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How Can Bosses Motivate Employees?

Updated on February 19, 2015

Monetary Incentives

Financial gain, for nearly all employees, is the only reason they work. You would struggle to find somebody willing to work for free. Business theorist Frederick Taylor claimed that, "man is a rational economic animal concerned with maximizing his economic gain" in other words, workers want money. "Theory X", or the "scientific approach" to employee motivation suggests that more opportunities for money will make staff work harder. Therefore, it can be argued that the best way to motivate staff is by offering them more money. There are several ways this can be done:

  • Incentive of higher wages - by giving an employee the opportunity to be given a higher salary they are likely to work a lot harder and become more productive in order to be given a pay rise. However, research suggests that employees will only work hard until they achieve their increased wage. Once they have received their pay rise, their productivity will eventually fall to the level it was at before being given the chance to earn higher wages.
  • Piece-rate pay - this method pays workers based on the number of units made. For example, if an employee made 100 T-shirts in a day, they would be paid $100 whereas a worker who made 40 T-shirts in a day would be paid $40. This method of increasing output was popular decades ago. However, piece-rate pay is now becoming increasingly unpopular as, while the quantity of goods increases, the quality suffers greatly; meaning businesses could lose popularity if there are a high percentage of faulty products.
  • Time-rate pay - this approach is currently the most popular around the world. Time-rate pay gives an employee a salary based on the amount of time they work. The longer somebody works, the more money they're paid. As an example, if a production line employee works for 10 hours a day, he would be paid $100 per day whereas a production line worker producing for 5 hours a day would be paid $50 per day. Typically, time-rate pay seeks to make employees work overtime, meaning that a business would have a higher productive capacity. This method of monetary incentive is most popular as it is easy for workers to understand while, at the same time, being simple for companies to calculate. As well as this, time-rate pay provides long-term motivation rather than a short-term push to increase salaries.
  • Performance related pay - performance related pay rewards staff based upon the quality of their work. This is primarily used by companies where performance isn't related to the quantity produced but on individual quality, such as the manufacturers of a Rolls-Royce car. A performance appraisal will take place occasionally and employees will be given a bonus depending on the quality of their work.
  • Profit sharing - this method is a valuable way of keeping staff hard at work. Profit sharing is when companies split a share of their profit out to staff. For example, if a business with 100 employees made $100,000 in profit, they may decide to give $1000 bonus to each employee. Profit sharing keeps workers motivated and hard-working and could make employees more reliable and more likely to keep working at the company.

Money is the most enticing bonus for employees
Money is the most enticing bonus for employees | Source

Which monetary incentive would you use if you wanted to motivate your employees?

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Fringe Benefits

Fringe benefits have components of monetary incentives, but aim to expand further into achieving greater motivation and persuading employees to keep working at a business. Examples of fringe benefits may include a company car, a company uniform, an attractive pension plan and staff discounts among others. These benefits in hand are not paid out in money and are becoming increasingly popular in the business world. As well as motivating existing employees, fringe benefits can be pivotal in attracting new staff members. For example, a candidate is much more likely to accept a job offer from a company that offers longer holidays and a childcare service.

Non-monetary Incentives

There are several ways in which businesses can motivate employees without having to increase their costs. While most likely not as effective as offering more money, the following methods may give the boost in output the business aims for:

  • Recognition - if an employee is seen to be a hard-working individual providing a healthy amount of output whilst maintaining quality, a boss could award the worker; For example, by giving an "employee of the month award". This may persuade other workers to increase their output in order to win said award the next month.
  • Empowerment - a company could allow a worker to become the leader of a task or to help make a decision within the business. This increased sense of power within the institute could push employees to work harder as they feel involved in the future of the firm.
  • Listening to the staff - listening to employees and taking their ideas on board is a sure-fire way of making them feel involved in the business. An "ideas" box is a perfect example of this being put to work

There are several other ways of motivating employees; though it has been suggested that these three methods are the most effective in making staff more efficient.

A motivated workforce is key in achieving an increase in output and quality
A motivated workforce is key in achieving an increase in output and quality | Source

Motivation is key

A motivated workforce are much more likely to lead to an increased output for businesses. If the right motivational techniques are used, quality may also be increased. The biggest companies in the world aim to have a motivated workforce who want to be working for said business. If you owned a business, how would you seek to increase motivation? Let me know in the comments.


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    • Sia184 profile image

      Sia 2 years ago from United Kingdom

      Great article. Motivating workers is always key to maximising output and therefore your revenue as a business :)