Motivation (OCR GCSE Business): Revision Note

The importance of employee motivation

• Motivation refers to the inner desire or willingness that drives a person to take action and achieve a specific goal or outcome

• Motivation plays a critical role in business success

Employees are more productive and efficient

• They are likely to be engaged in their work and use their initiative to solve problems

• They generate higher levels of output and quality

• Increased productivity results in higher profits for the business

Labour turnover rates are often lower

• Motivated employees are more likely to stay with the company long-term 

• Lower turnover rates reduce the need for costly recruitment and training

• Long-serving staff are likely to be productive and capable of delivering good customer service

Reliability and loyalty of workers are high

• Motivated employees take pride in their work, show up on time, meet deadlines and take fewer sick days

• This leads to increased trust between the business and its employees and encourages a positive organisational culture

The importance of employee retention

• A high level of labour retention means that few staff are leaving the business during a given period

• Retaining employees is important for several reasons:

  • Workers are familiar with the business

    • Familiarity with business procedures and expectations is likely to mean workers are productive and efficient

    • Experienced workers are likely to provide good customer service

    • Managers can focus on core tasks rather than directing subordinates

  • Lower costs of recruitment

    • Fewer expensive job advertisements need to be placed

    • Less management time is taken up in shortlisting, interviews and assessment

  • Reduced need for training

    • Repeated induction training sessions can be avoided

    • Training can focus on the further development of existing workers, increasing their effectiveness

Financial methods of motivation

• Financial methods of motivation use monetary incentives to increase morale and encourage employees to work harder or more effectively

Explanation of financial incentives

Non-financial methods of motivation

• Non-financial incentives are rewards that are not directly related to money

• These incentives are often intangible and can include praise, award schemes or a good work environment

Explanation of non-financial incentives

• Businesses commonly use a mixture of financial and non-financial methods to motivate workers

  • This helps to meet the individual needs of different workers

  • It also avoids wasting financial rewards on those for whom it would be unlikely to improve performance