why people work

2.4.1 The Importance of a Well‑Motivated Workforce

Objective – Why People Work (2.1.1)

Understanding the reasons why individuals choose to work enables managers to create conditions that motivate staff, leading to higher productivity, lower turnover and a competitive advantage for the organisation.

1. Reasons People Work (2.1.1 – Reasons & Benefits)

• Financial Rewards – salary, wages, bonuses, commissions, profit‑sharing, stock options.
• Job Security – desire for stable, long‑term employment.
• Career Progression – promotion opportunities, skill development and professional status.
• Social Interaction – relationships with colleagues, customers and the wider community.
• Personal Fulfilment – sense of achievement, pride in work and contribution to society.
• Intrinsic Motivation – enjoyment of the work itself, autonomy, mastery and purpose.

2. Intrinsic vs Extrinsic Motivation (2.1.1)

3. Benefits of a Well‑Motivated Workforce (2.1.1)

1. Higher Productivity – motivated employees work more efficiently and produce more output.
2. Improved Quality – greater attention to detail and standards.
3. Reduced Turnover – satisfied staff are less likely to leave, saving recruitment and training costs.
4. Better Customer Service – enthusiastic staff are more responsive and helpful.
5. Innovation & Initiative – motivated staff suggest improvements and take responsibility.
6. Positive Workplace Culture – high morale encourages teamwork and reduces conflict.

4. Key Motivational Theories (2.1.1 – Human‑needs & Motivational Theories)

4.1 Maslow’s Hierarchy of Needs

Physiological → Safety → Social → Esteem → Self‑actualisation.

4.2 Frederick Taylor’s Scientific‑Management Theory

• Task specialisation and standardisation.
• Scientific selection and training of workers.
• Close supervision and performance‑based pay (e.g., piece‑rate).
• Emphasis on financial rewards as the primary motivator.

4.3 Herzberg’s Two‑Factor Theory

• Hygiene factors (salary, working conditions, company policy, job security) – prevent dissatisfaction.
• Motivators (recognition, achievement, responsibility, personal growth) – create satisfaction.

4.4 McClelland’s Need Theory

People are motivated by three acquired needs:

• Need for Achievement (nAch) – desire to accomplish challenging goals.
• Need for Affiliation (nAff) – desire for friendly relationships and belonging.
• Need for Power (nPow) – desire to influence or control others.

4.5 Vroom’s Expectancy Theory (2.1.1)

Motivation = Expectancy × Instrumentality × Valence

• Expectancy – belief that effort will lead to performance.
• Instrumentality – belief that performance will lead to a reward.
• Valence – value placed on the reward.

5. Methods of Motivation (2.1.2 – Financial & Non‑Financial)

5.1 Financial Incentives

• Competitive Base Pay – provides financial security and satisfies basic physiological & safety needs.
• Performance‑Related Bonuses – reward individuals or teams for meeting targets; appropriate where clear, measurable objectives exist.
• Commission Schemes (e.g., sales staff) – justified because reward is directly linked to individual sales performance, appealing to achievement‑oriented employees.
• Piece‑Rate Pay – justified for repetitive, easily measured tasks where output can be quantified; aligns with Taylor’s emphasis on pay‑for‑performance.
• Profit‑Sharing / Employee Stock‑Option Plans – links personal reward to overall business success, meeting both financial needs and the intrinsic desire for achievement.

5.2 Non‑Financial Incentives

• Recognition Programmes (Employee of the Month, public praise) – satisfy esteem needs and act as motivators in Herzberg’s model.
• Training, Mentorship & Career Development – provide opportunities for skill growth (achievement) and future promotion (career progression).
• Job Enrichment – increased responsibility, autonomy and task variety; addresses intrinsic motivation and Maslow’s self‑actualisation level.
• Flexible Working Arrangements (remote work, flexitime) – improve work‑life balance, meeting safety/social needs and enhancing job satisfaction.
• Positive Work Environment – good relationships, safe conditions and supportive leadership; addresses hygiene factors and social needs.

6. Applying Motivation – AO4: Recommend & Justify

6.1 Case Study 1 – Start‑up Technology Firm

Scenario: A small team of highly skilled software developers feel undervalued and are considering offers from larger companies.

Recommended package: A modest base salary (financial security) combined with a profit‑sharing scheme and a formal recognition programme for innovative contributions.

Justification: The profit‑sharing links rewards directly to the firm’s success, satisfying the financial‑reward motive while also appealing to intrinsic needs for achievement and autonomy (Maslow’s esteem/self‑actualisation). Regular recognition addresses the need for esteem and affiliation, helping to retain talent in a competitive market.

6.2 Practice Prompt – AO4

Scenario: A national retail chain experiences high staff turnover in its sales department.

Task: Recommend one financial and one non‑financial motivation method suitable for this situation and justify each choice using at least one motivational theory.

Possible answer (example):

• Financial method – Tiered commission scheme: Rewards higher sales volumes, appealing to employees with a strong need for achievement (McClelland). Because the reward is directly tied to performance, it also satisfies Vroom’s instrumentality component.
• Non‑financial method – Structured career‑path and mentorship programme: Provides clear progression and skill development, meeting Maslow’s esteem and self‑actualisation needs and reducing turnover by increasing job satisfaction (Herzberg’s motivators).

7. Measuring Motivation

Managers can assess motivation levels through:

• Employee surveys and questionnaires (e.g., Likert‑scale questions on job satisfaction).
• Turnover and absenteeism statistics.
• Performance appraisals and productivity data.
• Informal observation of attitudes, engagement and initiative.

8. Summary

A well‑motivated workforce is essential for business success. By understanding why people work – both intrinsic and extrinsic drivers – and by applying appropriate motivational theories (Maslow, Taylor, Herzberg, McClelland, Vroom), managers can select and justify suitable financial and non‑financial methods. This improves performance, reduces turnover and gives the organisation a sustainable competitive edge.