GCSE Business Studies 0450
Business Studies – People in Business
- The importance of motivation
- Business organisational charts and management roles
- How leadership styles can impact on businesses
- Trade unions, recruitment and training of employees
- Understand the importance of internal and external communication
Motivating Employees
Having motivated staff leads to increased productivity which means less wastage and higher profitability for a business. Motivation reduces labour turnover and absenteeism rates which results in reducing the cost of recruitment.
Reasons why motivation is important
Wages are paid to part-time employees usually paid hourly or weekly. A salary is used to pay full-time employees, usually paid yearly, and divided into monthly payments. Performance-related pay is related to the effectiveness of the employee where their output can easily be measured. Share Ownership is where shares in the company are given to employees so that they become part owners in the company. Share ownership is often used in cooperatives.
Comparing Maslow and Taylor
Maslow’s hierarchy of needs also requires employees to be paid enough (basic needs). If a business is not paying employees enough to meet their basic needs they will not be motivated. Remember that employees must always be paid at or above the minimum wage. Using performance-related pay (piece rates) could result in employees being paid below the legal minimum wage.
Taylor’s Scientific Management
Taylor believed in a “fair day’s pay for a fair day’s work”. He also believed that employees would do the minimum amount of work (lazy) if not supervised. He carried out time and motion studies.
According to Taylor employees are motivated by high wages, higher wages equalled higher output. A manager’s role is to tell employees what to do (autocratic). Taylor believed employees’ roles are to do what they are told and get paid accordingly
Maslow’s Hierarchy of Needs
Maslow’s theory is that we all have a pyramid of needs. We all start by meeting our needs at the bottom of the pyramid. This first level is our Physiological needs which include sleep, food, water and shelter. If these needs are not met people will not be motivated or able to progress up the pyramid.
Once we have our first level of needs met we then process to the second level our safety needs. These needs include a secure job (job security) and a safe working environment.
On the third level of the Pyramid, people seek social needs. Employees need teamwork and a social job where they feel that they are part of the team.
Employee esteem needs can be met by giving them recognition and respect. Esteem needs are where employees seek recognition, responsibility and promotions.
Once all these needs are met we start to self-actualise, which is where we reach our potential
Hertzberg Two Factor Theory
Frederick Herzberg interviewed accountants and engineers in the 1960s, to find out what motivated them. This was done at the Hawthorne factory and is known as the Hawthorne Effect.
Hertzberg found that there were hygiene factors which if not met would dissatisfy the employees, but if they were met did not motivate them further. Therefore, businesses should provide good working conditions, pay, and relationships with other employees.
Hertzberg believed employees have motivating factors such as interesting work, recognition, personal achievement, responsibility and scope to develop.
Once you have explored the different theories of motivation it is important to understand that financial and non-financial methods of motivation can be linked to each of the theories. The following section will provide a brief overview of the different ways a business can motivate employees using financial ( money) and non-financial rewards.
Financial methods of motivation
Financial methods a business might use to improve employee motivation include. It’s important to explain which method will be best depending on the business in context. Thinking about the various advantages and disadvantages of each financial method will help you gain analysis marks.
- Wages
- Salary
- Bonuses
- Commission (% on sales)
- Performance-related pay (piece rate)
- Share Ownership
Non-financial methods of motivation
There are many non-financial techniques that a business might use to improve employee performance. Your exam board would like you to know about the following methods:
- Delegation
- Training (Opportunities for Promotions)
- Empowerment
- Team working
- Flexible working
- Job enrichment
- Job rotation
- Job enlargement
Fringe Benefits are non-financial rewards given to employees such as a company and holidays. Job Satisfaction is the enjoyment derived from feeling that you have done a good job. Job Rotation – Involves workers swapping around and doing each specific task for only a limited time and then changing around again. Job Enlargement is where extra tasks of a similar level of work are added to a worker’s job description. Job Enrichment involves looking at jobs and adding tasks that require more skill and responsibility.
2.3 Recruitment and Training
2.2 Organisation and Management
Read the following information and answer the questions before revealing answers.
Coffee and Cakes Ltd owns 28 coffee shops and has one factory that produces all the cakes sold in their coffee shops. Employees are paid slightly above the legal minimum wage. Ciny the Managing Director plans to change the pay system in Coffee Shops by reducing hourly wage rates for all employees to offer a commission on the number of customers served weekly. She believes this will allow employees to earn more if sales increase. Like many other coffee shops, many of the employees are students and don’t stay long. Employees in most coffee shops work well as a team and the coffee shops use job rotation to prevent employees from becoming bored.
The Coffee and Cakes factory pays workers a fixed daily wage with bonuses for meeting weekly production targets. Employees all have well-defined roles with no opportunity for job enrichment. The factory has a high labour turnover rate with many employees leaving within the first year. The factory manager Andre believes that non-finacial methods of motivation will be more effective than higher rates of pay to keep employees at the factory and reduce the high labour turnover.
Revision videos GCSE Business People in Business
3 Revision Videos: Business Enterprise
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