Methods of Motivation (Cambridge (CIE) IGCSE Business): Revision Note

Financial methods of motivation

• Financial incentives are rewards or payments given to employees in return for their labour or improved performance

• The different theories of human motivation offer varying perspectives on the role of money in motivating staff

  • Herzberg's theory says that money is not generally a motivator, but the lack of it leads to dissatisfaction

  • Maslow's theory suggests people move through levels of needs that motivate them

    • Lower-order needs are closely linked to financial rewards, whilst higher-order needs are rarely linked to pay

    • Physiological and safety needs can be partially met by providing adequate pay 

    • Love and Belonging needs are often met by encouraging aspects such as teamwork

Financial methods of motivation

Non-financial methods of motivation

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

• These incentives may be intangible and include methods that lead to recognition, praise, job satisfaction or improved work-life balance

Types of non-financial Incentives

1. Praise/employee of the month

   • Many workers respond well to praise or to recognition programs inside the workplace.

   • Meaningful praise can increase productivity

2. Job enrichment

   • Involves adding more challenging or meaningful tasks to a job

   •  Staff feel more motivated and engaged, leading to improved productivity

3. Job rotation

   • Involves moving staff between broadly similar but varied roles in the business

   • Exposes staff to new challenges and experiences, which can increase motivation, understanding and skill

4. Teamworking

   • Teamwork may involve workers completing tasks together

   • Teamwork can increase motivation in the workplace, as each member of staff has a role and a shared goal

5. Training

   • Involves staff improving or learning new skills and abilities

   • This can make employees feel valued, more productive and likely to remain with the business

6. Promotion opportunities

   • Employees offered promotion will feel recognised, have a higher status and will be given more challenging tasks/responsibilities to perform 

   • These benefits are closely linked to the views of both Maslow and Herzberg

Recommending motivation methods

• When recommending a method of motivation for employees in a business, managers must recognise that individuals are motivated in different ways

Factors affecting the choice of motivation method

• The context of the business

  • What type of business is it? E.g. manufacturing or sales 

  • The budget available 

  • How many workers does the organisation have?

  • Does the business currently use any methods of motivation?

  • What is the nature of the work carried out by employees on a daily basis?

• The balance of the compensation package

  • Ideally it should include both financial and non-financial 

  • It should be adaptable and reflect the changing needs of staff

Recommending a method of motivation