Business

• F.W. Taylor’s theory:

  • Employees were only motivated by money
  • Criticisms:
  • Ideas were too simplistic
  • Employees were motivated by factors that are not money
  • If employee’s productivity cannot be measured, there is no use in giving them more money
• Herzberg’s two factor theory:

  • Employees are motivated by the satisfaction of two factors:
  • Hygiene factors:
  • Salary
  • Work conditions
  • Security and status
  • Motivators:
  • Work advancement/promotion
  • Work itself
  • Healthy relationship with supervisors and subordinates
• Maslow’s hierarchy:

  • Self actualisation
  • Esteem needs
  • Social needs
  • Safety and security needs
  • Physiological needs
• Methods of Motivation:

  • Wages
  • Salary
  • Bonuses
  • Profit Sharing
  • Commission
  • Fringe benefits
• Wages:

  • Financial reward given to employees according to the hours they worked (time rate) or the number of products they have produced (piece rate)
  • Time rate limitations:
  • Good and bad workers get paid the same
  • Clocking in system required
  • Time consuming system
  • Piece rate limitations:
  • Careful workers may not get paid as much as rush workers
  • Quality of the product might fall
  • Malfunctioning equipment can cost workers their pay
• Salary:

  • Payment given to employees on a monthly basis
  • Limitations:
  • Workers may prefer a weekly pay
  • No pay for extra time worked
• Bonuses:

  • Extra money given to an employees as a reward for good work
  • Limitations:
  • Rivalry, some workers may be jealous of others getting bonuses when they don’t
  • Bonuses can be expected every year, if they do not receive it employees can be disappointed. Demotivated employees
• Commission:

  • Given to sales persons when they sell products
  • Limitations:
  • Competition between sales staff
  • Stress for sales staff
• Profit sharing:

  • When an organization gives a part of its profit to the employees
  • Limitations:
  • If a company earns less profit or takes a loss there won’t be any profit sharing leading to employee disappointment
• Fringe benefits:

  • Non-financial rewards given to employees
  • Examples:
  • Accommodation
  • Health insurance
  • Covered children’s education
  • Company transport
• Non-financial motivational methods:

  • Job rotation
  • Job enrichment
  • Team working
  • Training
  • Promotion opportunities
• Job rotation:

  • When employees swap tasks around for a limited time
• Job enrichment:

  • When an employee is given more tasks that require more skill and responsibility
• Teamworking:

  • When a group of employees work together to complete a task, responsibility, process or development
• Training:

  • When an employee’s skill is improved to increase their skill and productivity
• Promotion opportunities:

  • Internal recruitment gives employees a sense of belonging and recognition in the organization
• • Short chains of command have a wide span of control and a lot of subordinates under one manager can be difficult for the manager to keep in check. Poorly trained subordinates tend to make more mistakes
• Organization and management:

  • Organization chart advantages:
  • Gives employees a sense of belonging
  • Shows links and connections between different departments
  • Every individual knows their position in the organizations
  • Short chain of command advantages:
  • Effective communication
  • Wide span of control
  • Top managers are less remote
  • Short chain of command disadvantages:
  • Managers may lose control
• Role and functions of management:

  • Planning
  • Organizing
  • Coordinating
  • Commanding
  • Controlling
• Planning:

  • Setting aims and objectives for the business to give the organization a sense of direction
• Organizing:

  • Tasks must be delegated to others
  • Delegation
• Coordinating:

  • Managers have to ensure effective communication between departments
• Commanding:

  • Managers have to set targets and deadlines and make sure all workers are meeting the set deadlines
• Controlling:

  • Managers have to ensure all workers meet their given deadlines and targets, if they do not the manager is expected to find the reason and correct it
• Delegation:

  • When an employee of higher authority assigns a subordinate a task and the authority to carry it out
  • Advantages (manager):
  • Less likely to make mistakes
  • Measure success of staff easily
  • Managers cannot do every job themselves
  • Advantages (subordinate):
  • Feel important
  • Interesting and important work
  • Trains workers and easy for them to make progress
  • Why may managers not delegate?
  • If subordinate does task better than manager, they might feel insecure
  • Fear that subordinate might fail to do task properly
• Leadership styles:

  • Autocratic leadership
  • Democratic leadership
  • Laissez- faire leadership
• Autocratic leadership:

  • The manager is expected to make all the decisions for the organization. Employees are required to follow their orders. One way communication
  • Advantage:
  • Quick decision making
  • Disadvantage:
  • No employee involvement, demotivated employees
• Democratic leadership:

  • Employees are involved in the decision making, their decisions are taken into consideration although the final decision is made by the manager. Two way communication
  • Advantage:
  • Better decisions could be made with consulting employees
  • Motivates employees
  • Disadvantage:
  • Unpopular decisions such as making workers redundant is not possible with this leadership
• Laissez - faire leadership:

  • Employees are made well aware of the objectives of the business and are left to make decisions on their own
  • Advantage:
  • Encourages employees to be creative and responsible
  • Disadvantage:
  • Can be difficult in organizations where there is a need for clear and consistent decision making structure
• • Employees may go on strike if their demands are not met
  • Higher wages
• Trade unions:

  • Where employees are members of a group with a representative to bring their problems to their employers
  • Advantages (employees):
  • Strength when negotiating with employers
  • Improved work conditions
  • Improved work environment
  • Improved job satisfaction
  • Disadvantages (employees):
  • Payment for membership
  • Workers may be required to take industrial actions even if they don’t agree
  • Advantages (employer):
  • Easy to negotiate wage agreements
  • Good communication between employer and employees
  • Disadvantage (employer):
• Recruitment, selection and training of employees:

  • Human resources department:
  • Recruitment and selection
  • Wages and salaries
  • Industrial relations
  • Training programs
  • Health and safety
  • Redundancy and dismissal
• • Person is already known to the business, their skills are already known
  • Person knows the structure of the organization
  • Motivation to the employees
  • Disadvantages:
  • Lack of new ideas and experience into the business
  • Rivalry and jealousy against existing employees
  • Quality of internal candidates might be low
  • External recruitment:
  • Ways of advertising the job:
  • Local newspapers
  • National newspapers
  • Specialist magazines
  • Online recruitment sites
  • Recruitment agencies
  • Job centers
• Recruitment and selection:

  • Recruitment process:
  • Vacancy arises
  • Job analysis
  • Job description
  • Job specification
  • Job advertisement
  • Application and shortlisting
  • Interviews
  • Vacancy filled
  • Job analysis:
  • Study of the tasks and responsibilities that are to be carried out by the new employee
  • Job description:
  • Outlines the duties and responsibilities of the job
  • Job specification:
  • The qualities and qualifications required to undertake the job
  • Internal recruitment:
  • Advantages:
  • Quicker and cheaper, no advertisement required
• • Questions businesses ask themselves when drawing up a job advertisement:
  • What should be included in the advert?
  • Where should the advertisement be added?
  • What is the advertising cost?
• Benefits and limitations of part time and full time employees:

  • Advantages to a business of part time employees:
  • Flexible hours
  • Easier to ask employees to work at rush hours
  • Easier to extend business hours
  • Employees may be willing to accept a lower pay
  • Reduces business costs
  • Easier to make part time workers redundant in some countries
  • Disadvantages to a business of part time employees:
  • Employees are less likely to seek training
  • Longer recruitment process
  • Less commitment to the business
  • Communication difficulties
• Importance and methods of training:

  • Induction training
  • On the job training
  • Off the job training
• Induction training:

  • Training given to new employees, often include the business structure, aims and objectives, and functions and procedures of the business
  • Advantages:
  • Helps employee settle into job quickly
  • May be a legal requirement to give health and safety training
  • Less likely to make mistakes
  • Disadvantages:
  • Time consuming
  • Employees are still paid even if they are not doing any work
  • Delays the employee starting their job
• On the job training:

  • When an employee is trained by watching other experienced workers do the job
  • Advantages:
  • Individual tuition; cheap
  • Ensures production from worker while training
  • Less expensive than off the job training
  • Tailored training to the specifics of the business
  • Disadvantages:
  • Less productivity from trainer as they will be teaching the trainee
  • Bad habits of trainer may be passed off to trainee
  • Training qualifications may not be recognized outside the business
• Off the job training:

  • When the worker goes away from the place they work
  • Advantages:
  • Broad range of skills can be taught
  • If they are evening courses, cheaper for business as employee will work during the day
  • Business only needs to pay for course, employee’s value of output is there
  • Employee can be moved around the workplace as they know a variety of skills
  • Uses expert trainers
  • Disadvantages:
  • High costs
  • Wages are paid but workers don’t do anything
  • Additional qualifications make it easier for employee to leave and find another job