Motivating employees: Methods to motivate staff

The idea

Motivation is the drive that makes an employee choose to work hard. Financial methods include piece rate (pay per unit produced), commission (a percentage of sales value), bonus (a one-off reward for hitting a target), profit sharing and fringe benefits such as a company car or private health cover. Non-financial methods include job rotation (moving between tasks), job enrichment (extra responsibility and authority), teamworking, autonomy and praise. A business selects a method by weighing cost against the likely effect on retention and productivity. For example, a call centre paying commission on sales may raise output, but if targets feel unachievable, staff may leave. A small firm may prefer praise and job rotation because these cost little. Methods can be combined, and their success depends on the workforce and the job.

What earns the marks

• Financial methods reward effort with money: piece rate pays per unit produced, commission pays a percentage of sales value, and a bonus is a one-off payment for meeting a target.
• Non-financial methods reward effort without direct payment: job rotation varies tasks, job enrichment adds responsibility and authority, and teamworking builds belonging.
• Fringe benefits such as a company car, subsidised meals or private health cover can attract and retain staff even when basic pay is unremarkable.
• Profit sharing links reward to overall business performance, so employees gain when the business performs well, which can encourage effort and loyalty.
• Choice of method depends on cost, the type of job and the workforce: commission suits sales roles, while job enrichment suits roles where employees seek responsibility.
• Methods can be combined, and a poorly designed method, such as an unachievable target, can demotivate staff and increase labour turnover.

Common mistakes and how to put them right

• Treating motivation as identical to pay.

  Put it right: Pay is one financial method, but non-financial methods such as job enrichment and praise can motivate without extra cost.

• Confusing job rotation with job enrichment.

  Put it right: Job rotation moves an employee between different tasks at a similar level, while job enrichment gives greater responsibility and authority.

• Assuming one method suits every business.

  Put it right: The best method depends on the job, the workforce and the cost, so a sales team may respond to commission while a care team may respond to praise and training.

Exam tips

• Name the method precisely, then explain the link to effort: for example, commission raises the reward for each sale, so an employee may work harder to earn more.
• Use a short business example to show application, such as a restaurant using tips and job rotation to keep waiting staff.
• When evaluating, weigh cost against benefit: a bonus may raise productivity but adds to wage costs, so the effect on profit matters.