Business Studies – 2.4.2 Methods of motivation | e-Consult

Answer:

Here are four financial methods of motivation, with their advantages and disadvantages:

• Salary: A fixed amount paid regularly.

  • Advantages (Business): Predictable costs, attracts experienced staff, good for roles requiring consistent work.
  • Disadvantages (Business): May not motivate high performance, can be expensive if not managed well.
  • Advantages (Employees): Provides financial security, predictable income.
  • Disadvantages (Employees): May not reward high effort, limited incentive to exceed expectations.

• Piece-Rate: Payment based on the quantity of goods produced or services delivered.

  • Advantages (Business): Costs directly linked to output, can be effective for increasing productivity.
  • Disadvantages (Business): Quality may suffer, potential for disputes over measurement, may not be suitable for all roles.
  • Advantages (Employees): Directly rewards effort and productivity, potential for high earnings.
  • Disadvantages (Employees): Can be stressful, may not be suitable for roles where quality is important, income can be inconsistent.

• Commission: A percentage of sales revenue paid to sales staff.

  • Advantages (Business): Directly linked to sales revenue, motivates sales staff to increase sales.
  • Disadvantages (Business): Can lead to aggressive sales tactics, may not motivate non-sales roles.
  • Advantages (Employees): High earning potential, directly rewards sales success.
  • Disadvantages (Employees): Income can be unstable, pressure to meet sales targets.

• Bonus: A payment made in addition to salary, often for achieving specific targets.

  • Advantages (Business): Motivates employees to achieve goals, can be used to reward performance.
  • Disadvantages (Business): Can be expensive, may not be effective if targets are unrealistic.
  • Advantages (Employees): Provides extra income, rewards performance and effort.
  • Disadvantages (Employees): Can create competition and tension between colleagues, targets may be difficult to achieve.