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Chapter 2 Bs Notes by TSG

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Chapter 2

2.1 – Motivating Workers

Motivation

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

Motivation is the reason why employees want to work hard and work effectively for the
business. Money is the main motivator, as explained above. Other factors that may motivate a
person to choose to do a particular job may include social needs (need to communicate and
work with others), esteem needs (to feel important, worthwhile), job satisfaction (to enjoy
good work), security (knowing that your job and pay are secure- that you will not lose your job).

Why motivate workers? Why do firms go to the pain of making sure their workers are
motivated? When workers are well-motivated, they become highly productive and effective in
their work, become absent less often, and less likely to leave the job, thus increasing the
firm’s efficiency and output, leading to higher profits. For example, in the service sector, if the
employee is unhappy at his work, he may act lazy and rude to customers, leading to low
customer satisfaction, more complaints and ultimately a bad reputation and low profits.

Motivation Theories

1. 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. However, this theory is not entirely true.
There are various other motivators in the modern workplace, some even more important than
money. The piece rate system is not very practical in situations where output cannot be
measured (service industries) and also will lead to (high) output that doesn’t guarantee high
quality.

2. Maslow’s Hierarchy: Abraham Maslow’s hierarchy of needs shows that employees


are motivated by each level of the hierarchy going from bottom to top. Mangers can
identify which level their workers are on and then take the necessary action to advance
them onto the next level.

One limitation of this theory is that it doesn’t apply to every worker. For some employees, for
example, social needs aren’t important but they would be motivated by recognition and
appreciation for their work from seniors.

3. Herzberg’s Two-Factor Theory: Frederick Herzberg’s two-factor theory, wherein he states


that people have two sets of needs:

Basic animal needs called ‘hygiene factors’:

 status

 security

 work conditions

 company policies and administration

 relationship with superiors


 relationship with subordinates

 salary

Needs that allow the human being to grow psychologically, called the ‘motivators’:

 achievement

 recognition

 personal growth/development

 promotion

 work itself

According to Herzberg, the hygiene factors need to be satisfied, if not they will act as de-
motivators to the workers. However, hygiene factors don’t act as motivators as their effect
quickly wear off. Motivators will truly motivate workers to work more effectively.

Motivating Factors

a) Financial Motivators

i. Wages: often paid weekly. They can be calculated in two ways:

 Time-Rate: pay based on the number of hours worked. Although output may
increase, it doesn’t mean that workers will work sincerely use the time to
produce more- they may simply waste time on very few outputs since their pay is
based only on how long they work. The productive and unproductive worker will
get paid the same amount, irrespective of their output.

 Piece-Rate: pay based on the no. of output produced. Same as time-rate, this
doesn’t ensure that quality output is produced. Thus, efficient workers may feel
demotivated as they’re getting the same pay as inefficient workers, despite their
efficiency.

ii. Salary: paid monthly or annually.

iii. Commission: paid to salesperson, based on a percentage of sales they’ve made. The
higher the sales, the more the pay. Although this will encourage salespersons to sell
more products and increase profits, it can be very stressful for them because no sales
made means no pay at all.

iv. Bonus: additional amount paid to workers for good work


v. Performance-related pay: paid based on performance. An appraisal (assessing the
effectiveness of an employee by senior management through interviews, observations,
comments from colleagues etc.) is used to measure this performance and a pay is given
based on this.

vi. Profit-sharing: a scheme whereby a proportion of the company’s profits is distributed to


workers. Workers will be motivated to work better so that a higher profit is made.

vii. Share ownership: shares in the firm are given to employees so that they can become
part owners of the company. This will increase employees’ loyalty to the company, as
they feel a sense of belonging.

b) Non-Financial Motivators

i. Fringe benefits are non-financial rewards given to employees

 Company vehicle/car

 Free healthcare

 Children’s education fees paid for

 Free accommodation

 Free holidays/trips

 Discounts on the firm’s products

ii. Job Satisfaction: the enjoyment derived from the feeling that you’ve done a good job.
Employees have different ideas about what motivates them- it could be pay,
promotional opportunities, team involvement, relationship with superiors, level of
responsibility, chances for training, the working hours, status of the job etc.
Responsibility, recognition and satisfaction are in particular very important.

So, how can companies ensure that they’re workers are satisfied with the job, other than the
motivators mentioned above?

 Job Rotation: involves workers swapping around jobs and doing each specific task
for only a limited time and then changing round again. This increases the variety in
the work itself and will also make it easier for managers to move around workers to
do other jobs if somebody is ill or absent. The tasks themselves are not made more
interesting, but the switching of tasks may avoid boredom among workers. This is
very common in factories with a huge production line where workers will move from
retrieving products from the machine to labelling the products to packing the
products to putting the products into huge cartons.
 Job Enlargement: where extra tasks of similar level of work are added to a worker’s
job description. These extra tasks will not add greater responsibility or work for the
employee, but make work more interesting. E.g.: a worker hired to stock shelves will
now, as a result of job enlargement, arrange stock on shelves, label stock, fetch stock
etc.
 Job Enrichment: involves adding tasks that require more skill and responsibility to a
job. This gives employees a sense of trust from senior management and motivate
them to carry out the extra tasks effectively. Some additional training may also be
given to the employee to do so. E.g.: a receptionist employed to welcome customers
will now, as a result of job enrichment, deal with telephone enquiries, word-process
letters etc.
 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 take part in decision making and take responsibility for the
process. It gives them more control over their work and thus a sense of
commitment, increasing job satisfaction. Working as a group will also add to morale,
fulfill social needs and lead to 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-actualization and job
satisfaction
2.2 – Organization and Management

Organizational Structure

Organizational structure refers to the levels of management and division of responsibilities


within a business. They can be represented on organizational charts (left).

Advantages:

 All employees are aware of which communication channel is used to reach them with
messages

 Everyone knows their position in the business. They know who they are accountable to
and who they are accountable for

 It shows the links and relationship between the different departments

 Gives everyone a sense of belonging as they appear on the organizational chart

The span of control is the number of subordinates working directly under a manager in the
organizational structure. In the above figure, the managing director’s span of control is four. The
marketing director’s span of control is the number of marketing managers working under him (it
is not specified how many, in the figure).
The chain of command is the structure of an organization that allows instructions to be passed
on from senior managers to lower levels of management. In the above figure, there is a short
chain of command since there are only four levels of management shown.

Now, if you look closely,there is a link between the span of control and chain of command. The
wider the span of control the shorter the chain of command since more people will appear
horizontally aligned on the chart than vertically. A short span of control often leads to long chain
of command. (If you don’t understand, try visualizing it on an organizational chart).

Advantages of a short chain of command (these are also the disadvantages of a long chain of
command):

 Communication is quicker and more accurate

 Top managers are less remote from lower employees, so employees will be more
motivated and top managers can always stay in touch with the employees

 Spans of control will be wider, This means managers have more people to control This is
beneficial because it will encourage them to delegate responsibility (give work to
subordinates) and so the subordinates will be more motivated and feel trusted.
However, there is the risk that managers may lose control over the tasks.

Line Managers have authority over people directly below them in the organizational structure.
Traditional marketing/operations/sales managers are good examples.

Staff Managers are specialists who provide support, information and assistance to line
managers. The IT department manager in most organizations act as staff managers.

Management

So, what role do manager really have in an organization? Here are their five primary roles:

 Planning: setting aims and targets for the organizations/department to achieve. It will
give the department and its employees a clear sense of purpose and direction.
Managers should also plan for resources required to achieve these targets – the number
of people required; the finance needed etc.

 Organizing: managers should then organize the resources. This will include allocating
responsibilities to employees, possibly delegating.

 Coordinating: managers should ensure that each department is coordinating with one
another to achieve the organization’s aims. This will involve effective communication
between departments and managers and decision making. For example, the sales
department will need to tell the operations dept. how much they should produce in
order to reach the target sales level. The operations dept. will in turn tell the finance
dept. how much money they need for production of those goods. They need to come
together regularly and make decisions that will help achieve each department’s aims as
well as the organization’s.

 Commanding: managers need to guide, lead and supervise their employees in the tasks
they do and make sure they are keeping to their deadlines and achieving targets.

 Controlling: managers must try to assess and evaluate the performance of each of their
employees. If some employees fail to achieve their target, the manager must see why it
has occurred and what he can do to correct it- maybe some training will be required or
better equipment.

Delegation

It involve giving a subordinate the authority to perform some tasks.

Advantages to managers:

 managers cannot do all work by themselves

 managers can measure the efficiency and effectiveness of their subordinates’ work

However, managers may be reluctant to delegate as they may lose their control over the work.

Advantages to subordinates:

 the work becomes more interesting and rewarding- increased job satisfaction

 employees feel more important and feel trusted– increasing loyalty to firm

 can act as a method of training and opportunities for promotions, if they do a good job.

Leadership Styles

Leaderships styles refer to the different approaches used when dealing with people when in a
position of authority. There are mainly three styles you need to learn: the autocratic,
democratic and laissez-faire styles.

Autocratic style is where the managers expect to be in charge of the business and have their
orders followed. They do all the decision-making, not involving employees at all.
Communication is thus, mainly one way- from top to bottom. This is standard in police and
armed forces organizations.

Democratic style is where managers involve employees in the decision-making and


communication is two-way from top to bottom as well as bottom to top. Information about
future plans is openly communicated and discussed with employees and a final decision is made
by the manager.

Laissez-faire (French phrase for ‘leave to do) style makes the broad objectives of the business
known to employees and leaves them to do their own decision-making and organize tasks.
Communication is rather difficult since a clear direction is not given. The manger has a very
limited role to play.

Trade Unions

A trade union is a group of workers who have joined together to ensure their interest are
protected. They negotiate with the employer (firm) for better conditions and treatment and can
threaten to take industrial action if their requests are denied. Industrial action can include
overtime ban (refusing to work overtime), go slow (working at the slowest speed as is required
by the employment contract), strike (refusing to work at all and protesting instead) etc. Trade
unions can also seek to put forward their views to the media and influence government
decisions relating to employment.

Benefits to workers of joining a trade union:

 strength in number- a sense of belonging and unity

 improved conditions of employment, for example, better pay, holidays, hours of work
etc

 improved working conditions, foe example, health and safety

 improved benefits for workers who are not working, because they’re sick, retired or
made redundant (dismissed not because of any fault of their own)

 financial support if a member thinks he/she has been unfairly dismissed or treated

 benefits that have been negotiated for union member such as discounts on firm’s
products, provision of health services.

Disadvantages to workers of joining a trade unions:

 costs money to be member- a membership fee will be required

 may be asked to take industrial action even if they don’t agree with the union- they may
not get paid during a strike, for example.
2.3 – Recruitment, Selection and Training of Workers

The Role of the H.R. (Human Resource) Department

 Recruitment and selection: attracting and selecting the best candidates for job posts

 Wages and salaries: set wages and salaries that attract and retain employees as well as
motivate them

 Industrial relations: there must be effective communication between management and


workforce to solve complaints and disputes as well as discussing ideas and suggestions

 Training programs: give employees training to increase their productivity and efficiency

 Health and safety: all laws on health and safety conditions in the workplace should be
adhered to

 Redundancy and dismissal: the managers should dismiss any


unsatisfactory/misbehaving employees and make them redundant if they are no longer
needed by the business.

Recruitment

Job Analysis, Description and Specification

Recruitment is the process from identifying that the business needs to employ someone up to
the point where applications have arrived at the business.

A vacancy arises when an employee resigns from a job or is dismissed by the management.
When a vacancy arises, a job analysis has to be prepared. A job analysis identifies and records
the tasks and responsibilities relating to the job. It will tell the managers what the job post is
for.
Then a job description is prepared that outlines the responsibilities and duties to be carried
out by someone employed to do the job. It will have information about the conditions of
employment (salary, working hours, and pension scheme), training offered, opportunities for
promotion etc. This is given to all prospective candidates so they know what exactly they will be
required and expected to do.

Once this has been done, the H.R. department will draw up a job specification, a document
that outlines the requirements, qualifications, expertise, skills, physical/personal
characteristics etc. required by an employee to be able to take up the job.

Advertising the vacancy

a) Internal recruitment is when a vacancy is filled by an existing employee of the


business.

Advantages:

 Saves time and money- no need for advertising and interviewing

 Person already known to business

 Person knows business’ ways of working

 Motivating for other employees to see their colleagues being promoted- urging them to
work hard

Disadvantages:

 No new skills and experience coming into the business

 Jealousy among workers


b) External recruitment

It is when a vacancy is filled by someone who is not an existing employee and will be new to
the business. External recruitment needs to be advertised, unlike internal recruitment. This can
be done in local/national newspapers, specialist magazines and journals, job centers run by the
government (where job vacancies are posted and given to interested people; usually for
unskilled or semi-skilled jobs) or even recruitment agencies (who will recruit and send along
candidates to the company when they request it).

When advertising a job, the business needs to decide what should be included in the
advertisement, where it should be advertised, how much it will cost and whether it will be cost-
effective.

When a person is interested in a job, they should apply for it by sending in a curriculum vitae
(CV) or resume, this will detail the person’s qualifications, experience, qualities and skills. The
business will use these to see which candidates match the job specification. It will also include
statements of why the candidate wants the job and why he/she feels they would be suitable for
the job.

Selection

Applicants who are shortlisted will be interviewed by the H.R. manager. They will also call up
the referee provided by the applicant (a referee could be the previous employer or colleagues
who can give a confidential opinion about the applicant’s reliability, honesty and suitability for
the job). Interviews will allow the manager to assess:

 the applicant’s ability to do the job

 personal qualities of the applicant

 character and personality of applicant

In addition to interviews, firms can conduct certain tests to select the best candidate. This
could include skills tests (ability to do the job), aptitude tests (candidate’s potential to gain
additional skills), personality tests (what kind of a personality the candidate has- will it be
suitable for the job?), group situation tests (how they manage and work in teams) etc.

When a successful candidate has been selected the others must be sent a letter of rejection.

The contract of employment

It is a legal agreement between the employer and the employee listing the rights and
responsibilities of workers. It will include:

 the name of employer and employee


 job title

 date when employment will begin

 hours to work

 rate of pay and other benefits

 when payment is made

 holiday entitlement

 the amount of notice to be given to terminate the employment that the employer or
employee must give to end the employment etc.

Employment contracts can be part-time or full-time.

Part-time employment is often considered to be between 1 and 30-35 hours a week


whereas full-time employment will usually work 35 hours or more a week.

Advantages to employer of part-time employment (disadvantages of full-time employment to


employer):

 more flexible hours of work

 easier to ask employees just to work at busy times

 easier to extend business opening/operating hours by working evenings or at weekends

 works lesser hours so employee is willing to accept lower pay

 less expensive than employing and paying full-time workers.

Disadvantages to employer of part-time employment (advantages of full-time employment to


employers)

 less likely to be trained because the workers see the job as temporary

 takes longer to recruit two part-time workers than one full-time worker

 can be less committed to the business/ more likely to leave and go get another job

 less likely to be promoted because they will not have gained the skills and experience as
full-time employees

 more difficult to communicate with part-time workers when they are not in work- all
work at different times.
Training

Training is important to a business as it will improve the worker’s skills and knowledge and
help the business be more efficient and productive, especially when new processes and
products are introduced. It will improve the workers’ chances at getting promoted and raise
their morale.

The three types of training are:

i. Induction training: an introduction given to a new employee, explaining the firm’s


activities, customs and procedures and introducing them to their fellow workers.

Advantages:

 Helps new employees to settle into their job quickly

 May be a legal requirement to give health and safety training before the start of
work

 Less likely to make mistakes

Disadvantages:

 Time-consuming

 Wages still have to be paid during training, even though they aren’t working

 Delays the state of the employee starting the job

ii. On-the-job training: occurs by watching a more experienced worker doing the job

Advantages:

 It ensures there is some production from worker whilst they are training

 It usually costs less than off-the-job training

 It is training to the specific needs of the business

Disadvantages:

 The trainer will lose some production time as they are taking some time to teach
the new employee

 The trainer may have bad habits that can be passed onto the trainee

 It may not necessarily be recognized training qualifications outside the business


iii. Off-the-job training: involves being trained away from the workplace, usually by
specialist trainers

Advantages:

 A broad range of skills can be taught using these techniques

 Employees may be taught a variety of skills and they may become multi-skilled
that can allow them to do various jobs in the company when the need arises.

Disadvantages:

 Costs are high

 It means wages are paid but no work is being done by the worker

 The additional qualifications mean it is easier for the employee to leave and find
another job.

Workforce Planning

It is the establishing of the workforce needed by the business for the foreseeable future in
terms of the number and skills of employees required.

They may have to downsize (reduce the no. of employees) the workforce because of:

 Introduction of automation

 Falling demand for their products

 Factory/shop/office closure

 Relocating factory abroad

 A business has merged or been taken over and some jobs are no longer needed

They can downsize the workforce in two ways:

 Dismissal: where a worker is told to leave their job because their work or behavior is
unsatisfactory.

 Redundancy: when an employee is no longer needed and so loses their work, though
not due to any fault of theirs. They may be given some money as compensation for the
redundancy.

Worker could also resign (they are leaving because they have found another job) and retire
(they are getting old and want to stop working).

Legal Controls over Employment Issues


There are lot so government laws that affect equal employment opportunities. These laws
require businesses to treat their employees equally in the workplace and when being recruited
and selected- there should be no discrimination based on age, gender, religion, race etc.

Employees are protected in many areas including

 against unfair discrimination

 health and safety at work (protection from dangerous machinery, safety clothing and
equipment, hygiene conditions, medical aid etc.)

 against unfair dismissal

 wage protection (through the contract of employment since it will have listed the pay
and conditions). Many countries have a legal minimum wage– the minimum wage an
employer has to pay its employee. This avoids employers from exploiting its employees,
and encourages more people to find work, but since costs are rising for the business,
they may make many workers redundant- unemployment will rise.

Industrial tribunal

An industrial tribunal is a legal meeting which considers workers’ complaints of unfair dismissal
or discrimination at work. This will hear both sides of the case and may give the worker
compensation if the dismissal was unfair.

2.4 – Internal and External Communication

Effective Communication

Communication is the transferring of a message from the sender to the receiver, who
understands the message.

 Internal communication is between two members of the same organisations. Example:


communication between departments, notices and circulars to workers, signboards and
labels inside factories and offices etc.
 External communication is between the organisation and other organisations or
individuals. Example: orders of goods to suppliers, advertising of products, sending
customers messages about delivery, offers etc.

Effective communication involves:

 A transmitter/sender of the message

 A medium of communication eg: letter, telephone conversation, text message


 A receiver of the message

 A feedback/response from the receiver to confirm that the message has been received
and acknowledged.

One-way communication involves a message which does not require feedback. Example: signs
saying ‘no smoking’ or an instruction saying ‘deliver these goods to a customer’

Two-way communication is when the receiver gives a response to the message received.
Example: a letter from one manager to another about an important matter that needs to be
discussed. A two-way communication ensures that the person receiving the message
understands it and has acted up on it. It also makes the receiver feel more a part of the process-
could be a way of motivating employees.

Downward communication: messages from managers to subordinates i.e. from top to bottom
of an organization structure.

Upward communication: messages/feedback from subordinates to managers i.e. from bottom


to top of an organization structure

Horizontal communication occurs between people on the same level of an organization


structure.

Communication Methods

a) Verbal methods (eg: telephone conversation, face-to-face conversation, video


conferencing, meetings)

Advantages:

 Quick and efficient

 There is an opportunity for immediate feedback

 Speaker can reinforce the message- change his tone, body language etc. to influence the
listeners.

Disadvantages:

 Can take long if there is feedback and therefore, discussions

 In a meeting, it cannot be guaranteed that everybody is listening or has understood the


message

 No written record of the message can be kept for later reference.


b) Written methods (eg: letters, memos, text-messages, reports, e-mail, social
media, faxes, notices, signboards)

Advantages:

 There is evidence of the message for later reference.

 Can include details

 Can be copied and sent to many people, especially with e-mail

 E-mail and fax is quick and cheap

Disadvantages:

 Direct feedback may not always be possible

 Cannot ensure that message has been received and/or acknowledged

 Language could be difficult to understand.

 Long messages may cause disinterest in receivers

 No opportunity for body language to be used to reinforce messages

c) Visual Methods (eg: diagrams, charts, videos, presentations, photographs,


cartoons, posters)

Advantages:

 Can present information in an appealing and attractive way

 Can be used along with written material (eg: reports with diagrams and charts)

Disadvantages:

 No feedback

 May not be understood/ interpreted properly.

Factors that affect the choice of an appropriate communication method:

 Speed: if the receiver has to get the information quickly, then a telephone call or text
message has to be sent. If speed isn’t important, a letter or e-mail will be more
appropriate.

 Cost: if the company wishes to keep costs down, it may choose to use letters or face-to-
face meetings as a medium of communication. Otherwise, telephone, posters etc. will
be used.
 Message details: if the message is very detailed, then written and visual methods will be
used.

 Leadership style: a democratic style would use two-way communication methods such
as verbal mediums. An autocratic one would use notices and announcements.

 The receiver: if there is only receiver, then a personal face-to-face or telephone call will
be more apt. If all the staff is to be sent a message, a notice or e-mail will be sent.

 Importance of a written record: if the message is one that needs to have a written
record like a legal document or receipts of new customer orders, then written methods
will be used.

 Importance of feedback: if feedback is important, like for a quick query, then a direct
verbal or written method will have to be used.

Formal communication and Informal communication

a) Formal communication is when messages are sent through established channels using
professional language. Eg: reports, emails, memos, official meetings.
b) Informal communication is when information is sent and received casually with the use
of everyday language. Eg: staff briefings. Managers can sometimes use the ‘grapevine’
(informal communication among employees- usually where rumours and gossips
spread!) to test out the reactions to new ideas (for example, a new shift system at a
factory) before officially deciding whether or not to make it official.

Communication Barriers

Communication barriers are factors that stop effective communication of messages.

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