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Cambridge IGCSE0450

Motivating employees

Business Studies 0450 Chapter Notes

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Motivating employees - The importance of a well-motivated workforceMotivating employees - Methods of motivation
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1. Why people work and what motivation means

People work for many reasons. Examiners credit financial reasons: to earn a wage or salary, pay for needs and wants, and improve their standard of living. Others are safety, meaning job security, and job satisfaction, such as enjoyment and personal interest.

People also work to meet people and feel part of a group (social), to gain recognition and status, to reach their potential, and to help others or the community.

Motivation means wanting to work harder or faster. A mark scheme describes a bonus as money paid to motivate employees to work harder or faster.

Worked example 12 marks

Identify two reasons why people work.

  1. 1

    Knowledge: a financial reason, such as to earn money, a wage or salary, or to improve the standard of living. [1]

  2. 2

    Knowledge: a different reason, such as safety or job security, job satisfaction, social contact, esteem or recognition, reaching their potential, or helping others. [1]

2. Benefits of a well-motivated workforce

A well-motivated workforce brings clear benefits. The mark scheme credits higher labour productivity: quicker production, increased output and improved efficiency. It also credits lower labour turnover and lower absenteeism.

Other credited benefits are better quality goods and services, fewer mistakes and less waste, workers more willing to accept change, and fewer strikes.

Examiner insight

“Many candidates could outline one benefit with increased productivity and lower absenteeism typical answers. Unfortunately, most did not attempt to link their points to the context so missed the opportunity to gain application marks.”

Worked example 12 marks

Identify two benefits to a business of having a well-motivated workforce.

  1. 1

    Knowledge: one benefit, such as higher productivity or improved efficiency, increased output, or lower labour turnover. [1]

  2. 2

    Knowledge: a second, different benefit, such as lower absenteeism, better quality goods and services, fewer mistakes or less waste, or fewer strikes. [1]

3. Developing the benefits

Naming a benefit earns knowledge only. To reach analysis, say why it helps the business.

Low absenteeism means production is not disrupted and no one has to cover for absent colleagues. Low labour turnover means more production and no need to recruit or train new employees, which cuts costs.

Link each benefit to reducing costs or increasing sales. Answer about benefits only when the question asks for benefits.

Examiner insight

“However, these benefits were often not developed well enough as to why they were a benefit to TSE to move into level 2.” “A few candidates made errors such as explaining how to reduce labour turnover or reduce absenteeism rather than discussing why having a well-motivated workforce was beneficial to TSE.”

Worked example 16 marks

Nadia Rahman owns Rahman Print, which makes wedding invitations and employs 30 printers. Her printers are well motivated. Explain two benefits to Rahman Print of a well-motivated workforce.

  1. 1

    Knowledge: lower labour turnover. [1]

  2. 2

    Application: fewer of the 30 printers leave to join rival print firms. [1]

  3. 3

    Analysis: Nadia spends less on recruiting and training replacements, so her costs stay low. [1]

  4. 4

    Knowledge: higher productivity. [1]

  5. 5

    Application: each printer finishes more invitations a day. [1]

  6. 6

    Analysis: orders are delivered on time, so couples recommend Rahman Print and sales rise. [1]

4. Maslow's hierarchy of needs

Maslow's hierarchy sets human needs out in five levels. From the bottom up they are physical, safety, social, esteem and self-actualisation. Physical needs are also called basic needs. Write esteem, not self-esteem.

To use the theory, match what the business does to a level. Pay meets physical needs. Job security meets safety needs. Team building meets social needs. Recognition, such as an ‘employee of the month’ award, meets esteem needs. A chance to reach their potential meets self-actualisation.

Examiner insight

“All five levels of Maslow were presented in answering this question. Some candidates however, provided answers which were confused such as psychological or self – fulfilment. These answers were not rewardable.” “Many candidates were able to identify ways but were not able to develop the point to show the link between the way and the appropriate level of Maslow’s theory. Instead, they simply restated the question by saying it would increase motivation.”

Worked example 16 marks

Bright Cleaning cleans offices at night. It employs 40 cleaners on short contracts, and managers rarely see them at work. Explain two ways Bright Cleaning could use Maslow's hierarchy of needs to motivate its cleaners.

  1. 1

    Knowledge: offer job security. [1]

  2. 2

    Application: give the cleaners permanent contracts in place of short ones. [1]

  3. 3

    Analysis: this meets safety needs, because the cleaners no longer fear losing their jobs. [1]

  4. 4

    Knowledge: recognise good work with a ‘cleaner of the month’ award. [1]

  5. 5

    Application: managers rarely see the cleaners at night, so the award shows that their work is noticed. [1]

  6. 6

    Analysis: this meets esteem needs, because the winner feels valued. [1]

5. Taylor: motivation by pay

Taylor believed that employees are motivated by money. His approach is financial reward by results: the more an employee produces, the more they are paid.

It is likely to work where workers are expected to do tasks they are not paid for. It is harder to use where workers already enjoy their work.

Saying that higher pay motivates is not enough. Give the reason: with pay by results, workers see that harder work earns more.

Examiner insight

“The strongest candidates identified that Taylor focussed upon financial reward by results and then outlined the difficulty of using this method on a farm where workers were already enjoying their work.” “Many responses just suggested that paying a higher wage will motivate and did not give a reason why.”

Worked example 14 marks

Pedro owns Pedro's Pots, which makes ceramic mugs by hand. His 12 potters are paid a fixed weekly wage and say they enjoy their work. Outline one advantage and one disadvantage to Pedro's Pots of using Taylor's theory to motivate its potters.

  1. 1

    Knowledge: Taylor's theory is financial reward by results, which gives workers a reason to produce more. [1]

  2. 2

    Application: Pedro pays for each mug made, in place of the fixed weekly wage. [1]

  3. 3

    Knowledge: money is less likely to motivate workers who already enjoy their work. [1]

  4. 4

    Application: the 12 potters say they enjoy making mugs by hand, so extra pay may change little. [1]

6. Herzberg: motivators and hygiene factors

Herzberg's theory has two groups of factors: motivators and hygiene factors. For motivators, examiners credit recognition and achievement. Praise and promotion are typical ways to give them.

Hygiene factors do not act as motivators. Examiners report wages as a hygiene factor that candidates wrongly call a motivator. Name the factor itself: a way to be hygienic is not a hygiene factor.

Apply the factor to the business. Promoting a doctor links to recognition or achievement. Do not answer with Maslow's levels.

Examiner insight

“The best responses correctly identified relevant motivators including recognition and achievement. Typical wrong answers confused motivators with hygiene factors.” “A common mistake was to assume wages are a motivator, rather than a hygiene factor.”

Worked example 14 marks

Sunrise Lodge is a care home with 25 care assistants. Residents' families often thank the care assistants for their work. Outline one of Herzberg's motivators and one of his hygiene factors at Sunrise Lodge.

  1. 1

    Knowledge: a motivator, such as recognition. [1]

  2. 2

    Application: the manager passes on a family's thanks to the care assistant in front of colleagues. [1]

  3. 3

    Knowledge: a hygiene factor, such as wages. [1]

  4. 4

    Application: a rise in hourly pay for the 25 care assistants would not act as a motivator. [1]

7. Choosing between Taylor and Herzberg

A recommendation question asks which theory a business should use. Taylor says pay by results. Herzberg says use motivators such as recognition and achievement.

Use the facts you are given. A complaint about pay points to Taylor. A complaint that nobody notices good work points to Herzberg. Give each theory's limit too: increasing wages is unlikely to improve motivation in the longer term, so other methods would be needed.

A full answer gives a justified decision. It says why the other theory was rejected, without repeating earlier points. Do not confuse Herzberg with Maslow.

Examiner insight

“Weaker responses only identified that Taylor was about paying employees more money and then often confused Herzberg with Maslow.” “Stronger candidates recommended which method to use and justified their choice. Weaker responses repeated earlier points and found it difficult to explain why the other theory had been rejected.”

Worked example 112 marks

Swift Parcels employs 60 drivers on a low fixed wage. Many leave within a year and say that nobody notices good service. The owner could use Taylor's theory and pay drivers for every delivery. Or he could use Herzberg's theory and give awards for good service. Recommend which theory the owner should use. Justify your answer.

  1. 1

    Knowledge: Taylor's theory is financial reward by results. [1]

  2. 2

    Application: pay the 60 drivers for every delivery they complete. [1]

  3. 3

    Analysis: drivers see that more deliveries earn more, so they work harder. But increased pay is unlikely to improve motivation in the longer term. [2]

  4. 4

    Knowledge: Herzberg's motivators include recognition and achievement. [1]

  5. 5

    Application: awards answer the complaint that nobody notices good service. [1]

  6. 6

    Analysis: drivers who feel recognised have a reason to stay, so Swift Parcels spends less on recruiting and training. But an award goes to only a few drivers. [2]

  7. 7

    Evaluation: recommend Herzberg: drivers leave because nobody notices good service. [2]

  8. 8

    Evaluation: Taylor is rejected because pay for each delivery rewards the number of deliveries, not good service, and its effect is unlikely to last. [2]

Recap

  • People work for financial, safety, social and esteem reasons, and for job satisfaction.
  • Benefits: higher productivity, lower labour turnover and absenteeism. Link each to costs or sales.
  • Maslow's hierarchy: physical, safety, social, esteem, self-actualisation. Link each action to its level.
  • Taylor: financial reward by results. It is harder to use where workers already enjoy their work.
  • Herzberg: recognition and achievement are motivators. Wages are a hygiene factor, not a motivator.
  • In a recommendation, give a justified decision and say why the other theory was rejected.

8. Wage and salary

A wage can be paid by time-rate, where an employee is paid for each hour worked, or by piece-rate, where pay depends on output. A salary is a fixed amount of pay for the year.

Piece-rate is likely to increase output, because employees who produce more earn more. Quality may fall as workers rush to gain higher pay.

A pay rise can improve motivation. It also increases costs, so the business must be able to afford it, and wages may only provide a short-term boost.

Examiner insight

“The strongest answers focused upon the potential improvements to motivation of a pay rise and the problems for the bus company of being able to afford this increase in costs.” “Many understood that wages may only provide a short-term boost but could not develop the point.”

Worked example 14 marks

CCH builds large boats in its factory. The business has 1800 employees who are all members of a trade union. Outline two financial methods of motivation CCH could use for its production employees.

  1. 1

    Knowledge: salary, a fixed amount of pay for the year [1]

  2. 2

    Application: paid to each of CCH's 1800 employees [1]

  3. 3

    Knowledge: time-rate, pay for each hour worked [1]

  4. 4

    Application: for the employees working in the boat factory [1]

9. Bonus, commission and profit sharing

A bonus is an additional payment above basic pay as a reward for good work, for example for achieving a target. It might create jealousy between employees and may only provide a short-term boost.

Commission is pay linked to the sales an employee makes.

Profit sharing gives employees a share of the profit the business makes. It can help create a team spirit, which can help increase productivity. Profit sharing is not share ownership, and it is not a bonus.

Examiner insight

“The best answers built on the idea that bonuses might create jealousy between employees, or may only provide a short-term boost, which then might reduce rather than increase productivity.” “Profit sharing was less well understood as a concept with many confusing the term with share ownership.”

Worked example 12 marks

APL is a public limited company. It manufactures mobile phones. The business uses many methods to motivate its employees including paying bonuses. Define ‘bonus’.

  1. 1

    Knowledge: an additional payment above basic pay [1]

  2. 2

    Knowledge: given as a reward for good work or for achieving targets [1]

10. Job enrichment and job rotation

Non-financial methods motivate employees without paying them more.

Job enrichment gives employees additional and more challenging tasks. It is not a promotion. It may require additional training, which increases costs, and some employees may not want the additional tasks.

Job rotation lets employees switch between jobs, so the work is less boring. It does not give extra rest. Workers may need costly training for the other jobs, and productivity may fall or errors rise.

Examiner insight

“A minority of candidates assumed that employees were promoted for job enrichment rather than them carrying out additional and more challenging tasks.” “A common misconception was to assume that job rotation meant workers could gain additional rest periods when switched between tasks. Others confused job rotation with job enrichment or job enlargement.”

Worked example 16 marks

Kestrel Cleaning employs 40 cleaners at a large hospital. Each cleaner does one task all day: floors, windows or washrooms. Many cleaners say the work is boring and some have left. The owner is thinking of using job rotation. Explain one advantage and one disadvantage to Kestrel Cleaning of using job rotation.

  1. 1

    Knowledge: advantage: the work is less boring [1]

  2. 2

    Application: a cleaner who only washes floors would also clean windows and washrooms [1]

  3. 3

    Analysis: so fewer cleaners leave, which lowers Kestrel Cleaning's recruitment costs [1]

  4. 4

    Knowledge: disadvantage: workers may lack the skills for the other jobs [1]

  5. 5

    Application: a floor cleaner may clean the hospital's windows badly at first [1]

  6. 6

    Analysis: so the hospital may complain and Kestrel Cleaning may lose the contract [1]

11. Teamworking, training and promotion

Teamworking puts employees into groups that work together. It meets the wish to feel part of a group, which is one reason why people work. It is also a way to involve employees in decision-making.

Training gives employees new skills and can increase motivation and productivity. It has a cost, and output is lost while the training takes place. Trained employees may also expect higher pay.

Opportunities for promotion motivate staff to work hard to gain a future promotion. Promotion is classed as a non-financial method, so it earns no mark where a question asks for a financial one.

Examiner insight

“A common wrong answer was promotion. This, or points linked to it, were not accepted as it is classed as a non-financial method.” “Weaker candidates used vague comments to explain the advantages, such as this method will make them work harder, or this method will motivate them.”

Worked example 16 marks

Tarn Hotel has 45 employees. Its room cleaners work alone and several have left this year. The manager cannot afford a pay rise. Explain two non-financial methods of motivation Tarn Hotel could use for its room cleaners.

  1. 1

    Knowledge: teamworking [1]

  2. 2

    Application: the cleaners could clean each floor of the hotel in teams of three [1]

  3. 3

    Analysis: so they feel part of a group and fewer of them leave [1]

  4. 4

    Knowledge: opportunities for promotion [1]

  5. 5

    Application: a room cleaner could become a housekeeping supervisor [1]

  6. 6

    Analysis: so cleaners work hard to gain the post and clean rooms to a higher standard [1]

12. Recommending a method

A recommendation is a justified decision: a choice with a reason. Start from the business's problem. Is pay lower than at other firms, is the work boring, or is there no chance of promotion?

Give each method a chain of analysis: what it does for these employees and what it costs this business. Financial methods increase costs and may only give a short-term boost. Job rotation and job enrichment may cost less, but they may need training.

Then say why the other options are less likely to work in this business. A conclusion that only repeats earlier points is not a justified decision.

Examiner insight

“A good quality conclusion should include a clear, justified decision with supporting evidence, including why the other options are not as likely to be an effective method of motivation.” “The strongest responses considered alternative methods including job enrichment and used the comparison between the different methods as the basis for evaluation.”

Worked example 16 marks

Harbour Bakery pays its 12 bakers less than other local bakeries. Several bakers leave each year for better-paid jobs. The owner will either pay a bonus to bakers who reach a daily target or use job rotation between the ovens and the shop. Do you think a bonus is the better method for Harbour Bakery to use? Justify your answer.

  1. 1

    Knowledge: a bonus is extra pay for reaching a target [1]

  2. 2

    Analysis: bakers earn more, so fewer leave and Harbour Bakery's recruitment costs fall [1]

  3. 3

    Knowledge: job rotation makes the work less boring [1]

  4. 4

    Analysis: but work between the ovens and the shop pays no more, so bakers still leave [1]

  5. 5

    Evaluation: decision: a bonus is the better method [1]

  6. 6

    Evaluation: reason: low pay is why bakers leave, and only the bonus raises their pay [1]

Recap

  • Financial rewards: wage (time-rate, piece-rate), salary, bonus, commission, profit sharing.
  • Piece-rate is likely to raise output, but quality may fall as workers rush.
  • A bonus is an additional payment above basic pay as a reward for good work.
  • Profit sharing is a share of the profit. It is not share ownership.
  • Non-financial methods: job enrichment, job rotation, teamworking, training, opportunities for promotion.
  • Job enrichment is additional and more challenging tasks. Job rotation is switching between jobs.
  • Promotion is non-financial. Training gives new skills, but it has a cost and output is lost meanwhile.
  • To recommend a method, give a decision, a reason, and why the other options are less suitable.
  • Never write only that a method will increase motivation. Explain how.

End-of-chapter exercise

Test yourself on the whole chapter. Work through these before moving on.

  1. Ana has taken a job in a bakery. Identify two reasons why people work.2 marks
  2. Hill Street Gym has a well-motivated workforce. Identify two benefits to a business of having a well-motivated workforce.2 marks
  3. Tidal Taxis wants to use Maslow's hierarchy of needs to motivate its drivers. State two levels of the hierarchy.2 marks
  4. Orchard Print prints posters. Its 35 employees are well motivated. Outline two benefits to Orchard Print of having a well-motivated workforce.4 marks
  5. Northgate Deliveries has 25 van drivers who each work alone. It starts a monthly team-building day and a ‘driver of the month’ award. Outline which level of Maslow's hierarchy each action meets.4 marks
  6. Copper Kettle is a café with 9 waiters on a low hourly wage. Customers often name helpful waiters in online reviews. Outline one of Herzberg's motivators and one of his hygiene factors at Copper Kettle.4 marks
  7. Mina runs Mina's Mats, which weaves rugs by hand. Her 8 weavers are paid a fixed weekly wage and say they enjoy designing their own rugs. Explain one advantage and one disadvantage to Mina's Mats of using Taylor's theory to motivate its weavers.6 marks
  8. Volt Electrical has 50 electricians who repair wiring in customers' homes. They are well motivated. Explain two benefits to Volt Electrical of having a well-motivated workforce.6 marks
  9. Glacier Foods runs a frozen-food warehouse. Its 30 night-shift pickers have permanent contracts and are paid more than pickers at rival warehouses. Each picker works alone in a separate aisle, and the manager speaks to them only when an order is wrong. Many pickers say they do not feel part of the business. Explain two ways Glacier Foods could use Maslow's hierarchy of needs to motivate its pickers.8 marks
  10. Marlow Guitars builds guitars by hand. Its 20 craft workers earn a salary well above other local employers and say they enjoy the work. Output is below target, and two workers who left said their best guitars were never noticed. The owner could use Taylor's theory and pay a sum for each guitar completed. Or she could use Herzberg's theory and put each maker's name inside the guitar, with promotion to master builder for the best. Recommend which theory the owner should use. Justify your answer.12 marks
  11. Mill Lane Bakery uses profit sharing to motivate its 30 employees. Define ‘profit sharing’.2 marks
  12. Delta Print wants to motivate its machine operators without paying them more. Identify two non-financial methods of motivation.2 marks
  13. Rosa owns a clothes shop with 8 shop assistants. Outline two financial methods of motivation Rosa could use for her shop assistants.4 marks
  14. Bay Hotel has 12 receptionists. They check guests in and out all day and say the work is boring. Outline how Bay Hotel could use job rotation and how it could use job enrichment.4 marks
  15. Orla runs a dental clinic with 6 dental nurses. She cannot afford a pay rise. Outline two non-financial methods of motivation Orla could use for her dental nurses.4 marks
  16. Brightway Phones pays a bonus to factory workers who reach a monthly output target. Explain one advantage and one disadvantage to Brightway Phones of paying bonuses.6 marks
  17. Hill Garden Centre has 20 assistants who water plants and fill shelves. The manager is thinking of using job enrichment. Explain one advantage and one disadvantage to Hill Garden Centre of using job enrichment.6 marks
  18. Vale Pottery employs 20 potters who make plates by hand. They are paid by time-rate. The owner wants more output and plans to change to piece-rate. Explain one advantage and one disadvantage to Vale Pottery of using piece-rate.6 marks
  19. Pine Call Centre employs 50 call handlers. Each works 2000 hours a year and is paid textdollar14 an hour. Other local call centres pay textdollar16 an hour. Last year 12 call handlers left, and replacing each one cost textdollar2000. Profit last year was textdollar150 000. The owner is thinking of paying the same wage as the other call centres. Do you think Pine Call Centre should pay the same wage as the other call centres? Justify your answer.6 marks
  20. Ridgeway Cycles assembles bicycles on three assembly lines. It has 60 workers, each trained for one line. They are paid textdollar10 an hour. Other local firms pay textdollar11 an hour. Last year 15 workers left, and most of them said the work was boring. Profit is low. The owner is considering three methods of motivation: a monthly bonus for the 10 workers with the highest output, job rotation between the three lines, or opportunities for promotion to 2 new supervisor posts. Consider each method. Recommend which one method Ridgeway Cycles should use. Justify your answer.12 marks

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