Commission is usually paid to sales people for each product they sell. Employees are paid a basic salary plus extra money for every good sold each month, this is usually a percentage.
Bonus payments are amounts of money given to a worker when they have worked well. They are usually paid at different times of the year. The more successful the business, the bigger the bonus. Bonuses give workers an incentive to work hard so that the company does well.
Profit Sharing is where at the end of the year a portion of the profits are shared out amongst all employees as a reward for their loyalty and hard work. The more profits the company make, the bigger proportion shared out. This method allows employees to feel that they are part of the company, it also encourages them to work hard to make more profits for the company.
Overtime is when a payment for extra hours worked over the basic hours set in the employee’s contract of employment. It is paid at a higher rate than the basic hourly rate. Overtime is not usually allowed in most firms as it costs the company. It is offered to staff to help them prepare urgent orders or cope with sudden increases in demand.
Fringe benefits are what some employees receives as well as their wage or salary. They are a way of motivating staff other than by offering them more money. Fringe benefits include:
- company Car
- discount off the company’s products
- luncheon vouchers
- free health care
- free trips abroad
- free membership to a gym
- free pension
- free bus service to work
- subsidised canteen meals
- free uniforms (they give employees a sense of belonging)
Training provides existing employees with new skills and experiences, this can benefit low level employees as it allows them the opportunity to learn more once they are trained. Training also makes employees jobs more interesting.
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On-the-job training - learning new skills and being trained whilst doing the job.
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Off-the-job training – an employee completes a training course away from their job in order to learn new skills.
Internal training is where the training department in the company run training courses.
External training is where employees are sent to do training outside of the company to specialist training firms or colleges.
Promotions are offered to experienced workers by the company in order to motivate them. The employee is given more responsibilities to show them that their skills have been recognised and that their work has been appreciated.
Social Activities are events or activities organised by the company. This method of motivation can be used to help employees to get to know each other better, improving their social life and friendships at work. Employees will work better together and learn to trust each other through team building exercises.
Job Rotation is where employees would change jobs every so often. This gives the worker more variety in what they do so that they don’t get bored.
The methods of motivation can be assorted into two groups:
Financial methods involve paying employees in different ways in order to motivate them.
Non-financial methods consist of offering things such as fringe benefits, training and social activities in order to motivate them.
Motivation Theories
Abraham Maslow (1908-1970)
Maslow studied people and what made them happy. His belief that everyone had the same needs could be organised as a hierarchy: The Hierarchy of Needs.
Maslow thought that a person would try to satisfy lower needs by moving onto the next level of needs. If it’s not possible to satisfy the needs then the person experiences frustration to which the responses may be de-motivation at work or aggression. The way to persuade people to work more productively was to offer them the opportunity to satisfy higher level needs.
Maslow’s hierarchy suggests that if workers are de-motivated the company should look at what ‘need’ on the hierarchy they need to satisfy next and try to help them achieve it. This will motivate them to work harder and they will be more content at work.
Frederick Herzberg
Herzberg analysed characteristics of jobs. In Pennsylvania, in the 1950’s, he conducted a survey of 200 engineers and accountants. He asked them to describe the factors that made them feel very satisfied or dissatisfied in their jobs. From his research Herzberg split his findings into two different groups:
Maintenance or Hygiene Factors
These are factors which do not motivate the workers, but if these factors are not very good then workers will be de-motivated and output can decline.
Motivation Factors
These are factors that can motivate workers and encourage them to work harder, they will also have higher job satisfaction.
