2.4 Motivation and rewards

2.4.1 The importance of motivation in the workplace

Importance of Motivation

• Increased productivity - Motivated employees would be more productive and therefore increase the efficiency of the business.

• Employee retention - Motivated employees would reduce the number of employees leaving the first as they would be satisfied with their job.

• More innovation - Motivated employees would feel better supported in their jobs and, therefore they would work harder and innovate.

Motivational Theories

Herzberg’s Two-Factor Theory

• Herzberg’s theory involves two factors which allow for employee satisfaction: hygiene and motivators.

• Hygiene factors such as salary, working conditions and job security, prevent dissatisfaction but do not actively motivate employees

• Motivators lead to job satisfaction and increased motivation. These include recognition and achievement.

Maslow’s Hierarchy of Needs

• Maslow’s hierarchy of needs is a pyramid with five levels of human needs where lower-level needs must be satisfied before employees can reach higher levels which motivate them. These include:

  1. Physiological Needs (food, water, salary).

  2. Safety Needs (job security, safe working environment).

  3. Social Needs (relationships, teamwork).

  4. Esteem Needs (recognition, achievement).

  5. Self-Actualization (personal growth, fulfilling potential).

Taylor’s Scientific Management

• Taylor's theory is based on the idea that employees are primarily motivated by money.

• His theory suggested that simplifying and optimising jobs would increase productivity.

2.4.2 How businesses motivate employees

Financial Methods:

• Remuneration - The total payment received by employees

• Bonus - Additional payment(s) for achieving specific targets or achievements.

• Commission - A percentage of sales generated by the employee.

• Promotion - Advancement to a higher position with increased responsibilities and pay.

• Fringe benefits - Extra compensation companies give their employees.

Non-financial Methods:

• Job rotation - The lateral transfer of employees between jobs in an organization to reduce monotony and develop additional skills.

• Job enrichment - Giving employees more responsibility, such as added difficulty, when completing their tasks which usually increases job satisfaction by making work more meaningful.

• Autonomy - Giving employees more control over decision-making and their approach to completing tasks which will allow them to become more independent.