Abdul Kadir Molla

International School

Grade-9 (Business Studies)

Chapter- 6 and 7

Chapter-6 Motivating employees

Benefits of a well-motivated workforce
A well-motivated workforce gives benefits to a business, including:

 high output per worker – which helps to keep costs low and increase profits
 willingness to accept change, for example, new methods of working
 two-way communication with management, for example, suggestions for improving quality
 low labour turnover – a loyal workforce – this reduces the cost of recruiting workers who
leave
 low rates of absenteeism – reducing the disruption caused by absence from work
 low rates of strike action – avoiding damage to customer relations.

People work for several reasons:

 Have a better standard of living: by earning incomes they can satisfy their needs and wants
 Be secure: having a job means they can always maintain or grow that standard of living
 Gain experience and status: work allows people to get better at the job they do and earn a
reputable status in society
 Have job satisfaction: people also work for the satisfaction of having a job

The concept of human needs - Maslow's Hierarchy

Abraham Maslow – his hierarchy of needs suggests that people have similar types of needs from low
level basic needs to the need for achievement

 Needs start at a basic level.

 After one need is satisfied - move on to the next.
 Satisfied need will not motivate action
 Reversion is possible - satisfaction can be withdrawn & level of need moved down

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 Abdul Kadir Molla
International School

Evaluation of Maslow’s hierarchy of needs

 Maslow also suggested that each level in the hierarchy must be achieved before an
employee can be motivated by the next level.
 There are problems in that some levels do not appear to exist for certain individuals, while
some rewards appear to fit into more than one level.
 Managers must identify the level of the hierarchy that a particular job provides and then
look for ways of allowing the employees to benefit from the next level up the hierarchy.
Criticisms

 These needs to not apply to all employees (all humans are different)
 Difficult for managers to determine which needs their employees need

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 Abdul Kadir Molla
International School

Motivational theories
F. W. Taylor:
 Taylor based his ideas on the assumption that workers were motivated by personal gains,
mainly money and that increasing pay would increase productivity (amount of output
produced).
 Therefore, he proposed the piece-rate system, whereby workers get paid for the number of
output they produce.
 So, in order, to gain more money, workers would produce more.
 He also suggested a scientific management in production organisation, to break down labour
(essentially division of labour) to maximise output.

Taylor’s scientific approach:

1. Select workers to perform a task.

2. Observe them performing the task & note the key elements of it.

3. Record the time taken to do each part of the task.

4. Identify the quickest method recorded.

5. Train all workers in this quickest method & do not allow them to make any changes to it.

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 Abdul Kadir Molla
International School
6. Supervise workers to ensure that the ‘best way’ is being used & that the set time is not exceeded.

7. Pay workers on the basis of results

Criticism

 There are various other motivators in the modern workplace, money is not the only motivator
that workers seek.
 The piece rate system is not very practical in situations where output cannot be measured
(service industries)
 His theory led to (high) output however, doesn’t guarantee standard quality.

Frederick Herzberg (Herzberg’s two factor theory)

According to Herzberg, humans have two sets of needs; one is for the basic needs, which he called
‘hygiene’ factors or needs, and the second is for a human being to be able to grow psychologically, which
he called ‘motivators.

According to Herzberg, the ‘hygiene’ factors must be satisfied;

if they are not satisfied, they can act as demotivators to the
worker. However, they do not act as motivators, as once
satisfied the effects of them quickly wear off. The presence of
hygiene factors doesn’t motivate employees, but their
absence demotivates them.

Motivators will motivate workers to work more effectively.

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 Abdul Kadir Molla
International School

Methods of financial motivation

The methods of payment or financial reward are used to provide incentives to employees to encourage
them to work hard and effectively.

1. Wages are often paid every week or daily.

Advantages:

 The worker gets paid on a regular basis and does not have to wait long for some money.
 This is their regular amount per hour plus an extra amount. This is an incentive to work
additional hours when required by the business.
However, there are some drawbacks:

 As the wages are paid weekly, they have to be calculated every week, which takes time
and money.
1.1 Time rate is payment by the hour (payment for a period of time). For example, if an employee is paid
$10 per hour and they work for 40 hours, then they will be paid $400.

Advantage:

 The business only pays workers for the number of hours they are at work.
 Worker knows exactly how much they will be paid for working a certain period of time.
Disadvantage:

 The productive and unproductive worker will get paid the same amount, irrespective of
their output.
 Quality is not ensured.
1.2 Piece rate Payment to workers based on the number of units produced.

Advantage:

 Workers are only paid for the number of items they produce hence; they are certain about
their payment.
 Encourages workers to work faster and produce more goods.
Disadvantage:

 The quality of goods produced may be poor because workers try to work too quickly to
increase their output and pay.
 If the machinery breaks down, will delay the production, hence, the employees will earn
less money.
2. Salaries, Salaries are paid monthly, normally straight into a bank account. They are not paid in cash. It
is usual for office staff or management to be paid salaries.

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 Abdul Kadir Molla
International School
Advantages of salaries

 It is easy to calculate salary costs for the business.

 The organization has the money in their bank account for longer than if they were paying
their workers’ wages, as salaries are paid only once a month.
 Easy to calculate
Disadvantages

 Workers may prefer to be paid weekly.

 No payment for extra time worked – workers may be reluctant to work longer.
3. Bonuses, A bonus is a lump sum paid to workers when they have worked well. It can be paid at the
end of the year or at intervals during the year.

Advantages

 Bonuses do not have to be paid – a business can decide to pay a bonus just to an individual
worker who has performed well or to all of its employees if the business has exceeded
certain targets.
 A bonus is paid in addition to the standard wage or salary. Being paid a bonus can have a
positive motivating effect.
 Workers often consider themselves to be ‘recognised’ and ‘special’ if they are paid a
bonus.
Disadvantages

 Bonuses can become ‘expected’ every year and if they are not paid, then employee
disappointment can be difficult to manage.
 If only one or a small number of workers are paid a bonus, then bad feelings can be caused
as other workers resent this and question why they did not receive one.
4. Commission, these additional payments are often paid to sales staff. Commission is paid in addition to
the existing wage or salary.

Advantages

 The more sales they make, the more money they are paid. This encourages the sales staff
to sell as many products as possible.
Disadvantages

 If the sales staff are very persuasive and encourage people to buy goods they don’t really
want, then the business may see its sales increase only in the short term and then fall again
as it gets a bad reputation.
 It can be very stressful for the sales staff because, if they have a bad month, their pay will
fall.

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 Abdul Kadir Molla
International School
 There might be too much competition between sales staff.
5. Profit sharing, employees receive a share of the profits in addition to their basic wage or salary.

Advantages

 This additional payment should motivate the workers to work hard as they all receive a
share of the profits earned by the business.
Disadvantages

Possible limitations

 When business will not provide any share of the profit then employee will be disappointed
as well as de motivated.
 Profit given to employees may reduce dividends for shareholders.
 The profit share is usually calculated on the basis of an additional percentage of a worker’s
existing wage or salary – so higher paid workers will receive a higher profit share. This
could cause bad feeling among lower paid workers who consider that they have worked
just as hard.

Fringe benefits
In addition to these financial rewards, businesses may give other employee benefits. These usually vary
according to the seniority of the job.

These are sometimes called ‘perks’ or ‘fringe benefits’ of a job. Examples include: company vehicle (car),
health care paid for, children’s education fees paid, free accommodation and free trips abroad/holidays.

Motivating factors – nonfinancial methods

Job Satisfaction: Enjoyment derived from feeling that you have done a good job.

 Pay
 Promotion
 Status
 Training
 If these things are kept in mind employees will be well-motivated
Job Rotation: Working, swapping around and doing a specific job for a limited time period

 Increases variety of work

 Easier for managers to cover up if 1 employee is absent
 Makes the job more interesting
 Job Enlargement
 Where extra tasks of similar level of work are added to a person’s job description
 Extra tasks shouldn’t add extra work
 Increases variety

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 Abdul Kadir Molla
International School
 Higher job satisfaction
Job Enrichment: It involves adding tasks that require more skills

 Higher responsibility
 Higher job satisfaction
 Higher productivity
 This gives employees a sense of trust from senior management and motivate them to carry
out the extra tasks effectively.
Team-working: a group of workers is given responsibility for a particular process, product or development.

 They can decide as a team how to organize and carry out the tasks.
 The workers can become more involved in the decision making and take responsibility for
this process.
 This gives a feeling of control over the jobs/tasks and the employees feel more committed,
therefore increasing job satisfaction.
Opportunities for training: providing training will make workers feel that their work is being valued.
Training also provides them opportunities for personal growth and development, thereby attaining job
satisfaction.

Opportunities of promotion: providing opportunities for promotion will get workers to work more
efficiently and fill them with a sense of self-actualisation and job satisfaction. Employees offered
promotion will feel recognised, have a higher status and will be given more challenging work to perform.
All of these benefits are closely linked to the views of both Maslow and Herzberg.

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 Abdul Kadir Molla
International School

Chapter-7 Organisation and management

 Organisational structure refers to the levels of management and division of responsibilities
within an organisation.

Organisational chart refers to a diagram that outlines the internal management structure.
Features –
 It is a hierarchy
 Organised into departments
 Shows the chain of command
and span of control
Benefits –
 The chart shows how
everybody is linked in the
organization
 Gives a sense of belonging
 Employees know their
position
 It shows how departments
are linked
 All employees are aware
from which communication channel will they receive messages

 Hierarchy refers to the levels of management in any organisation, from the highest to the
lowest.
 A level of hierarchy refers to managers/supervisors/other employees who are given a similar
level of responsibility in an organisation.
 Chain of command is the structure in an organisation which allows instructions to be passed
down from senior management to lower levels of management.

Span of Control
The span of control is the number of subordinates working directly under a manager.

Business can have a ‘tall’ structure, with a long chain of command:

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 Abdul Kadir Molla
International School

Characteristics of narrow span of control

 Less responsibility: One manager manages a few subordinates.

 Long structure: The organizational structure involves many layers.
 Less workload: Managers have to supervise and manage a few subordinates, leading to
tight control.
 Fewer delegates: Managers may try to make decisions independently and delegate less to
employees.
 Centralized authority: Decisions are concentrated at higher levels, where the higher the
level, the higher the decision-making power.
 Longer levels of authority: Decision-making involves a long chain of command, so it can
be slower to get to the top level or vice versa.
 Common in established companies: They have many employees, and therefore the size
of their organization is large.
Advantages of narrow span of control

 More control: Managers can supervise better because they supervise fewer subordinates.
 Better productivity: The manager’s workload is less due to supervising fewer
subordinates. In addition, decision-making is distributed over more layers. That should lead
to higher performance and productivity.
 Better decision: Managers take a more dominant role in making decisions than employees.
Thus, they can make better, more coordinated decisions than delegating them to employees.
 More effective communication: Fewer subordinates allow for higher quality
communication and feedback.
Disadvantages of narrow span of control

 Lowers morale: If managers supervise too closely, it can demotivate employees.

 Greater cost: Companies need more managers to supervise fewer employees. Thus, it
consumes a larger cost.

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 Abdul Kadir Molla
International School
 Slower communication and coordination: Communication quality may be good under a
narrow span of control. But it can take more time to get from the lowest to the top-level
(or vice versa) because it has to go through many layers.
You can have a ‘wide’ structure, with a short chain of command:

Characteristics of a wide span of control

 More responsibility. One manager manages many subordinates.

 Short structure. The organizational structure involves a few layers.
 Heavier workload. Managers have to supervise many subordinates.
 More delegates. Managers may seek to reduce workload through delegation.
 Decentralized authority. Managers trust subordinates to make decisions.
 Less level of authority. Decision-making involves a short chain of command to get to the
top level more quickly.
 Common in innovative companies. They have few employees, and therefore their
organization size is small.
Advantages of wide span of control

 Faster communication and coordination. Information from the lowest level gets to the
top-level (or vice versa) faster because fewer layers are involved. It allows for quick
coordination and decision-making.
 Higher motivation. Managers delegate less essential decision-making to employees. It
can lead to high job satisfaction and motivation as employees are more involved in
making decisions about their work.
 Work flexibility. Managers reduce oversight of their subordinates through delegation. And
they place high trust in subordinates and are expected to act according to their expectations.
 Lower costs. Managers supervise more people. So, companies need fewer managers and
layers in the organizational structure.
 More delegates. encourage managers to delegate more because it is impossible to do all
the important work on their own.

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 Abdul Kadir Molla
International School
 Job satisfaction. With more delegation, employees can make more decisions on their own.
It can be more effective because they understand the problems in their job better than the
manager. Combined with more autonomy, they have the freedom to manage their
working life, leading to higher job satisfaction.
Disadvantages of wide span of control

 Decreased productivity. Managers manage many subordinates, and not all managers have
the quality to do so. That can place a heavier workload, lowering their productivity.
 Bad decision. Delegation allows employees to make decisions. However, they may not be
good decision-makers even though they are experts in their fields. In the end, they may
make the wrong decision.
 Losing control. It is difficult to control all the subordinates. Bad decisions by employees
can stress managers out. In addition, individual decisions may not be well-coordinated and
tend to be random and undirected. Finally, it requires more managerial intervention to
guide, increasing the manager’s workload.
 Less effective communication. Communication messages may arrive faster, but the
quality may be poor. That’s because managers need to convey it to a lot of people. And
not all understand; each may have its own interpretation.

 The supervisors working in these departments are Line managers – they have direct
responsibility over people below them in the organisational chart
 Staff Managers – which are specialists in certain areas to provide support and information to
line managers

Role of Management
All organizations have managers. Leaders, director, executive are all different names, but they are all
managers

The functions of managers include:

 Planning – setting aims or targets

 Organising – delegating tasks. organising people and resources effectively
 Co-ordinating – making sure departments work well with each other and have good
communication
 Commanding – making sure the workers are keeping to targets and deadlines. By guiding
and delegating tasks
 Controlling – measuring and evaluating work of employees and verify they are on target
Without clear and effective management, a business will lack

 A sense of control and direction

 Control of employees

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 Abdul Kadir Molla
International School
 Organization of resources
 Coordination between departments

Delegation
Delegation involves giving a subordinate the authority to perform particular task.

However, if the employee does a bad job, the manager must accept the responsibility for it

Delegation is important because:

 Managers cannot do every job by themselves (Advantages to manager)

 Managers can then measure the success of the employees (Adv to manager)
 Work becomes more interesting for subordinate, increases their motivation (Adv to
employee)
 Makes employees feel trusted and important (Adv to employee)
 Gives workers greater career opportunities and chances of promotion (Adv to employee)
However, some managers do not delegate tasks because:

 They might be afraid the subordinates will fail and manager wants to control everything
 Manager might also feel threatened that subordinate will do a better job than them
 Delegation means that once the task is completed, the manager will have less direct control
 This means the trust for the workers is increased by the manager
 Therefore, there needs to be more trust in workers in order to reduce control over them

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 Abdul Kadir Molla
International School
Why is it important to have good managers?

A good manager should:

 motivate employees
 give guidance and advice to employees they manage
 inspire employees they manage to achieve more than they thought possible
 manage resources effectively and keep costs under control
 increase profitability of the business.

Leadership Styles
Leadership styles are the different approaches to deal with people when with authority.

Autocratic Democratic Laissez-faire

Objectives Set by the leader Set by the leader, but the Usually set by the
without any input from workers are consulted leader with or without
workers the input from
workers
Decision-making Taken by the leader Workers are encouraged Delegated to workers
without any input from to take part, but leader who take the decisions
workers still makes the final
decision

Supervision of Closely supervised by Leader is available to No supervision by

workers the leader solve problems but close leader
supervision is not needed

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 Abdul Kadir Molla
International School
Availability of Workers are given very Workers given Workers provided
information limited information information which allows with all the
about the business them to fully participate information they need
in the business to take decisions

Communication One-way, from leader Two-way, feedback is Little feedback from

to worker. No encouraged manager, mostly
feedback communication is with
the leader from
subordinates
Motivation levels Likely to be low Likely to be high Could be high or low,
depending on the task
and skill of workers

Autocratic: A leadership style where the leader makes all the decisions and expects to take takes charge
of the business. Best practice in military and governmental organization. And when any important quick
decisions required, on that time, organizations uses autocratic leadership style.

Advantage: Quick decision making, for example, during a crisis.

Disadvantage: No opportunity for employee input into key decisions, which can be demotivating.

Democratic Leader: where the manager allows the subordinates to be involved in the decision-making
process

Advantage: Better decisions could result from consulting with employees and using their experience and
ideas – as well as being a motivating factor.

Disadvantage: Unpopular decisions, such as making workers redundant, could not effectively be made
using this style of leadership.

Laissez-Faire Leader: Where the manager makes broad/general objectives for the employees and leaves
them to make their own decisions.

Advantage: Encourages employees to show creativity and responsibility.

Disadvantage:

 Communication is rather difficult since a clear direction is not given.

 In an organisation where a consistent and clear decision-making structure is needed, for
example, in providing customer service.

Trade union – a group of workers that join together to protect their interests. Forming a trade
union is a way of helping employees to achieve improvements in these different aspects of their
employment – a trade union is a type of pressure group.

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 Abdul Kadir Molla
International School
Benefits for employees for joining a trade union

 Strength in numbers when negotiating with employers.

 Improved conditions of employment, for example, rates of pay, holidays and hours of
work.
 Improved environment where people work, for example, health and safety, noise, heating.
 Improved benefits for members who are not working because they are sick, retired or have
been made redundant.
 Improved job satisfaction by encouraging training.
 Advice and/or financial support if a member thinks that they have been unfairly
dismissed or made redundant, have received unfair treatment, or have been asked to do
something that is not part of their job.
 Benefits that have been negotiated or provided for union members such as discounts in
certain shops, provision of sporting facilities or clubs.
 Trade unions often meet government officials to influence policies for the benefit of
workers.
 More secure employment.

Disadvantages of joining a trade union

 It costs money to be a member.

 Workers may be required to take industrial action even if they don’t agree.
Advantages for employers

 They can help improve communications between workers and management.

 Wage agreements will be easier to negotiate with a trade union than with many individual
workers.
Disadvantages for employers

 trade unions can organise strikes if they do not receive the pay levels and work conditions
they demand
 wages are likely to be higher – adding to business costs – when many employees are trade
union members.

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Abdul Kadir Molla
International School

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