Sample Notes: Motivation

AS Level Business – Detailed Notes

Chapter 2.2: Motivation

2.2.1 Motivation as a Tool of Management and Leadership

Why Motivation Matters

• Motivation refers to the internal and external forces that stimulate people to take actions that lead to achieving a goal.
• In business, motivated employees are:
  • More productive
  • More innovative
  • More likely to provide better customer service
  • Less likely to be absent or leave (lower labour turnover)
• Managers and leaders use motivation to:
  • Align employee behavior with business objectives.
  • Encourage high performance.
  • Improve morale and loyalty.

2.2.2 Human Needs

Basic Human Needs

• Human needs are essential desires or requirements that influence behavior.
• They range from basic survival needs to psychological growth.
• At work, needs can include:
  • Income for survival
  • Recognition and status
  • Growth opportunities
  • Belonging to a team

Satisfaction of Needs at Work

• Satisfied needs lead to high motivation and engagement.
• Unmet needs result in:
  • Low morale
  • Poor performance
  • High absenteeism
  • Resentment or disinterest

2.2.3 Motivation Theories

1. Taylor (Scientific Management)

• Belief: Workers are motivated primarily by money.
• Key ideas:
  • Work should be broken down into simple tasks.
  • Use piece-rate pay to incentivize productivity.
  • Close supervision is necessary.
• Criticism: Ignores social and psychological needs.

2. Mayo (Human Relations Theory)

• Belief: Social needs and recognition matter more than money.
• Hawthorne Studies findings:
  • Worker performance improves when they feel valued and part of a team.
  • Communication and group belonging are crucial.
• Application: Emphasise teamwork, regular feedback, and interest in workers’ welfare.

3. Maslow’s Hierarchy of Needs

• A pyramid of five human needs:
  1. Physiological (e.g. salary for food/shelter)
  2. Safety (e.g. job security)
  3. Social (e.g. team, belonging)
  4. Esteem (e.g. recognition, respect)
  5. Self-actualisation (e.g. personal growth, challenging work)
• Application:
  • Employers should try to meet higher-level needs once lower-level ones are fulfilled.
  • Motivation improves as employees climb the pyramid.

4. Herzberg’s Two-Factor Theory

• Two categories:
  • Hygiene factors (prevent dissatisfaction): salary, working conditions, company policy.
  • Motivators (drive satisfaction): achievement, responsibility, recognition, personal growth.
• Removing dissatisfiers ≠ motivation.
• True motivation requires motivator factors.

5. McClelland’s Theory of Needs

• Three motivators:
  1. Need for Achievement (nAch): driven by challenging goals, performance feedback.
  2. Need for Affiliation (nAff): prefers social interaction and being liked.
  3. Need for Power (nPow): wants control and influence.
• Managers should tailor roles to dominant needs of employees.

6. Vroom’s Expectancy Theory (Process Theory)

• Motivation = Expectancy × Instrumentality × Valence
  • Expectancy: belief that effort leads to performance.
  • Instrumentality: belief that performance leads to rewards.
  • Valence: value placed on the reward.
• If any component is zero, motivation is zero.

2.2.4 Motivation Methods in Practice

Financial Motivators

1. Time-Based Pay

• Payment based on number of hours worked.
• Suitable for consistent output but may not reward productivity.

2. Salary

• Fixed annual/monthly payment regardless of hours worked.
• Provides stability but limited performance incentive.

3. Piece Rate

• Payment per unit produced.
• Incentivizes speed but may reduce quality.

4. Commission

• Payment based on sales.
• Motivates sales staff but may cause aggressive selling.

5. Bonuses

• One-off payments for achieving targets.
• Encourages goal achievement but may create rivalry.

6. Profit Sharing

• Distributing part of profits to employees.
• Aligns employee interests with business success.

7. Performance-Related Pay (PRP)

• Pay linked to performance appraisals.
• Motivates high performers but may be subjective.

8. Fringe Benefits

• Non-cash perks (e.g. company car, health insurance, gym).
• Adds value and loyalty but may not motivate all employees.

Non-Financial Motivators

1. Training and Development

• Helps employees grow skills.
• Enhances motivation through learning and future potential.

2. Promotion Opportunities

• Gives recognition and new challenges.
• Fulfils esteem and self-actualisation needs.

3. Job Redesign

• Enriching or enlarging tasks to make jobs more meaningful.
• Improves engagement and reduces monotony.

4. Status

• Providing higher job titles or authority.
• Appeals to need for recognition and power.

5. Empowerment

• Granting employees autonomy in decision-making.
• Increases ownership and accountability.

6. Participation

• Involving employees in decision-making processes.
• Builds team spirit and commitment.

7. Team Working

• Promotes social belonging and shared responsibility.
• Encourages communication and cooperation.

8. Job Enrichment

• Designing roles to include variety, challenge, and responsibility.
• Increases motivation through meaningful work.

Employee Participation in Management and Control

• Forms of participation:
  • Quality circles
  • Employee committees
  • Works councils
  • Joint decision-making boards
• Benefits:
  • Increases engagement and loyalty
  • Improves ideas and problem-solving
  • Reduces conflict between employees and managers