Financial and non-financial motivators

• Piece work = employees are paid per finished item. Employers may choose to pay either minimum wage or a 'fair piece rate' based on the average time taken to complete the product.
• Commission = salespeople are paid a percentage of unit price or per unit sold.
• Bonus = lump sum paid on top of salary/wage
• Profit share = employees are paid an annual dividend based on profits
• Performance-related pay = line manager sits with worker and decides on criteria that employee must fulfill. Appraisals determine the performance of the employee.
• Delegation = Allocating tasks to employees. Manager creates list of tasks and divides it amongst employees.
• Consultation = Employees are part of the decision-making process. Employees discuss w/ management about improving productivity, cutting costs etc.
• Team working = grouping employees to work in teams. collaborating and discussing could lead to a better product/solution
• Advantages of team working:

  • Pooled talents, specialisation, shared responsibility, brainstorming
  • Well-managed teams could lead to better results
  • Peer pressure could lead to high motivation
• Disadvantages of team working:

  • Tension and conflict
  • Too many meetings
  • Sometimes individual approaches may be better
• Job enlargement = giving employee a variety of tasks at the same level of responsibility. prevents employee from getting bored + expands horizontal scope of job
• Advantage of job enlargement:

  • Less boring
  • Less repetitive
  • More efficient
  • Maximum employee utility
• Disadvantage of job enlargement:

  • Employee may regard it as just more to do
• Job rotation = moving an employee between different jobs within the organisation.
• Piece work advantage:

  • Experienced + efficient workers earn more
  • Incentive to complete work
  • Employees may work more hours
  • Home workers start and end when they want to
• Piece work disadvantage:

  • Speeding up workers may cause cut corners - decrease quality
  • Slower workers may be paid the minimum wage
• Commission advantage:

  • skilled salespeople make good money
  • employers not paying for downtime
  • motivates employees
• Commission disadvantage:

  • Unsteady income
  • Risky in recession
  • Employees may not focus on meeting customer needs
• Bonus advantage:

  • incentive
  • means of appreciation
• Bonus disadvantage:

  • Cash can be costly, so employer may offer giftcards
  • Employee pays taxes on bonus
• Profit share advantage:

  • Employees work towards common goal
  • High motivation
  • Employees committed to organisation
  • Bridges gap between employee + employer
• Profit share disadvantage:

  • Salaries go up equally, not based on merit
  • Smaller companies may have drastic fluctuations
  • May not focus on quality
• Performance-related pay advantages:

  • Link between performance and pay
  • Easy for business to rank staff + look at promotions
• Performance-related pay disadvantages:

  • Causes jealousy
  • Those not meeting targets may blame line manager
  • Bonuses may be too low to motivate
• Delegation advantages:

  • Empowers managers to allocate tasks to appropriate staff
  • Maximises team's potential
  • Builds trust between manager + employees
• Delegation disadvantages:

  • Managers sometimes allocate tasks when overloaded, not to motivate
  • Manager may not choose most suitable employee
• Consultation advantages:

  • Avoid minor issues
  • Avoid union action
  • Motivates - employee views heard
  • Quality circles
• Consultation disadvantages:

  • Employees may not know how to run successful business
  • Employees may hold grudges
• Empowerment = employees can delegate tasks to others

  • suitable employees make decisions and get the responsibility + take accountability
• Empowerment advantage:

  • Staff recognised for ability - less frustrated, increase productivity
  • Empowered employees more effective at solving problems at their level
  • Loyalty due to involvement
• Empowerment disadvantage:

  • Cost cutting, delayering, management redundancy technique
  • Lack of experience may increase risk of mistakes