3.5 Motivation and retention

• Financial methods of motivation


  Pay(wage or salary), bonus, profit sharing (workers recieve some profits from business), fringe benefits (additional benefits in addition to pay like health insurance and gym memeberships)
• Pay (salary or wages) as a method of motivation


  A wage usually paid weekly and is based on amount of work done. Extra amount per hour can be paid for overtime or unsociable hours. Motivates workers because more they work, the more they earn.

  A problem is a wage doesn't reward workers for how well they work only how long.

  A salary - annual sum divided into 12 monthly payments. Motivates workers as they recieve a regular income.
• Bonus as a method of motivation


  A payment a worker recieves in addition to pay, usually for meeting a production or sales target. Motivates workers because more they produce or sell, more they earn - improves productivity. Targets need to be fair and realistic or workers not motivated
• Profit sharing as a method of motivation


  Profit share may be paid to workers whose individual output can't be measured. Motivates because they know if efficient and business makes more profit, increases income. However , reduces profits for shareholders
• Non- financial methods of motivation


  Praise, award scheme and working environment
• Praise as method of motivation


  Makes workers feel appreciated and valued. Those not praised may feel they need to do better to earn praise.

  
  

  Suitable for all workers as everyone likes to feel appreciated
• Advantages and disadvantages to praise


  A - doesn't cost business and helps create positive climate

  D- sometimes if no financial reward for a long period, workers don't feel truly valued
• Award scheme as a method of motivation


  Makes workers feel valued and will encourage them and others to continue to increase efforts.

  Suitable for all workers as everyone likes to feel appreciated.
• Advantages and disadvantages of award schemes


  A - Costs of rewards varies but not all expensive

  D- some cost , need to be given fairly or workers don't recieve may be upset
• Working environment as a method of motivation


  Improving so it is pleasant. Makes workers feel well looked after and that their opinions are valued. Suitable for most workers except those who work in conditions where improvements to comfort difficult.
• Advantages and disadvantages of improving the working environment as a method of motivation


  A - if workers feel valued they will respect business and colleagues which creates a positive attitude to work

  D - some cost to some like improving furniture or paying for activities
• Retention


  When workers choose to stay employed in a business rather than leaving to work elsewhere
• Labour turnover


  A measure of the number or proportion of staff who leave an organisation each year and therefore need to be replaced.
• Benefits of motivated workers


  Higher worker productivity, reduced levels of worker supervision, low worker absenteeism, improved quality
• Why is higher worker productivity a benefit to the business?


  Workers will produce more goods or improved services in the time they work. Reduces costs of production and prices the business charges can be reduced so sales and profits rise.
• Why is reduced levels of worker supervision a benefit to the business?


  Workers will want to do job well if motivated. May reduce business costs as fewer supervisors need to be employed.
• Why is lower levels of absenteeism a benefit to the business?


  If motivated, workers will be happy to come to work and less likely to take a day off if slightly ill
• Why does improved quality benefit the business?


  If motivated, workers will take pride in work and will produce quality goods and services, knowing that this will satisfy consumers and give business a good name. Will be less waste which reduces costs
• High vs low employee retention


  High - workers stay with a business for a long time.

  Low - workers do not stay long and there is a high labour turnover
• By motivating employees , employee retention increases
• Benefits of workers staying for a long period of time

  • Business needs to recruit less often , saves time and recruitment costs
  • Training costs lower because business doesn't need to train as many new workers. Workers already familiar with business and customers so need less training.
  • When firm does want to recruit new workers, easier bcs good reputation for treating workers well
• Some businesses don't want to retain employees for long periods of time , may just need for particular length of time

  such as extra staff during Christmas