Motivation

Believed in two-factor theory

Motivators

Factors that directly motivate employees to work harder

Giving responsibility, recognition for good work, sense of achievement, opportunities for promotion

Hygiene factors

Factors that can de-motivate if not present but do not actually motivate employees to work harder

Pay, working conditions, job security

Motivate by using motivators plus ensuring hygiene factors are met

Use job enrichment and empowerment (delegating more power to employees to make their own decisions).



Autocratic Management Style

Description

Senior managers make all important decisions

Closely supervise and control workers

Managers do not trust workers and simply give orders (one-way communication)

When suitable

When quick decisions are needed in a company

E.g. in a time of crises

When controlling large numbers of low skilled workers



Democratic Management Style

Managers trust employees

Encourage employees to make decisions

Delegate authority/power to employees and listen to their advice



McGregor’s - Theory X and Theory Y

McGregor believed that managers have two very different views of workers in terms of their attitudes to work and motivation

Theory X view of workers:

Workers dislike work and are lazy

Workers must be controlled and punished were necessary

Workers try to avoid responsibility

Theory Y view of workers:

Workers like to work and enjoy new challenges

Workers like to make decisions and are creative and imaginative

Workers seek responsibility.



Best Approach/Style for Management?

Depends on circumstances

Whether workers are skilled or experienced

Level of genuine motivation

Whether quick decisions are needed etc

Best managers are those that are versatile and can call upon right style at right time



Reasons Why People Go To Work

To earn money

To feel a sense of achievement or job satisfaction

To feel a sense of belonging to a group

To achieve a sense of security

To obtain a feeling of self-worth



Main Types of Financial Incentives

Wages Normally paid per hour worked and receive money at end of week

Salaries - Normally an annual salary which is paid at end of each month

Bonus system - Usually only paid when certain targets have been achieved

Commission - Some workers, often salesmen, are partly paid according to number of products they sell

Profit sharing - A system whereby employees receive a proportion of company’s profits

Performance related pay - paid to those employees who meet certain targets

Share options - common incentive for senior managers who are given shares in company rather than a straightforward bonus or membership of a profit sharing scheme

Fringe benefits - Often known as ‘perks’, these are items an employee receives in addition to their normal wage or salary e.g. company car, private health insurance, free meals



Main Types of Non-Financial Incentives

Empowerment - delegating power to employees so they can make their own decisions

Praise - recognition for good work

Promotion opportunities - promoting employees to a position of higher responsibility

Job enrichment - giving employees more challenging and interesting tasks

Job enlargement - giving employees more tasks of a similar level of complexity

Better two-way communication - employees have a chance to give feedback and advice to managers

Better working environment - providing a safe, clean, comfortable environment to work in

Team working - offers employees an opportunity to meet their social needs and often accompanied by some form of empowerment for team



Fringe Benefits

Known as ‘perks’

Items an employee receives in addition to their normal wage or salary

E.g. company car, private health insurance, free meals

Often increases loyalty to company as these benefits are not always taxed or are taxed at a reduced rate

More likely to recruit best people to company



Wages and Salaries

Wages

Paid by hour with pay packet normally received at end of each week

Often paid to lower skilled workers or to temporary staff

Any additional hours worked normally paid a higher rate on an overtime basis

Salaries

Often set on an annual basis but payment is made at end of each month

Normally paid to managers or those higher up in a company

A set number of hours is not normally agreed but employment contract requires enough hours worked to get job done



Gross and Net Pay

Gross pay:

Pay each month or week before any deductions have been removed

E.g. before income tax, national insurance contributions

Net pay:

Pay after deductions have been taken off

Sometimes known as take-home pay



Overtime and Bonus Pay

Overtime

Additional hours worked over and above normal working hours

E.g. at weekends or on bank holidays

Paid at a higher rate - often 1.5 or 2 times normal hourly wage

Bonus pay

Given out when certain performance targets have been met

Normally applicable at manager level in a company

How bonuses are used:

By motivating employees to work harder in order to meet a realistic yet challenging target and therefore achieve a bonus payment

Would only be effective if bonus payments were a significant sum



Profit Sharing

What it is:

A system whereby employees receive a proportion of business profits

Advantages

Creates a direct link between pay and performance

Creates a sense of team spirit- helps remove ‘them and us’ barrier between managers and workers if all employees involved

May improve employee’s loyalty to company

Employees more likely to accept changes in working practices if can see that profits will increase overall



Performance Related Pay

Increasingly popular method of paying people

Paid to those employees who meet certain targets

Advantages

Senior managers can easily monitor and assess individual employee performance during appraisal process

Setting of targets for employees can ensure they are all closely focused to company objectives

Disadvantages

Discourages a team based approach- can create unhealthy rivalry between managers

Can be difficult to accurately measure performance of some workers e.g. in service sector firms

Incentives may not be larger enough to motivate employees



Motivational Theorist Views on Pay

Taylor was only theorist to emphasis pay, in particular piece-rate, as best way of motivating employees

Mayo, Maslow and Herzberg all felt that non-financial rewards, such as teamworking, empowerment or job enrichment, acted as a better incentive for employees to work harder



Job Enrichment and Job Enlargement

Job enrichment

Giving workers more interesting and challenging tasks

Seen as more motivating as it gives workers chance to further themselves

Herzberg in particular recommended this approach

Job enlargement

Giving workers more tasks to do of a similar nature or complexity

Job rotation is a part of this



Reasons for Pay Differentials

Mainly due to supply and demand

People with skills that are in demand, but are in short supply, get paid more

Cost of living varies between regions

Some jobs require qualifications (e.g. accountants, lawyers)



Piece Rate Payment

Now a relatively unusual and old-fashioned way of paying people

Pay per item produced in a certain period of time

Advantages

Requires low levels of manager supervision

Encourages high speed production

Provides good incentive for workers who are mainly motivated by pay

Disadvantages

Workers are focused on quantity not quality

It is repetitive for workers and can be de-motivating

Workers are only used to one set method of production and may resistant change

business essentials - chapter 9 (b).ppt

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