Motivation (Edexcel GCSE Business)

The Importance of Employee Motivation

• 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 to Improve Performance

• 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

Non-financial Incentives to Improve Performance

• 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