Unit 2 – Leadership & Motivation

Motivation

Motivation

Refers to the desire, effort and passion to achieve something

It is often referred to as the willingness to complete a task or job with enthusiasm

“getting someone to do something you want or, on an individual basis, wanting to do something for yourself for a particular reason.”

Benefits of Increased Employee Motivation

Higher morale and job satisfaction (leading to improved productivity)

Improves corporate image (helps attract both customers and potential employees)

Better industrial relations (in a unionized environment)

Lower staff turnover Lower staff absenteeism Higher profits

Warning Signs of Poorly Motivated Employees

High absenteeism ratesHigh labour turnover ratesHigh wastage levelLow quality outputIncreasing number of customer complaintsPoor punctualityIncreasing number of discipline problems

Intrinsic Motivation

People engage in an activity out of their own desire, such as enjoyment of pursuing a hobby or interest

Activities are undertaken because the person finds them challenging, stimulating or satisfying

Employees can see that their success is a result of something they have done

Extrinsic Motivation

Occurs when people participate in an activity because of the benefits and rewards associated with the activity

Rewards can be tangible (wages or bonuses) or intangible (recognition or praise)

Can also come about from threats and pressure imposed by senior management

Satisfying Individual Need

Identify the Need

Incentive Satisfaction Result

Revise

Employee is involved in the decision making process Employee discuss with management about the goals and

working practices Employee feels as if their contribution is valuable Employee works longer hours or takes on more responsibility

Motivation in Practice

Financial Motivation Payment methods that are used by businesses

to motivate their workforce

Non-financial motivation All other forms, such as praise, recognition and

team work

Financial Motivation

WagesPiece RateSalaryCommissionProfit-related PayPerformance-related PayEmployee Share ProgramsFringe benefits

Wages, Piece Rate & Salary

Wages are usually expressed as an hourly rate Some countries have minimum wage limits Amount is usually based on several factors Method is straight forward

Piece rate rewards workers that are more productive (taxi drivers etc)

Wages, Piece Rate & Salary (continued)

Salaries are a fixed annual rate Used when output and productivity cannot

easily be measured Overtime is not usually paid

Little incentive to work hard

Commissions

An output based payment system Usually based on a percentage of output Often found in lower salary paying jobs or when

the incentive to sell is a key component Creates added pressure in the workplace Tasks can be repetitive and monotonous

Profit Related Pay

Linked to profit (success) of the firmPaid as an annual bonusStrengthens employee loyalty and foster a

team effortManagers and employees are working

togetherShare can be quite small and individual

effort is not recognized

Performance Related Pay

Rewards employees who meet certain goals Sales targets, job competence, contract completion Awarded during a performance appraisal

Problems may arise of performance levels are unattainable

PRP ignores non-financial motivators

Exercise - Hong Kong Football Association

Employee Share Programs & Fringe Benefits

Usually shares of a company sold at a discounted or company matched price Used primarily for senior management

Fringe benefits (perks) are payments to an employee over and above their salary

Potentially a huge cost to the company

Problems with Incentive Schemes Operating problems Fluctuating earnings Quality Changes in payment Quality of working life Jealousy Measured

performance

Are Incentives Effective?

According to research… Performance and merit pay had only a modest

effect on employee commitment Use of bonuses for managers had a positive

effect on the rate of return on capital employed in the business

Profit sharing had a positive effect on productivity and company performance

Mini Case Study

Case: Incentives for Value Added Resellers

Source: Jones, Hall, Raffo, Business Studies,3rd Edition, Unit 60, page 434

Motivation in Practice – Non-Financial RewardsUsed to improve productivityHowever, increasingly businesses have

realized that: The chance to earn more money may not be an

effective motivator Financial incentive schemes are difficult to

operate Individual rewards may be not be effective as

work is done in groups Other factors that employer does not know about

Job Enlargement

Giving an employee more work to do of a similar nature

This variety prevents boredomProblem of “horizontal loading”More efficient if the workers are organized

into groupsLeads to job rotation

Job Rotation

Changing jobs or tasks from time to time May increase motivation, but a new learning

curve for all jobs involved might decrease productivity

Motivation is not guaranteed if worker moves from one boring job to another

Should only be used if rotation involves a similar skill set

Workers do not want to move into a hazardous job possibility

Team WorkHigher productivity due to pooling of talentPeople can specializeShared responsibilityFlexible workingProblems include:

Too much emphasis on “harmony” Poor preparation Individualism Seeing teams as the solution for all problems

Job Enrichment

“vertical extension” of an employers job responsibilities Planning a task Quality control Work supervision Ordering Maintenance

Gives employees a challenge; develop “unused” skills

Multi-tasking

Process of enhancing the skills of employees

Giving an employee more skills and responsibilities can improve work performance

Criticisms include an expectation that the employee will work harder for the same pay

Training may also be an issue

Problems with Job Re-design

Employee’s reactionViews and costsTechnologyEffects on output

Employee involvement schemes have been used widely in recent years

Success varies from company to company

Management by ObjectivesCoined by Peter Drucker (1954)

Business objectives should be defined for a specific individual and revised after assessment of the performance of the individual

Satisfaction comes from achieving certain goals The harder the goals, the greater the satisfaction Businesses should set specific goals (that are

attainable) Saying “do your best” is not sufficient

Organization Behaviour Modification

OBMod Assumes behaviour is a consequence of action

Thorndike and Skinner studies Managers should observe behaviour not

attitude, and how this behaviour relates to consequences

Employee receives something he likes Something the employee dislikes is taken away Something the employee likes is taken away Something the employee dislikes is given

Employee Assistance Programs

EAP’s have been around for 50 yearsDesigned to help employees cope with

difficulties Usually bereavement issues or job loss Now it can be anything from budget balancing

to raising children

Mini Case Study

Case: BET

Source: Management

7th Ed., Schermerhorn