You are viewing a free preview of this lesson.
Subscribe to unlock all 10 lessons in this course and every other course on LearningBro.
Having examined the theoretical foundations of motivation, this lesson focuses on the practical methods businesses use to motivate their workforce. These methods fall into two broad categories: financial (monetary rewards) and non-financial (intrinsic and organisational methods that do not directly involve additional pay).
Financial methods of motivation use monetary incentives to encourage higher performance, greater output or specific behaviours.
Employees are paid a fixed amount for each unit of output they produce.
| Advantages | Disadvantages |
|---|---|
| Direct link between effort and reward — motivates hard work | May sacrifice quality for quantity — workers rush to produce more |
| Easy to understand and calculate | Income is unpredictable — varies with output, making budgeting difficult for workers |
| Aligns with Taylor's view that money is the primary motivator | Not suitable for service-based or creative roles |
| Reduces the need for close supervision — output is self-monitored | Can create a stressful, competitive environment |
Example: Garment workers in a clothing factory paid £0.50 per item completed.
Employees earn a percentage of the value of sales they generate, either as their sole income or as a supplement to a basic salary.
| Advantages | Disadvantages |
|---|---|
| Strong incentive to sell — directly rewards revenue generation | May encourage aggressive or unethical sales practices |
| Attracts competitive, driven individuals | Income instability — commission-only roles create financial insecurity |
| Aligns employee goals with business revenue targets | May discourage teamwork — individuals compete for sales |
| Variable cost for the business — commission only paid when sales are made | Customer service may suffer if employees prioritise closing sales over building relationships |
Example: An estate agent earns a basic salary of £20,000 plus 1% commission on each property sale.
A fixed annual payment, divided into equal monthly instalments, regardless of hours worked or output produced.
| Advantages | Disadvantages |
|---|---|
| Provides financial security and predictability for employees | No direct link between effort and reward — may reduce motivation to exceed expectations |
| Easier to budget for the business (fixed labour cost) | Overtime is often unpaid for salaried workers, which may cause resentment |
| Suits professional and managerial roles where output is hard to measure | Can lead to a "clock-watching" culture if not combined with non-financial motivators |
| Associated with status and career progression | Pay rises may be infrequent, leading to dissatisfaction over time |
An element of pay that is linked to the achievement of specific targets or performance standards, typically assessed through an appraisal system.
| Advantages | Disadvantages |
|---|---|
| Links pay to individual performance — rewards high achievers | Appraisal processes can be subjective and perceived as unfair |
| Can help attract and retain talented employees | May discourage teamwork — individuals focus on their own targets |
| Focuses employees on measurable objectives | Short-termism — employees may prioritise hitting targets over long-term quality |
| Gives managers a tool for rewarding and differentiating performance | Setting appropriate, fair targets is difficult |
| Can be applied at individual, team or company level (bonuses) | If targets are too easy, PRP becomes an entitlement; if too hard, it demotivates |
Example: A bank manager receives a bonus of up to 20% of salary based on achieving targets for customer satisfaction, new account openings and loan sales.
These methods align employees' interests with shareholders' interests, encouraging a long-term perspective and a sense of ownership.
Non-financial methods address employees' intrinsic needs — the desire for meaningful work, recognition, autonomy and personal growth. Herzberg argued that these methods are the true drivers of motivation.
Giving employees the authority and autonomy to make decisions about their own work, rather than requiring them to seek approval from managers.
Subscribe to continue reading
Get full access to this lesson and all 10 lessons in this course.