2.

5 Motivations

Intrinsic Motivation:
Occurs when people engage in an activity out of their desire, e.g. enjoyment of
perusing a hobby or an interest. Person would find them to be challenging,
stimulating or satisfying.

Extrinsic Motivation:
Occurs when people participate in an activity because of the benefits and
rewards associated with the activity.

HL Extension:

Motivation theories can be categorized as Process theories or content theories.

Content theories (What motivates) of motivation seek to explain the specific
factors that actually motivate people, i.e. what motivates people. Process
theories of motivation look at the decision-making processes and behaviour of
people. Instead of focusing on what motivates, process theories look at why
people behave in a certain manner and how motivation can be maintained or
stimulated.

Mayo – Proven by Hawthorne experiment

Mayo believed that workers are motivated by a more humane approach to
management whereby human relations at work are the key factor (Disagrees with
Taylor’s theory). His findings were instrumental in changing workforce planning
and personnel management. Business began to see the value in establishing
teamworking and setting up social events for staff.

Mayo suggested that managers should work to promote and manage team spirit
(loyalty and unity of team members) and group dynamics (exploiting the skills
and expertise of each team member)

McClelland – theory of needs

Need for achievement: People who are driven by a need to achieve tend to be
moderate risk takers. If they are given low risk activities that are too easy to
achieve, they will be demotivated. At the same time, Achievement motivated
people do not take high risks because the outcome is largely based on chance
and luck, than their own efforts.
Need for power: Power-motivated people like to influence the behaviour of other
people so tend to be very strong-willed manager.
Need for affiliation: People who need affiliation are those who seek to have a
good social and working relationship with their colleagues and the management
team.

Vroom’s Expectancy theory

Vroom suggested that people would only put in effort to do a task when they
expect their role will help to achieve the required result. (If they lack the ability or
skill to achieve a target, then their level of efforts will be lower)

He suggested that Motivation force is composed of three parts:

Expectancy: People have different expectations about their experience,
capability and level of self-confidence in tackling a task.
Instrumentality: People hold the perception that if they meet performance
expectations, then they will be rewarded accordingly (Managers needs to ensure
that promises are upheld to gain trust and therefore level of motivation
Valence: People place different values on different rewards. They will think about
whether it is worth the effort in terms of both intrinsic and extrinsic rewards.
Hence, managers need to find out what their staff value.
Adams’s Equity theory
Workers will naturally compare their efforts or rewards to those of others in the
workplace. Each worker should receive a remuneration package (salary plus
fringe benefits) that reflects his or her efforts. Adam argued that the degree of
equity in rewarding efforts will have an impact on the level of motivation.

He also suggested Inequity would lead to increase in absenteeism and thereby

increasing costs.
• Costs of high absenteeism:
• Hiring temporary staff
• OT costs and disruptions to staff
• Lower productivity
• Loss of output

Financial motivation
Using form of monetary reward

Time-based payment system

Wages – Straightforward method, but encourage slack and poor productivity as
workers are rewarded for their time not efforts.
Salary – Fixed annual rate but paid at the end of each month (Time-based
payment system).
Improve a firm’s cash flow, safer and more convenient.
Time-based payment systems disadvantages
• It is not easy to distinguish the efforts of workers. Therefore it is difficult to
reward those who are more efficient and productive.
• Little incentive to work hard, since people paid the same amount for their
time and effort.

Output-based payment system

Piece rate – Pays workers each item that they produce or sell in a given time
period.
Workers have an incentive to work hard to maximize their incomes, but there
may be a trade off between quantity and quality of output. Also, staff may be
demotivated, as incomes are uncertain.
Commission – Pays workers on a proportion of sales or output contributed by a
worker. Piece rate and commissions are commonly found in jobs that pay a low
basic wage or when payment acts as an incentive to sell more. In reality, they
would also receive a basic salary and piece rate and commissions are just
addition.
Output-based payment systems disadvantages
• Speed in production/aggressive selling techniques, might lower quality and
dissatisfy customers
• Added pressure on workers
• Tasks can repetitive and monotonous  boredom
• Lack of security
• Need of QC, especially in manufacturing process
Profit related pay
An annual bonus, strengthen employee loyalty and to foster team working, profit
sharing should also boost labour efficiency and limit the possibility of labour
conflict.
Share of profits often seen as too small to provide an incentive for workers to
work any harder. Individual efforts are not recognized.

Performance-related pay (PRP)

More flexible, rewards those employees who meet certain goals (e.g. sales
targets)

PRP Can be paid:

Performance bonus – Paid to workers who have reached output or quality
targets
Loyalty bonus – Paid to workers who have stayed with a firm for a certain length
of time
Pay rise – Increment in pay due to exceeding performance target.
Gratuity – Paid to staff who complete their employment contracts

Advantages:
• Creates incentives for people to work and perform better
• Focus better if target is clearly set out
• A fairer system since hard work is rewarded
Disadvantages:
• Targets may be unrealistic or unachievable, cause resentment
• Stress caused by the pressure imposed on workers to meet targets
• Non-financial motivators are ignored
• May not promote teamwork (individual target)

Employee share ownership schemes

Rewards workers, managers and directors by giving them shares in the company,
alternative to profit sharing. Staff will have more interest in the well-being of the
firm, lower rate of absenteeism and staff turnover.

Fringe benefits
The payments and benefits to an employee in addition to his or her wages. E.g.
subsidized meals, health insurance, company cars and etc. Helps encourage
employee loyalty, meeting safety needs in Maslow’s hierarchy, make workers feel
valued. However, it could be costly and can be a huge burden on a firm’s cash
flow position.

Non-financial motivation
Job enrichment (Vertical loading)
Making jobs more interesting and challenging, aims to give workers greater
independence and power in their work. Workers have better opportunities to
express and develop their ideas. They would have a better sense of achievement
and hence they become more committed to their work. However the time and
money need to be spent to train these workers are the main limitation of job
enrichment.
Job enlargement
Broadening number of tasks that an employee performs in order to motivate (add
interest). The aim of this is to reduce monotony of tasks that can cause boredom
and demotivation.

Job rotation (Horizontal loading)

A form of job enlargement that involves workers performing different tasks at the
same level of complexity, this is to provide more variety to avoid the problems of
over-specialization.

Empowerment
Granting workers the authority to be in charge of their own jobs, to make
decisions and to execute their ideas. Boost motivation as empowered employees
have a say in how things are done at work, they will also feel a sense of
achievement. However, this must be used aapropriately, as it can only be
successful if the works have the skills required and have training to given tasks,
since managers are still held accountable for the tasks that they delegate to their
subordinates.