Chapter 4 Why people work
The role of work in satisfying human needs:
People work for many reasons.
Money – people need money to pay for their needs and wants.
Security – having a job that will be there for many years.
Job satisfaction – enjoying what they do.
Self-esteem – feeling important as have something to contribute to society.
Social – to feel part of a group.
The concept of motivation
Motivation is ‘something that makes people want to work’
Different people will be motivated by different things. What works for one person might not
work for everyone.
To motivate people, a business must try to offer the right rewards to suit each individual.
Motivation theories are ideas that try to explain what motivates different people. This should
help the business choose the right reward to increase workers’ motivation.
Motivation is important as motivated workers will work harder than unmotivated workers which
can help the businesses’ efficiency.
The organisation must offer the following to motivate workers.
- Must offer the right rewards to suit each worker.
- Workers must know how to achieve the rewards.
- Workers must believe reward is achievable.
- Workers must believe rewards are fair.
Motivated workers are likely to be:
More productive
Produce better quality work
Contribute more ideas
This could help the business achieve:
More sales
More efficient production
Lower costs
More profit.
The three main motivation theories
Maslow’s hierarchy of needs
Basic idea is that all people are motivated by the same things (needs). These are ranked in order of
importance from basic needs to complex needs.
To motivate people each set of needs must be satisfied in the right order. Once each set of needs have
been satisfied they no longer act as a motivator to people.
McGregor’s theory X and Y
McGregor’s ideas focus on hoe managers look at workers. He concluded that all workers could be split
into two groups.
Theory X Theory Y
Workers are only motivated by money. Workers are motivated by many needs.
Workers are lazy, do not like work and Workers enjoy work, have ambitions.
have no ambitions.
This means: This means:
Workers must always be supervised Sharing responsibility and consulting
Pay is the best motivator. workers are good ways to motivate.
Pay alone will not motivate workers.
Herzberg’s hygiene factors
Herzberg believed that all workers’ needs could be simply split into two groups.
Hygiene factors Motivating factors
Factors which are necessary for people to Factors which encourage people to work
work harder
This means: This means:
Workers expect basic needs to be Adding variety/tasks to make work more
provided for them such as safe working interesting.
conditions, fair pay etc. Sharing responsibility, consulting and
These rewards do not motivate workers praising workers.
**Note: There are many theories of motivation. It is more important to understand why motivation is
important. The theories just try to explain why different methods of rewards are used.
The methods of financial rewards
Payment methods
1. Time rate – system of pay where workers are paid a set amount of each hour worked. The more
hours worked, the higher the amount worker earns. This encourages people to work longer
periods to earn more pay. But his can lead to slow rate of work as people take longer than
needed so that they can be paid for more hours. This is useful when it is difficult to measure
output.
2. Piece rate – workers paid by amount of output they produce. The more a worker makes, the
higher the amount that person earns. It encourages workers to produce more to earn more pay.
But can lead to poor quality as workers rush to complete work.
**Note: Wages are variable. The amount paid can change from week to week
Performance related pay
It refers to when pay is based on an assessment of how well someone is carrying out their job. Below are
the forms mentioned.
Bonuses – is a sum of money paid to workers, in addition to their basic pay if they reach certain
performance targets. Workers are encouraged to work harder to meet targets to earn the extra
money.
Commission – people earn a certain percentage of sales they have made. The have an incentive
to sell more to earn more money. Tis is usually paid to sales staff.
Profit sharing – all workers receive an additional payment based on the level of profits made by
the business. All workers will try to help business increase its profits as higher profits mean
more money for all the workers.
Share ownership – some limited companies offer employees a chance to buy shares in business.
Workers should work harder as they are part owners in the business.
Fringe benefits – extra incentives give to employees; for example, discounts, insurance or
company car. These are given in addition to wages.
**Note: It is important to understand the difference between each method and how they can help
motivate workers.
The methods of non-financial rewards
Maslow, Herzberg and McGregor’s theory Y all suggest that money is not the only motivator. A business
cannot afford to pay employees as much as some want. Some employees have other reasons for
working such as social or esteem needs. Good communication and involving employees can be just as
effective as paying people more money. There are also the following methods to consider.
Job enrichment
Employee is given more difficult tasks to do.
Employees are encouraged to take part in the decision-making and consultation process.
Workers are motivated as work is more challenging and they feel valued.
Advantages Disadvantages
Less supervision needed Workers might need training which adds
Reduces boredom to costs
Develops workers skills Workers might want pay rise
Job rotation
Employees are able to do other jobs at different times
Workers do one simple job for a period, then move to another simple job
Workers’ boredom is reduced as they do not have to repeat the same job all the time.
Advantages Disadvantages
Flexible work force as able to cover other The range of tasks given are similar to
jobs boredom can return
Reduces boredom as more variety of Some workers might be better at certain
tasks tasks than others. This means quality and
Develops workers skills productivity might vary
Job enlargement
Employee is given a wider range of similar tasks to do as part of their usual job.
Extra tasks are added to their job description to make their duties more interesting.
Advantages Disadvantages
Reduces boredom as more variety of If just more of same, the employee could
tasks feel being overworked
Develops workers skills
Team working
Employees are given responsibility for parts of the production process.
Employees are encouraged to take part in the decision-making and consultation process.
Workers are motivated as work is more challenging and they feel valued.
Often used as part of lean production.
Advantages Disadvantages
Less supervision needed Workers might need training which adds
Reduces boredom as involvement is to costs
encouraged Workers might want pay rise as have
Develops workers skills. more responsibility.
**Note: All methods of reward can cost money. A business will hope the extra output or efficiency
gained will be enough to cover the costs of using the method.
Key terms
Bonus: a sum of money paid to workers, in addition to their basic pay if they reach certain performance
targets.
Commission – people earn a certain percentage of sales they have made.
Fringe benefits – extra incentives give to employees in addition to wages.
Hygiene factor: any factors which are necessary for people to work, but do not make people work
harder.
Job enlargement: employee is given a wider range of similar tasks to do as part of their usual job.
Jon enrichment: employee is given a wider range of more complex tasks and encouraged to take part in
the decision-making and consultation process.
Job rotation: employees are able to do other jobs at different times.
Motivation: something that makes people want to work.
Piece rate: system of pay where workers paid by amount of output they produce.
Profit sharing: workers receive an additional payment based on the level of profits made by the
business.
Time rate: system of pay where workers are paid a set amount for each hour worked.
