MOTIVATING WORKERS

MOTIVATION
The factors that influence the behavior of workers towards
achieving set business goals.
The Factors that influence motivation at work:
1. Money- to pay for necessities and some luxuries.
2. Promotion- salary increment
3. clean and safe workplace- the worker knows that when they go to
work they are protected from injury or harm.
4. Job security- knowing that the job and pay are safe and not likely
to lose it.
5. Training- the employer helps the worker to learn new skills or
improve their existing skills. This help personal development and
improve chance of promotion..
6. Friendship- feeling important, get the opportunity to socialize with
other workers.
7. Variety of task- the work is interesting because the worker is not
doing the same task all of the time.

Benefits of a well-motivated workforce

Improved
productivit
y

More Low rate of

competitiv absenteeis
e Benefits of m
having a
well-
motivated
workforce

Better
Low rate of
quality
labour
goods and
turnover
services

1|Page
 Disadvantages of a less motivated workforce.
• Employees may act lazy leading to low productivity,
• Low productivity results in business failing to meet deadlines
• Poor quality of goods and services.
• Delays in receiving goods and poor quality may leading low
customer satisfaction, more complaints, bad reputation and low
profit
• Employees may be rude to customers leading to low customer
satisfaction, more complaints and a bad reputation and low profits
• High rate of absenteeism and labour turnover.
Labour productivity: a measure of the efficiency of workers by
calculating the output per worker.
Absenteeism: workers’ non-attendance at work without good
reason.
Labour turnover; the rate at which workers leave a business.

The concepts of human needs – Maslow’s Hierarchy

Abraham Maslow identified the needs of humans these are shown
in Maslow’s Hierarchy of needs
SELF-ACTUALISATION
Reaching one’s potential
ESTEEM NEEDS
Respect from others,
recognition for a job well
done, status

SOCIAL NEEDS
Friendship, accepted, belonging to a
group

SAFETY NEEDS
Health and safety at work, job security, free from
threats

Physical NEEDS
Water, food, shelter, clothing and rest

Maslow’s Hierarchy of Needs

Maslow believed that humans have levels of need:
Physical needs – these are the basic needs we must have to be
able to survive. They include water, food, shelter, clothing and rest.

2|Page
 Safety needs – we need to be safe from physical danger and
individuals need to know that they have job security.
Social needs – most people want to be accepted by others and feel
that they are loved and trusted. It is important to have friends and
belong to a group where social activities can be shared and enjoyed
together.
Esteem needs – individuals want to be respected and to have their
achievements recognized by others. For some people having a
certain status is also an important need.
Self-actualisation – not everyone will reach their full potential, but
for some individuals it is a very important need. Even the most
successful people rarely achieve self-actualisation because they
will always set themselves another challenge.

Advantages of Maslow’s theory of motivation

• increase business efficiency;workers will produce more, better
quality goods and services for customers. This will improve
competitiveness and help to reduce business costs and improve
profitability.
limitations of Maslow’s theory of motivation.
▪ It is often difficult to identify how much of each need has been met
and level each worker is on.
▪ Money might also satisfy esteem needs as well as those lower down
the hierarchy.
▪ Not everyone has the same needs as those in Maslow’s Hierarchy.
▪ Self-actualisation is rarely, if ever achieved. Therefore, unless more
challenging tasks are always being provided, it is unlikely that work
will help to satisfy this need. There is a risk that if jobs are no longer
challenging that the worker becomes demotivated.

How human motivation changes according to Maslow's

hierarchy of needs.
• According to Maslow, all humans start at the lowest level of need -
Physical needs

3|Page
• Once they have satisfied their physical needs, then they are
motivated to try to reach the next level - safety needs and so on,
until they reach the top level- self actualisation.
• Once a need has been satisfied it is no longer a motivator.

Key motivational theories: Taylor and Herzberg

F.W. Taylor – scientific management theory
• Taylor’s scientific management theory aims to reduce inefficiency
in the work place by finding the quickest method of performing each
task and then training all workers to use this method.
• Taylor believed that workers were motivated by money alone. To
get workers to increase their efforts they had to be rewarded with
more money. If workers are motivated by money then they will work
harder because the more units they produce the more they will pay.

Limitation of Taylor’s Scientific management theory

• There are various other motivators in the modern workplace, some
even more important than money. (Eg promotion, status, sense of
belongings, respect etc)
• The piece rate system is not very practical in situations where output
cannot be measured (service industries)
• Piece rate system may lead to high output but it doesn’t guarantee
high quality.

Fredrick Herzberg – two-factor theory

Herzberg research identified two groups of factors which he called
hygiene factors and motivators.

4|Page
 Hygiene factors Motivators
▪ Working conditions ▪ The work itself
▪ Relationship with others
▪ Responsibility
▪ Salary or wage ▪ Advancement
▪ Supervision ▪ Achievement
▪ Company policy ▪ Recognition of achievement
and
administration

Hygiene factors
1. Working condition – includes things such as how clean and safe the
work place is and what facilities are provided for workers, for
example washrooms, drinks machines and canteen for meals
2. Relationships with others – this factor considers the importance to
a worker of having good working relationships with other workers-
the need for friendship and to belong to a group – and a good
relationship with managers – to be treated fairly and with respect.
3. Salary and wage – Herzberg argue that people had to be paid
enough to encourage them to do a job, but money was not enough
for them to want to do the job well.
4. Supervision – this factor consider the importance of leadership style
and how closely workers are supervised

5|Page
5. Company policy and administration – these are the rules and
procedures which control and affect the way that workers work and
their relationship with others in the workplace.
Motivators
1. Work itself – the tasks that workers do are an important influence
on the motivation of workers. The work needs to be varied and
challenging and Herzberg suggests that this could be achieved by
introducing job enrichment.
2. Responsibility – giving workers more responsibility for the tasks
they perform, for example allowing them to make decision about
their tasks. The manager is showing that they trust workers and
value their contribution.
3. Advancement – workers have the opportunity for promotion
4. Achievement – workers need to feel that they have reached
challenging goals
5. Recognition of achievement – workers need to have their
achievements recognised by management and other people they
work with.
Methods of motivation
Managers can motivate workers in several ways. These can be
divided into financial rewards and non-financial reward.

6|Page
 Financial rewards and methods
➢ Hourly wage rate
An hourly wage rate means that workers are paid a fixed amount
per hour worked. The longer a worker is at work the more they get
paid. For example, if an employee is paid $10 per hour and he works
for 40 hours, then he will be paid $400
(40x$10).
This is the most common method of paying production workers and
non-managerial staff, also use where it is difficult to measure the
output of the workers, for Eg: a bus driver or hotel receptionist.
Advantages
• Easy to calculate the wages as the business only pays workers for
the number of hours they are at work
• The worker knows exactly what they will be paid for working a
certain period of time.
Disadvantages
• Good and bad workers will get the same rate per hour.
• Needs more supervisors to make sure the workers keep working
and producing good quality products.
• As there more supervisors needed, it is expensive.
• A clocking-in system is needed to determine the number of hour
worked by the employees.
➢ Salary
With salary workers are paid a fixed amount per year, which is
usually paid monthly. This method is best use for workers whose

7|Page
 work effort is not directly linked to production, for example
supervisors, managers, and professional staff.
The advantage of this method is that workers do not receive more
pay and they have to work longer hours to complete a task. The
main disadvantage is that salary is not linked to worker effort or the
amount produced.
➢ Piece – rate
Piece-rate means that pay is based on the number of units of output
workers produce. Piece rate can be used where it is possible to
measure the performance shown by an individual in a team.
The main advantage of this method is that workers are only paid for
number of items they produce.
Advantages
• It encourages workers to work faster and produce more goods.
• Helps to increase the output
The main disadvantage is that the quality of goods produce may be
poor because workers try to work too quickly to increase their output
and pay.
Disadvantages
• The workers may ignore the quality of production.
• It requires a quality control system which is expensive.
• Poor quality control may damage the reputation of the business
• Friction between employees may be caused as some will earn more
than others.

8|Page
 ➢ Commission
With commission, pay is based on the value of sales made by staff.
This method is only ever used to reward sales staff
The main advantage of this method is that pay is linked to the value
of goods sold. The main disadvantage of this payment method to
worker is that they are never certain about how much they will earn.
This may mean that they leave as they cannot guarantee that they
will earn enough to pay for their basic needs. This might then
become a disadvantage to the business because they will have to
spend more time recruiting and training new workers.
➢ Bonus scheme
Bonus is an additional reward paid to workers for achieving targets
set by managers. A bonus scheme is a method of performance-
relate pay. Workers receive an additional payment for achieving a
target set by managers. This method can be used to reward any
individual worker or groups of workers where a performance target
can be set by managers. If the targets set by the managers are
unrealistic then workers could become demotivated. Also, if the
target is group-based and the target is reached, all workers in the
group will receive the bonus even if some have work harder than
others to achieve the target. This could lead to conflict between
members of the group.
Performance-related pay is a pay which is related to the
effectiveness of the employee. This system is used where output

9|Page
cannot readily be measured, for example police personnel,
teachers, managers or health workers. To assess their
performance, business or managers often use a system of
appraisal. Appraisal is a method of assessing the effectiveness of
an employee
➢ Fringe benefits
It is non-cash rewards often used to recruit or retain workers and to
recognise the status of certain employees. They include discounts
on company products, company cars, health insurance and
pensions received by the workers in a business.
All workers could receive fringe benefits. It is more usual for different
types of fringe benefits to be linked to the individual’s status within
the business. For example all workers might receive a discount if
they want to buy the firm’s products, but only managers receive a
company car.
The main advantage of fringe benefits is that they can help in the
recruitment and retention of workers. The main disadvantage is that
fringe benefits are often linked to status and not performance.
➢ Profit - sharing
It is an additional payment to workers based on the profits of the
business. It is usually paid once a year. It may be in the form of cash
payment, calculated as a percentage of worker’s wage or salary, or
workers may be given shares in the company.

10 | P a g e
 The benefits to the employees are that they feel a greater sense of
being part of the business and that their efforts are being rewarded.
Employees will hopefully work more effectively which is good for the
business.
The main advantage is that profit-sharing is directly linked to the
performance of the business. The better the performance, the
higher the profit and the greater the share of profits for workers.
The main disadvantage is that profit sharing is that any profit given
to employees might reduce the dividends to shareholders or reduce
the amount available to be reinvested into the business.
Non-financial rewards and methods
➢ Job rotation – instead of doing the same task, workers switch
form one job to another. This makes the work more interesting and
helps prevent boredom. Workers become multi-skilled, which
helps create a more flexible workforce.
➢ Job enlargement – workers are given a greater variety of similar
level tasks to do. Their jobs become more interesting and as with
job rotation, this reduces boredom.
➢ Job enrichment – this method was developed from Herzberg’s
research. Work is organized so that workers are able to use more
of their skills and abilities. They often become more involved in
decisions affecting their job. Workers feel more valued by their
employer and this increases their job satisfaction, efficiency and
motivation.

11 | P a g e
 Increasing the variety or difficulty of tasks workers do, using any of
the above methods is known as job redesign. The aim of job
redesign is to make the work more interesting and more challenging
for workers. It can also help them to learn new skills which may help
their chances of promotion.
➢ Quality circles
Quality circles are groups of workers who meet regularly to discuss
work-related issues. Workers come up with solutions to problems
or suggest how improvements can be made. The results of quality
circles are presented to manage and good ideas and solutions are
introduced into workplace.
Team working and delegation
➢ Team working – production workers are organized into groups or
teams and are given responsibility for the completion of the whole
task. For example, a team of workers might be responsible for the
production of a complete car engine instead of individual workers
completing just one small part of it.
➢ Delegation – this involves managers passing authority for the
performance of tasks to lower-level workers. It is often combined
with empowerment – for example, allowing workers to make
decisions about how tasks are performed.
Choosing methods of motivation
Managers must choose the method they think is best to motivate
different types of worker. They may consider the following factors
when choosing which method to use:
12 | P a g e
▪ What is the cost to the business of using a particular method?
▪ Some methods of motivation can only be used for certain type of
workers; for example piece-rate system is only suitable for
production workers
▪ A method of motivation which works for one worker or group of
workers, may not work for other workers. For example, some
workers might be motivated by higher pay for working longer hours,
but others might be satisfied with lower pay and longer leisure
hours.
The different styles of management

Autocratic Democratic Laissez-faire

Objectives Set by leader Set by the Usually set by
without any leader, but the leader with
input from workers are or without any
workers. often input from
consulted. workers.
Decision Taken by the Workers are Delegated to
making leader encouraged workers who
without any to take part, take the
input from but leader still decisions.
workers takes the final
decision
communication One-way Two-way Communication
from leader feedback is most often
to worker. No encouraged. upwards from
opportunity subordinates to
for feedback. leader. Little
feedback from
manager.
13 | P a g e
 Supervision of Workers are Workers are Workers
workers given very given provide with all
limited information the information
information which allows they need to
about the them to fully take decisions.
business. participate in
the business.
Motivation Likely to be high High or low
level low

Factors to consider when deciding on the right management

style are as following.
• Managers own characteristics – is the manager naturally autocratic
or democratic?
• Characteristics of the group – does the team respond better to being
given clear instructions or to decide what to do on their own?
• The task – is it straightforward or complex?
• Type of business – a design business is likely to have a different
approach to a large factory making standard products.
TRADE UNIONS
A trade union is a group of workers who have joined together to
ensure their interests are protected.
Employees generally share many of the same interests, such as
improving their pay, having a pleasant environment in which to work
, being treated fairly by their employer, being given proper training
and working in a safe environment. Forming a trade union is a way

14 | P a g e
 of helping employees to achieve improvements in these different
aspects of their employment. A trade union is a type of pressure
group. If workers decide to join the trade union, they will pay an
annual subscription (a yearly fee)
Why do workers join a trade union?
• Strength in numbers
• Improved condition 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 financial support if a member thinks they have been
unfairly dismissed or make redundant 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 for sporting facilities
or clubs

8 Recruitment, selection and training of workers

Recruitment: Filling a vacant post with someone internally or
externally.

15 | P a g e
 Internal recruitment
Filling a vacant post with someone already employed in the
business.
Advantages
▪ The vacancy can be filled more quickly and more cheaply.
▪ Applicants already know how the business works.
▪ The business already knows the strengths and weaknesses of
applicants.
▪ Workers can become more motivated when they see that there is a
chance of promotion.
limitations
▪ A better candidate may have been available from outside the
business.
▪ It could cause conflicts within the workplace if other internal
candidates feel they should have got the job.
▪ It does not bring any new ideas.
▪ There will still be a vacancy to fill, unless the worker’s previous has
become redundant.
External recruitment
Filling a vacant post with someone body not already employed in
the business.
The main benefits to a business of external recruitment are:
▪ External applicants might bring new ideas and this can improve the
effectiveness and efficiency of the business.
▪ There will be a wider choice of applicants with different skills and
experience.
▪ It avoids the risk of upsetting workers when someone who is internal
is promoted.
The limitations of external recruitment include:
▪ It takes longer to fill the vacancy
▪ It is more expensive than internal recruitment because of
advertising costs and the time spent interviewing candidates.
▪ External applicants will need induction training, which increases
their expenses

16 | P a g e
 Main stages in recruitment and selection of staff
1. the business identifies the need for a new worker and
carries out a job analysis
2. a job desription is produced
3. a person specification is produced
4. the job is advertised
5. send out application forms and job details

6. received completeed applications

7. Select a shortlisted candidates

8. Interview shortlisted candidates

9. select the right candidate

Job analysis
This is a process that identifies the content of a job in terms of the
activities involved and the skills, experience and other qualities
needed to perform the work. It also identifies the main job
requirements.
Job description
A job description is a written document that provides all the details
about what a job involves. It is a list of the key points about a job,
job title, key duties, responsibility and accountability.
A job description needs to include:
▪ Job title – for example, Sales and marketing executive
▪ The main duties of the post – for example, plan and carry out
marketing activities to agreed budget and timescales

17 | P a g e
▪ Responsibilities – who the job holder is responsible for
supervising/managing.
▪ Accountability – who the job holder reports to
An example of simple job description is shown below:

Person specification
It is an analysis of the type of qualifications, skills, experience and
personal qualities the business is looking for in applicants.
An example of a person specification is shown below

18 | P a g e
 Advertising a job
Once the job description and person specification have been
produced the business needs to advertise the vacancy.
If the job is to be filled using internal recruitment, then the
advertisement could be placed on the staff notice board, emailed
to all staff, or included in a workplace newsletter.
If external recruitment is being used, then the advertisement could
be placed in local or national newspapers.
Here are some suitable media of advertising:
▪ Local newspaper: Usually for office and manual workers. These
people are plenty since the job does not require too much skill.
▪ National newspaper: Used to find workers for senior positions that
requires a lot of skills. It can be read by people anywhere in the
country or overseas.
▪ Specialist magazines: Used for particular technical
specialists such as physicists. Can be used to hire people in the
home country or abroad.
19 | P a g e
▪ Recruitment agencies: Keeps details of qualified people, and will
send the suitable applicants to interviews when a business asks for
a worker. Many businesses prefer to use recruitment agencies to
find them workers because it is easier. However, it is expensive
since their fee is based on a percentage of the workers’ pay.
▪ Government job centers: Place where businesses can
advertise their vacancies. These vacancies are usually for
unskilled or semiskilled workers.
Sending out application forms and job details
Once the job has been advertised then the business will need to
send out further details and application forms to people who have
shown an interest in applying.
Those who decide to apply will complete and return an application
form or send a curriculum vitae – known as a CV – whichever the
employer requests.
An example of curriculum vitae is shown below

20 | P a g e
Receiving applications and shortlisting applicants
The Human Resource Department and manger of the department
where the vacancy exists will look through all the applications. They
will compare the information on the application forms or CV with the
job description and person specification to produce a shortlist of
applicants for interview.
Interviewing shortlisted candidates
Shortlisted candidates will be invited to attend for interview. The
interview may just be a question-and-answer session with one or
two people interviewing each candidate, ot there may be a panel of

21 | P a g e
 interviewers. Usually the more senior the position, the more people
are likely to be involved in the interview process.
Selecting the right candidate
Following the interviews and results of any test, the interview
panel will select who they think is the best applicant for the jobThe
applicant will receive a formal job offer in writing, although they
might first receive a phone call offering them the job. Once they
start work, the will be given a contract of employment and
induction training
Shortlist: A list of candidates who are chosen from all of the
applicants to be interviewed for the job.
Benefits and limitations of part-time and full-time workers
Benefits of part-time workers
▪ A business can often attract well-qualified workers – mainly women
– who want to return to work but need to have flexible working
hours.
▪ Offering a full-time worker the opportunity to work part-time can help
a business to keep experienced staff.
▪ Part-time work provides greater flexibility. For example, if a worker
is off sick, part-time workers can often cover their duties at short
notice.
▪ The contract hours of part-time worker may be flexible to allow for
changes in demand. The part-time worker works longer hours

22 | P a g e
 during busy periods and fewer hours when the business is less
busy.
▪ There is some evidence to suggest that part-time workers are more
productive than full-time workers. Perhaps because they work fewer
hours so are less tired, or because they are motivated to work for
an employer who recognizes the benefits of part-time workers.
▪ Employing two part-time workers instead of one full-time worker,
often increases the skills and experiences of the workforce
▪ Part-time workers do not need to take time off work for medical
appointments. When full-time workers take time off, output falls.
There are also limitations to employing part-time workers:
▪ There will be an increase in induction and training costs.
▪ There could be communication problems. Getting the same
message to all worker is difficult when some workers are only in the
workplace at certain times during the week.
▪ The quality of service offered to customers may not be as good with
part-time staff as it is with full-time staff.

The importance of training and methods

Why workers need training
Training is important to both businesses and workers. The main
benefits of training include:
▪ Trained production workers are more efficient. This increases
productivity and improves quality
23 | P a g e
▪ Management training improves the quality of business decisions
and reduces the risk oc mistakes
▪ Training helps workers to develop their abilities and reach their
potential. This improves their motivation and morale. Workers less
likely to want to leave a business that provides them with good
training.
▪ It is easier to recruit new workers and to keep existing workers.
▪ Training can improve customer service. This helps to improve
customer relationships and increases customer loyalty.
▪ Health and safety training helps to reduce accidents.
▪ A well-trained workforce improves a business’s competitiveness.
Methods of training
There are three main methods of training:
▪ Induction
▪ On-the-job
▪ Off-the-job
Induction training
A training programme to help new recruits become familiar with their
workplace, the people they work with and procedures they need to
follow.
Induction training introduces the new worker to:
▪ Their work colleagues
▪ The organization structure and their role and responsibilities within
the structure
24 | P a g e
▪ The health and safety procedures in the workplace
▪ The facilities available to workers, for example canteen facilities
The main benefit of induction training for the worker is that they
quickly feel part of the business. This brings a benefit to the
business because workers who are settled are more likely to
perform their tasks more effectively from the start of their
employment.
The main limitation of induction training is that it increases business
costs and during the period of induction training workers are not
adding to output but are receiving their wage or salary
On-the-job training
On-the-job training involves the worker learning the skills they need
to complete tasks in the workplace. They will often sit with an
experienced worker and watch how they perform the task. They will
then complete the task under the guidance of the experienced
worker.
The main advantages of on-the-job training are:
▪ It is relatively cheap
▪ Workers learn the way that the business wants the job done.
▪ Workers are producing output while training
However there are also disadvantages of this method including:
▪ Workers might pick up any of the experienced worker’s bad habits.
▪ Workers might not learn the most up-to-date methods.
▪ Workers make more mistakes when learning and this increases
waste.

25 | P a g e
▪ It slows down the production of the experienced worker.
Off-the-job training
Off-the-job training takes place away from the workplace. This might
be at the company’s own training facility, or attending courses
offered by specialist training companies, or at local colleges and
universities. It is most often used where the job requires a high level
of technical skill, or specific management skills need to be
developed.
The main advantages of off-the-job training include:
▪ Workers learn the latest methods and techniques.
▪ It does not disrupt the production of other workers
The disadvantages include:
▪ It can be expensive, especially when the training is provided by a
private training provider
▪ The worker does not produce any output during training.
Reasons for reducing the size of the workforce

Reasons for
terminating
emplyment

Resignation Retirement of
Redundancy Dismissal
by the worker the worker

26 | P a g e
 Resignation
Termination of employment by the worker, perhaps because they
have found a job with a different employer.
Retirement
Termination of employment due to the worker reaching an age
beyond which they do not need to work.
Redundancy
Termination of employment by the employer because the job is no
longer needed.
Dismissal
Termination by the employer because the worker has broken
company rules or not performing work to the required standard.
An employer may dismiss a worker from their job for one of two
reasons:
1. Incompetence – the worker does not perform their task to the
required standard.
2. Poor conduct – the worker breaks the rules
Redundancy and dismissal are both decisions that are made by
employer. They both result in a worker no longer having a job.
However, with redundancy the job loss is not the worker’s fault, but
if they are dismissed then it is their fault.
Reasons for downsizing the workforce
A business may need to reduce the size of its workforce for any of
the following reasons:
▪ There may be fall in demand for the product the worker produces.
If demand does not increase, the business may need to reduce the
size of its workforce because it is costly to employ workers who
have nothing to do for any length of time.

27 | P a g e
▪ The business may introduce new technology which automates
tasks that workers currently do. The business may no longer need
these workers.
▪ The business may relocate some distance from its current site,
perhaps to another country. It may not be possible for workers to
move or travel to the new location, and they will have to leave their
jobs.
In all these cases, the business will makes the employees
redundant.
Deciding which workers to recruit or make redundant
▪ How productive workers are – keeping the more productive
workers as they are better for the future of the business
▪ How often workers have been late or absent from work in the
past year – workers who are often late or absent will be less
productive because they are not at work
▪ How old a worker is – perhaps those closer to retirement should
be made redundant so that younger workers can be kept on.

Possible problems of leaving many employees

▪ -cost of recruiting new workers
▪ -cost of training new worker
▪ - lower productivity
▪ - damage business reputation.
Legal controls over employment issues
The governments of most countries have passed laws aimed at
protecting workers from being exploited by employers and
dismissed unfairly. The main areas covered by these legal controls
are shown below:
28 | P a g e
 Contracts
of
employmen
t

Unfair Discriminati
dismissal on

Legal
Controls

Minimum Health and

wage safety

Contract of employment
This is a legally binding agreement between the employer and the
employee and will include details such as

29 | P a g e
Unfair dismissal

Discrimination

Health and safety

30 | P a g e
 Legal minimum wage

INTERNAL AND EXTERNAL COMMUNICATION

There are two main types of business communication
▪ Internal communication is when employees communicate with each
other. This may be with colleagues, managers or subordinates in
their own department or with other departments in the business,
▪ External communication involves communicating with people and
organisations outside the business – the business’s stakeholders.
This may include selling goods and services to customers, dealing
with complaints, and sending information about the business to
shareholders, ordering goods from suppliers,
▪ Effective communication and its importance to business
Effective communication:
Information passed between two or more people or groups, with
feedback to confirm that the message has been received and
understood
Communication between two or more people or groups of people
will only be effective if:
▪ The message is sent using the correct communication media

31 | P a g e
▪ The message is sent to and received by the right person
▪ The receiver understand the message
▪ The receiver provides feedback to the sender to confirm they have
received and understood the message.

Effective communication brings a number of benefits to

business including:
Reducing the risk of mistakes – the receiver of a message must
understand what it is they are being asked to do by the sender. If
the message is not understood then the instructions or task will not
be completed correctly.
Enabling faster decision-making – if the number of people who
need to receive the communication is kept to a minimum, then this
will speed up the decision-making process
Enabling quicker response to market changes - the longer it
takes to communicate changes in markets, the slower the business
will be to respond and may miss marketing opportunities as a result.
Improving coordination between departments – decisions taken
by one department often have an impact on other departments.
There need to be effective communication between departments so
32 | P a g e
that each knows what the others are doing and can respond
appropriately.
Improving morale and motivation of the workforce – if the
workforce knows what is going in the workplace and is able to take
part in discussions, this will make workers feel valued and part of
the organisation.
Improving customer relationships – keeping customer informed
about the progress of their orders or any new products that the
business has added to its range will make customers feel valued
and they will want to continue to buy from the business in the future.

Benefits and limitations of communication methods

Communication methods can be divided into four main types as
shown in the diagram below

33 | P a g e
Oral communication
This is communication using the spoken words, for example
meetings and telephone calls. It allows for two-way communication
between the sender and receiver provides the opportunity for
feedback so that the sender can check that the message has been
understood.
Oral communication is most appropriate to use when something
needs to be discussed between two or more people. It helps to hear
ideas of other people so that any decision made consider all the
different options. If a worker has a problem at work it is usually best
for this to be discuss with their mangers face-to-face.
Written communication
Written forms of communication provide a permanent record of a
message and can be looked at more than once to check
understanding. The main froms of written communication used by
businesses include:
Letter – this is used for formal communication between the
business and its stakeholders, such as employees and customers,
for example informing employees about a pay rise or replying to a
customer complaints
Memorandum – this is only used for communication within the
business, for example a message from the Human Resource
Manager to the Operations Manager about the date and time for job
interviews
34 | P a g e
Agender – this is the order for the conduct of a meeting.
Minutes of meeting – this is a written record of what was discussed
at a meeting, the views expressed by those in attendance and the
decision taken
Job description – this is a written statement of what every worker’s
job involves.
Purchase order – an official document which is sent to suppliers to
request the supply and delivery of raw materials, components and
other items needed by the business
Invoice – an official form sent to customers requesting payments
for goods which the business has supplied.
Electronic communication
Many businesses communicate with customers and suppliers via
email, fax and text messaging. These electronic communication
methods have the advantage of being much faster than traditional
methods and the message is received instantly.
The use of video-conferencing has reduced the need for people to
travel to meetings as managers can connect with each other via
internet. They can see and speak to each other as if they were all
sitting the same room, but they might be hundreds or even
thousands of miles apart.
Visual communication
The effectiveness of business presentations and information to
internal and external stakeholders can be improved with the use of
35 | P a g e
graphs and charts. Videos and photographs on company websites
often have greater impact on the receiver than the spoken or written
word. Visual communication methods may be used when trying to
explain difficult concepts. Pictures and charts are often easier for
some people to understand than words or complex tables of
numbers or detail contained in financial statements. Television
advertising to introduce consumers to a new product or remind them
of existing products is also an important method of visual
communication used by many businesses.

The benefits and limitations of the four main methods of

communication used in business
Method Benefits Limitations
Oral ▪ Personal contact between ▪ No permanent record
sender and receiver ▪ Receiver might not listen
▪ Allows for immediate ▪ Receiver might not hear
feedback the message correctly
▪ Language used can be because of noise
altered to the needs of the
receiver
Written ▪ Provides a permanent ▪ No personal contact
record ▪ Feedback is slower
▪ Might not be understood
because language is too

36 | P a g e
 ▪ Can be used by the receiver complex, or message is
more than once, to check too long
understanding ▪ Time-consuming for
▪ Can be sent to many both sender and
receivers receiver
▪ The message cannot be
changed
▪ Very quick
Electronic ▪ Not everyone has
▪ Some methods, for example access to the equipment
email, provide a permanent needed
record and can be looked ▪ Equipment and software
at more than once, to check can be expensive
understanding ▪ No personal contact –
▪ Can be sent to many except for video-
receivers at the same time conferencing
▪ Can be used to create a ▪ Risk of the message
more interesting message – being received by
a company website for people whom it is not
example intended for
Visual ▪ Can simplify complex data ▪ Some detail must be lost
so more easily understood ▪ Different receivers might
▪ Creates interests and grabs interpret the information
the attention of receivers differently

37 | P a g e
 ▪ Receivers often remember
visual messages, especially
if moving images are used

Choosing the best method of communication

When choosing the best method of communication, businesses
need to think about:
How urgent the message is – for example, a telephone call or
face-to-face conversation would be better than a letter if the
message is urgent
The length and complexity of the message – written
communication is best for long or complex messages, so that the
receiver can read it over again to check they have understood.
How many people need to receive the message – letters might
be expensive, but it is a good way of contacting many people.
Emails might be another method to use depending on the purpose
of the message.
How far away the receiver is from the sender – several methods
could be used to communicate over long distances, such as email,
text, phone call or letter. It will depend on other factors, such as how
urgent the message is and if the receiver has access to the internet
or mobile phone network.
How important it is for all receive the message at the same time
– a meeting is the best way of getting the same message to
everyone at the same time. If this is not possible then letters or
38 | P a g e
emails could be used. Everyone will receive the same message, but
not necessarily at exactly the same time.
The cost of media – letters are more expensive than other methods
because of the postage charge. However, email, text messaging
and telephone calls all require investment in equipment and regular
payments to the phone service or internet provider.
How important it is to have a written record of the
communication – if this is important, then the method must be a
written one (such as letters, memorandums or reports) or electronic
(such as email or text messaging).
If the message requires discussion – meetings, telephone calls
and video-conferencing are all ways for people to discuss and
debate a message.
How confidential the message is – a letter addressed to the
person concerned is the best method for communicating a
confidential message.

39 | P a g e
Advantages and disadvantages of the most common
communication media used in business
Communication Advantages Disadvantages
media
Letters Written record Postage costs
Confidential
Memorandum Written record Only used for
internal
communication
Email and text Written record Costs of equipment
messaging Might not be
confidential
Telephone Can discuss Cost
message to make Not face-to-face
sure it is understood
Meetings Everyone gets the Time-consuming
same message Costly if people
Allows for the have to travel from
possibility of different locations
discussion and No written record
feedback unless minute are
taken
Interviews Confidential Time-consuming

40 | P a g e
 Allows for the No written record
possibility of unless minute are
discussion and taken
feedback
Video-conferencing Reduces travel cost Costs of equipment
Less time Problem with
consuming as no different world time
need to travel zones
Charts and Information is easier Loss some of the
diagrams to understand detail

Communication barriers
How communication barriers arise and problems of
ineffective communication
The main causes of barriers to effective communication can be
divided into three main areas:
▪ Problems with the channel of communication
▪ Problems between senders and receivers
▪ Problems with the physical environment

41 | P a g e
 The causes of barriers to effective communication

▪ .

Tasks not
completed

Wrong type
Tasks done
of worker
incorrectly
recruited

problems of
effective
communication
Business's
Poor sales reputation
damaged

Risk of Workers
accidents in morale and
the work motivation
place falls

How communication barriers can be reduced or removed

Ways of reducing and removing communication barriers include:
▪ Make sure the language used is appropriate to the receiver. This
might mean using simple rather than complex words, or avoiding
42 | P a g e
 the use of complex technical terms that are not understood by
people.
▪ Keep the channel of communication as short as possible. The more
people a message is passed through, the greater the risk of the
message being changed before it gets to the final receiver
▪ The sender must always insist or receiving feedback as this shows
that the message has been received and understood.
▪ The sender must use the most appropriate media for the message;
for example, it would not be appropriate to send a long and complex
instruction by text message.
▪ Physical barriers, such as noise, should be removed. If two people
are having a conversation in a noisy environment, then they should
move to somewhere quieter if the source of the noise cannot be
turned off.
▪ Management must build a culture of trust and respect between all
employees.

43 | P a g e