Motivating Employees

What this topic is all about

• Overview of the theories that support motivational techniques at work

• Practical approaches to motivation in the workplace (financial & non-financial)

• How motivation links to:– Organisational structure

– Improving profit and quality

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

The Theory of

Motivation

The Theory of Motivation (1)

Taylor Mayo Maslow Herzberg

Scientific management

Human relations management

Hawthorne Effect

Two-factor theoryMotivatorsHygiene or maintenance factors

Hierarchy of needs

The Theory of Motivation (2)

McGregor Drucker Peters

Theory XTheory Y

Importance of objectives

Involving employees

Recognising champions

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 workers using piece-rate payment (pay based on how much they produce)

Mayo’s Theory of Motivation

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

• 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

• 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

Maslow’s Hierarchy of Needs

Psychological Basic needs – e.g. food, shelter

Safety

Social

Esteem

Self-actualisation

Safe working environment; job security

Feeling wanted, sense of belonging, part of team

Self-respect, level of status

Intellectual needs, fulfilling potential, achieving targets

Herzberg’s Theory of Motivation

• Believed in two-factor theory• Motivators

– Factors that directly motivate people to work harder– Giving responsibility, recognition for good work,

opportunities for promotion

• Hygiene (maintenance) 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).

McGregor’s - Theory X and Theory Y

• McGregor believed that managers have two different views of workers in terms of 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.

Drucker

• Setting objectives is a key method of motivation

• Important that employees can measure their performance

• Profit targets are important motivators

• Also supported good pay, promotion & communication

Peters

• Employers should:– Recognised champions (sense of

recognition)

– Involve workers in all aspects of the business

– Offer financial incentives (e.g. target-related bonuses

– Provide job security

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

Implications of theory for management styles?

• A distinction is often made between:

• Autocratic management

• Democratic management

• Which is best or most suitable?

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

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

Motivation in Practice

Reasons Why People Go To Work

• To earn money

• For a sense of achievement or job satisfaction

• To belong to a group

• For a sense of security

• To obtain a feeling of self-worth

Main 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

CommissionSome 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 optionsCommon incentive for senior managers who are given shares in company rather than a straightforward bonus or membership of a profit sharing scheme

Fringe benefitsOften 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 Non-Financial Incentives

Empowerment Delegating power to employees so they can make their own decisions

Praise Recognition for good work

Promotion 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 communication

Employees have a chance to give feedback and advice to managers

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

Piece Rate Payment

• Relatively unusual and old-fashioned way of payment• 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

Commission

• A financial incentive linked to achievement of sales

• Typical set-up– % commission for £value of sale achieved– Basis commission rate set at low rate– Higher rate offered once sales targets are achieved

• Main advantage – clear link between sales and remuneration

• Main disadvantages – sales may be influence by factors outside of employee control (e.g. mature product, customer service)

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)

Working in Teams

Why Use Teams?

• Some production tasks appropriate for individuals – high division of labour

• But many production processes are best undertaken by people working together

Benefits of Teamworking

• Higher productivity

• More flexible workforce (team members tend to be multi-skilled)

• Improved quality

• Reduced wastage

• More job satisfaction = better motivation

• Higher customer service

Test Your Understanding

http://www.tutor2u.net/business/quiz/motivation/quiz.html

Motivating Employees