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2.4 Motivation - in practice 2014

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Deborah Kelly

on 3 November 2018

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Transcript of 2.4 Motivation - in practice 2014

Wages (Time and Piece Rate)
Time Rate:
Employees are paid an hourly rate, or for a number of hours per week. It is possible that overtime rates of pay are used too.

Motivation Factors:
The security of receiving a regular income and the opportunity to receive overtime pay.

Speed of work is not rewarded.
It is possible that employees will work slowly since their pay is not based on output. Slow work could encourage overtime pay.
Financial Rewards
Financial rewards are methods that businesses can use to motivate workers by using some form of monetary payment. The most common payment systems are:

wages (time and piece rates)
profit-related pay
performance-related pay (PRP)
employee share ownership schemes
fringe benefits (perks)
2.4 Motivation in Practice
Financial and non-financial rewards
Piece Rate
Piece Rate:
Employees are paid for each unit (or batch produced). The employee's wages therefore are dependent on the quantity of output produced.

Motivation Factors:
Increased output will equal more pay.

Speed of work is encouraged - quality could suffer unless quality checks are put into place.
There could be an emphasis on quantity rather than quality.
Slow work can be encouraged when a worker reaches a satisfactory wage level.
Salary is the most common form of payment for professional, supervisory and management staff. Employees are paid a sum of money per month. The salary level is fixed each year and is not dependent on the number of hours worked or the number of units produced.
Employees are paid by results, for example, a flat fee or a percentage for each item sold. This is common in real estate, car sales, retail sales...

Motivation Factors:
Employees will be rewarded with results.

Employees may not have control over results - during a recession sales will fall.
Employees may be tempted to sell where it is not in the best interest of the customer or business and this could lead to problems.
Employees may be encouraged to use high-pressure sales tactics
Slow work can be encouraged when an employee reaches a satisfactory wage level
Does not encourage team work
The world economy was brought to its knees in 2008 by risk-taking bankers hungry for bonuses that brought them riches beyond the wildest dreams of most normal working people. One American bank paid an average bonus of $500 000 to its staff, with top staff receiving multi-million dollar pay-outs. Striving for such large sums meant bankers took huge risks by making loans to businesses and individuals that were often not in a position to pay them back."

Organizations like banks should not be allowed to motivate their staff by using large financial rewards."

In groups, discuss to what extent you agree or disagree with this statement.
Theory of Knowledge
Motivation Factors:
gives security of regular income
gives status compared to time rate or piece rate payment systems
aids in costing - the salaries will not vary for one year
it is suitable for jobs where output is not measurable
is suitable in management positions where staff are expected to put in extra time to complete a task or assignment
income is not related to effort levels or productivity
the employer is typically relying on the professionalism of the staff to improve the quality and quantity expected.
it may lead to complacency of the salary earner
regular appraisal may be needed to assess whether an individual should move up the salary scale
Performance-Related Pay (PRP)
PRP is usually a bonus paid in addition to a salary. Targets are set and management determines if they are met or not.

Motivation Factors:
The assumption is that employees will be motivated by the opportunity to make extra money by performing better than the targets.

As long as the tasks are repetitive tasks that involve physical skills, PRP can enhance performance. However, when cognative tasks are involved, PRP may reduce productivity.
PRP can cause divisions in a business if the evaluation of employees performance is based upon subjective factors.
The emphasis is on individual performance that does not encourage team work.
Profit-Related Pay
Employee Share-Ownership Schemes
Fringe Payments (Perks)
Non-Financial Rewards
Job Enrichment
Job Enlargement
The amount an employee receives is linked to the amount of profit the business makes.

Motivation Factors:
Sharing the financial rewards of a business may encourage a sense of belonging and a desire to contribute to its success.

The reward is not based on an individual effort.
If profits fall then employees could experience a loss through no fault of their own.
There are two forms of this. The first is as a type of bonus where the payment is shares in the business rather than cash. The second is a type of employee savings plan where they are allowed to purchase shares each pay period without having to pay the brokerage fees. Some employers also "match" share purchases - for ever $1 the employee invests in shares the company will give the employee $0.50. Paying employees with shares of the companies stock.

Motivating Factors:
Employees become partial owners of the business, which is thought to provide an incentive to work harder.
Employers benefit from more motivated employees, lower rates of absenteeism and staff turnover.

In reality share ownership schemes tend to be used for rewarding those in the senior leadership team. The majority of employees do not qualify for share ownership.
Motivation Factors:
Employees like perks.
They are used by businesses in addition to normal payment systems in order to give status to higher-level employees and to recruit and retain the best staff.

If fringe payments are not given equally to all employees or an a clear, fair basis, division among the staff can result.
Employees can come to expect certain perks and may become angry if taken away.
These are non-monetary factors that motivate people by offering psychological and intangible benefits (factors not linked to money). The theories of Maslow, Herzberg and Pink all advocate non-financial methods of motivation. Non-financial motivators include:

job enrichment
job rotation
job enlargement
purpose/the opportunity to make a difference
CUEGIS - Culture
This is also known as
vertical loading
This makes an employee's job more meaningful and rewarding by allowing employees to use the full range of their abilities. This process often involves supervising employees less and making the responsibilities of the position more challenging. An employee will be responsible for an entire production process and will have a greater sense of ownership and responsibility in what they produce.

Motivation Factors:
Employees typically prefer to have responsibilities that are challenging.
Employees who are more satisfied are typically more motivated to work hard.

There is added expense of time and money needed for training.
The increased workload could result in anxiety and stress.
Job enlargement involves giving employees more tasks to do. This can include both job rotation and job enrichment, and is known as
horizontal loading
. Its purpose is to reduce the monotony of tasks that can cause boredom and demotivation.

Motivation Factors:
Generally employees prefer some variation in the tasks they must do. It can make a job more interesting.

Some employees will view it as nothing more than giving them additional duties to perform and will lead to dissatisfaction.
Overtime the initial benefits are likely to diminish.
It can lead to unmanageable workloads.
Teamwork involves working cooperatively with a group of people to achieve a goal. The success of teams can be crucial to performance so an organization will strive to have high-performance teams.

Motivation Factors:
Individuals tend to be energized by working in teams, which creates a sense of group cohesion and common purpose.

Team failures can increase dissatisfaction and thus decrease employees productivity.
K&U Questions
Case study application

Extra Resource:
10 things you need to know about people
Bill Gates suggests that employee share ownership has been fundamental to the success of Microsoft. The promise of shareholding helps Microsoft to attract the brightest graduates to work for them and keeps them focuses on the company's success.
Job Rotation
Job rotation can have two meanings. One is that involves having an individual employee move through different divisions in a business over a period of time as a form of training. The second one is a type of job enlargement that involves workers performing different tasks at the same level of complexity. For example supermarket employees might work at the checkout cashier one day, the bag packing another, then work in the bakery or staking shelves on other days. The intention is to provide more variety.

Motivation Factors:
Provides more variety.
The additional training and acquisition of new skills and knowledge can lead to new opportunities.

Multi-skilling requires more training costs.
Some employees may feel it is simply adding to their workload with no real benefit.
Delegation involves the passing down of authority to perform tasks to workers. Empowerment goes further and involves giving individuals access to resources and information to do their jobs and the power to make decisions. Employees are given considerable control over how their jobs should be done.

Motivation Factors:
Empowered employees generally believe that they can be instrumental in changing things and learning new skills. Employees find this rewarding

Businesses run the risk that the empowered employee may not be able to manage the responsibility.
Employees may make decisions that are not productive or cost the business unnecessarily.
opportunity to make a difference
This refers to the ability of businesses to connect employees to the aims of the organization other than profit. Non-profit organizations have this advantage, as they typically exist to meet some social or environmental need.

Motivation Factor:
Many individuals want to do more than merely make money. They want to know that they are making a difference in the world and find these purposes intrinsically motivating.

If for-profit organizations overemphaise social or environmental aims, employees may lose focus on the profit-making objectives.

From your text:

Recent studies from global management consultancy firm McKinsey & Co. found that respondents view three non-financial rewards:

praise from line mangers
leadership attention to the work being done and
a chance to lead projects

to be more effective in motivating and engaging workers than the three highest-related financial rewards:

cash bonuses
increased base pay
share options
Financial and non-financial rewards have differing degrees of effectiveness in different countries and cultures.

In general in developing countries, many are unaccustomed to making significant income. Work is traditional industrial production: a series of simple, uninteresting tasks
Financial rewards tend to be important
Wages based on piece-rate can be motivating.

In developed countries, individuals are accustomed to high standards of living. Economies have shifted to the tertiary and quaternary sectors where work tasks tend to be more complex and require cognitive processes.
People are increasingly interested in non-financial rewards
Personally satisfying work, teamwork and making a difference in the world are important.

However, these are generalizations. In all economies some people are mostly interested in making money, while others are more interested in non-financial objectives.

Aside from culture, the type of job impacts which motivators will work best.
"When we delegate tasks we get things done. But when we delegate responsibility, others get done much more than we ever could." - Simon Sinek
Read: Article - Don't mistake perks for corporate culture.
Employee engagement article
Harrod's Case Study
US Employee Engagement
Source: Gallop News. The Worldwide Employee Engagement Crisis January 2016
Article about ee engagement in Asia.
The types of extras that businesses offer their employees. They can include medical insurance, a car, gym membership and private pension plans. They often include perks related to the nature of the business (a hotel may offer discounted rates to employees).
5 Unreal Employee Perks | Forbes
Top 10 Cool Benefits At Google
Top 10 employee benefits and perks for 2017, according to Glassdoor
Companies that pay competitively and help employees balance the demands of work and life have no problems hiring and retaining good people.
Four out of five workers say they would prefer new benefits over a pay raise according to Glassdoor.
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