Ways to Motivate Employees (AQA GCSE Business)

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Written by: Lisa Eades, Business Content Creator

Reviewed by: Steve Vorster, Economics & Business Subject Lead

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 Tip

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.

Last updated: 17 April 2024

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