Cambridge Igcse Business Studies Coursebook With CD Rom Third Edition Mark Fisher Veenu Jain Cambridge University Press Web

Cambridge IGCSE

®

Business Studies Coursebook Third Edition

70

Section 2:

People in business Business of all sizes are organisatio organisations ns which need people. They may be owners, managers or other workers; full-time or part-time; skilled or unskilled. People are the most valuable asset of any business. The way that they work will have a direct eff ect ect on the success or failure of the business. The recruitment, selection and training of workers is an important function of human resource management. You You will learn the importance of having a well-trained workforce and how managers might use theories of motivation to ensure that workers produce maximum output of the highest quality. As a business grows grows it will need to have a clear clear organisational organisational structure with eff ective ective managers and leaders. You will learn about the functions of management and the importance of di ff erent erent leadership styles. In many countries workers workers benefit from membership of a trade union who will negotiate on their behalf with management to achieve better pay and working conditions.

9781107680258c06_p070-088.indd

70

2/3/2014 5:49:10 PM

6 Objectives In this chapter you will learn about: ■

why people work

■

the meaning and importance of motivation in the workplace

■

key motivational theories

■

financial and non-financial methods of motivation.

Motivating workers Introduction Why do you come to school? Do you use both your time and resources well? How hard do you work at your studies? What will make you work harder? Do you work harder in some subjects than you do in others? Why do you work harder and more e ff iciently in some subjects than in others? If you know the reasons why, then could this help to improve the way you work in all of your subjects? These questions are similar to questions that may be asked of people at work. Just as your teachers want you to work hard and eff iciently, so too do the managers of workers. Managers want to be able to motivate workers so that they produce as many good quality products as they can during their time at work. In this chapter you will study why people work and what motivates them to work. A well-motivated employee is likely to work harder and more e ff iciently and enjoy what they do than an employee who has no interest in their job. So you will also learn about people who have studied motivation at work and how this can help managers and businesses achieve a well-motivated workforce.

The importance of a well-motivated workforce Why people work and what motivation means

71

People working in an off ice

KEY TERM

Motivation: the factors that influence the behaviour of workers towards achieving set business goals.

Motivation at work results from a combination of factors such as money, job security, how interesting the work is and promotion prospects. ese factors encourage workers to be interested and committed to their job so that they work harder and more effi ciently. If you ask people why they work, most will a nswer ‘to earn money’ so they ca n buy what they need to live. But there are many other reasons that motivate people to work. Some of the most important factors to in fluence motivation at work are shown in Figure 6.1.

© Cambridge University Press 2014 9781107680258c06_p070-088.indd

71

2/3/2014 5:49:16 PM

IGCSE Business Studies

Section 2 People in business

72

Figure 6.1 Factors that influence motivation at work

EXPLORE!

The questionnaire below lists some of the most important reasons why people work and factors that influence people’s motivation at work. 1

Using the questionnaire, survey five people you know who work. You might need to explain what is meant by motivation.

2

When everyone in the class has collected their results these can be combined into one results table. If your class is very large, then work in groups of 6–8 and combine results. (If you have access to computers, then use a spreadsheet as this will make it easier to complete tasks 3 and 4).

3

For each question calculate the average score. For example if five people in the survey gave the following scores 3, 4, 5, 3, 5 in response to a statement in the questionnaire, then the average score would be: (3+4+5+3+5) 20 = =4 5 5

4

Using the average score for each question, produce a bar chart to compare the importance of each factor in influencing motivation at work.

5

Using the survey results and your analysis and presentation of these, write a short report explaining the importance of diff erent factors on influencing motivation at work.


72

2/3/2014 5:49:22 PM

5: Business objectives and stakeholder 6: Motivating objectives workers

Questionnaire: Factors that motivate people at work

On a scale of 1 to 5, with 5 being very important and 1 being not important, how would the following factors increase your motivation at work?

Results of survey of five people A

B

C

D

E

Increased pay Chance of promotion Recognition by managers for a job well done Option to work from home Training to help improve job prospects Longer holidays, better pensions, sta ff discounts Improved work environment – cleaner and safer Option to work flexible hours Bonus based on targets Increased variety of tasks

KEY TERMS

Labour productivity: a measure of the eff iciency of workers by calculating the output per worker. Absenteeism: workers’ nonattendance at work without good reason. Labour turnover: the rate at which workers leave a business.

Benefits of a well-motivated workforce A well-motivated workforce will help a business to achieve its objectives. Wellmotivated workers will want to work effi ciently and produce quality goods and services for customers. Motivated workers will increase labour productivity and this will help a business to reduce average costs and increase competitiveness. Workers who are motivated will enjoy going to work, are less likely to take days o ff – ensuring a low rate of absenteeism – or to leave the business. A lower labour turnover will reduce recruitment costs. A well-motivated workforce is easier to manage and will want to work with management to help improve the business. e main benefits to a business of having a well-motivated workforce are shown in Fig 6.2.

73

Improved productivity

Recruitment costs: see Chapter 8, page 107. More competitive

Benefits of having a well‐motivated workforce

Better quality goods and services

Low rate of absenteeism

Low rate of labour turnover

Figure 6.2 The benefits to business of a well-motivated workforce. © Cambridge University Press 2014 9781107680258c06_p070-088.indd

73

2/3/2014 5:49:23 PM



.

  

Zhengdong HuPeng Automobile Fittings Ltd (ZHAF) is a Chinese manufacturer of electronic components used in the car industry. It was founded by Hu Peng 15 years ago. Many of the company’s workers have worked for the company all of their working lives. Two years ago Hu Peng retired and the company is now run by his son Bo, who has a degree in Business Management and worked for several manufacturing companies before joining ZHAF. Bo believed that ZHAF had not been working e ff iciently for several years and that is why it was less profitable than its competitors. First, he introduced new machinery. ZHAF now produces more car parts with fewer workers. Six workers were made redundant. Other workers were trained to use the new machinery, but they find the work boring. They liked their work when it had more variety and they used their skills. Next, Bo looked at the workers’ wages. The employees at ZHAF earned a higher wage than that o ff ered by similar businesses. Bo felt t hat some employees were paid too much because they did not produce as many items as other, more hard-working employees. He introduced a new pay system. Many workers did not receive a pay r ise. However, they can earn a bonus if they meet production targets set by Bo. Workers say that the targets are too high to achieve. Their pay is now lower than that of similar businesses. In the past six m onths many workers have le  the business, and absenteeism is at an all-time high. Production levels have fallen while customer complaints about late deliveries and poor quality have risen. 1 Identify factors that suggest workers at ZHAF have become less motivated since Bo took over control of the business. 2 Discuss the possible reasons that have caused the workers at ZHAF to become less motivated. 3 What does this case study tell you about the importance of having a well-motivated workforce? 4 Do you think the new pay system introduced by Bo will motivate workers? Justify your answer.

74

The concept of human needs – Maslow’s Hierarchy Abraham Maslow identified the main needs of humans. ese are shown in Maslow’s Hierarchy of Needs – see Figure 6.3.

SELF‐ ACTUALISATION Reaching one’s potential

ESTEEM NEEDS Respect from others, recognition for a job well done, status SOCIAL NEEDS Friendship, accepted, belonging to a group

SAFETY NEEDS Health and safety at work, job security, free from threats

PHYSICAL NEEDS Water, food, shelter, clothing and rest

Figure 6.3 Maslow’s Hierarchy of Needs


74

2/3/2014 5:49:24 PM


Maslow believed that humans have fi ve levels of need: ■

Physical needs – these are the basic needs we must have to be able to survive. They include water, food, shelter, clothing and rest.

■

Safety needs – we need to be safe from physical danger and individuals need to know that they have job security.

■

Social needs – most people want to be accepted by others and to feel that they are loved and trusted. It is important to have friends and belong to a group where social activities can be shared and enjoyed together.

■

Esteem needs – individuals want to be respected and to have their achievements recognised by others. For some people having a certain status is also an important need.

■

Self-actualisation – not everyone will reach their full potential, but for some individuals it is a very important need. Even the most successful people rarely achieve self-actualisation because they will always set themselves another challenge.

According to Maslow, all humans start at the lowest level of need – physical needs. Once they have satisfied their physical needs, then they are motivated to try to reach the next level – safety needs – and so on, until they reach the top level of need – self-actualisation. Once a need has been satis fied it is no longer a motivator. Maslow’s Hierarchy of Needs is important to managers because it is possible for an individual to satisfy some, or all, of their needs at work. If managers want to motivate workers then they have to organise work so that individuals a re able to satisfy their needs. If managers do this, and worker motivation is improved, then this will increase business e fficiency. Workers will produce more, better quality, goods and services for customers. is will improve competitiveness and help to reduce business costs and improve profitability. However, there are some limitations of Maslow’s theory of motivation. ese include:

Contract of employment: see Chapter 8, page 119.

■

It is oen diff icult to identify how much of each need has been met and which level each worker is on.

■

Money might also satisfy esteem needs as well as those lower down the hierarchy.

■

Not everyone has the same needs as those in Maslow’s Hierarchy.

■

Self-actualisation is rarely, if ever, achieved. Therefore, unless more challenging tasks are always being provided, it is unlikely that work will help to satisfy this need. There is the risk that if jobs are no longer challenging that the worker becomes demotivated.

75

.

  

Each of the following could help an individual to achieve one of the needs identified by Maslow. Copy and complete the table below by entering each of these into your t able against the correct level. 1 Pay received is high enough to buy basic nee ds. 2 The manager praises workers. 3 Workers are given a contract of employment setting out their pay and working conditions.


75

2/3/2014 5:49:24 PM



4 Workers are organised into teams or groups. 5 Workers are provided with protective clothing. 6 Work is challenging. 7 The business is very profitable. 8 Workers are given responsibility for completion of tasks. 9 Workers are given free meals at work. 10 Workers are given the opportunity to develop new skills to increase their potential. 11 Workers are given the opportunity for promotion. 12 Social activities are organised for workers. 13 Workers receive payment during periods of illness. 14 Respect from other workers. 15 Workers are trained how to use equipment correctly.

Level of need

How a business helps individuals to satisfy their needs

Physical needs Safety needs Social needs Esteem needs Self-actualisation 76

Key motivational theories: Taylor and Herzberg Many researchers have carried out studies to try to find out what motivates people at work. ese studies have produced a number of motivational theories. Many of these theories have identi fied that individuals are motivated by the wish to satisfy ‘needs’. You have already seen how Maslow’s research described these needs. You are now going to learn about the work of other motivational theorists and how their studies may help management to motivate workers.

KEY TERMS

The theory of economic man: the view that humans are only motivated by money. Piece-rate: paying workers for each unit produced.

F. W. Taylor – scientific management theory Taylor’s scienti fic management theory aims to reduce i neffi ciency in the workplace by finding the quickest method of performing each task and then training all workers to use this method. e scientific management approach is stil l used in many countries today; for ex ample workers involved in flow production specialise in performing one task really well. Taylor believed that workers were motivated by money alone. To get workers to increase their e ff orts they had to be rewarded with more money.  is is sometimes known as the theory of economic man . e piece-rate method of paying production workers developed from Taylor’s research. Workers are paid a fi xed amount for every unit they produce. If workers are motivated by money then they will work harder because the more units they produce the more they will be paid.


76

2/3/2014 5:49:24 PM


Flow production: see Chapter 15 page 209.

Figure 6.4 A flow production process

Fredrick Herzberg – two-factor theory Herzberg wanted to find out about the factors that motivated people at work. His research identified two groups of factors which he cal led hygiene factors and motivators . ese factors are shown in Table 6.1. KEY TERMS

Hygiene factors

Hygiene factors: the factors that must be present in the workplace to prevent job dissatisfaction.

■

Working conditions

■

■

Relationship with others

■

Motivators: the factors that influence a person to increase their eff orts.

■

Salary or wage

■

Supervision

■ ■

Company policy and administration

77

Motivators The work itself

Responsibility Advancement Achievement

■ ■

Recognition of achievement

Table 6.1 Herzberg’s two-factor theory Hygiene factors

Working conditions – includes things such as how clean and safe the workplace is and what facilities are provided for workers, for example washrooms, drinks machines and canteen for meals. 2 Relationships with others – this factor considers the importance to a worker of having good working relationships with other workers – the need for friendship and to belong to a group – and a good relationship with managers – to be treated fairly and with respect. 3 Salary and wage – Herzberg argued that people had to be paid enough to encourage them to do a job, but money was not enough for them to want to do the job well. 1

TOP TIP

Don’t assume that an increase in pay automatically motivates workers to increase output. There may be other factors that cause an increase in output.


77

2/3/2014 5:49:24 PM



Supervision – this factor considers the importance of leadership style and how closely workers are supervised. 5 Company policy and administration – these are the ru les and procedures which control and aff ect the way that workers work and their relationship with others in the workplace. 4

KEY TERM

Job dissatisfaction: how unhappy and discontent a person is with their job.

According to Herzberg, hygiene factors must be present at a level which is acceptable to workers to prevent job dissatisfaction. Improving hygiene factors makes job d issatisfaction less likely, but will not motivate workers to work more effi ciently. Motivators 1

2

3 4 5

TOP TIP

78

It is more important that you can apply the ideas of di ff erent theories to business situations than to list all the findings.

Workers are dissatisfied and demotivated

e work itself –

the tasks that workers do are an important in fluence on the motivation of workers. e work needs to be varied and challenging and Herzberg suggested that this could be achieved by introducing job enrichment. Responsibility – giving workers more responsibility for the tasks they perform, for example allowing them to make decisions about their tasks. e manager is showing that they trust workers and value their contribution. Advancement – workers have the opportunity for promotion. Achievement – workers need to feel that they have reached challenging goals. Recognition of achievement – workers need to have their achievements recognised by management and the other people they work with.

According to Herzberg, managers can use one or more motivators in order to increase the motivation of workers. However, these motivators will not work unless there is an acceptable level of hygiene factors to prevent job dissatisfaction. e eff ect of hygiene factors and motivators on worker satisfaction and motivation is shown in Figure 6.5.

Hygiene factors

Workers are not dissatisfied but are not motivated

Motivators

Workers are satisfied and motivated

Figure 6.5 Hygiene factors and motivators


78

2/3/2014 5:49:25 PM


.

  

The senior managers of Farook Fashions (FF) are concerned about the fall in productivity at one of its factories – Factory A. The company’s Human Resources Director has produced the following data for last year. Factory A Average weekly productivity per worker

Average for FF’s other factories

220

350

Average number of days’ absence per worker

19

8

Number of workers who le 

40

18

$126

$125

Average weekly wage

Factory A employs 500 workers and is the oldest of FF’s factories. Workers in Factory A have o en complained to the factory manager about their poor working conditions compared to workers in FF’s other factories. In a recent meeting when this issue was raised again, the factory manager said: ‘I do not understand why you keep complaining about working conditions. You all have well-paid jobs. All factories are noisy and dir ty places, t his one is no diff erent.’ This was a typical comment from a manager who was not ver y well liked by the workers. He never showed any interest in them. The only time he spoke to them was to give orders or to tell them o ff for breaking one of the many rules he had introduced when he became manager 20 years ago. 1 Identify two factors that suggest workers in Factory A are less well motivated than in FF’s other factories. 2 Calculate the percentage of workers who le  Factory A in the last year. 3 Do you think that money is the cause of poor motivation at Factory A? Justify your answer.

79

4 How might the senior managers at FF use Herzberg’s two-factor theory to improve productivity at Factory A?

 

1 List, in the correct order from bottom to top, the five levels of need as identified by Maslow. 2 Explain the di ff erence between Herzberg’s motivators and hygiene factors.

KEY TERMS

Financial rewards: cash and non-cash rewards paid to workers which are oen used to motivate workers to increase their eff orts. Non-financial rewards: methods used to motivate workers that do not involve giving any financial reward.

Methods of motivation Managers can motivate workers in several ways. ese can be divided into financial rewards and non-financial rewards as shown in Figure 6.6, page 80.

Financial rewards and methods e theorists we looked at earlier

agree that money is an important reason why people work. However, they do not all agree on how important money is as a motivator. Taylor’s view of ‘economic man’, for example, argues that money is the most important motivator, whereas Herzberg’s theory only sees money as important for preventing job diss atisfaction, but not as a ‘motivator’.


79

2/3/2014 5:49:25 PM



Methods of Motivation

Financial rewards

Non‐financial rewards

• Hourly wage rate

• Job rotation

• Salary

• Job enlargement

• Piece‐rate and commission

• Job enrichment

• Bonus schemes

• Quality circles

• Fringe benefits

• Team working

• Profit‐sharing

• Delegation

Figure 6.6 Financial and non-financial methods of motivation

If money is an important motivator then managers need to consider how best to use it to achieve a well-motivated workforce. e methods of fi nancial rewards identi fied in Figure 6.6 are explained below. KEY TERM

Hourly wage rate: payment to workers based on a fixed amount for each hour worked. 80

KEY TERM

Salary: fixed annual payment to certain grades and types of sta ff not based on hours worked or output.

KEY TERM

Piece-rate: payment to workers based on the number of units produced.

Hourly wage rate An hourly wage rate means that workers are paid a fi xed amount per hour worked. e longer a worker is at work the more they get paid. For exa mple, if a worker is paid $5 per hour and works 40 hours in a week, then they will earn a wage of $5 × 40 = $200. is is the most common method of payi ng production workers and nonmanagerial staff . e main advantage of this method is that the business only pays workers for the number of hours they are at work. However, the disadvantage is that workers’ pay is not linked to how much they produce. For example one worker might produce an average of 20 units per hour and another may produce 28 units per hour, but both workers will receive exactly the same pay. Salary With a salary , workers are paid a fi xed amount per year, which is usually pa id monthly. is method is best use d for workers whose work eff ort is not directly linked to production, for example supervisors, managers and professional staff . e advantage of this payment method is that workers do not receive more pay if they have to work longer hours to complete a task. e main disadvantage is that salary is not linked to worker e ff ort or the amount produced. Piece-rate Piece-rate means that pay is based on the number of units of output workers produce. For example if a worker is paid $0.25 for every unit they produce, and they produce 600 units in a week, then their wage will be $0.25 × 600 = $150. Piece-rate systems are only used to reward production workers. e main advantage of this method is that workers are only paid for the number of items they produce. e main disadvantage is that the quality of goods produced may be poor because workers try to work too quickly to increase their output and pay.


80

2/3/2014 5:49:26 PM


KEY TERM

Commission: payment to sales staff based on the value of the items they sell.

KEY TERMS

Bonus: an additional reward paid to workers for achieving targets set by managers. Performance-related pay: a bonus scheme used to reward staff for performing to the required standard.

Commission With commission, pay is based on the value of sales made by sta ff . is method is only ever used to reward sales sta ff . e main advantage of this method is that pay is linked to the value of goods sold. e main disadvantage of this payment method to workers is that they a re never certain about how much they will earn. is may mean that they leave as they cannot guarantee that they will earn enough to pay for their basic needs.  is might then become a disadvantage to the business because they will have to spend more time and money on recruiting and t raining new workers. Bonus scheme A bonus scheme is a method of performance-related pay . Workers receive an additional payment for achieving a target se t by managers. is method can be used to reward any indiv idual worker or group of workers where a performance target can be set by managers. If the targets set by managers are realistic then they can motivate workers to work harder because they know they wil l receive a bonus. e main advantage to businesses of this method is that it is linked to performance targets. Workers are only awarded a bonus if they i ncrease their productivity. An increase in productivity wi ll reduce average costs. e main disadvantage is that if the targets set are unrealistic then workers could become demotivated. Also, if the target is group-based and the target is reached, all workers in the group will receive the bonus even if some have worked harder than others to achieve the target. is could lead to con flict between members of the group. 81

.

  

The table below shows how the pay and average weekly output of workers at three di ff erent companies is calculated. Company A

Company B

Company C

Hourly rate

$4.75

–

$4.50

Piece-rate

–

$0.10

–

Bonus based on producing more than 1,900 units per week

$5

–

$15

Hours worked

40

40

40

1,850

2,000

1,950

Average weekly output per worker

1 Calculate the average weekly wage for a worker in each of the three companies. Show your workings. 2 Based on your results to question 1, which company would you choose to work for? Justify your answer.

KEY TERM

Fringe benefits: non-cash rewards oen used to recruit or retain workers and to recognise the status of certain employees.

Fringe benefits Fringe benefits are an alternative to cash payments. ey include discounts on company products, company cars, health insurance and pensions received by the workers in a business. All workers could receive fri nge benefits. It is more usual for di ff erent types of fringe benefits to be linked to the individual’s status within the business.


81

2/3/2014 5:49:26 PM



For example all workers might receive a d iscount if they want to buy the firm’s products, but only managers receive a company car. e main advantage of fringe benefits is that they can help in the recruitment and retention of workers. e main disadvantage is that fringe bene fits are oen linked to status and not performance. KEY TERM

Profit-sharing: an additional payment to workers based on the profits of the business.

TOP TIP

Focus on understanding how diff erent rewards may motivate workers not just learning what the diff erent rewards are.

Profit-sharing Profit-sharing is an additional payment to all sta ff based on the profits of the business. It is usually paid once a year. It may be in the form of a cash payment, calculated as a percentage of a worker’s wage or salary, or workers may be given shares in the company. It can be used to provide additional financial reward to all workers, or just certain groups of workers. e argument for using profit-sharing to reward workers is that everyone – from senior managers to production workers – has contributed to the business earning the pro fit and they should all, therefore, share in the success. e main advantage is that profit-sharing is directly linked to the performance of the business. e better the performance, the higher the pro fit and the greater the share of profits for workers. e main disadvantage is that any profit given to employees might reduce the dividends to shareholders or reduce the amount available to be reinvested into the business.

.

  

82

Read the two job adverts for vacancies at the same health and fitness company and then answer the questions that follow.

d ver

d ver t

ons irec or o f Co munica and ar e t ng 0+ Salar y package $100,00 ep tional e are oo ng for an e xc siona to tak e for war commun ca t ons pro fes a tions s, far-reach ng communic i an am tiou s trong track recor s tra teg y. ou will a ve a mar e ting, e xcellen t in commu ca t ons an l- e ve ope s tra teg c in terpersona sk ls an we l an tness n a hea th ea ers ip sk s, eal y ropria te pro fess ona ela te en v ronmen t. pp u remen t o f this k e y uali ca t ons are a so a req t. sen or managemen t pos r s pack age to e o er an a t trac t ve re wa ar y plus per formance nc u e a gh basic sa n y car, ree heal t ela te onuses, compa ns on an re oca tion nsurance, compan y pe e xpenses.

ecep tion s t tionis t for our ne w e re uire a ul - time recep ea th an t ess clu . t telephone manner ou mus t a ve a con en ul personal it y is more an a fr en ly an cheer ali ca t ons. mpor tan t than orma qu r ing en vironmen t an e can o f fer a goo wo $6 er hour. Hours o f an hourl y wage ra te o f 2 ours per week . wor are e t ween 3 an y as ull tra ning w be o e xper ence necessar pro vi e .


82

2/3/2014 5:49:26 PM


1 Identify the pay systems the businesses are using to recruit workers for these two jobs. 2 How much will the receptionist earn in a week if they work 40 hours? 3 Using Advert A, identify and explain the meaning of the term ‘fringe benefits’. 4 Why do you think the business in Advert A is o ff ering fringe benefits, but the business in Advert B is not? 5 Choose one fringe benefit you think the company can o ff er to attract better quality applications for the receptionist post? Explain your choice.

Non-financial rewards and methods If Maslow and Herzberg are correct about money not being enough to motivate workers, then managers need to consider non-financial methods of motivation. e methods listed in Figure 6.6 are explained below.

KEY TERMS

Job rotation: increasing variety in the workplace by allowing workers to switch from one task to another. Job enlargement: increasing or widening tasks to increase variety for workers.

KEY TERMS

Job enrichment: organising work so that workers are encouraged to use their full abilities. Job satisfaction: how happy and content a person is with their job.

Job rotation, enlargement and enrichment ■

Job rotation – instead of doing the same task, workers switch from one job to another. This makes the work more interesting and helps prevent boredom. Workers become multi-skilled, which helps create a more flexible workforce.

■

Job enlargement – workers are given a greater variety of similar-level tasks to do. Their jobs become more interesting and, as with job rotation, this reduces boredom.

■

Job enrichment – this method was developed from Herzberg’s research. Work is organised so that workers are able to use more of their skills and abilities. They oen become more involved in decisions aff ecting their job. Workers feel more valued by their employer and this increases their job satisfaction, eff iciency and motivation.

83

Increasing the variety or di ffi culty of tasks workers do, using any of the above methods, is known as job redesign. e aim of job redesign is to make the work more interesting and more challenging for workers. It can also help them to learn new skills which may help their chances of promotion.

.

  

Ever since the management of Company X increased automation and introduced new technology into the workplace, production line workers have not been happy. Many have left and those that remain are less productive than they used to be and absenteeism is much higher. Many of the workers no longer use their skills. The work is boring and does not have the same level of interest or c hallenge for workers. Company X has appointed a new operations manager, Eduardo. He has been told by the direc tors that he ‘must improve productivity and reduce absenteeism and recruitment costs’. Eduardo thinks that job redesign is the solution to these problems. 1 Identify two factors that may have caused motivation problems at Company X. 2 Identify and explain two benefits to Company X of improving worker motivation. 3 Do you think t hat Eduardo is right in thinking job redesign is the solution to t he problems at Company X? Justif y your answer.


83

2/3/2014 5:49:30 PM


KEY TERMS

Quality circles: groups of workers who meet regularly to discuss work-related problems. Team-working: organising production so that groups of workers complete the whole unit of work. Delegation: passing responsibility to perform tasks to workers lower down in the organisation.


Quality circles Quality circles are groups of workers who meet regula rly to discuss work-related issues. Workers come up with solutions to problems or suggest how improvements can be made. e results of quality circles are presented to managers and good ideas and solutions are i ntroduced into the workplace. is approach is similar to Herzberg’s ‘responsibility’ motivator. Team working and delegation ■

Team working – production workers are organised into groups or teams and are given the responsibility for the completion of the whole task. For example, a team of workers might be responsible for the production of a complete car engine instead of individual workers completing just one small part of it.

■

Delegation – this involves managers passing authority for the performance of tasks to lower-level workers. It is oen combined with empowerment – for example, allowing workers to make decisions about how tasks are performed.

Delegation: see Chapter 7, page 92.

.

  

Work in pairs to discuss t he method(s) you think might be the mos t appropriate for motivating workers in each of the following circumstances. 84

1 A shop assistant who works in a large fashion outlet. 2 Workers on a production line where the level of faulty products has increased over the past three months. 3 A pizza delivery driver. 4 A marketing manager for a shoe manufacturer. 5 Someone who works as a bank cashier. 6 A car salesman. 7 A farm labourer. 8 A young university graduate who has worked for a company for 12 months. 9 Staff who work in the Research and Development Department of a cosmetics manufacturer. 10 A teacher in your school or c ollege.

Choosing methods of motivation We have seen that managers can use di ff erent methods to motivate workers. However, there is no ‘ best’ method of motivation. Managers must choose the method that they think is best to motivate di ff erent types of worker. ey may consider the following factors when choosing which method to use: ■

What is the cost to the business of using a particular method? Every method we have discussed above will increase costs. Can the business aff ord it? Will the benefit to the business of motivating workers be greater than the increase in costs


84

2/3/2014 5:49:30 PM


Figure 6.7 A quality circle

of doing so? For example, using job redesign to improve motivation might reduce the absenteeism of workers or reduce the number leaving the business. This will improve productivity and reduce recruitment costs. If this cost-saving is greater than the costs of redesigning jobs, then it has been a success. ■

Some methods of motivation can only be used for certain types of workers; for example piece-rate system is only suitable for production workers.

■

A method of motivation which works for one worker or group of workers, may not work for other workers. For example, some workers might be motivated by higher pay for working longer hours, but others might be satisfied with lower pay and longer leisure hours.

85

 

1 Using examples, explain the di ff erence between financial and non-financial methods of motivation. 2 What is the diff erence between job rotation and job enrichment?


85

2/3/2014 5:49:31 PM



.

  

Muzmed Footwear Company (MFC) is a manufacturer of ladies’ fashion shoes in India. The company employs 200, mainly female, workers. Each worker is skilled in one part of the production process; for example ten workers cut out the shape of the soles for shoes from sheets of leather or rubber. All workers involved in the production of shoes are paid using the piecerate system. Recently another footwear manufacturer has opened a factory in the same area as MFC. This factory is very modern and off ers workers better working conditions than those o ff ered by MFC. They pay workers an hourly rate, plus a performancerelated bonus. Some workers have already le  MFC to work for this new competitor. The owner of MFC is worried that he is going to lose more of his skilled workers to t his new competitor company. 1 What is meant by ‘working conditions’? 2 What is meant by ‘performance-related bonus’? 3 Identify and explain one advantage and one disadvantage to MFC of its workers being skilled in one part of the production process. 4 Identify and explain two reasons why workers might be leaving MFC to work for the new competitor? 5 The owner of MFC is considering changing the way he pays his workers. Do you think this is a good idea? Justify your answer.

86


86

2/3/2014 5:49:31 PM

6: Motivating workers

Revision checklist

Exam practice questions

●

Many factors which motivate people to work were identified by the research of Taylor, Maslow and Herzberg.

●

Financial and non-financial motivation methods can be used to make sure a business has a well-motivated workforce.

1

The diagrams below show the payment received by workers in two manufacturing companies, Company A and Company B. Company A is a manufacturer of televisions. The number of televisions produced by the workforce during the past four weeks were 270, 240, 280 and 250. Company B are manufacturers of pottery items. Workers do not require any special skills to complete their tasks. Many workers leave before completing one year of employment with the company. Company A pays workers based on an hourly rate. Workers work an average of 40 hours per week. In addition to their wage, Company B provides all workers with fringe benefits. Company A

e g a w y l k e e w e g a r e v A

$200

Company B

e g a w y l k e e w e g a r e v A

Output per week

Information in examinations might be presented in the form of diagrams. Make sure you understand what such diagrams show.

Output per week

a

What is meant by ‘fringe benefits’?

b

Calculate the hourly rate Company A pays its workers. [2]

c

Identify and explain the method of payment Company B uses to reward its workers.

[4]

Identify and explain two financial methods Company A could use to improve the motivation of its workers.

[6]

The management of Company B believes that money is the only way to motivate workers. Do you agree? Justify your answer.

[6]

d

TOP TIPS

87

e

[2]


87

2/3/2014 5:49:31 PM



2

ABC is a candy manufacturer. It employs 50 workers. Workers are paid $150 per week based on a 40-hour week. Workers also receive a bonus if they reach production targets set by management. The factory manager receives a salary of $30,000 per year plus a company car. All managers at ABC are part of a profitsharing scheme. They also receive private health insurance. The motivation of production workers is low. They leave the company after an average of only 16 months. a

What is meant by the term ‘bonus’?

[2]

b

What is meant by the term ‘motivation’?

[2]

c

Identify and explain two benefits to ABC of offering fringe benefits to its managers.

[4]

Identify and explain how any two non-financial methods of motivation might be used by ABC to improve the motivation of production workers.

[6]

Do you think that the production workers should receive the same fringe benefits and share of profits as the factory manager? Justify your answer.

[6]

d

e

88

Total available marks 40


88

2/3/2014 5:49:34 PM

Cambridge Igcse Business Studies Coursebook With CD Rom Third Edition Mark Fisher Veenu Jain Cambridge University Press Web

Recommend Documents