Making Human Resource Decisions: Improving Motivation and Engagement – A Level Business Studies AQA Revision

The Benefits of Motivated and Engaged Employees

A motivated workforce:

Produces a quality product (adds value, reduces wastage).
Reduces costs through better productivity and innovaztions to improve productivity.
Stays with the business, so reducing costs of recruitment.
Is receptive to change and development.

Motivational Theories

Motivational theory describes ways that motivation can be improved. It’s a useful reference when discussing changes in the workforce and their practices.

Taylor

Scientific School of Thought

Managers should determine the most efficient means of production and then train workers in this way.
Workers should undertake the same task and managers should maintain close control and supervision over their employees.
Links to autocratic style of managing a workforce.
Workers motivated solely by money so therefore pay via piece-rate.

Maslow

The Neo-Human Relations School.

Believed in the hierarchy of needs and focused on individual psychological needs of employees.
The higher order needs would positively motivate (social needs and above) whilst the lower order needs would not motivate but were necessary as building blocks for the future.

Herzberg

The two-factor theory:

1. Motivators / Satisfiers

		Factors that directly motivate employees to work harder.

		Delegating authority, recognition, sense of achievement, and opportunities for promotion.

2. Hygiene factors / Dissatisfiers

		Factors that can de-motivate if not present but do not actually motivate employees to work harder.

		Pay, working conditions, job security.

Unless hygiene factors exist in the business then motivators will not work.

How to Improve Employee Engagement and Motivation

Practical ways to motivate employees include financial and non-financial methods.

Financial Methods of Motivation:

Piece rate

Pay per number of items produced in a certain period of time. Links to Taylor view of workers.

This is most applicable in production work where output is relatively easy to measure.

Commission

When employees are rewarded with a fixed percentage of the revenue earned by the products sold directly by them.

Salary schemes

Normally an annual amount (salary) which is paid at the end of each month.

Performance-related pay.

Is paid to those employees who meet certain targets. The targets are often evaluated and reviewed in regular appraisals

Non-financial methods

Job enrichment

Giving employees more challenging and interesting tasks.

Job enlargement

Giving employees more tasks of a similar level of complexity.

Empowerment

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

Team working

Organising production and employees into groups or units. Offers employees an opportunity to meet their social needs and often accompanied by some form of empowerment for the team.

The Value of Theories of Motivation

It depends on the work situation and the skills of the management.

Taylor suits

Quick decision-making, autocratic style of management.
Low-skilled work, where workers prefer to “work to live”, and be paid per item made.
A more manufacturing type of product.

Maslow and Herzberg suit

A more democratic leadership style.
More skilled, involved work, such as high quality manufacturing or service industries.
Work where employees can move up through the business.

The Use of Financial Methods of Motivation

	Advantages	Disadvantages
Piecework	It can provide good incentives for workers who are mainly motivated by pay.	High levels of supervision are not required.		Workers would be focused on quantity not quality.	Repetitive for workers and can be de-motivating. Workers are only used to one method of production and may resist change to new methods because they are not multi-skilled.
Performance related pay	Setting of targets for employees can ensure they are all closely focused on the business objectives.	Can create unhealthy rivalry between managers and within teams. Incentives may not be large enough to motivate employees
Salary	Fulfils basic needs of employees (Maslow’s physical needs, Herzberg’s hygiene factors) and in some cases can be used to emphasise job status and importance (Maslow).		A salary may mean that the company are not making the most of financial rewards as a motivator for employees.
Commission	Drives more sales.	Can mean that employees become solely focused on one task and ignore other areas of their job description.

The Use of Non-financial Methods of Motivating Employees

Job enrichment	Can be very motivating for employees when used correctly (Herzberg).	More difficult for managers to supervise employees and there will be some who do not like the new tasks.
Job enlargement	It may involve job rotation. Less motivating than job enrichment but does remove repetitiveness of job. Not as threatening as empowerment.	Potentially not as motivating as enrichment because workers are not able to make full use of their skills.
Empowerment	Both managers and subordinates are more motivated - relate to Herzberg’s motivators and Maslow’s higher level needs. Therefore, improves productivity.	Can also result in senior managers having more time for important strategic decisions.	Some managers may not like empowerment and prefer a target driven culture.	Requires trust on the part of the management team.
Team working	Offers employees an opportunity to meet their social needs and often accompanied by some form of empowerment for the team.	Often requires a variety of job roles (job enlargement/enrichment) and delegation.	Can be difficult to implement and requires strong buy-in from employees.

Influences on the Choice and Assessment of the Effectiveness of Financial and Non-financial Reward Systems

Employees must be paid for their work. The structure of how they are paid can motivate them or avoid demotivating them (Herzberg).

How the managers organise work can also motivate and engage the workers.

When answering questions on this area you need to consider the following aspects in particular:

The type of work.
The skills needed by the workers.
The type of worker who is attracted to this type of work.
The skills of the managers.
The resources available (time and money).
The culture of the business.

Definitions

Added value	Increase in the value of a product so that someone is prepared to pay more for it.
Autocratic leadership	The leader has control over all the business decisions.
Commission	When employees are rewarded with a fixed percentage of the revenue earned by the products sold directly by them.
Democratic leadership	The leader asks for and respects the decisions from the workforce.
Empowerment	Delegating power to employees so they can make their own decisions.
Herzberg’s theory of motivation	Two-factor theory: Workers can be motivated by certain factors such as empowerment and promotion but demotivated by poor pay and poor working conditions.
Job enlargement	Giving employees more tasks of a similar level of complexity.
Job enrichment	Giving employees more challenging and interesting tasks.
Maslow’s theory of motivation	Workers are motivated by a hierarchy of needs, starting at the bottom with basic needs and at the top self-actualisation.
Motivation	Inspiring employees through e.g. incentives, empowerment to increase productivity, improve quality and efficiency.
Performance-related pay	Is paid to those employees who meet certain targets. The targets are often evaluated and reviewed in regular appraisals
Piece rate pay	Pay per unit produced.
Productivity	Output per worker
Salary schemes	Normally an annual salary which is paid at the end of each month.
Taylor’s theory of motivation	Motivation can be improved through pay and tight control.
Team working	Organising production and employees into groups or units. Offers employees an opportunity to meet their social needs and often accompanied by some form of empowerment for the team.

Which motivational theorist said that the workers needed close supervision from their managers and were more motivated by pay?: Taylor
Maslow’s hierarchy of needs suggests that the lower order needs should be satisfied first. What were the top two needs?: Your answer should include: Self-actualisation / self-esteem
In the Herberg two-factor theory, what sort of factors are pay and working conditions?: Hygiene
What is the term for pay per number of items produced in a certain period of time?: Your answer should include: piece / rate
What is giving employees more challenging and interesting tasks?: job enrichment
Exam Style QuestionXY Ltd mainly uses non-financial methods to motivate its employees. With reference to theories of motivation, to what extent are non-financial methods of motivation likely to be more effective than financial methods for XY Ltd? Justify your answer. [16 marks]: Your answer should include: Maslow / Herzberg / motivation / efficiency / costs / quality / job / enrichment / enlargement / empowerment
Explanation: This is a 16 mark question, so you should be spending at least 16 minutes on it. You should define motivation and then think about the pros and cons non-financial methods. You will probably need to make at least three separate points. And which theories will you refer to? For these questions, make a point, explain why it's relevant to this question, then explain the business studies behind it. Finally, you need to say you have made this decision. That means putting weight to your answer.