business unit 3

• Maslow's Hierarchy of Needs


  A motivational theory that suggests people have five fundamental needs, and their sequential attainment of each need acts as a source of motivation
• Maslow's five fundamental needs

  • Physiological needs
  • Safety and security needs
  • Social needs
  • Esteem needs
  • Self-actualisation needs
• Maslow's Hierarchy of Needs


  • For an individual to reach their optimal performance and full potential, they must address each need in a sequential order
  • The needs act as a source of motivation to progress the individual up the steps
• For employees to perform with high rates of productivity, a business must ensure they are motivated by their work
• Motivation


  The willingness of an individual to expend energy and effort in completing a task
• Five fundamental needs in Maslow's Hierarchy of Needs

  • Physiological needs
  • Safety and security needs
  • Social needs
  • Esteem needs
  • Self-actualisation needs
• Physiological needs


  • The basic requirements for human survival, such as food, water, and shelter
  • Must be met before a person is motivated to satisfy the subsequent needs in the hierarchy
• Safety and security needs

  • The desires for protection from dangerous or threatening environments
  • Include avoiding physical harm in the workplace and having a stable income and job security
• Social needs


  • The desires for a sense of belonging and friendship among groups, both inside and outside the workplace
• Esteem needs


  • An individual's desires to feel important, valuable, and respected
• Self-actualisation needs


  • The desires of an individual to reach their full potential through creativity and personal growth
  • Rely on intrinsic motivation rather than external factors
• Managers can use Maslow's Hierarchy of Needs to determine the factors that act as a source of motivation for their employees
• After assessing which level of the hierarchy an employee is at, managers can develop a business environment that better satisfies the unfulfilled needs of each employee
• Employees who reach self-actualisation can improve business performance through creative work
• Advantages of Maslow's Hierarchy of Needs

  • Can give managers a clear path to motivate employees
  • Can help managers determine which level of the hierarchy is motivating an employee
  • Employees who reach self-actualisation can improve business performance through creative work
• Disadvantages of Maslow's Hierarchy of Needs


  • Difficult to measure success as the levels of satisfaction gained at each stage can vary among people
  • Assumes all employees are motivated in the same order
  • Assumes that there are no other fundamental needs that can motivate employees
  • Time-consuming for a manager to determine the level of each individual employee and implement appropriate strategies
• Goal Setting Theory


  A motivation theory that states that employees are motivated by clearly defined goals that fulfill five key principles
• Goals that motivate employees

  • Specific
  • Measurable
  • Achievable
  • Relevant
  • Time-bound
• 'Setting goals is the first step in turning the invisible into the visible' - Tony Robbins
• Managers can motivate and inspire employees by

  Sharing their vision for the future and developing a concrete plan for how employees can work towards reaching their shared goals for success
• Rational


  (in classical economic theory) economic agents are able to consider the outcome of their choices and recognise the net benefits of each one
• Rational agents will select the choice which presents the highest benefits
• Consumers act rationally by


  Maximising their utility
• Producers act rationally by


  Selling goods/services in a way that maximises their profits
• Workers act rationally by


  Balancing welfare at work with consideration of both pay and benefits
• Governments act rationally by


  Placing the interests of the people they serve first in order to maximise their welfare
• Rationality in classical economic theory is a flawed assumption as people usually don't act rationally
• Goal Setting Theory


  A motivation theory that states that employees are motivated by clearly defined goals that fulfil five key principles
• Five key principles of the Goal Setting Theory

  • Clarity
  • Commitment
  • Challenge
  • Task complexity
  • Feedback
• Process of implementing the Goal Setting Theory

  1. Employee discusses personal goals with manager

  2. Manager aligns employee goals with business objectives

  3. Manager and employee set a clear, achievable goal together

  4. Manager regularly checks employee progress and provides support

  5. Manager celebrates and rewards the employee for reaching a goal

  6. Manager and employee set a new, more difficult goal together
• A production quota is a goal for how many products are to be made within a specific time period
• Exam questions often reference motivation theories only by the names of the theorists (e.g. Locke and Latham's theory) rather than the name of the theory (e.g. Goal Setting Theory)
• The collaborative process of goal setting is essential because whether or not an employee will find a goal challenging enough will depend on their personal skill set and capabilities
• Sample goals ranked by challenge level


  • Performing a song at assembly
  • Tutoring a group of peers on writing an English essay
  • Efficiently inputting data into an excel spreadsheet for analysis
  • Writing a blog post once a week for a school newspaper
  • Creating an exercise plan for a friend who wants to start working out
  • Cooking a delicious lunch for 50 people
• Skills and knowledge possessed by an individual will affect how challenging they find certain tasks
• Personal interests can make some tasks more appealing to an individual
• Some goals are more challenging to measure than others
• Managers should ensure all goals are specific and measurable
• Locke and Latham's Goal Setting Theory can be used by managers to establish well-defined objectives that motivate employees
• Advantages of the Goal Setting Theory

  • Goals that align employee goals with achieving business objectives are likely to improve business performance
  • The process of managers setting goals with employees can improve levels of trust and the relationship between employees and management
  • An employee can clearly understand management's expectations through straightforward goals and regular feedback
  • Employees may be more motivated to complete tasks if work goals align with their personal interests
  • As goals are specific and measurable, it is not time-consuming for managers to assess whether an employee has achieved their goal or not
  • When employee goals align with business objectives, they can contribute to a business's financial aims, such as increasing sales and net profit