Motivation and demotivation

📚The business management

Taylor: scientific management

F. W. Taylor (early 1900s) studied tasks with time-and-motion studies to find the one best way to do each job, then trained workers to follow it, supervised them closely and paid them by output (piece rate). He assumed workers are motivated mainly by money. Strengths: big productivity gains in repetitive work; influences fast-food and factory processes today. Limitations: ignores social and psychological needs; repetitive work causes boredom and alienation; quality may suffer when paid for quantity; conflicts with modern knowledge work.

Maslow: hierarchy of needs

People are motivated by unmet needs, from basic to higher; a satisfied need no longer motivates, so managers should identify which level each employee has reached. Limitations: not everyone follows the order (an artist may seek self-actualization while poorly paid); levels are hard to measure; needs vary by culture (collectivist cultures may prioritize belonging); a single job can meet several levels at once.

Herzberg: two-factor (motivation–hygiene) theory

Hygiene factors, if poor, cause dissatisfaction, but improving them only removes dissatisfaction; they do not motivate. Motivators relate to the job itself and create real motivation. Implication: pay rises alone will not motivate for long; managers should enrich jobs. Limitations: based on a small study of accountants and engineers; for many low-paid workers, pay does motivate; people may credit themselves for satisfaction and blame the firm for dissatisfaction (a bias in the research method).

Further theories HL

• McClelland’s acquired needs theory: people have a dominant need, learned from experience: achievement (want challenging goals and feedback: suit sales or entrepreneurial roles), affiliation (want to belong and be liked: suit team and customer roles), or power (want influence: may suit management). Managers should match roles and rewards to the dominant need.
• Deci and Ryan’s self-determination theory: intrinsic motivation (doing a task because it is satisfying) is stronger and longer-lasting than extrinsic motivation, and flourishes when three needs are met: autonomy, competence and relatedness. Heavy use of controlling rewards can crowd out intrinsic motivation.
• Equity theory (Adams): employees compare the ratio of their outcomes (pay, recognition) to inputs (effort, skills) with others’. Perceived inequity leads to reduced effort, demands for more, or quitting. Implication: transparent, fair pay structures.
• Expectancy theory (Vroom): motivation = expectancy (belief that effort leads to performance) × instrumentality (belief that performance leads to reward) × valence (how much the reward is valued). If any is zero, motivation is zero. Implication: set achievable targets, reward reliably, and offer rewards employees actually value.

Labour turnover HL

High turnover raises recruitment and training costs, loses experience and damages morale and service; it may signal poor motivation, pay or management. Some turnover is healthy (new ideas, removing poor performers) and some industries (hospitality, retail) naturally have high rates.

Appraisal HL

Recruitment HL

The recruitment process typically runs: job analysis, job description and person specification, advertising, shortlisting, interviews and tests, selection, and induction.

Financial rewards

• Salary: a fixed annual amount paid monthly; security, but no direct link to output.
• Wages: paid per period worked. Time rate: per hour; piece rate: per unit produced (Taylor).
• Commission: a percentage of the value of sales made; motivates sales staff but can encourage pushy selling.
• Performance-related pay (PRP): bonus or increase linked to individual appraisal; motivating if targets are fair, divisive if not.
• Profit-related pay: a share of the firm’s profit; builds shared interest, but weak link to individual effort.
• Employee share ownership schemes: staff receive or buy shares; long-term loyalty and interest in company success.
• Fringe payments (benefits): non-wage benefits: health insurance, company car, meals, discounts, pensions.

Non-financial rewards

• Job enrichment: giving more challenging tasks and responsibility (Herzberg’s vertical loading).
• Job rotation: moving between tasks of similar difficulty; variety and multi-skilling, but may not add challenge.
• Job enlargement: adding more tasks at the same level (horizontal loading); variety but can feel like more work for the same pay.
• Empowerment: giving employees authority to make decisions about their work.
• Purpose / the opportunity to make a difference: meaningful work linked to a mission, especially powerful in social enterprises.
• Teamwork: working in teams meets social needs and can raise commitment and creativity.

Training

✏️Worked example

(a) A sales assistant earns a basic salary of Rp 4 000 000 a month plus 2% commission on sales. In one month she sells Rp 60 000 000. Calculate her pay. (b) HL A company had 110 employees at the start of 2025 and 130 at the end; 18 left during the year. Calculate labour turnover and comment, given 9% in 2023, 11.5% in 2024 and an industry average of 10%.

(a) Commission = 2% × 60 000 000 = Rp 1 200 000. Pay = 4 000 000 + 1 200 000 = Rp 5 200 000.

(b) Average staff = (110 + 130) ÷ 2 = 120.

\[ \text{labour turnover} = \frac{18}{120} \times 100 = 15\% \]

Turnover has risen each year (9% → 11.5% → 15%) and is now 5 percentage points above the industry average. This suggests a problem with pay, conditions or management; each leaver adds recruitment and training costs. The firm should investigate through exit interviews and consider Herzberg’s hygiene factors (is pay competitive?) and motivators.

Check it. Use the average number of staff, not the starting or finishing number: 18 ÷ 110 = 16.4% and 18 ÷ 130 = 13.8% would both be wrong.

Naming a theory without applying it. “According to Maslow, workers have needs” earns little. Say which level these employees are at and what the business should therefore do.