Motivation

A crucial role of management is to motivate and develop people to ensure that

they are as productive and creative as possible. In this section we start to look at
theories about motivation and consider how to get the best from the firm's human
resources.

Motivational theories
The art of getting people to work well and
consistently is a difficult one to get right.
We are all the result of genes, ethics,
values and other factors that make us
difficult to predict. Directing the actions
of others is not a simple process.

You will need to be able to relate the

theories of several motivational theorists
that have tried to suggest ways in which
we can motivate others. There are two
basic types of motivation theory. They are
firstly content theories, which involve what
actually motivates people. This involves a
study of the needs of people and how
these are met. Such needs can either be
extrinsic (pay) or intrinsic (praise or
something that notifies recognition). What
follows are all content theories and a little
later we will also look at McGregor, who is
also in this type of motivation theory.

Content theories

Abraham Maslow

Maslow produced a triangle of NEEDS. He identified five different levels of

needs, which tend to be represented (as in figure 1 below) as a triangle with the
most basic needs at the base and the highest level at the tip of the triangle.
Figure 1 Maslow's hierarchy of needs

The first level is physiological needs, which centre on the BASIC needs of a
wage and decent working conditions. Next level up comes security needs,
which relate to security in work, a pension, benefits and a safe working
environment. Next comes love and belonging or social needs, which really
mean the opportunity to gain a sense of belonging, say through working in
teams, or being invited to participate in social events. Then it's esteem needs
and the need to feel positive about oneself. This often is achieved via good
feedback on performance and seeing this linked to promotion. Finally, there are
self-actualisation needs, which are the satisfaction of achieving one's
innermost desires. This might be resolved by seeking new challenges, or being
given new problems to resolve within an organisation.

To progress to the next level of needs, the employee has to achieve the level
they are currently on.

Herzberg

Frederick Herzberg is the next motivation theorist to look at. His work was done
in 1966 and he felt that motivation is influenced by TWO groups of factors.

Hygiene factors

Hygiene factors were identified by Frederick Herzberg as factors that can lead to
workers being dissatisfied. He argued that to improve worker's motivation, firms
needed to improve these hygiene factors. Hygiene factors may include pay and
conditions, company policy or the way people are treated at work.
Motivators

Motivators are factors, which help employees to gain job satisfaction, such as
recognition of the job they are doing. An increase in motivators is required to
improve job satisfaction.

As we can see from the two definitions above the first group of factors are
hygiene factors, which focus on salary, security, working conditions and general
company policy towards employees. Such conditions might remove
dissatisfaction but they will not necessarily improve staff morale and motivation.
The second group of factors is known as motivators and centre on recognition,
responsibility, the nature of the work (e.g. health professionals) and opportunities
for promotion. It is by improving these that motivation is increased. These are
summarised in figure 2 below.

Figure 2 Herzberg two factor theory

McGregor Theory X and Theory Y

In 1960 Douglas McGregor published the 'Human side of enterprise'. In this work
he attempted to apply the implications of the work of Maslow, Taylor and Mayo to
what businesses do. He identified two theories to try to explain what motivates
people to work. He argued that people are either Theory X workers or Theory Y
workers.

Theory X

Theory X workers are essentially lazy and work just for money. If this is the case
then they need to be strictly controlled (using a more dictatorial or autocratic style
of leadership). Theory X workers are considered to be:

 Lazy and dislike work

 Motivated mainly by money
 Selfish - their own needs are more important than those of the
organisation
  In need of close control by management

Theory Y

Theory Y workers are a complete contrast to this. They are more motivated by
the higher level needs on Maslow's hierarchy. They essentially enjoy work and
are committed and enjoy responsibility. Theory Y workers are considered to be:

 Well motivated and enjoy work

 Able to take responsibility and organise themselves
 Creative in the right working environment
 Independent and flexible

Taylor

Taylor was thought be many to be the 'father' of modern management. He took

on the earlier ideas of some economists that money is the most important
motivator. He developed work-study and methods of doing things that maximised
efficiency. In doing so he is charged with creating scientific management.
Specialisation and repetitive work practices would in his opinion maximise output
and efficiency. Most of his ideas are now thought to be rather outdated.

Ouchi

Professor William Ouchi (1981) developed the concept of 'Theory Z', blending
Japanese and American approaches to management. McGregor gave us Theory
X and Theory Y. In Theory Z, Ouchi claims that it is irrelevant to classify people
independent of their working environment. People change their priorities based
on the situation in which they find themselves.

The central assumption of the theory is that workers should find the meaning of
their lives in work. Corporations are the central unit of society and should take
responsibility for employees' happiness. For employees, they wish their
productive time to be rewarding and want to contribute to the success of
whatever enterprise, which they may be associated. In practice, in the US, this
approach translated into lots of benefits that allow workers to work longer hours!
Motivation theory - self-test

1 Self actualisation

Which of the following is a definition of self-actualisation needs?

a) The provision of a basic wage and decent working conditions

b) The opportunity to gain a sense of belonging
c) Achieving one's innermost desires
d) The opportunity to feel positive about oneself

2 Herzberg - hygiene factors

Which of the following is a precise definition of what Herzberg called hygiene

factors?

a) The factors that can lead to workers being dissatisfied

b) The factors which influence the rates of pay
c) The factors which help employees to gain job satisfaction
d) The factors which allow the workplace to be clean and tidy

3 Mayo - motivating factors

Distinguish which of the following is not one of Mayo's motivating factors.

a) Money and working conditions

b) Working in groups
c) Recognition and feeling part of a secure group
d) Promotion
4 F W Taylor theories

What is the name under which F W Taylor's theories are best known?

a) Welfare strategies
b) Scientific management
c) Expectancy theory
d) Equity theory

CADB

Motivation & leadership styles - self-test

1 Performance-related pay

Which of the following is the correct definition of performance-related pay?

a) A method of payment in which the employee is paid a flat rate for a

period of time
b) A method of payment where the employee is paid for each product
made
c) A method of payment where the employee receives a percentage value
of the total value of the goods they sell in a specific time period
d) A method of payment where the employee is paid a specific amount
which is related to targets of quantity or quality of personal output

2 Non-financial motivation methods

Which of the following is NOT a non-financial method of motivation?

a) Delegation
 b) Empowerment
c) Company car
d) Job enlargement

3 Motivation

Deciding on whether poor motivation is a factor within a company can be

complicated. Of the following which is NOT a way of noting poor motivation
within a business?

a) Increasing levels of absenteeism

b) Increased usage of postage
c) Rising costs of production
d) Falling order books

4 Leadership styles

Autocratic or authoritarian leadership is normally thought to include:

a) A lot of consultation with the workforce

b) Allowing employees to basically run their own affairs
c) Treating employees as falling into two distinct groups who have to be
treated differently
d) A system which places a strong emphasis on formal systems and a strict
code of conduct

5 Leadership styles

Which of the other factors listed below would NOT influence the style of
leadership adopted by a firm?

a) The corporate culture

 b) The task being undertaken
c) The age of the employees
d) The skills and personality of the leader
D,C,B,D,C

Exam advice motivation

Exam advice - how might motivation appear in an examination?

The most common scenario that you are likely to confront in an exam
question or case study will be a drop in morale and often output (both
quantitative and qualitative). You will then be asked to put forward ways of
solving these problems. Other factors that might appear in a question are:

 Increasing levels of absenteeism

 Increasing labour turnover
 Rising costs of production
 Falling productivity
 Falling order books

All point to problems with motivation BUT remember that you will be asked WHY
has this happened and WHAT would you do about it? When answering questions
on motivation, or problems with it, why not think about the following issues:

1. Has the business got a strong corporate culture and team spirit?
2. Are the systems for deciding on pay and fringe benefits considered to be
fair?
3. Do the majority of workers feel that their jobs are challenging and
satisfying?
4. Could the decision-making process be taken further down the
organisation? If so, where and why?
5. Is management giving enough recognition, praise etc. to employees for
their efforts and achievements?
6. Are communication flows as effective as they could be?

What to include when answering about motivation

1. Empowerment and the more modern approach of giving more workers
some control over their working environment. This autonomy could
improve motivation and with it quality and other problems listed above. If
the quality of output improves, then the value of the output should also
rise. That should make the company more competitive.
 2. You might also want to suggest the benefits of team or group work. This
enshrines some of the older working practices that were once used - such
as job rotation, enrichment and some delegation of tasks.
3. You must never forget to look and see if simple financial rewards might
help boost motivation. Whatever the task being undertaken some
increased money available does often have a positive impact, though is
this practical given the firm's financial position - always bear that in mind.
4. You will also need to think about financial and non-financial incentives and
re-visit the motivation theorists

Exam skills

There is advice on revision and the skills that examiners are looking for in the
revision tips section of the course (under study support). Also in that section is
some advice on the command words that examiners use in questions and what
they all mean.

We all know the importance of CONTENT but beware; examiners often find that
the larger you draw the Maslow triangle the poorer the answer is! When they set
questions, examiners are looking to test particular skills and below we look at
some of these skills and how they may be tested in a question on motivation.

Application

Application means selecting what is relevant to the questions asked and not the
chance to LIST everything you know about every one of the above motivation
theorists!

Analysis

LINKS with other areas of the course are important here. Explain WHY you
would suggest a certain theory and WHAT you expect to be its benefits to the
company being discussed. Remember that happy people are more than just well
paid individuals. Think what makes you work hard and why. It can be as simple
as having a nice chat with someone.

Evaluation

This is when our old friend TIME might enter the equation. Things do change and
what was once the best way of doing something no longer is. Also, always look
for hints about past EXPERIENCES and how these impact on people today and
tomorrow.

If you can combine all of these skills and keep one eye firmly on the fact that
most of us are complex beasts and react to a range of different incentives then
you should do well. Oh, and always look for nice examples hidden in the text.
So, think about the following as you work on this very important part of your
course:

 Can I link the various theories together to show how thinking on motivation
has evolved?
 Can I set them in context?
 Is it only money that increases job satisfaction?
 Where else and how else do people gain satisfaction within their lives?
 Does a 'one size' approach to motivation fit all workers?
 How do changing circumstances affect motivation within the workplace?
 Does personality, experience and other attitudes, such as leadership style
influence the success or otherwise of motivation theories and their
application?
 Can I set motivation in a wider context and include other factors that now
influence people in their place of work, e.g. the role of women or the
changes in contracts?

If you practice putting motivation into certain contexts and thinking about how you
would react to changing circumstances, then you are following the best revision
route to what will appear in your examinations
Motivation in practice: Financial motivation
There are many different
methods of payment that a
business can choose from
and they need to choose
carefully as remuneration is
an important aspect of
motivation. Most produce a
system that suits their
particular business but
whichever they do select will
be designed to motivate the
workforce. Let's look at
some of the methods that
are popular with modern
business.

The most common pay schemes used are:

 Flat rate - which is a fixed weekly or monthly rate for a specific job. It's
easy to run but seldom really motivates individuals.
 Piece rate - which is payment by output. This encourages effort but we
have to watch the quality of individual workers.
 Time rate - which is based on a given rate of pay per period of time. Any
time worked above this is paid at a higher rate, or overtime.
 Bonus - this is an extra incentive to encourage employees, especially
during a busy period of for a one-off job.
 Commission - which is paid as a percentage of the value of sales made
by an individual sales person.
 Profit-related - which allows individual employees to receive a share of
profits. This acts both as an incentive and also allows management some
flexibility when setting basic rates of pay

Time-rate ('flat rate') schemes

This method involves the employee receiving a basic rate of pay per time period
that they work (e.g. $5 per hour, $50 per day, $400 per week). The pay is not
related to output or productivity.

If the employee works more than the agreed number of hours per week they will
normally be eligible for overtime payments e.g. $7.50 per hour instead of $5 per
hour (time and a half).
Piece-rate schemes

This method involves the employee receiving an amount of money per unit or per
'piece' that they produce. Therefore their pay is directly linked to their productivity
level. Care has to be taken to make sure that employees do not reduce the
quality of their output in order to boost the quantity they produce. Frustrations
and tensions can also be caused if workers are slowed down by production
stoppages, or problems elsewhere in the production line.

Commission

This is a common method of payment for employees who sell a finished result
e.g. a shop assistant or telesales. The employee receives a percentage of the
value of the goods that they sell in a period of time. Sales representatives will
often receive a proportion of their pay in this way.

Performance-related pay (PRP)

This is a method of giving individuals more money based on their personal

performance. They are often related to the employee achieving a number of
targets over the year. This is common with managerial and professional workers.

Profit sharing

This system of financial inducement involves each employee receiving a share of

the profits of the business each year. So, the better the company performs the
more the individual employees should earn (often subject to a maximum amount
per employee).

Such a scheme aims to increase the levels of effort, motivation and productivity
of each employee, since their annual pay-award will be related to the profitability
of the business. Alas, a firm can also record a loss and then employees may
suffer from both lost earnings and a feeling that the company is performing badly.

Share ownership

A common form of payment in many Plc's is what is known as a 'share option'.

This involves each employee receiving a part of each month's salary in the form
of shares, normally at less than current market price.

This forms what is really a savings-plan for the employee. They can sell their
shares after an agreed period of time. Employees should feel a desire to work
harder and so boost profits. As a result the price of their shares may rise and
they will receive higher dividends. However, it should be noted that shares move
for many other reasons and so this connection can be tenuous. Share options
are a common form of remuneration / incentive for senior managers and
directors.

To the various schemes mentioned above some firms add such perks as private
health schemes, pension schemes, subsidised meals, discounts on holidays and
travel, cheap mortgages and loans, company cars and discounts when buying
the company's products.

The total package of pay plus fringe benefits is known as the remuneration
package.
Motivation in practice: Non-financial motivation
In the 1960s and 70s there were increasing amounts of dissatisfaction with
financial methods of remuneration and ideas were developed based around the
'human relations school of management'. These techniques agreed that
employees were more likely to be motivated by non-financial factors and that
their jobs needed to be designed or redesigned around these factors.

Five principles were suggested that needed to be taken into account when
designing any incentive scheme. These were:

 Principle of closure - this means that the job has all tasks necessary to
complete a product or process. This helps workers understand that their
work has some meaning.
 Control and monitoring of tasks - the worker should be able to take
responsibility for a task themselves without interference from inspectors
who might demotivate them.
 Task variety - the tasks carried out need to be varied to maintain
motivation.
 Self-regulation - employees need to be empowered to have control over
their work methods and procedures and therefore work in a way that suits
them.
 Interaction and co-operation - if possible the job should give the
opportunity for social interaction and being able to work in a group.

Methods of job redesign that might help achieve these principles include:

 Delegation - when managers pass a degree of authority down the

hierarchy to their subordinates.
 Empowerment - managers give subordinates a degree of power over
their work, so allowing them to decide for themselves the best way to
approach a problem.
 Job enlargement - this involves increasing the number of tasks, which
are involved in performing a certain job. This should motivate and develop
the multi-skill capabilities of employees.
 Job enrichment - this is a system of motivation based on giving
employees more responsibilities and the opportunity to use their initiative.
 Job rotation - this involves allowing employees to perform a number of
different tasks in turn, so increasing the variety of their job, which should
help with motivation.

Other changes in working practices might also help people be more motivated
and achieve these redesign principles. These include:
 Teleworking - working remotely can often help people be more motivated.
With teleworking they may be able to work a proportion of their time from
home with perhaps 'hot desks' in the office that they can occupy if they
need to come in for any reason. These hot desks may be shared by a
number of employees. However, the majority of their time can be spent
working perhaps from home.
 Flexible working - this means working in a manner that suits the
employee. This may mean flexible hours to fit around the employee's
needs or perhaps even flexible patterns through the year.
TryIT - Human resource management at Maze Green
Yachts

Now that you have considered some of the

key issues relating to human resource management, you may like to see how
effectively you can motivate staff in a major yachts manufacturer.

In the window below is the Maze Green Yachts online business simulation. In
this, you get to see how well you can run a major international yacht
manufacturer.

To test how well you can motivate their staff, go to the Maze Green business
simulation (you can either do this in the window below or you can open it in a
separate window by following the previous link).

In the simulation you can change the levels of pay for the various different staff
(administration, production and marketing staff). You can also invest in factory
improvements and other capital equipment that will help to create a better
working environment and therefore better motivated workforce. Try running the
simulation for a few quarters and then consider the following questions.

Question 1

Give three examples of 'motivators' and 'hygiene factors' (as identified by

Herzberg in his two-factor theory) at Maze Green Yachts.

Question 2

Try running the simulation for four quarters without increasing the level of wages
and salaries at all. What has been the impact on productivity of the workforce?
Why do you think this is the case?
Question 3

When looking at their pay packets, the staff at Maze Green Yachts tend to look at
the 'real wage'. What is meant by the 'real wage'? Why do they look at this rather
than their 'money wage'?

Question 4

Try running the simulation for four quarters while increasing the amount spent on
investment. What impact would you expect this to have on productivity? Did what
you expected happen? If not, why not?

Question 5

Analyse the problems that Maze Green Yachts are likely to face if they fail to plan
ahead and recruit new staff in advance of increases in demand.

Question 6

Evaluate the most appropriate training strategy for Maze Green Yachts to adopt
for training their production staff.

Question 7

What additional factors would you like to be able to control in addition to those
available in the simulation to motivate staff more fully?