Motivation (Edexcel GCSE Business)

• Motivation refers to the inner desire or willingness that propels a person to take action and achieve a specific goal or outcome
  • Motivation can be intrinsic, coming from within a person (values, beliefs etc)
  • Motivation can be extrinsic, coming from external factors (rewards or punishments)
     
• Motivation plays a critical role in a business's success, and can have a significant impact on productivity, reliability and loyalty of the workers, and labour turnover rates
   

1. The impact of motivation on productivity

• Motivated employees are more productive and efficient as they are more likely to be engaged in their work and take initiative in order to meet or exceed their goals
• They will generate higher levels of output and quality
• Increased productivity results in higher profits for the business
    

2. The impact of motivation on the reliability of workers

• Motivated employees are more likely to be reliable and dependable
• They take pride in their job, show up on time, meet deadlines, and take fewer sick days
• This leads to increased trust between the business and its employees and higher productivity
  
  

3. The impact of motivation on turnover rates

• Motivated employees are more likely to stay with the company long-term which reduces the turnover rate
• Lower turnover rates reduce the need for costly recruitment and training

• Financial incentives are rewards or payments given to employees in return for their labour - or improved performance
  
  

Types of financial incentives used to motivate employees

 

• There are different theories of human motivation which offer varying perspectives on the role of money in motivating staff
  • Herzberg's Two Factor Theory says that money is not a motivator, but lack of it leads to dissatisfaction
  • Maslow's Hierarchy of Needs argues that people move through levels of needs that motivate them - their first need is physiological (food, water, clothing), followed by safety (employment, shelter etc) - once a need is met it no longer serves to motivate
     

An Explanation of the Financial Incentives Available to Businesses

Incentive Type	Explanation
Remuneration	This refers to the basic wage or salary that a worker receives for their labour   Employees who work on an hourly rate are paid wages   Salaries are paid to full time staff and usually accompanied by benefits
Commission	A percentage of sales revenue paid to workers who sell products or services   Commonly used in sales roles and motivates staff to sell more and increase their sales revenue
Bonus	An additional payment given to staff as a reward for achieving specific goals, completing projects on time, or exceeding performance expectations   The opportunity to earn more money may motivates staff to work harder and achieve better results
Promotion	Promotion usually demands a higher level of responsibility from an employee in the job role Higher pay is usually offered to reflect the increased responsibility   A clear promotion pathway can act as a motivator to improve productivity and staff performance
Fringe benefits	These are additional benefits usually offered to salaried employees and include benefits such as a company car, private healthcare, gym membership etc.   Employees can be motivated to work hard in order to keep their job and the associated fringe benefits

• Non-financial incentives are rewards or motivators not directly related to money
• These incentives are usually intangible and include methods that lead to recognition, praise, job satisfaction, and work-life balance
  
  

Types of Non-financial Incentives

Incentive Type	Explanation
Autonomy	Involves giving staff the authority and resources to make decisions and take action without first receiving management approval   Increases staff sense of ownership and responsibility, leading to improved productivity   Gives employees a sense of ownership and control over their work, which can lead to improved productivity, especially for skilled workers
Job enrichment	Involves adding more challenging or meaningful tasks to a job   Staff feel more motivated and engaged, leading to improved productivity
Job rotation	Involves moving staff between different roles in the business   Exposes staff to new challenges and experiences which can increase motivation, understanding and skill