Ways to Motivate Employees (AQA GCSE Business)

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Lisa Eades

Written by: Lisa Eades

Reviewed by: Steve Vorster

The Benefits of a Motivated Workforce

  • Motivation refers to the inner desire or willingness that drives a person to take action and achieve a specific goal or outcome

  • Motivation plays a critical role in business success:

Employees are more productive and efficient

  • They are likely to be engaged in their work and use their initiative to solve problems

  • They generate higher levels of output and quality

  • Increased productivity results in higher profits for the business

Labour turnover rates are often lower

  • Motivated employees are more likely to stay with the company long-term 

  • Lower turnover rates reduce the need for costly recruitment and training

  • Long-serving staff are likely to be productive

The reliability and loyalty of workers are high

  • Motivated employees take pride in their work, show up on time, meet deadlines and take fewer sick days

  • This leads to increased trust between the business and its employees and encourages a positive organisational culture

Financial Motivation

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

Diagram: Financial Incentives

Financial incentives include remuneration, commission, bonuses, promotion and fringe benefits

Financial incentives motivate some employees, depending upon the importance that they place on monetary items/money as a reward

Comparison of Financial Incentives

Incentive

Explanation

Remuneration

  • Basic wages or salary that a worker receives for their labour

  • Employees who work on an hourly rate are paid wages and accrue benefits such as annual leave according to the hours they work

  • Salaries are paid to full-time staff and usually accompanied by benefits such as a fixed number of days of annual leave

  • In some businesses, piece rates are paid to employees for each item produced

Commission

  • A percentage of sales revenue is paid to workers who sell products or services

  • Commonly used in sales roles to motivate staff to sell more and upsell

    • E.g. Staff at electrical retailer Currys receive a commission for each item they sell, with greater rewards for add-on services such as extended warranties

Bonus

  • An additional payment given to staff for achieving specific goals, completing projects on time or exceeding performance expectations

  • The opportunity to earn more money may motivate staff to work harder and achieve better results

    • E.g. British Gas offers generous bonuses to engineers who meet or exceed expectations related to customer service

Profit sharing

  • A business may decide to share a proportion of its profits with workers

  • Employees are motivated by the chance to benefit from the overall success of a business

    • Publisher Bloomsbury rewarded its employees with bonuses of around 6% of their salary following outstanding business performance in 2022

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 motivate workers to improve performance

Fringe benefits

  • These are additional benefits usually offered to salaried employees

    • Fringe benefits could include the use of a company car, private healthcare or gym membership

  • Employees are motivated to work hard in order to keep their job and the associated fringe benefits

    • E.g. Dunelm Mill Ltd offers staff generous discounts on its homewares

Non-financial Motivation

  • Non-financial incentives are rewards that are not directly related to money

    • These incentives may be intangible and include methods that lead to recognition, praise or job satisfaction

  • Businesses commonly use a mixture of financial and non-financial methods to motivate workers

    • This helps to meet the individual needs of different workers they employ and helps avoid wasting financial rewards on those for whom it would be unlikely to improve their performance

Types of Non-financial Incentives

Incentive Type

Explanation

Training

  • Providing good quality training that enhances employees' skills can make them feel valued

  • In some cases, workers have the opportunity to work toward formal qualifications, such as a a degree or professional certificate, funded by the business

    • E.g. Kennedy's Law funds law degrees for its apprentices

Autonomy

  • This involves giving staff the authority and resources to make decisions and take action without first receiving management approval

    • It increases employees' sense of ownership and responsibility, leading to improved productivity

Job enrichment

  • This involves adding more challenging or meaningful tasks to a job

  • Staff feel more motivated and engaged, leading to improved productivity

Job rotation

  • This involves moving staff between broadly similar but varied roles in the business

  • It exposes staff to new challenges and experiences, which can increase motivation, understanding and skill

  • The style of management used by leaders can have a significant impact on motivation in the workplace

    • Autocratic managers make most of the decisions in a workplace

      • This provides clear direction for employees

      • For some employees, this lack of autonomy can cause frustration and dissatisfaction

    • Democratic managers involve workers when making decisions

      • Workers who feel that they have a say are likely to be more engaged at work

      • Decision making may be less efficient

Examiner Tips and Tricks

In evaluation questions, remember that there is no right or wrong way to motivate workers. Rewards that are closely linked to the individual needs of workers are most likely to be successful. This is an excellent 'it depends' point to make in your conclusion.

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Lisa Eades

Author: Lisa Eades

Expertise: Business Content Creator

Lisa has taught A Level, GCSE, BTEC and IBDP Business for over 20 years and is a senior Examiner for Edexcel. Lisa has been a successful Head of Department in Kent and has offered private Business tuition to students across the UK. Lisa loves to create imaginative and accessible resources which engage learners and build their passion for the subject.

Steve Vorster

Author: Steve Vorster

Expertise: Economics & Business Subject Lead

Steve has taught A Level, GCSE, IGCSE Business and Economics - as well as IBDP Economics and Business Management. He is an IBDP Examiner and IGCSE textbook author. His students regularly achieve 90-100% in their final exams. Steve has been the Assistant Head of Sixth Form for a school in Devon, and Head of Economics at the world's largest International school in Singapore. He loves to create resources which speed up student learning and are easily accessible by all.