A LevelBusinessEdexcelRevision Notes1. Marketing and People1.4 Managing People1.4.4 Motivation in Theory & Practice

Motivation in Theory & Practice (Edexcel A Level Business)

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Steve Vorster

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The Importance of Employee Motivation

  • Motivation refers to the inner desire or willingness that propels a person to take action and achieve a specific goal or outcome
    • Motivation can be intrinsic, coming from within a person (values, beliefs etc)
    • Motivation can be extrinsic, coming from external factors (rewards or punishments)
       
  • Motivation plays a critical role in a business's success and can have a significant impact on productivity, reliability and loyalty of the workers, and labour turnover rates
     

1. The impact of motivation on productivity

  • Motivated employees are more productive and efficient as they are more likely to be engaged in their work and take initiative to meet or exceed their goals
  • They will generate higher levels of output and quality
  • Increased productivity results in higher profits for the business
      

2. The impact of motivation on the reliability of workers

  • Motivated employees are more likely to be reliable and dependable
  • They take pride in their job, show up on time, meet deadlines, and take fewer sick days
  • This leads to increased trust between the business and its employees and higher productivity

3. The impact of motivation on turnover rates

  • Motivated employees are more likely to stay with the company long-term which reduces the turnover rate
  • Lower turnover rates reduce the need for costly recruitment and training

Motivation Theories: Taylor's Scientific Management

  • Developed by Frederick Winslow Taylor in the early 20th century
  • It focuses on breaking down complex tasks into simpler ones, standardising work processes, and providing workers with clear instructions and training to achieve maximum efficiency
  • Many manufacturing businesses use Taylor's principles to structure their staff benefits e.g. piece rate pay
    • Production lines involving human labour are often set up based on these principles

1-4-4-taylors-scientific-management

Taylor's method starts with a scientific analysis of what is involved in a job and then breaks it down into parts for which employees can be trained

 

1. Study and analyse the work process

  • Carefully analyse each step of the work process
  • Break down complex tasks into simpler ones and identify the most efficient and effective way to perform each task
     

2. Standardise the work process

  • This involves creating detailed procedures and instructions for each task so that workers can follow these procedures consistently
     

3. Select and train the workers

  • Workers should be carefully selected based on their skills and abilities
  • Train workers to perform their tasks efficiently and effectively
    • This training includes both technical skills and the proper attitudes/behaviours required to be successful (e.g patience in a repetitive task)
       

4. Provide incentives for performance

  • Scientific management emphasises the use of incentives to motivate workers
    • This may include bonuses or piece-rate pay
       

Ways in which Businesses use Taylor's Scientific Management

How Businesses use Taylor's Approach Advantages Disadvantages

  • Workers are trained to perform only one task which they become very skilled at
  • Workers are usually only paid for the completed work (piece rate pay) e.g. $0.16 per T-shirt completed by garment workers in Bangladesh

  • Increased efficiency which lowers costs
  • Standardised procedures for work processes that everyone follows can help reduce errors and inconsistencies
  • Specialisation of labour leads to greater efficiency and productivity
  • Clear hierarchy and lines of authority can lead to more efficient decision-making and communication
  • Improved training and development can lead to better performance and job satisfaction

  • Overemphasis on efficiency reduces worker satisfaction and creativity
  • Workers may disengage from work if they are reduced to working in a machine-like system
  • Limited applicability as this approach may not work for roles that require high levels of creativity, problem-solving, or interpersonal skills
  • Potential for exploitation as this approach may be used to extract more work from workers without compensating them fairly e.g many 'sweat shop' labourers get paid using this method

Motivation Theories: Mayo's Human Relations Theory

  • Mayo's Human Relations Theory was developed by Elton Mayo in the 1930s and focuses on the importance of social factors in the workplace
    • These include factors such as communication, motivation, and job satisfaction
       
  • Mayo suggests that the key to improving productivity and job satisfaction lies in understanding and improving the relationships between workers, supervisors, and management

Ways in which Businesses use Mayo's Human Relations Theory


How Businesses use Mayo's Approach
Advantages
Disadvantages

  • Empowering employees in decision-making e.g, creating teams which decide their priorities
  • Team-building activities are used to build relationships
  • Providing feedback and recognition  to employees e.g Worker of the Week
  • Creating a positive work environment by promoting open communication and providing support to employees e.g. offering wellness programs
  • Encouraging employee development by offering training programs, mentorship opportunities, and career advancement paths

  • Improved job satisfaction
  • Increased productivity as workers feel valued and supported
  • Better communication as workers value open and honest communication which reduces misunderstandings and conflicts
  • Employee empowerment increases worker's sense of ownership and responsibility
  • Stronger teams as there is a sense of community and team spirit

  • Time-consuming as building positive relationships requires time and effort
  • Lack of control as workers take more decisions
  • Resistance to change as some workers and managers may be resistant to the changes required by Mayo's theory
  • Potential for conflict as attempts to build stronger relationships can also lead to conflicts and disagreements
  • Limited applicability as it may not work for businesses which require a high degree of individual autonomy and independence

Motivation Theories: Maslow's Hierarchy of Needs

  • Maslow's Hierarchy of Needs is a theory of human motivation that outlines five tiers of human needs that must be met for individuals to reach their full potential

1-4-4-maslows-hierarchy-of-needs

Maslow's Hierarchy of Needs

 

Maslow's Hierarchy of Needs applied to business

  1. Physiological Needs
    Businesses can provide necessities for their employees e.g comfortable work environment, access to clean water and food, and adequate rest breaks

  2. Safety Needs
    Businesses can provide job security, fair pay, benefits, and safe working conditions for their employees

  3. Love and Belonging Needs
    Businesses can encourage teamwork and generate a sense of community and belonging within the workplace

  4. Esteem Needs
    Businesses can provide recognition for employees' accomplishments, and provide a positive work culture that values individual contributions

  5. Self-Actualisation Needs
    Businesses can help employees achieve this need by offering opportunities for employees to pursue their passions and interests e.g Barclay's was known for supporting elite sportspeople by allowing them time off work in the day to continue their training (the focus was on getting the job done, not having to be in at a certain time)
     

The Advantages & Disadvantages to Business of Applying Maslow's Hierarchy


Advantages
Disadvantages

  • Higher employee satisfaction: By meeting the needs of employees, businesses can create a more satisfying work environment which can lead to increased productivity and lower turnover rates

  • Increased motivation: Businesses can motivate their employees by offering incentives that align with their specific needs and desires

  • Improved employee performance: Employees who feel valued and supported by their employers are more likely to perform at a higher level

  • One size does not fit all: Businesses need to tailor their approach to meet the individual needs of their employees

  • Expensive: Meeting many individual needs can be costly, especially when offering perks such as the use of a company car

  • Time-consuming: Requires significant effort from management to connect individually to understand which opportunities for personal growth are desired

Motivation Theories: Herzberg's Two Factor Theory

  • Herzberg's theory suggests that there are two types of factors that affect employee motivation and job satisfaction - hygiene factors and motivators
    • Hygiene factors are elements that do not necessarily lead to job satisfaction, but their absence can cause dissatisfaction which decreases motivation e.g poor teamwork in the workplace
    • Motivators are elements that lead to job satisfaction and motivation e.g. increased responsibility
       

1-4-4-herbergs-two-factor-theory-1

An explanation of how the lack of hygiene factors causes dissatisfaction while addressing the motivators increases satisfaction. Increased satisfaction leads to increased productivity and profitability

 

How businesses can use hygiene factors to decrease dissatisfaction

  • Pay fair wages/salaries
    If an employee is not paid a fair wage for their work, they may become dissatisfied and demotivated

  • Offer excellent working conditions
    If the workplace is dirty, unsafe, or uncomfortable, employees may become dissatisfied and demotivated e.g Google has a reputation for providing amazing workplaces which include gourmet restaurants, laundry services and dog care

  • Offer employment contracts which provide job security
    If employees feel that their job is not secure, they may become anxious and demotivated and contribute less to the business goals

 

How businesses can use motivating factors to increase satisfaction

  • Build a recognition and rewards culture
    When employees are recognised and rewarded for their hard work, they are motivated to continue performing well e.g. Sales person of the month award
     
  • Offer opportunities for growth and development
    When employees are given opportunities to learn new skills and advance in their careers, they are motivated to continue working for the company e.g. set in place a 3 year growth plan which helps the worker move towards a reach job role

  • Provide challenging work which requires problem solving
    When employees are given challenging work that allows them to use their skills and abilities, they are motivated to continue performing well

Financial Incentives to Improve Performance

  • Financial incentives are rewards or payments given to employees in return for their labour - or improved performance
     

Types of Financial Incentives & Their Links to Motivational Theory


Incentive Type
Explanation
Link to Motivational Theories

Piecework

  • Employees are paid according to the number of units or pieces they produce
  • Commonly used in manufacturing or assembly-line settings and encourages workers to produce more and increase their output

  • Taylor's Scientific management

Commission

  • A percentage of sales revenue paid to workers who sell products or services
  • Commonly used in sales roles and motivates staff to sell more and increase their sales revenue

  • Hygiene factor in Hertzberg's Theory
  • Connects to Esteem Needs in Maslow's Hierarchy (salesperson of the month)

Bonus

  • An additional payment is given to staff as a reward for achieving specific goals, completing projects on time, or exceeding performance expectations
  • Motivates staff to work harder and achieve better results

  • Connects to Esteem Needs in Maslow's Hierarchy (achievement)
  • Herzberg believed bonuses as the main form of payment would negatively influence individual behaviour in the workplace (this was part of the problem in the banking industry leading up to the 2008 financial crash)

Profit share

  • A portion of the company's profits are distributed among staff which encourages them to think like owners, work collaboratively and focus on the company's overall goals

  • Motivator in Herzberg's Theory as it creates buy in to increased responsibility (help the organisation succeed; be an owner) and is seen as a form of recognition 

Performance-related pay

  • Staff are paid based on their performance which (theoretically) motivates staff to work harder and achieve better results
  • This form of payment has been severely criticised as discriminatory and open to abuse by managers

  • Hygiene Factor in Herzberg's theory - and has been proven to cause significant dissatisfaction when utilised

Non-financial Incentives to Improve Performance

  • Non-financial incentives are rewards or motivators not directly related to money
  • These incentives are usually intangible and include methods that lead to recognition, praise, job satisfaction, and work-life balance

Types of Non-financial Incentives & Their Links to Motivational Theory


Incentive Type
Explanation
Link to Motivational Theories

Delegation

  • Involves transferring responsibility from a manager to their staff
  • Gives employees a sense of ownership and control over their work, which can lead to improved productivity

  • Maslow's 'Esteem' Needs as staff contribution is valued
  • A 'motivator' in Herzberg's Two Factor Theory (increase in responsibility)

Consultation

  • Involves seeking the input of staff on decisions that affect their work
  • This inclusion can increase staff engagement and commitment, leading to improved productivity

  • Maslow's 'Esteem' Needs as staff contribution is valued

Empowerment

  • Involves giving staff the authority and resources to make decisions and take action without first receiving management approval
  • Increases staff sense of ownership and responsibility, leading to improved productivity

 

  • Maslow's 'Esteem' Needs as staff contribution is valued
  • A 'motivator' in Herzberg's Two Factor Theory (increase in responsibility)

Team working

  • Involves creating opportunities for staff to work collaboratively
  • Staff can share ideas and expertise, leading to improved productivity and innovation

 

  • Mayo's Human Relations Theory encourages teamwork

Flexible working

  • Involves providing staff with the option to work remotely, or to adjust their hours to suit their lifestyle
  • Can increase staff satisfaction and work-life balance leading to improved productivity and reduced turnover

 

  • Maslow's 'Self Actualisation' as schedules can be adjusted to allow staff to attack their aspirations
  • A 'motivator' in Herzberg's Two Factor Theory (personal growth)

Job enrichment

  • Involves adding more challenging or meaningful tasks to a job
  • Staff feel more motivated and engaged, leading to improved productivity

  • Mayo's Human Relations Theory as it encourages the development of staff
  • A 'motivator' in Herzberg's Two Factor Theory

Job rotation

  • Involves moving staff between different roles in the business
  • Exposes staff to new challenges and experiences which can increase motivation, understanding and skill

  • A 'motivator' in Herzberg's Two Factor Theory (the work itself)

Job enlargement

  • Involves expanding staff's job duties to include additional tasks or responsibilities
  • Engaging with a variety of tasks can increase motivation and job satisfaction, leading to improved productivity

  • Mayo's Human Relations Theory as it encourages the development of staff
  • A 'motivator' in Herzberg's Two factor Theory (the work itself)

Exam Tip

When you are asked to asses a compensation package that a business is wanting to offer, there are several factors you should consider before answering:

  1. The context of the business: Is it a manufacturing facility or a team of creative designers?
  2. The Industry norms: Does the data provide any insight into what competitors are doing?
  3. The balance of the compensation package: ideally it should include appropriate financial and non-financial incentives to maximise employee productivity and retention.

The case study usually provides good data which helps you to answer the above questions and base your answer on, so refer to it as supporting evidence.

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    Steve Vorster

    Author: Steve Vorster

    Steve has taught A Level, GCSE, IGCSE Business and Economics - as well as IBDP Economics and Business Management. He is an IBDP Examiner and IGCSE textbook author. His students regularly achieve 90-100% in their final exams. Steve has been the Assistant Head of Sixth Form for a school in Devon, and Head of Economics at the world's largest International school in Singapore. He loves to create resources which speed up student learning and are easily accessible by all.