Agustina Olivera

Definitions to learn
● Motivation is the reason why employees want to work hard and
work effectively for the business.
● A wage is payment for work, usually paid weekly.
● Time rate is the amount paid to an employee for one hour of work.
● Piece rate is an amount paid for each unit of output.
● A salary is payment for work, usually paid monthly.
● A bonus is an additional amount of payment above basic pay as a
reward for good work.
● Commission is payment relating to the number of sales made.
Profit sharing is a system whereby a proportion of the company’s
profits are paid out to employees.
● Job satisfaction is the enjoyment derived from feeling that you
have done a good job.
● Job rotation involves workers swapping around and doing each
specific task for only a limited time and then changing around again.
● Job enrichment involves looking at jobs and adding tasks that
require more skill and/or responsibility.
● Teamworking involves using groups of workers and allocating
specific tasks and responsibilities to them.
● Training is the process of improving a worker’s skills.
● Promotion is the advancement of an employee in an organisation, for example, to a
higher job/managerial level.

Why People Work:

➔ People work primarily to earn money for basic necessities, but work can also
be motivated by non-monetary factors.
➔ Motivated employees are more productive, leading to increased profits.
➔ Benefits of a well-motivated workforce include high output, willingness to
accept change, communication with management, low turnover, low
absenteeism, and low strike rates.
Maslow's Hierarchy of Needs:

● Abraham Maslow's hierarchy of needs explains human motivation.

● It consists of five levels: physiological, safety, love and belonging, esteem, and
self-actualization.
● Higher-level needs become motivating factors once lower-level needs are
satisfied.
● Managers should understand these needs to motivate employees effectively.
Motivation Theories:

★ F.W. Taylor's Theory: Taylor focused on monetary incentives as the primary

motivator.
○ He believed that employees are motivated by personal gain.
○ Taylor's ideas led to productivity gains but were criticized for
oversimplification.
★ Herzberg's Theory:
○ Herzberg identified two types of needs: hygiene factors (basic needs)
and motivators (psychological growth).
○ Hygiene factors prevent dissatisfaction but don't motivate. Motivators
are factors like achievement, recognition, and personal growth.
○ Satisfaction of hygiene factors is a prerequisite for motivating
employees.

Methods of Payment:

★ Wages:
○ Paid weekly for manual workers.
○ Overtime pay is common.
○ Simple to calculate but may not differentiate between good and bad
workers.
★ Salaries:
○ Paid monthly for office staff and management.
○ Calculated annually and provides stability for the employer.
○ No payment for extra time worked.
★ Bonuses:
○ Lump-sum payments for good performance.
○ Not guaranteed and can lead to employee disappointment.
★ Commission:
○ Paid to sales staff based on sales performance.
○ Can be stressful and lead to unhealthy competition among sales staff.
★ Profit Sharing:
○ Employees receive a share of the profits.
○ Encourages commitment but depends on business profitability.
★ Fringe Benefits:
○ Non-monetary benefits, such as company vehicles or health care.
○ Varies by job seniority.
Non-Financial Methods of Motivation:

★ Job Rotation:
○ Workers switch tasks periodically to add variety but doesn't necessarily
make tasks more interesting.
★ Job Enrichment:
○ Adding tasks with more skill or responsibility to make jobs more
fulfilling.
★ Autonomous Work Groups or Teamworking:
○ Teams of workers take responsibility for tasks and decision-making.
○ Increases job satisfaction and commitment.
★ Training:
○ Improving skills leads to a sense of achievement and more challenging
work, aligning with job enrichment.
★ Opportunities for Promotion:
○ Internal promotions recognize and motivate employees, leading to
higher status and more challenging roles.

Remember that a combination of financial and non-financial incentives can

effectively motivate employees, depending on their needs and circumstances.

1 Joe owns a business which produces wooden furniture. He employs 20 workers in the
Production department and three workers in the offices. Joe pays all his workers wages
which are calculated by time rate, but he is thinking of changing to piece rate. He has a high
labour turnover from the factory as his workers are not well motivated.

a Define ‘piece rate’.

b Identify two examples of non-financial benefits Joe could give to his employees.

c Outline two reasons why many employees leave their job at the furniture company.

d Explain two ways Joe can improve the job satisfaction of his employees.

e Do you think a wage calculated by piece rate is a suitable method of payment for all Joe’s
employees? Justify your answer.

2 Sasha is a hotel manager. She has 30 employees and they are divided into teams working
in the following departments: kitchen; restaurant; hotel reception; housekeeping (room
cleaning). Two of the hotel receptionists have been trained by Sasha in some aspects of
hotel management. A modern hotel has recently opened two kilometres away. Sasha wants
to improve the motivation of all the employees and is thinking of introducing a bonus. She
thinks it will make the hotel more profitable.

a Define ‘bonus’.
b Identify two reasons why people work.

c Outline two levels in Maslow’s hierarchy of needs experienced by the hotel workers.

d Explain two benefits to the hotel of having well-motivated employees.

e Do you think introducing a bonus is the best way to improve the motivation of the
employees at the hotel? Justify your answer.

Joe's Furniture Business:

a. Define 'piece rate':

Piece rate is an amount paid to an employee for each unit of output they produce. In other
words, employees are compensated based on the quantity or number of items they create or
complete.

b. Identify two examples of non-financial benefits Joe could give to his employees: Non-
financial benefits for Joe's employees could include:

Job Enrichment: Adding more challenging tasks to their roles, such as allowing them to
participate in the design process or giving them more responsibility.

Training Opportunities: Providing training to improve their skills and knowledge, which can
lead to a sense of achievement.

c. Outline two reasons why many employees leave their job at the furniture company:

Possible reasons for high turnover could include:

Lack of Motivation: Employees may not feel motivated due to the current payment method
(time rate) and a lack of non-financial incentives.

Job Dissatisfaction: Employees may find their tasks monotonous or unfulfilling.

d. Explain two ways Joe can improve the job satisfaction of his employees:

Joe can enhance job satisfaction by:

Implementing Job Enrichment: Adding more challenging tasks that require skills and
responsibility.

Promoting Teamworking: Allowing workers to collaborate in groups and share

responsibilities, which can increase job satisfaction through teamwork and a sense of
belonging.

e. Do you think a wage calculated by piece rate is a suitable method of payment for all Joe’s
employees? Justify your answer:
Piece rate may not be suitable for all employees. It can be effective for production workers
who have direct control over their output, like those involved in making furniture. However,
office workers might not have easily measurable output in units, making piece rate less
appropriate for them. It's crucial to consider the nature of each job before implementing
piece rate.

Sasha's Hotel:

a. Define 'bonus':

A bonus is an additional amount of payment above basic pay, given as a reward for good
performance or achieving specific goals.

b. Identify two reasons why people work:

People work to earn money for their basic needs and also for non-monetary reasons such as
job satisfaction, career growth, and personal fulfillment.

c. Outline two levels in Maslow’s hierarchy of needs experienced by the hotel workers:

Hotel workers may experience:

Physiological Needs: The need for a stable income to cover basic necessities like food and
shelter.

Social Needs (Love and Belonging): The need for positive relationships and a sense of
belonging among coworkers and guests.

d. Explain two benefits to the hotel of having well-motivated employees:

Well-motivated employees can bring several benefits to the hotel, including:

Increased Productivity: Motivated employees are often more productive, leading to improved
guest satisfaction and potentially higher profits.

Lower Turnover: Higher job satisfaction can reduce employee turnover, saving the hotel
recruitment and training costs.

e. Do you think introducing a bonus is the best way to improve the motivation of the
employees at the hotel? Justify your answer:

Introducing a bonus can be a motivating factor for employees, especially if it's tied to
specific performance goals. However, it may not be the best or sole method to improve
motivation. Sasha should consider a combination of financial incentives like bonuses and
non-financial incentives such as job enrichment, teamworking, and training to ensure a well-
rounded approach to motivation. Additionally, understanding the specific needs and
preferences of her employees through regular communication can help tailor motivation
strategies effectively.