People work for several reasons:

 Have a better standard of living: by earning incomes they can satisfy their needs and
wants
 Be secure: having a job means they can always maintain or grow that standard of living
 Gain experience and status: work allows people to get better at the job they do and earn a
reputable status in society
 Have job satisfaction: people also work for the satisfaction of having a job

Motivation is the reason why employees want to work hard and work effectively for the
business.
Money is the main motivator, as explained above. Other factors that may motivate a person to
choose to do a particular job may include 
social needs (need to communicate and work with others),
esteem needs (to feel important, worthwhile), 
job satisfaction (to enjoy good work), 
security (knowing that your job and pay are secure- that you will not lose your job).
Why motivate workers? Why do firms go to the pain of making sure their workers are
motivated? 
When workers are well-motivated, they become highly productive and effective in their
work, become absent less often, and less likely to leave the job, thus increasing the firm’s
efficiency and output, leading to higher profits.
For example, in the service sector, if the employee is unhappy at his work, he may act lazy and
rude to customers, leading to low customer satisfaction, more complaints and ultimately a bad
reputation and low profits.

Motivation Theories
 F. W. Taylor: Taylor based his ideas on the assumption that workers were motivated
by personal gains, mainly money and that increasing pay would increase productivity
(amount of output produced). Therefore he proposed the piece-rate system, whereby
workers get paid for the number of output they produce. So in order, to gain more money,
workers would produce more. He also suggested a scientific management in
production organisation, to break down labour (essentially division of labour) to
maximise output.
However, this theory is not entirely true. There are various other motivators in the
modern workplace, some even more important than money. The piece rate system is not
very practical in situations where output cannot be measured (service industries) and also
will lead to (high) output that doesn’t guarantee high quality.
Maslow’s Hierarchy: Abraham Maslow’s hierarchy of needs shows that employees are motivated by
each level of the hierarchy going from bottom to top. Mangers can identify which level their workers are
on and then take the necessary action to advance them onto the next level.

One limitation of this theory is that it doesn’t apply to every worker. For some employees, for example,
social needs aren’t important, but they would be motivated by recognition and appreciation for their work
from seniors.

 Herzberg’s Two-Factor Theory: Frederick Herzberg’s two-factor theory, wherein he

states that people have two sets of needs:
Basic animal needs called ‘hygiene factors’:
 status
 security
 work conditions
 company policies and administration
 relationship with superiors
 relationship with subordinates
 salary
Needs that allow the human being to grow psychologically, called the ‘motivators’:

 achievement
 recognition
 personal growth/development
  promotion
 work itself
According to Herzberg, the hygiene factors need to be satisfied, if not they will act as de-
motivators to the workers. However hygiene factors don’t act as motivators as their effect
quickly wear off. Motivators will truly motivate workers to work more effectively.
 

Motivating Factors
Financial Motivators
 Wages: often paid weekly. They can be calculated in two ways:
 Time-Rate: pay based on the number of hours worked. Although output
may increase, it doesn’t mean that workers will work sincerely use the time to
produce more- they may simply waste time on very few output since their pay
is based only on how long they work. The productive and unproductive
worker will get paid the same amount, irrespective of their output.
 Piece-Rate: pay based on the no. of output produced. Same as time-rate,
this doesn’t ensure that quality output is produced. Thus, efficient workers
may feel demotivated as they’re getting the same pay as inefficient workers,
despite their efficiency.
 Salary: paid monthly or annually.
 Commission: paid to salesperson, based on a percentage of sales they’ve made. The
higher the sales, the more the pay. Although this will encourage salespersons to sell more
products and increase profits, it can be very stressful for them because no sales made
means no pay at all.
 Bonus: additional amount paid to workers for good work
 Performance-related pay: paid based on performance. An appraisal (assessing the
effectiveness of an employee by senior management through interviews, observations,
comments from colleagues etc.) is used to measure this performance and a pay is given
based on this.
 Profit-sharing: a scheme whereby a proportion of the company’s profits is distributed to
workers. Workers will be motivated to work better so that a higher profit is made.
 Share ownership: shares in the firm are given to employees so that they can become part
owners of the company. This will increase employees’ loyalty to the company, as they
feel a sense of belonging.
Non-Financial Motivators
 Fringe benefits are non-financial rewards given to employees
 Company vehicle/car
 Free healthcare
 Children’s education fees paid for
  Free accommodation
 Free holidays/trips
 Discounts on the firm’s products
 
 Job Satisfaction: the enjoyment derived from the feeling that you’ve done a good
job. Employees have different ideas about what motivates them- it could be pay,
promotional opportunities, team involvement, relationship with superiors, level of
responsibility, chances for training, the working hours, status of the job etc.
Responsibility, recognition and satisfaction are in particular very important.
So, how can companies ensure that they’re workers are satisfied with the job, other than the
motivators mentioned above?
 Job Rotation: involves workers swapping around jobs and doing each specific task for
only a limited time and then changing round again. This increases the variety in the work
itself and will also make it easier for managers to move around workers to do other jobs
if somebody is ill or absent. The tasks themselves are not made more interesting, but the
switching of tasks may avoid boredom among workers. This is very common in factories
with a huge production line where workers will move from retrieving products from the
machine to labelling the products to packing the products to putting the products into
huge cartons.
 Job Enlargement: where extra tasks of similar level of work are added to a worker’s
job description. These extra tasks will not add greater responsibility or work for the
employee, but make work more interesting. E.g.: a worker hired to stock shelves will
now, as a result of job enlargement, arrange stock on shelves, label stock, fetch stock etc.
 Job Enrichment: involves adding tasks that require more skill and responsibility to a
job. This gives employees a sense of trust from senior management and motivate them to
carry out the extra tasks effectively. Some additional training may also be given to the
employee to do so. E.g.: a receptionist employed to welcome customers will now, as a
result of job enrichment, deal with telephone enquiries, word-process letters etc.
 Team-working: a group of workers is given responsibility for a particular process,
product or development. They can decide as a team how to organize and carry out the
tasks. The workers take part in decision making and take responsibility for the process. It
gives them more control over their work and thus a sense of commitment, increasing job
satisfaction. Working as a group will also add to morale, fulfill social needs and lead to
job satisfaction.
 Opportunities for training: providing training will make workers feel that their work is
being valued. Training also provides them opportunities for personal growth and
development, thereby attaining job satisfaction
 Opportunities of promotion: providing opportunities for promotion will get workers to
work more efficiently and fill them with a sense of self-actualisation and job satisfaction