People In Business Flashcards
What is motivation?
Motivation is the reason why employees want to work hard and work effectively for the business.
What are the reasons why people work?
Money - to pay for necessities and some luxuries
Security - a sense of security, i.e. knowing that your job and pay are safe - you are not likely to lose your job.
Social needs (affiliation) - feeling part of a group or organisation, meeting people, making friends at work
Esteem needs (self-importance) -
feeling important, feeling that the job you do is important
Job satisfaction - enjoyment is derived from feeling that you have done a good job
What are the benefits of a well-motivated workforce?
High productivity - high output per worker - in a business usually comes from a workforce that is motivated to work effectively and from this comes increased profits. Which helps to keep costs low and increase profits
Willingness to accept to accept change (e.g. new methods of working)
Two-way communication with management (e.g. suggestions for improving quality)
Low labour turnover - a loyal workforce - Which reduces the cost of recruiting workers who leave
Lowrates of strike action - Avoiding damage to customer relations
Describe well-motivated vs unhappy workers
Well-motivated workers → High productivity → Increased output → Higher profits
Unhappy workers → DO not work very effectively → Low output → Lower/no profit
Describe each tier in the Maslow’s hierarchy from the bottom to the top and how managers can provide them to employees
Physiological needs - food, rest, recreation, shelter : wages high enough to meet weekly bills
Safety/security needs - protection against danger, protection against poverty, fair treatment : job security
Social needs - friendship, a sense of belonging to a team : work colleagues who support you at work
Esteem needs - having status and recognition, achievement, independence : being given recognition for a job well done
Self-actualisation - succeeding to your full potential, feeling that you have done a good job not just for financial and personal reward : being promoted and given more responsibility
Explain the idealogy behind Maslow’s hierarchy of needs
- Most business managers now recognise that if employees are going to be motivated to work effectively then the higher levels in the hierarchy must be available to them
- Maslow also suggested that each level in the hierarchy must be achieved before an employee can be motivated by the next level.
For example, once social needs are met, this will no longer motivate the employee, but the opportunity to gain the respect of follow workers and to gain esteem could motivate employee to work effectively
There are problems in that some levels do not appear to exist for certain individuals, while some rewards appear to fit into more than one level. (e.g. money allows basic needs to be purchased, but high pay can also be status symbol)
Managers must identify the level of hierarchy that a particular job provides and then look for ways of allowing the employees to benefit from the next level up the hierarchy (e.g. e.g. providing full-time jobs to workers in agriculture to fulfill not only their physiological needs, but also security needs)
What are the two main employee motivational theories?
Taylor’s Motivational Theory - Money is the only motivator (e.g. piece rate, hourly rate)
Herzberg’s Motivation-hygiene Theory - Some of the factors cause satisfaction and some of the factors cause dissatisfaction/
Explain Tayloy’s Motivational Theory as well as the criticisms
It is created by Frederick W. Taylor -he started his working life as labourer in a factory in America in the 1880s, and rose to become chief engineer. He based his ideas on the assumption that all individuals are motivated by personal gain and therefore, if they are paid more, they will work more effectively. Taylor saw employees rather like machines - when they were working hard, their productivity would be high and therefore the labour costs would be low for each unit produced.
Taylor’s ideas resulted in a big productivity gains at the company where he worked and many other businesses adopted his ideas. However, there are several criticisms of Taylor’s ideas:
His ideas were too simplistic - Employees are motivated by many things and not just money.
You can pay an employee more money, but if they are unfulfiled by their work in some way, there will be no increase in their effectiveness at work and there will be no productivity gains.
A practical problem arises if you cannot easily measure an employee’s output.
Worker working not for money but for other interests.
Explain Herzberg’s Motivation-hygiene Theory
According to Herzberg, humans have two sets of needs; one is for basic needs - ‘hygiene’ factors or needs, and the second one is for a human being to be able to grow psychologically - ‘motivational’ needs or ‘motivators’.
Motivators (motivates workers) (Maslow’s Hierarchy)
Achievement
Recognition
Personal growth/development
Workitsment/promotion
‘Hygiene’ (or ‘maintenance) factors
:
Status
Security
Work conditions
Company policies and administration
Relationship with supervisor
Relationship with subordinates
Salary
According to Herzberg, the ‘hygiene’ factors must be satisfied; if they are not, they can act as demotivators to the workers. However, they do not act as motivators, as once satisfied, the effects of them quickly wear off.
What are the most frequently used methods of payment or financial reward?
Wage
Wage - Time rate
Wage - Piece rate
Salary
Bonus
- Commission
Profit sharing
Fringe benefits
Describe wage as a financial reward
Wages is payment for work, usually paid weekly, sometimes in cash and sometimes directly into a bank account.
The workers get paid on a regular basis and does not have to wait long for some money (tends to be paid to manual workers e.g. those who work in a warehouse/factory)
- If the employee works longer than their normal hours, they can usually be paid overtime
What are the drawbacks of wages as a financial reward?
As the wages are paid weekly, they have to be calculated every week, which takes time and money
Wages clerks are often employed to perform this task
When calculating the wages to be paid, they can be worked out in a number of different ways - time rate or piece rate
Describe wage (time rate) as a financial reward
Time rate is payment by hour. For example, if an employee is paid $10 per hour, and they work for 40 hours, they will be paid $400.
- This makes it easy to calculate the worker’s wages and the worker knows exactly how much they will be paid for working a certain period of time
What are the possible limitations of wages (time rate) as a financial reward?
- The hours worked are often recorded on a timesheet which must be filled in and used to calculate the wages by the Accounts department. This system takes time.
- Good and bad workers get paid the same amount of money
- Often supervisors are needed to make sure the workers keep working and producing a good quality product. This is expensive because more supervisors are needed by the business
- A clocking-in system is needed to determine the number of hours worked by the employees
When is time rate often used?
Time rate is often used where it is difficult to measure the output of the worker, for example, a bus driver or hotel receptionist.
Describe wages (piece rate) as a financial reward
Piece rate is where the workers are paid depending on the quantity of products made - the more they make, the more they get paid. A basic unit is usually paid, with additional money paid according to how many products have been produced.
Piece rates can only be used where it is possible to measure the performance of an individual or a team.
- The advantage with this system is that it encourages workers to work faster and produce more goods
What are the possible limitations of wages (piece rate) as a financial reward?
Workers may concentrate on making a large number of products and ignore quality. This usually requires a quality control system and this is expensive
- Workers who are careful in their work will not earn as much as those who rush, which may not be seen as fair.
Friction between employees may be caused as some will earn more than others
If the machinery breaks down, the employees will earn less money. Because of this, workers are often paid a guaranteed minimum amount of money
Describe salaries as a financial reward
Salaries are paid monthly, normally straight into a bank account. It is usual for office staff or management to be paid salaries.
• A salary is calculated as an amount of money per year for the job performed by the worker. It is divided into 12 monthly amounts. This means it is easy to calculate salary costs for the business.
The employer has the money in their bank account for longer than if they were paying their workers’ wages, as
salaries are paid only once a month
Do not have to pay for OT (overtime)
They payment has to be calculated only once a month instead of at least four times a month (e.g., like wages)
What are the possible limitations of salaries as a financial reward?
Workers may prefer to be paid weekly
No payment for extra time worked - workers may be reluctant to work longer
Might decrease output as they get paid the same
Describe bonuses as a financial reward
A bonus is an additional amount of payment above basic pay as a reward for good work. It can be paid at the end of the year or at intervals during the year.
Bonuses do not have to paid - a business can decide to pay a bonus just to an individual worker who has performed well or to all of its employees if the business has exceeded certain targets. Being paid a bonus can have a positive motivating effect. Workers often consider themselves to be ‘recognised” and ‘special’
What are the possible limitations of bonuses as a financial reward?
Bonuses can become ‘expected” every year and if they are not paid, then employee disappointment can be
difficult to manage
- If only one or a small number of workers are paid a bonus, then bad feelings can be caused as other workers resent this.
Describe commission as a financial reward
Commission is payment relating to the number of sales made. These additional payment are often paid to sales stuff.
The more sales they make, the more money they are paid - similar to piece rate, but applying only to sales staff. This encourages the sales staff to sell as many products as possible. This should be good for the business as sales may increase. Commission is paid in addition to the existing wage or salary.
What are the possible limitations of commissions as a financial reward?
If the sale staff are very persuasive and encourage people to buy goods they don’t really want, then the business may see its sales increase only in the short term and then fall again as it gets a bad reputation.
- It can be very stressful for the sales staff because, if they have a bad month, their pay will fall.
- There might be too much competition between sales staff to ‘get the next customer’ who enters the shop.
Descibe profit sharing as a financial reward
Profit sharing is a system whereby a proportion of a company’s profits is paid out to employees. This additional payment should motivate the workers to work hard as they all receive a share of the profits earned by the business. THe rest of the profits will be paid as dividends to the shareholders or retained by business.
Profit sharing is often used in the service sector where it is difficult to identify an individual employee’s contribution to the increased profits, but they will all benefit from more productive work.
What are the possible limitations of profit sharing as a financial reward?
- If a business makes very low profits or even a loss, then no ‘profit sharing’ will be possible - leading to employee disappointment
- The profit share is usually calculated on the basis of an additional percentage of a worker’s existing wage or salary - so higher paid workers will receive a higher profit share. This could cause bad feeling among lower paid workers who consider that they have worked just as hard.
What is a fringe benefit and give examples?
A non-financial reward, such as a Company vehicle (car)
Discounts on the business’ products
Health care paid for
- Children’s education fees paid
Free accommodation
Share options (where company shares are given to employees)
Generous expense accounts (for food and clothing)
- Pension paid for by the business
- Free trips abroad/holidays
What are the non-financial reward methods?
Job rotation
Job enrichment
Autonomous work groups or teamworking
Training
- Opportunities for promotion
Describe job rotation as a non-financial reward
Workers on a production line may carry out simple but different tasks. Job rotation involves the workers swapping round and doing each specific task for only a limited time (e.g. for one hour) and then changing around again. This increases the variety in the work itself and also makes it easier for the managers to move workers around the factory if people are ill and their jobs need covering. However, it does not make the tasks themselves more interesting.
Describe job enrichment as a non-financial reward
Job enrichment involves looking at jobs and adding tasks that require more skill and/or responsibility. Additional training may be necessary to enable the employee to take on extra tasks. For example, employees may be given responsibility for a whole area of the work.
If managers can design jobs so that they provide scope for fulfilling higher human needs, workers will often become more committed because they get more satisfaction from their jobs, again raising productivity.
Describe autonomous work groups or teamworking as a non-financial reward
Team working involves a group of workers being given responsibility for a particular process, product or development.
They can decide as a group how to complete the tasks or organise the jobs. The workers can become more involved in the decision making and take responsibility for this process. This gives a feeling of control over the jobs/tasks and the employees feel more committed, therefore increasing job satisfaction.
Example of this is organising employee on a car production line where particular parts of the assembly line are given over to teams of workers and they decide how to organise themselves.
Describe training as a non-financial reward
Improving a worker’s level of skills can have beneficial effects on motivation levels.
First, workers can feel a great sense of achievement if they successfully gain and apply new work-based skills. Second, they could now be given challenging and rewarding work to perform - and this is an important element of job enrichment.
Workers can also feel as if they have been selected by management for training courses and this can give them a feeling that their good work has been recognised.
Describe opportunities for promotion as a non-financial reward
Many businesses prefer to fill posts of responsibility (e.g. supervisors, team leaders, managers). This internal recruitment offer opportunities for advancement to existing workers.
Not only does the business benefit from promoting workers who already ‘know how it operates’ but it also gains from better motivated workers. Employees offered promotion will feel recognised, have a higher status and will be given more
challenging work to perform. All of these benefits are closely linked to the views of both Maslow and Herzberg.
(definition) motivation
Motivation is the reason why employees want to work hard and work effectively for the business
(definition) wage
A wage is payment for work, usually paid weekly
(definition) time rate
Time rate is the amount paid to an employee for one hour of work
(definition) piece rate
Piece rate is an amount paid for each unit of output
(definition) salary
A salary is payment for work, usually paid monthly
(definition) bonus
A bonus is an additional amount of payment above basic pay as a reward for good work
(definition) commission
Commission is payment relating to the number of sales made
(definition) profit sharing
Profit sharing is a system whereby a proportion of the company’s profits is paid out to employees
(definition) job satisfaction
Job satisfaction is the enjoyment derived from feeling that you have done a good job
(definition) job rotation
Job rotation involves workers swapping around and doing specific task for only a limited time and then changing around again.
(definition) job enrichment
Job enrichment involves looking at jobs and adding tasks that require more skill and/or responsibility
(definition) teamworking
Team working involves using groups of workers and allocating specific tasks and responsibilities to them
(definition) training
Training is the process of improving a worker’s skills
(definition) promotion
Promotion is the advancement of an employee in an organisation, for example, to a higher job/managerial level
(definition) organisational structure
Organisational structure refers to the levels of management and division of responsibilities within an organisation. This structure is often presented in the form of an organisational chart with several levels of hierarchy.
What are the features of an organisation chart?
- It is a hierarchy - meaning there are different levels in the organisation. Each level has a different degree of authority
- It is organised into departments.
- there’s a chain of command as there are different levels of management. It allows instructions to be passed down from senior management to lower levels of management.
What are the advantages of an organisation chart?
Every individual can see their own position in the organisation. They can identify who they are accountable to and who they have authority over. Employees can see who they should take orders from.
- It shows the links and relationship between different departments within the organisations
: Everyone is in a department and this gives them a sense of belonging
Describe the span of control and organisational charts
There is an important link between the span of control and the chain of command. The longer the chain of command, the “taller’ will be the organisational structure and the ‘narrower’ the span of control. When the span of control is short, the organisation will have ‘wider’ spans of control.
(definition) delayering
When organisations make their structure ‘wider’ with shorter chain of command - in some cases, this has been done by removing a whole level of management.
What are the advantages of short chains of command?
- Communication is quicker and more accurate.
Each message has fewer levels to pass through before reaching the intended person.
-Top managers are less remote from the lower level of the hierarchy. These top managers should be more in touch with people below them as there are fewer management levels to get to know.
-Spans of control will be wider. This means each manager is responsible for more subordinates. Advantage of this includes it will encourage to managers to delegate more, and there will be less direct control of each worker and they will feel more trusted as they will be able to take more decision by themselves
What is a disadvantage of short chains of command?
However, wider spans of control, with more people to be directly responsible for, could mean that the managers lose control of what their subordinates are doing. The subordinates could make many mistakes if they are poorly trained.
Describe the directors in a business
Directors:
There are a lot of different types of directors (e.g. operations director, financial director, purchasing director.). Directors are senior managers who lead a particular department or division of a business. They have the final responsibility for the work of everyone in the department.
Describe the managers in a business
There may be two general types of managers - line managers and staff
managers. Line managers have direct responsibility for people below them in the hierarchy of an organisation. Staff managers, however, are specialists who provide support, information and assistance to line managers.
Describe the supervisors in a business
Supervisors are junior managers who have direct control over the employees below them in the organisational structure.
Describe the employees in a business
Employees are people employed by another usually for wages or salary and in a position below the executive level.
What are the functions of management?
Planning (future target)
Organising (resources)
Coordinating (labour)
Commanding (labour)
Controlling (factors of production)
