1.4.4 Motivation in theory and practice

The importance of employee motivation to a business

Motivation is the reason for people's actions, willingness and goals.

Motivated employees are often more productive, reliable and loyal, and labour turnover rates should be considered with staff motivation.

When staff are motivated, they are more likely to stay with the business, reducing the costs associated with high staff turnover.

Higher levels of motivation often lead to improved productivity, which helps a business get the best out of their staff and achieve its goals.

Intrinsic vs extrinsic motivation

Intrinsic motivation comes from within a person, such as their values and beliefs. Extrinsic motivation comes from external factors, such as rewards or punishment.

Theories of motivation

Taylor's scientific management theory

Taylor's scientific management suggested a job could be broken down into constituent parts, so that the most efficient way of working could be calculated.

He believed workers are motivated by money.

His theory states that employee pay should be related to the amount of work they do, as money is the most appropriate motivator for employees.

Mayo's human relations theory

Mayo's human relations theory emphasises the importance of the ways in which people interact and how they are treated.

This theory suggests that motivation can improve when employees feel more involved.

By making employees feel involved, businesses can meet social needs that simple financial rewards might ignore.

Maslow's hierarchy of needs

Maslow's hierarchy of needs is the order of people's needs, starting with basic human needs.

Once a lower-level need is satisfied, the business must provide opportunities to meet the next level of need to maintain motivation.

1. Physiological needs

2. Safety needs

3. Social needs

4. Esteem needs

5. Self-actualisation 

Herzberg's two-factor theory

Herzberg’s two factor theory focuses on motivators that create satisfaction and hygiene factors that prevent dissatisfaction.

Motivators include factors such as achievement, recognition, and the nature of the work itself, which lead to positive job satisfaction.

Hygiene factors include pay, company policy, and working conditions; these do not motivate on their own but cause dissatisfaction if they are poor.

Financial incentives to improve employee performance

Financial incentives are monetary rewards used to help improve staff motivation and achievement.

Piece rate

Piece rate is a payment system where employees are paid an agreed rate for every item produced.

An advantage is that it provides a direct incentive for employees to work faster and ensures the business only pays for the work actually completed.

A disadvantage is that employees may rush, leading to a decline in product quality, and workers may feel insecure if their earnings fluctuate due to factors like machinery breakdowns.

Commission

Commission is a payment to a worker based on a percentage of the value of sales.

An advantage is that it motivates sales staff to maximise revenue while keeping the business’s costs flexible as pay only rises when sales are high.

A disadvantage is that it can lead to high-pressure sales tactics that damage the business's reputation and creates an unstable income for employees.

Bonus

A bonus is a sum of money added to an employee's wages/salary as a reward for performance when they reach or exceed their targets.

An advantage is that it can be targeted toward specific goals like completing projects on time without increasing the business's long-term fixed salary costs.

A disadvantage is that if bonuses are not awarded fairly, they can cause resentment, and employees may ignore tasks that are not linked to a payout.

Profit sharing

Profit sharing is a form of financial incentive given to employees, where part of the profit of the business is shared amongst the employees.

An advantage is that it encourages employees to work together toward the overall success of the company and improves staff retention.

A disadvantage is that individual effort is not always reflected in the profit share and employees may become demotivated in years where the business makes no profit.

Performance-related pay

Performance-related pay is a financial reward to employees whose work is considered to have reached a required standard.

An advantage is that it encourages staff to meet specific standards and allows managers to reward high-performing staff without increasing the pay of underperformers.

A disadvantage is that the appraisal process can be subjective and biased, and it can create a competitive rather than collaborative culture among staff.

Non-financial incentives to improve motivation

Non-financial techniques are ways of encouraging employees without the use of monetary rewards.

Delegation

Delegation is the authority to pass down from superior to subordinate.

An advantage is that it empowers employees to develop new skills for promotion and frees up the manager’s time for more strategic tasks.

A disadvantage is that the task may be completed poorly if the employee is not properly trained and some staff may feel stressed by added responsibility without extra pay.

Consultation

Consultation occurs when employee opinions/feedback are sought when making business decisions.

An advantage is that it provides managers with diverse ideas and ensures employees are more likely to accept changes if they have been involved.

A disadvantage is that the decision-making process can become much slower and employees may feel demotivated if a manager ultimately ignores their feedback.

Empowerment

Empowerment involves giving official authority to employees to make decisions and to control their own work activities.

An advantage is that it increases job satisfaction and allows for faster responses to customer needs without constant supervision.

A disadvantage is that it carries a risk of inconsistent decision-making across the business and some staff may lack the confidence to take on such authority.

Team working

Team working is the organising of people into working groups that have a common aim.

An advantage is that it satisfies social needs and allows teams to solve complex problems more effectively than individuals working alone.

A disadvantage is that group conflict can occur which disrupts productivity and some individuals may contribute less effort than others while hiding in the team.

Flexible working

Flexible working involves offering different working hours/location/pattern of working that improve work-life balance/motivation for employees.

An advantage is that it helps the business attract a wider range of skilled staff and can reduce costs such as needing less office space.

A disadvantage is that it can make communication between staff members more difficult and some employees may find it harder to separate work from home life.

Job enrichment

Job enrichment involves giving employees greater responsibility and recognition by vertically extending their work role.

An advantage is that it makes work more interesting and provides employees with a sense of achievement while developing future leaders.

A disadvantage is that not all workers want more responsibility and it may require significant investment in training for the employees.

Job rotation

Job rotation is the changing of jobs or tasks to provide variety.

An advantage is that it reduces boredom and creates a multi-skilled workforce that can cover for absent colleagues.

A disadvantage is that employees may never become true experts in one specific task and productivity may drop as employees constantly adjust to new roles.

Job enlargement

Job enlargement involves giving an employee more work to do of a similar nature, horizontally extending their work role.

An advantage is that it provides more variety in the daily routine and makes more efficient use of an employee’s time.

A disadvantage is that it can be seen as giving more work for the same pay and does not necessarily make the work more rewarding.