Ali Nehan Khan

Section 2 PEOPLE IN BUSINESS

Chapter 6 – Motivation: Worksheet

Learning objective: To explain,

- Why people work and what motivation means
- The benefits of a well-motivated workforce: labour productivity, reduced absenteeism and labour
turnover
- The concept of human needs – Maslow’s hierarchy
- Key motivational theories – Taylor and Herzberg
- Financial and non-financial rewards as methods of motivation
- How to recommend and justify appropriate methods of motivation in given circumstances

1. Give the meaning of the following:

a. Motivation: The reason why employees want to work hard and work effectively for the
business. When employees are motivated, it leads to a well-motivated workforce, which enables
higher output and lower labor turnover- benefiting the business.

b. Wage: A form of payment for work, usually paid weekly. When calculating the wages to be
paid, they can be worked out using two main ways: a time rate pay system or a piece rate pay
system.

c. Time rate: A system of payment in which the amount is paid to an employee for one hour of
work. Time rate is often used where it is difficult to measure the output of the worker, for
example, a bus driver or hotel receptionist.

d. Piece rate: A system of payment in which the amount is paid for each unit of output. Piece rate
systems directly tie earnings to productivity, motivating employees to work efficiently and
maintain high levels of output.

e. Salary: A system of payment for work, usually paid monthly. A salary is calculated as an
amount of money per year for the job performed by the worker; divided into 12 monthly
amounts.

f. Bonus: An additional amount of payment above basic pay as a reward for good work. Workers
often consider themselves to be ‘recognized’ and ‘special’ if they are paid a bonus.
Ali Nehan Khan
g. Commission: A payment relating to the number of sales made. This encourages the sales staff
to sell as many products as possible, as the more sales they make, the more money they are
paid.

h. Profit sharing: A system where a proportion of the company’s profits is paid out to employees.
This additional payment should motivate the workers to work hard as they all receive a share of
the profits earned by the business.

i. Job satisfaction: The enjoyment derived from feeling that you have done a good job. Job
satisfaction is also linked to increased productivity and creativity within the workplace, as
content employees are more likely to contribute positively to their tasks and environment.

j. Job rotation: The changing of roles or tasks for a limited duration before transitioning to
different responsibilities, for employees. Adding variety to tasks simplifies managers' ability to
cover for absent employees by easily shifting workers within the factory.

k. Job enrichment: The enhancement of job roles by adding tasks that require higher skill sets or
increased levels of responsibility. Although job enrichment enhances job satisfaction, additional
training may be necessary to enable the employee to take on extra tasks.

l. Teamworking: When using groups of workers and allocating specific tasks and responsibilities
to them. Teamworking gives a feeling of control over the jobs/tasks, enabling the employees to
feel more committed, therefore increasing job satisfaction.

m. Training: The process of improving a worker’s skills. Training gives employees the feeling that
their good work has been recognized, enabling worker motivation.

n. Promotion: The advancement of an employee in an organisation, usually to a higher

job/managerial level. Employees offered promotion will feel recognised, have a higher status
and will be given more challenging work to perform.
Ali Nehan Khan

2. How do businesses benefit from a well-motivated workforce?

 High output per worker – which helps to keep costs low and increase profits
 Willingness to Accept Change- for example, new methods of working
 Two-way Communication with management- for example, suggestions for improving
quality
 Low labour Turnover – a loyal workforce; this reduces the cost of recruiting workers who
leave
 Low rates of Absenteeism – reducing the disruption caused by absence from work
 Low rates of Strike Action – avoiding damage to customer relations

3. Maslow’s hierarchy of needs: Label the below

Self Actualisiation
Esteem Needs

Social Needs

Safety/Security Needs

Physiological Needs

Maslow’s theory explained:

Maslow's theory suggests that for employees to be motivated at work, their needs across
Ali Nehan Khan
4.

5.
Taylor’s theory explained:
F.W. Taylor, an American laborer turned chief engineer in the 1880s, pioneered efforts to
enhance labor productivity by linking higher pay to increased work efficiency. His
approach involved breaking down job tasks into simpler elements and setting output targets,
primarily centered around financial incentives. However, criticisms arose as his theories
oversimplified employee motivation, neglecting non-monetary incentives. Taylor's focus on
pay failed to acknowledge that job satisfaction and fulfillment significantly impact workers'
effectiveness, and practical challenges emerged in accurately measuring output, posing
implementation hurdles for his ideas in various workplaces.

6.

Herzberg’s theory explained:

Frederick Herzberg developed motivation theories after studying engineers and

accountants in the USA. He proposed that humans possess two sets of needs: 'hygiene'
factors, such as fair pay and a safe workplace, prevent dissatisfaction but don't inherently
motivate; whereas 'motivational' factors, like recognition and opportunities for growth,
inspire enthusiasm and personal development beyond basic job contentment, aligning with
an individual's psychological growth and fulfillment.

7. Explain the advantages and disadvantages of the financial and non-financial methods of motivation
Ali Nehan Khan
Methods of Advantages Disadvantages
motivation
Wages  Workers receive regular payments,  Weekly calculations require time and
reducing financial uncertainty. money.

 Overtime pay motivates employees to  Good and bad workers receive the same
work additional hours, or produce pay, potentially causing resentment.
more units, when needed.

Time rate  Rewards workers that work  Time-consuming paperwork with time
system overtime/put in more hours of work. sheets.
 Easy to calculate wages, providing
clarity to both employees and  Equal pay for both good and bad
employers. workers.

 Need for a clocking-in system to track

hours worked.

Piece rate  Encourages workers to produce more,  Workers may prioritize quantity over
system which can increase productivity. quality, requiring costly quality control
 Rewards employees based on their measures.
output, promoting efficiency.
 Potential for wage inequality among
workers, causing resentment.

 Vulnerability to reduced earnings when

machinery breaks down.

Salary  Employers have more predictable  Some workers may prefer more frequent
monthly payment schedules. payments.

 Easier calculation of salary costs for  No extra pay for additional hours
businesses. worked, potentially reducing motivation
for overtime.

 Can motivate employees and make  Expectations for bonuses can lead to
Bonus them feel recognized. disappointment if not paid.

 Encourages exceptional performance.  Unequal distribution may cause

resentment among employees.

 Motivates sales staff to increase  May encourage aggressive sales tactics.

Commission sales.

 Monthly variations in pay can create

Ali Nehan Khan
 Directly ties pay to performance. financial stress for sales staff.

 Encourages employees to contribute  No profit share in low-profit or loss-

Profit- to the company's profitability. making years.
sharing
 Usually rewards employee loyalty to a  Higher-paid workers receive more
business. significant profit shares, potentially
causing resentment among lower-paid
employees.

Job rotation  Increased Workforce Flexibility (Easy  Potential for higher mistakes as the
task reassignment) employees will not be specialized in
 Allows employees to change their their fields.
work up, allowing them to try unique
experiences, adding to their job
satisfaction.

Job  Higher Job Satisfaction  Additional training may be required to

enrichment  Employees will gain higher assist employees with their added work
responsibilities, giving them a sense of load; meaning more costs for the
belonging and independency. business.

Team  Improved affiliation and decision  Potential for conflicts/disagreements

working making. when making decisions.

Training  Skill Development and Achievement,  Investment in Training Costs Time and
allowing employees to specialize in Money.
their respective departments.
Promotion  Motivated Workers with Higher Status  Employees that are not promoted may
and Challenging Roles feel resentment and demotivation.
 Workers are rewarded for their  Some employees may feel as if they are
contributions towards the business. not recognized for their efforts.


8. What are fringe benefits? Give all possible examples.

Fringe benefits are additional non-monetary perks offered by employers to employees, enhancing
their overall compensation beyond wages or salaries. Fringe benefits, often including healthcare
coverage or retirement plans, aim to enhance the overall well-being and satisfaction of employees
within the workplace. Examples include: Company vehicle, discounts on products, health care,
children's education, free accommodation, share options, generous expense accounts, pension, and
free trips/holidays.