Higher productivity
Employees who apply more effort and work effectively can raise output per worker and lower unit labour costs.
Cambridge International AS & A Level Business · 9609 · AS Level
2.2 Motivation
Motivation affects how willing employees are to direct effort towards business goals. This topic explains why motivation matters, what employees may need from work, the main motivation theories, and the financial and non-financial methods managers can use in practice.
Exam-focusedAll 4 subtopicsInstant-feedback questions
What you need to know
For high marks, do not simply memorise theorists. You should be able to apply each theory to a business situation, explain why a method may motivate some employees but not others, and evaluate whether the likely improvement in performance justifies the cost or difficulty of the method.
High-grade habit: link motivation to business performance. For example, a motivated workforce may have lower absenteeism and labour turnover and higher productivity, but the best method depends on employee needs, the type of job, the resources of the business and the way performance can be measured.
Subtopics
These follow the textbook table of contents. Select a subtopic to jump directly to it.
2.2.1
Motivation as a tool for management and leadership
MotivationThe factors that arouse, maintain and direct behaviour towards a goal.
Motivation may come from within the employee, such as enjoyment, interest or achievement, or from external influences, such as pay, bonuses, praise, promotion or the wish to avoid a negative consequence.
Why motivation matters to a business
Lower labour turnover
Satisfied and committed employees may be less likely to leave, reducing recruitment and training costs.
Lower absenteeism
Employees who value their work are less likely to be absent without a valid reason.
Better relations
Motivation can support co-operation between managers and employees and reduce workplace conflict.
AbsenteeismA situation in which an employee is absent from work without a good reason.
How motivation can support objectives
Higher productivity can help a business produce at lower cost. Managers may then choose to lower prices to become more competitive or keep prices unchanged and earn a larger profit margin. Lower labour turnover can also help growth by retaining skills and reducing disruption.
Motivation improvesgreater effort and commitment
→Workforce performance improvesproductivity, attendance, retention
→Business objectives supportedgrowth, profit, service, competitiveness
Evaluation: motivation does not automatically produce higher profit. Results depend on whether employees have the right skills, equipment and systems, and whether the extra motivational costs are lower than the gains created.
2.2.2
Human needs
Human needsThe elements people require for survival and for good mental and physical health.
People do not work only for money. Employment can satisfy a range of needs, although the extent to which it does so depends on the job and how the organisation is managed.
Needs that may be satisfied through work
| Need | How work may help satisfy it | When it may not be satisfied |
|---|---|---|
| Physical / subsistence | Regular pay can provide food, clothing and shelter. | Hours or income may be too low or uncertain. |
| Safety / protection | Secure contracts, safe conditions, pensions and benefits can reduce uncertainty. | Temporary work or unsafe conditions may create insecurity. |
| Social / participation | Teamworking, communication and involvement can create belonging. | Isolated jobs or poor relations may limit social contact. |
| Esteem | Recognition, responsibility, status and useful feedback can build self-respect. | Employees may feel ignored or undervalued. |
| Self-actualisation / creation | Challenging work, creativity and learning can help employees fulfil their potential. | Highly repetitive or tightly controlled work may offer few opportunities. |
| Freedom | Empowerment can give employees control over how they organise and perform work. | Autocratic management may leave little discretion. |
Example: two employees receiving the same salary may respond differently. One may value job security most, while another may already feel secure and be more motivated by recognition, promotion or a challenging project.
Exam point: this explains why one motivation method rarely works equally well for an entire workforce. Employees differ in age, income, career stage, personality, job role and personal circumstances.
2.2.3
Motivation theories
Content theories and process theories
Content theories
Ask what motivates people by focusing on needs and goals. The textbook considers Taylor, Mayo, Maslow, Herzberg and McClelland.
Process theories
Ask how motivation occurs by examining how employees think about effort, performance and outcomes. The textbook focuses on Vroom.
Frederick W. Taylor — scientific management
Taylor argued that employees were primarily motivated by money and that managers should organise work scientifically to maximise efficiency.
1Study the work
Break production into tasks and identify the most efficient methods.
2Measure performance
Observe efficient workers and establish expected times and output.
3Train and equip
Teach employees the approved method and provide suitable equipment.
4Pay by results
Use piece-rate or differential piece-rate and close supervision to encourage output.
Piece-rateA payment system in which employees are paid according to the quantity they produce.
Strength and limitation: Taylor’s approach can be useful where output is easy to measure and repetitive work is important, but it may reduce quality, create monotony and ignore social or psychological needs.
Elton Mayo — the human relations school
Mayo’s Hawthorne research shifted attention towards the social side of work. Productivity improved partly because employees received attention and worked as a group, not simply because physical conditions changed.
- Group relationships and morale can influence performance.
- The type of supervision matters.
- Employees may value belonging, communication and recognition.
- Teamworking and informal groups can support motivation.
Hawthorne effectThe idea that employees may change their behaviour and performance because they know they are receiving attention or being observed.
Application: Mayo is especially relevant where teamwork, communication and social interaction are important. Do not reduce his theory to “employees like nice facilities”; the central issue is social relationships and attention.
Abraham Maslow — hierarchy of needs
Maslow argued that employees have a hierarchy of needs. Once lower-level needs are sufficiently satisfied, higher-level needs become more important sources of motivation.
| Level | Need | Possible workplace response |
|---|---|---|
| 5 | Self-actualisation | Challenging work, development, creativity, major responsibility. |
| 4 | Esteem | Recognition, promotion, status, responsibility. |
| 3 | Social | Teams, good relationships, social interaction. |
| 2 | Security | Employment contracts, safe conditions, job security. |
| 1 | Physiological | Pay sufficient for basic living needs and acceptable physical conditions. |
Evaluation: Maslow is useful because it recognises that employees differ, but people do not always move through needs in the same fixed order. A satisfied need may also continue to matter.
Frederick Herzberg — two-factor theory
Herzberg separated factors around the job into hygiene factors and factors within the job itself that can create positive motivation.
Hygiene factors
Company policy, supervision, working conditions, salary and relationships with colleagues. Poor hygiene factors can create dissatisfaction, but improving them does not necessarily create lasting motivation.
Motivators
Achievement, recognition, interest in the work, responsibility, personal growth and advancement. These relate to the content of the job and can create positive motivation.
Hygiene factorsFeatures of the job environment that can cause dissatisfaction if inadequate.
MotivatorsFactors within the job, such as achievement and responsibility, that can positively motivate employees.
Herzberg’s practical message is that managers should reduce dissatisfaction and design jobs so employees can achieve, take responsibility and grow.
Evaluation: Herzberg classified pay mainly as a hygiene factor. This may be more convincing for some well-paid employees than for low-paid workers whose basic needs are not fully satisfied.
David McClelland — acquired needs
McClelland argued that experience shapes three important needs and that the combination differs from person to person.
Need for achievement (n-ach)
Preference for challenging but achievable goals, personal accomplishment and regular feedback.
Need for power (n-pow)
Desire to influence or organise others. Institutional power can help managers direct people towards organisational goals.
Need for affiliation (n-affil)
Desire for positive relationships, belonging and co-operative interaction with others.
Application: a high-achievement employee may respond well to a demanding project with measurable targets; a high-affiliation employee may be better motivated by collaborative teamworking.
Victor Vroom — expectancy theory
Vroom treats the employee as an active decision-maker. Motivation is stronger when the employee believes effort can produce good performance, good performance will lead to a valued reward, and the reward is personally desirable.
Expectancy“Can I perform the task?”
→Instrumentality“Will performance lead to the promised outcome?”
→Valence“How much do I value that outcome?”
- Expectancy: confidence that effort can lead to acceptable performance.
- Instrumentality: belief that performance will actually produce the expected reward.
- Valence: the strength of the employee’s desire for that reward.
Example: a sales bonus will have little motivational effect if the salesperson thinks the target is impossible, does not trust the business to pay the bonus, or does not value the reward.
High-grade comparison: content theories focus on the needs or factors that may motivate; Vroom focuses on the employee’s thought process and expectations before effort is given.
2.2.4
Motivation methods in practice
No single technique is automatically best. Managers need to consider the workforce, type of work, ability to measure performance, available finance and the motivation theory that best fits the situation.
Financial motivators
| Method | How it works | Possible benefit | Possible problem |
|---|---|---|---|
| Time-based pay | Pay depends on hours worked. | Simple and predictable. | May reward attendance rather than performance. |
| Salary / wages | Salary is normally expressed annually; wages are often paid weekly and linked to stated working hours. | Provides a regular income and security. | Limited direct link to individual output. |
| Piece-rate | Pay depends on units produced. | Can raise output where quantity is measurable. | Employees may sacrifice quality for speed. |
| Bonus | Extra payment for meeting performance criteria. | Can focus effort on important targets. | Poorly designed targets may encourage unwanted behaviour. |
| Commission | Payment linked to the quantity or value sold. | Can encourage stronger sales effort. | May encourage aggressive selling or neglect of service quality. |
| Profit sharing | Employees receive a share of business profit. | Can increase loyalty and a sense of shared success. | Individual effort may have little visible effect on total profit. |
| Performance-related pay (PRP) | Part of pay depends on achieving agreed targets. | Rewards contribution and performance. | Judgements may be seen as unfair, especially where performance is difficult to measure. |
| Fringe benefits | Additional benefits such as health insurance, pension contributions, discounts or a company car. | Can improve retention and the total attractiveness of a reward package. | Benefits can become expensive and may not be valued equally by all employees. |
Worked example — time-based pay: if an employee earns $11 per hour and works 36 hours, gross pay is $11 × 36 = $396.
Worked example — piece-rate: if a worker earns $3.20 per completed unit and produces 85 acceptable units, pay is $3.20 × 85 = $272. If quality problems cause rejected units, the final amount may be lower depending on the scheme.
Performance-related pay and variable pay
Performance-related pay (PRP) links some pay to achievement of targets. It can provide a clear reward for success, but employees may see it as unfair when performance is difficult to measure or when managers make subjective judgements.
Variable payA reward based on employee performance or results against targets; the amount can change with performance.
Evaluation: PRP works best when targets are measurable, employees can influence the result, the assessment is trusted and the reward is large enough to matter. It is weaker when success depends heavily on team effort or external factors.
Non-financial motivators and job design
Job designThe process of grouping individual tasks together to form a complete job.
Non-financial methods aim to make work itself more satisfying, challenging, meaningful or participative.
Job enrichment, enlargement and rotation
| Method | Meaning | Motivational effect |
|---|---|---|
| Job enrichment | Increasing the complexity, challenge and responsibility of a job; sometimes called vertical loading. | Can create achievement, recognition, responsibility and growth. |
| Job enlargement | Adding more tasks of a similar level of complexity; horizontal loading. | Can reduce repetition but may not make the work more challenging. |
| Job rotation | Regularly moving employees between tasks of similar complexity. | Can reduce monotony and broaden experience. |
Common exam trap: job enrichment is not simply “more work”. It increases challenge and responsibility. Job enlargement gives more tasks at a similar level.
Empowerment
EmpowermentGiving employees greater control over their working lives and authority over how work is organised and completed.
Empowerment can increase interest, responsibility and problem-solving. It can also bring employee knowledge into decision-making. However, employees may need training and some may not want the additional responsibility.
Teamworking
Teams can meet social needs and may also enrich jobs by allowing employees to plan, solve problems, monitor quality and set targets.
Production teams
Multi-skilled employees take responsibility for a significant part of the production process and may monitor quality and output.
Quality circles
Small groups meet to identify problems and suggest improvements to quality and production methods.
Management teams
Managers work as a complementary group to set objectives and oversee their achievement.
Training and development
Training can motivate because employees may feel valued, more capable and more confident. Development can also provide opportunities for achievement and advancement. However, training is costly and newly skilled employees may leave for another employer.
Promotion and status
Promotion can provide higher pay, recognition, responsibility, authority and a clearer career path. Higher status may also be motivating, although some organisations use single-status policies to reduce visible differences between grades.
Employee participation
Employee participationThe involvement of employees in business decision-making.
Quality circles
Employees meet regularly to suggest improvements.
Works councils
Employee representatives and managers discuss issues such as pay, training and working conditions.
Employee shareholding
Employees own shares, giving them a financial interest in business performance.
Autonomous work groups
Teams receive substantial control over work, sometimes including task allocation and selection of members.
Overall judgement: the strongest answer rarely says “financial” or “non-financial” motivation is always best. A business often needs a suitable combination: fair pay to prevent dissatisfaction, plus job design, recognition, participation or development that fits the needs of its workforce.
2.2 revision checklist
Define motivation and explain why it matters to business performance.
Explain the difference between internal and external sources of motivation.
Explain how work can satisfy different human needs.
Distinguish content theories from process theories.
Explain Taylor’s scientific management and piece-rate approach.
Explain Mayo’s human relations approach and the Hawthorne effect.
Apply Maslow’s hierarchy of needs to workplace situations.
Distinguish Herzberg’s hygiene factors from motivators.
Explain McClelland’s needs for achievement, power and affiliation.
Apply Vroom’s expectancy, instrumentality and valence.
Compare time-based pay, salary, wages, piece-rate, bonuses and commission.
Evaluate profit sharing, PRP, variable pay and fringe benefits.
Distinguish job enrichment, job enlargement and job rotation.
Explain how empowerment can affect motivation.
Explain how teamworking may motivate employees.
Explain the motivational role of training, promotion and status.
Explain methods of employee participation.
Choose and justify suitable motivation methods for different business contexts.
Questions open in a pop-up. Each answer is marked immediately, with an explanation so you know why it is correct or incorrect.