Chapter 13

  • Motivation is the reason why employees want to work hard and effectively for a business
  • The main reason behind it is usually money but some work is voluntary
  • Well motivated employees will:
    work effectively resulting in higher output and profit
    be more productive
    have better attendance rates
    be more cooperative and open to change
    produce better quality work
  • Unhappy employees work ineffectively resulting in lower output and less profit
  • Intrinsic rewards are directly related to the job/ in the work place e.g. job satisfaction
  • Extrinsic rewards are external to the job/ outside the work place e.g. pay

Motivation Theories

F.W. Taylor:

  • Motivation through personal gain
  • If they are paid more, they will work more
  • And thus output will increase and the total cost will reduce despite paying labor high


  • People need to constantly climb the hierarchy
  • This is proven through the attitudes of those unemployed
  • Hierarchy:

1. Physiological Needs: wages enough for basic requirements

2. Safety/Security: physically & financially safe, job security, fair treatment

3. Social Needs: rewarding relationship with employees, support

4. Esteem Needs: self-respect, recognition, status, independence, achievement

5. Self-Actualization: being able to be creative & knowing you’ve done a good job, potential recognized, promotions


Hygiene Factors
(Basic Animal Needs)
(Psychological Growth)
Work ConditionsPersonal Growth & Development
Relationship with supervisor, subordinatesWork itself



Theory XTheory Y
Dislikes workThinks work is natural
Must be pressurized to work and threatened if they do notThey have their own initiative to work and do not need to be supervised
Do not want responsibilityAccept and seek responsibility
Not ambitiousGreat potential and under-utilized potential
Security is their main needSelf-actualization is their greatest need
Motivated by external factors such as payMotivated by internal factors such as a good working environment
Need incentives and supervision constantlyAs long as they’re not frustrated, they work well


  • Theory Y working environment should be created, which will help the Theory X people work harder as well

Why Do People Work?

Moneyfulfill needs and wants
Social Needsfeeling as if they’re part of something
Esteem Needsfeel important
Job Satisfactioncontentment/enjoyment
Securityjob security, financial security, physically secure etc.


Financial Motivators

  • Wages: payment for work, often weekly
Time RatePiece Rate
Payment by the hourDepends on the quantity of output
Easy to calculateEncourages workers to work hard and fast
Good and bad workers are paid the same amountIgnores the quality of the good
Time-sheet and clocking-in system is requiredRequires a control system
Used where it is difficult to measure the output of the workerUsed where it is possible to measure the total output of each worker
Government taxation, trade union scheme must be deductedWorkers who rush get more than those who don’t compromise on quality
Machinery may break down


  • Salaries: payment for work, often monthly
Extra Earnings
CommissionThe more sales they make, the more money they are paid
Profit SharingEmployees get a part of the extra profit made and although it is difficult to see who deserves the most, everyone feels equally rewarded
BonusA large sum of money paid to a good worker
Performance-Related PayLinked to the effectiveness of one’s work
AppraisalWhen an employee’s immediate superior observes their work, talks to his colleagues and then rewards him
Share OwnershipEmployees are given a share of the company


Non-Financial Motivators

  • Children’s education fees
  • Discounts on firm’s products
  • Health care
  • Company vehicle
  • Free accommodation
  • Share options
  • Generous expense accounts
  • Pension paid for
  • Free holidays

Job Satisfaction

  • The enjoyment derived from feeling you have done a good job
  • High pay
  • Friendly colleagues
  • Fringe benefits
  • Nature of work itself
  • Status of job
  • Opportunity for training
  • Maslow and Herzberg emphasize that the important aspects of jobs are that they should give recognition, responsibility and satisfaction

Methods of Job Satisfaction

  • Job Rotation: involves workers swapping round and doing each specific task for only a limited time and then changing around again
  • Job Enlargement: extra tasks of a similar level of work are added to a worker’s job description
  • Job Enrichment: involves looking at jobs and adding tasks that require more skill and/or responsibility
  • Autonomous Work: responsibility for a particular process, product or development is given to a group of workers where they can control the tasks themselves
  • Multiskilling: training employees for a number of tasks
  • Empowerment: giving an employee power over their own work
  • Delegation: subordinates are to be entrusted with work from their supervisors

Leadership Styles

  • The different approaches to dealing with people in a position of authority
  • Autocratic Leadership:
    Managers expects to be in charge of the business and everyone is to follow their orders
    They only tell the employees the need to know information and keep the rest to themselves
    Communication is usually only downward
  • Leave-To-Do Leadership:
    Broad objectives of the business is known to the employees but they are left to make their own decisions
    Communication is difficult since no clear direction
    Leader only has a very limited role to play
  • Democratic Leadership:
    Other employees are involved in the decision making process
    Information about future plans is openly discussed before final decision I made
    Communication is upward and downward

Formal and Informal Groups

  • Formal: a group designated to carry out specific tasks within a business
  • Informal: a group of people who form independently any official groups set up within the business and who have something in common
  • Formal groups may not be very effective if former departments still sees itself as a separate informal group so informal groups must be handled very carefully
  • Motivation can be improved if a positive solution can be found

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