NOTES OF BUSINESS AS – UNIT 2, PEOPLE .

2. PEOPLE IN
ORGANISATION
CONTENTS: PURPOSE &
• Lecture – 1: Purpose & Functions of Human
Resource Management. FUNCTIONS OF
• Lecture – 2: The Manager & Management.
• Lecture – 3: The Leader & Leadership.
HUMAN RESOURCE
• Lecture – 4: Motivation Theories. MANAGEMENT
• Lecture – 5: Motivation in Practice.

LECTURE: 1

SYLLABUS SYLLABUS
■ The role of HRM in meeting organisation’s ■ Labour Turnover, methods of recruitment
objectives. and selection.
■ Workforce planning, recruitment, selection, ■ Purposes of job descriptions, person
training, advice, guidance and induction as specifications and job advertisement.
HRM functions. ■ Main features of a contract of employment.
■ The purpose of staff development/training ■ Relationship between HRM, staff morale
as a means of securing required skills and and welfare in a business.
motivating the workforce.
■ Difference between redundancy and
dismissal.

HUMAN RESOURCE MANAGEMENT (HRM) PURPOSE OF HRM

It is the strategic approach to the

effective management of an HRM aims to recruit capable, flexible and
committed people, managing and rewarding
organization’s workers so that they help their performance and developing their keys
the business gain a competitive skills to the benefit of the organization. .
advantage.
It is an important function of the
organisation.

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FUNCTIONS OF HRM MORE FUNCTIONS

• Workforce planning. Ensuring smooth redundancies &
• Recruitment & selection of staff. dismissal.
• Training and development of staff. Ensuring equal opportunities for all
• Development of appropriate pay systems. employees.
• Staff Morale and Welfare Ensuring health & safety requirements to
• Preparation of employment contracts be met.
Measuring Staff Performance: Monitoring
their performance.

HUMAN RESOURCE PLANNING STEPS INVOLVED IN HR PLANNING

HR planning is a process which focus on “How Forecasting future employees

to meet HR requirements of a business in a demand.
future time period”.
Process focus on: Analyzing current employee
situation.

The number of staff needed in future. Planning Internal employee

supply.
The skills required by staff.
Planning external employee
Their positions in organizational structure. supply.

1. FORCASTING FUTURE EMPLOYEES 2. ANALYSING CURRENT EMPLOYEE

DEMAND SITUATION
Following factors influence: This analysis is made to find out; if current
employees are enough to meet future
demand and to find a gap between present
Expected changes in demand. employees and future requirement. Also
called workforce audit. We assess;
Changes in workers productivity.
Number of employees.
Using business & management knowledge.
The skills they posses.
Calculating staff loss.
Their positions on Org. structure.

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3. PLANNING INTERNAL EMPLOYEE SUPPLY ADVANTAGES OF INTERNAL

(INTERNAL RECRUITMENT) RECRUITMENT
This is a process of meeting future employees
demand gap with the help of current • employees motivation with growth
employees or from within the organisation. opportunities.
Internal planning may include; • Shorter induction period as the employee is
likely to be familiar with the company.
• Reduced risk of employing a wrong person.
Promotions.
• Internal recruitment will be quicker and less
Transfer. expensive.
• Culture and management style well
Re-applying for the job. understood

DISADVANTAGES OF INTERNAL 4. PLANNING EXTERNAL EMPLOYEE SUPPLY

RECRUITMENT (EXTERNAL RECRUITMENT)
Methods which are used to recruit required
• Internal advertising limits the number of employees externally.
applicants for a vacancy.
Following options are available
• External candidates might have been of
better quality. Job Advertisements.
• Another vacancy will be created after
internal recruitment, which might have to Contacting Job Centers (e.g. Rozee.pk)
be filled through external recruitment.
Private Recruitment Agencies (consulting firms).
• Less new ideas and fresher perspective.
• May cause resentment in those who are Head/ Talent Hunting.
not selected.
Visiting Colleges, Universities etc.

REASONS OF HIGH LABOUR TURNOVER

LABOUR TURNOVER • Reason can be staff discontent and low
Labour turnover measures the rate at which morale.
employees are leaving an organisation as a • This may be due to an ineffective
proportion of total employees during a certain recruitment policy that leads to the wrong
period of time like an year. people being employed.
• This may be due to low unemployment in
Labour Turnover = the local area.
• However some industries typically have
higher labour turnover rates than others like
x 100 Restaurents.

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COST/ DISADVANTAGES OF HIGH EVALUATION OF HIGH LABOUR

LABOUR TURNOVER TURNOVER
It results in low employee productivity. ■ However; high labour turnover might be a
result of external factors, which will not be
There will be additional recruitment and
training costs for repetition of process. in business control.
Disruption of production process. ■ Sometimes high labour turnover might be
beneficial for a business as it will reduce
Poor customer service could result from
staff shortages. staff number or will bring in new skills and
ideas, may make redundancy less costly.
Difficult to build good team

STEPS IN RECRUITMENT & SELECTION

RECRUITMENT & Job Analysis (detailed study of Job

SELECTION created).

Preparing Job Description & person

RECRUITMENT – the process of identifying the specification.
need for a new employee, defining the job to be
filled and the type of person needed to fill it and Finding methods of recruitment.
attracting suitable candidates for the job.

Short listing of applicants.

SELECTION – involves the series of steps by
which the candidates are interviewed, tested and
screened for choosing the most suitable person Selecting best applicant.
for vacant post.

JOB ANALYSIS JOB DESCRIPTION

■ This is a process in which an HR manager
study a job in detail to find out; The job description is a simple ‘word picture’
■ The nature of Job. of the job. It include;
■ Where would it exist in the organization. ) Job title
■ What duties & responsibilities are expected 2) Details of the tasks to be performed
with that position. Etc. etc. 3) Responsibilities involved
■ Job analysis provides a base for making job 4) Place in the hierarchical structure
description & person specification. 5) Working condition
6) how the job will be assessed and
performance measured.

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PURPOSE OF JOB DESCRIPTION PURPOSE OF JOB DESCRIPTION

■ Candidates would know the expectations ■ Job description ensures that when a worker
from them. comes to a job or task, they know exactly
what to do.
■ It also helps to decide on the qualities that
successful candidates must have. ■ However job description is a means of
communication so there might not be
■ Can be used to measure the performance
problems of misunderstanding.
of an employee, by comparing their
activities with the job description. ■ It is also sometimes criticized, as it is rarely
possible to include every feature of a
■ Disputes about the work can also be settled
particular job in its job description.
by looking at the job description.

PERSON SPECIFICATION JOB ADVERTISEMENT

Person specification can be described as • Once a vacancy is created and its job
the description of the qualities a suitable description & person specification is made
candidate must have to perform a then it need to be advertised.
particular job. It may include the • Its important to choose the most
qualification, skills, knowledge, appropriate media to advertise a vacancy. A
expertise, attitude and personal traits of recruitment advertisement should be brief
the most desired person. and attractive because of the cost of space
• Such a description can then form the and the need to get attention.
basis for the selection of the most
suitable person to fill the job.

SOME OF THE INFORMATION THAT MIGH BE SELECTION

INCLUDED IN THE JOB ADVETISEMENT
The process which focus on selecting the right
■ The job title. employee from those applying for the job.
■ The name and address of the employer.
1) Shortlisting of CV’s
■ The salary and any other remuneration.
■ Details of the vacancy. 2) Selection Tests & Exercises.
■ The skills and experience required for the
3) Detailed/ Final Interviews.
successful candidate.
■ Any other benefits. 4) Confirmation from references
■ What the applicant needs to do to apply.
5) Trial period
■ Where to apply and to whom.

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NOTES OF BUSINESS AS – UNIT 2, PEOPLE .

1) SHORTLISTING OF CV’S 2) TEST & EXERCISES

The candidates CV’s that does not match our Aptitude tests are the test undertaken to
minimum person specification might be assess specific technical skills in candidate.
screened out.
This reduce the burden of testing/ Psychometric tests are designed to assess
interviewing too many irrelevant candidates character, attitude and personality by using a
and reduce the expense. series of role play, question and problem
solving scenarios. It is claimed that these test
are much rigorous in comparison to interview
where an “actor” may pose as strong person.

INTERVIEWS TRIAL PERIOD

They are most common method used in
selecting candidates. Generally interviewer This is the period within which an employee
follows a seven point plan to assess work in a business but he is not given a full
candidates; job contract unless he is properly assessed
1) achievement, within a specific time. This allow the employer
2) intelligence, to assess capability of employee in full detail
3) skills,
4) interests,
5) personal manner,
6) physical appearance and
7) personal circumstances

CONTRACT OF FEATURES OF THE CONTRACT OF

EMPLOYEMENT
EMPLOYMENT • The names of the employer and the employee.
Once appointed, employees are entitled to a • The date on which the employment is to
CONTRACT OF EMPLOYMENT. This is an begin.
agreement between the employer and the • The job title / the designation of the job.
employee under which each has certain • The terms and conditions of employment.
obligations. It is ‘binding; to both parties in • The number of hours to be worked.
the agreement, the employer and the • Pay, benefits and employee rights.
employee. This means that it is unlawful to • Disciplinary procedures.
break the terms and conditions in the
• Grievance procedure.
contract without the other party agreeing.
• Duration of contract.

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NOTES OF BUSINESS AS – UNIT 2, PEOPLE .

TRAINING AND TRAINING METHODS INCLUDES

DEVELOPMENT
Induction Training.
TRAINING
A process of learning some new skills or
knowledge by the employees to carry out On-The-job Training.
their jobs in a better way.

Training is the work-related education to Off-The-Job Training.

increase workforce skills and efficiency.

INDUCTION TRAINING FEATURES OF INDUCTION TRAINING

■ The introduction of new employees to the Intro to the business.
business, its policies & procedures, health
and safety, products, job & their colleagues. Knowledge of company policy.

Info about business objectives & future plans.

■ Induction training is provided to those who
recently joins a business to familiarize them Knowledge of duties & responsibilities.
with business.
Position in organizational structure.

Span of Control.

Intro to colleagues.

ON THE JOB TRAINING OFF THE JOB TRAINING

■ It is instruction at the place of work on how
a job should be carried out, often carried ■ All training undertaken away from the
out by HR manager or operational line business. It may be undertaken in any form.
manager. ■ It might be conducted by the same
■ Working with senior member automatically organization or by some specialist institute
involves learning and training. or university.
■ It is cost effective in comparison to off the ■ Generally expensive in nature, yet can be
job training. important for capacity building.

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NOTES OF BUSINESS AS – UNIT 2, PEOPLE .

DEVELOPMENT BENEFITS OF TRAINING & STAFF

Development can be defined as a process of DEVELOPMENT
providing some new skills and knowledge to the ■ Enables employees to fulfil their job
employees and preparing them to meet & accept
future requirements of their job & organization.
responsibilities.
Developing involve new challenges, ■ Improved performance of individual.
responsibilities, additional courses to learn new ■ Enables employees to cope up with changes
skills, promotion, delegation of authority, job in;
enrichment etc. to build the capacity of • Organisational structure.
employees.
• Methods of working.
This is a continuous process. Ideally, the
• Technology.
organization should balance the need of the firm
with that of the employee to create a mutually
benefiting blend.

MORE BENEFITS DOWNSIDES

• Improved efficiency. • Cost
• Reduced wastage. • Might create suspension of work
• Improved quality allows flexibility in • Poaching: the trained employees leave for
production & organisation. better prospects.
• Greater job satisfaction.
• Continuous development of employees
enable them to meet future challenges.

REDUNDANCY & REDUNDANCY & DISMISSAL

DISMISSAL Redundancy rules:
Redundancy In UK, company has to pay redundancy
payment to redundant employees. In
Redundancy can be defined as a process of
laying off the worker when a contract of
redundancy, it is important for company to
employment is ended by the employer follow a set guideline, ensuring merit.
because there is no more sufficient work for a Generally last in-first out strategy is
worker to do. This may be because of change followed.
of technology or a certain department or a
part of factory is closed down. Or due to
restructuring of the organisation.

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NOTES OF BUSINESS AS – UNIT 2, PEOPLE .

REDUNDANCY & DISMISSAL WHY DISMISSAL IS A SERIOUS ISSUE:

a) It leads to the withdrawal of the financial
Dismissal
support and social status to the worker and
Where as dismissal takes place when a his dependents.
worker’s contract of employment is ended b) If dismissal is not according to company
up by the management due to his/ her policy or law, it may lead to unfair dismissal.
poor performance, unsatisfactory behavior,
c) Except in case of gross misconduct like
misconduct, negligence or not following
fraud or theft, law require that the company
discipline. So dismissal takes pace due to must be doing all possible efforts to avoid the
an employee’s failure to meet dismissal, otherwise, despite a valid reason, a
management’s / organization’s dismissal may be termed as unfair.
expectations.

GENERAL DISMISSAL PROCESS UNFAIR DISMISSAL

It is ending a worker employment contract for
reasons that the law regard as unfair.
UNFAIR REASON
■ Pregnancy
■ Discrimination based on gender, race,
religion
■ Being a member of union
CONSEQUENCES OF UNFAIR DISMISSAL
■ Compensation is awarded to employees

EQUAL OPPORTUNITIES EQUAL OPPORTUNITIES - EXPLANATION

These are the practices and processes
A concept that focus on providing equal aimed at achieving a fair organization
opportunities to every applicant, where everyone has the opportunity to
qualifying for a job or to existing fulfill their potential.
employee. That means that there should
Equality policy means not taking our
not be any discrimination, nepotism or recruitment, selection, pay, promotion,
favoritism among applicants or dismissal and other decision based on:
employees.
1) Race 2) ethnicity 3) gender 4) religion
etc.

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EQUAL OPPORTUNITIES - advantages DIVERSITY POLICY

Diversity policies are practices and processes

high staff high whose aim is to create a MIXED workforce
and placing positive value on diversity in the
morale,. reputation workplace.
This policy creates an inclusive environment
that value differences. Such organization sees
and strength in diversity.
attraction of
satisfaction of Typical diversity relates to gender diversity,
best talent,
the staff cultural diversity etc.

DIVERSITY - advantages METHODS TO MEASURE

EFFECTIVENESS OF HRM
more qualified work
capturing a greater force Labour Turnover Rate.
consumer market
better gene pool Absenteeism Rate.
Labour Productivity.
lower labour turnover more creativity Industrial Relations.
Profitability.
overcoming of Image of a business.
deep analysis language and other
barrier Relationship with other stakeholders.
Morale of the workforce.

STAFF MORALE AND WELFARE WORK LIFE BALANCE

An important task of human resource Work life balance refer to a situation where
department is to ensure the high morale employees are able to give the right amount of
and motivation of staff. time and effort to work and to their personal
life outsides work, e.g. family or other social
This is done through co-ordination of HR engagement.
department and line managers. Most HR
offer advice and counseling to employees The demand of the modern day work practices
in need of support. This creates a good like globalization, 24/7 service from customer
and business trying to meet the demand has
caring image in the views of employees. put a lot of stress on employees.
HR department also design different To following methods are used to create the
reward packages and programs for the balance …
welfare of employees.

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10 | P a g e M. IMRAN FAWAD CA (INTER), ACCA, M.COM, ICMA
NOTES OF BUSINESS AS – UNIT 2, PEOPLE .

WORK LIFE BALANCE - STYLES PRACTISE QUESTIONS

■ Teleworking – staff working from home but • With reference to its functions discuss / evaluate or
keeping contact with the office by means of analyse the benefits of a separate HR department for a
modern IT communications. given business. (12 marks)
■ Flexitime contract – employment contract that • Discuss the usefulness of job description & person
allows the staff to be called in at times most specification in the recruitment process. (11 marks)
convenient to employers and employees e.g. ■ What is strategic workforce planning? [Marks 2]
busy times of the day ■ Discuss three method of selection used to select a
manager in a restaurant? [Marks 8]
■ Job sharing- one job shared by two employees
and splitting the return. ■ What would be the disadvantages of recruiting a
school headmistress internally? [Marks 8]
■ Sabbatical periods – Extended leaves, often
■ Diversity policies are considered important in today
without pay, but the job is kept open. Some world. Discuss. [Marks 8]
partially pay.

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11 | P a g e M. IMRAN FAWAD CA (INTER), ACCA, M.COM, ICMA
NOTES OF BUSINESS AS – UNIT 2, PEOPLE .

LEARNING OUTCOMES
■ Understanding of the term manager and
management.
MANAGEMENT AND ■ The functions of management, including
Mintzberg’s roles of management.
MANAGERS ■ Functions, roles and styles.

LECTURE: 2

MANAGERS DEFINED 5 BASIC FUNCTIONS OF

MANAGEMENT BY HENRY FAYOL
Managers are those who are responsible for
setting objectives, organizing resources & Setting objectives & planning.
motivating staff so that the organisation’s
aims are met.
Organizing resources.
Managers ‘Get things done’ – not by doing all
jobs themselves but by working with &
Directing & motivating staff.
through other people.
Managers must also coordinate activities in Coordinating activities.
the firm, as well as controlling and measuring
performance against targets.
Controlling & measuring performance.

PLANNING & SETTING OBJECTIVES ORGANISING AND ALLOCATING

RESOURCES
All good managers think ahead. Senior
manager set overall goal, aims and objectives, Organizing includes organizing the people and
which are then translated in to tactical plan other resources to use them efficiently &
by the middle management. Operational effectively and to achieve tasks successfully.
managers divide them into operational day to
day planes.
This is when managers divides the
responsibilities among various employees and
or departments and delegate them the
required authority for better implementation
of plans.

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NOTES OF BUSINESS AS – UNIT 2, PEOPLE .

DIRECTING & MOTIVATING STAFF CO-ORDINATING ACTIVITIES

Means bringing people and departments
This is about passing instructions and guiding together to carry out plan in an efficient &
people and departments so that various tasks effective manner. Different parts of the
will be carried out according to the plan and organisation may be performing various
their activities could be coordinated and functions but their efforts should be
supervised. coordinated to ensure that the whole
Managers also motivate every one to improve organisation is working in the same direction
performance & to carry out plan efficiently & and for the same objectives. Coordination
effectively. brings efficiency and success to the whole
organisation.

CONTROLLING & MEASURING

PERFORMANCE MINTZBERG’S ROLE OF
Work is measure and compared with the
MANAGEMENT
performance targets to check that either
targets are being met or not. This is a modern management theory.
According Henry Mintzberg; what managers
Managers also suggest corrective measures if do cannot be fully related to the classical view
performance is below standards. The reasons (Fayol view) of the activities or functions of
for poor performance needed to be management.
investigated & controlled. Rather the manager’s job can be described
more meaningfully in terms of various ‘roles’
which managers play when working at a
formal position.

MINTZBERG’S ROLE OF INTERPERSONAL ROLES

MANAGEMENT
Mintzberg recognizes that people who ‘manage’ have
Management is always a social position.
formal authority over the unit they command and this Managers interact with lots of people inside and
leads to a special position and status in the org. outside their department and organisation.
Managers develop relations with other people
As a result of this formal authority and status,
managerial activities can be seen as a set of ten arising from the manager’s status and authority.
‘Managerial Roles’ which may be divided into three The roles managers play during their interaction
groups. with others are known as interpersonal roles.
Interpersonal roles. Following are three interpersonal roles a manager
Informational roles.
play!

Decisional roles.

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NOTES OF BUSINESS AS – UNIT 2, PEOPLE .

1) FIGURE HEAD ROLE 3) LIAISON ROLE

■ Managers perform a symbolic role while they
formally represents an organisation. Managers ■ To remain connected and updated with
are routinely involved in the matters of current happenings, managers liaison or
ceremonial nature, such as the signing of create a horizontal social network with the
documents, opening new office, opening speech, other managers in the same organisation
Starting AGM etc.
and in other related organisations.
2) LEADER ROLE ■ These horizontal relationships will help
Managers influence, inspire and control many people managers to be in contact and updated.
working under them. Managers have goals to achieve
which they can not achieve through their own efforts ■ Managers also provide information to other
but through a team of workers. managers through this role.
Managers achieve their objectives through
interacting and influencing the subordinated and
colleagues.

INFORMATIONAL ROLES 1) MONITOR ROLE

In organisations, managers act as a center of
Managers closely observe business
information. environment and develop their understanding
Due to their interpersonal roles they receive about it. Manager seeks and receives
and transfer lots of information from and to information, from internal or external sources
various stakeholder groups in and outside the which may be formal or informal.
organisation. This information enables the manager to
These roles help managers to be more develop an understanding of the working of
the organisation and its internal & external
updated and even to transfer right environment.
information to their subordinates and
colleagues.

2) DISSEMINATOR ROLE DECISIONAL ROLES

■ Sending information collected from internal On the basis of the manager’s status and
and external sources to the relevant people authority, and access to information, mangers
within the organisation are involved in making of strategic and other
organizational decisions. The roles played by
3) SPOKESPERSON ROLE managers while making various kind of
■ Communicating information about the decisions are known as decisional roles.
organisation, such as current position and
achievements, to external groups and
people such as the board of director or
other superiors, and the general public
such as suppliers, customers, government
departments and the press.

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NOTES OF BUSINESS AS – UNIT 2, PEOPLE .

1) ENTREPRENEURIAL ROLE 2) DISTURBANCE HANDELER

Risk taking is an important entrepreneurial ROLE
function. It is also an important ability and Disturbances are situations which negatively
function of a managers job. Managers take effects smooth running of an organisation.
risk to bring improvement to the organisation. Managers react to these unpleasant situations
It is the manager’s function to initiate and and unpredictable events. When an
plan controlled change through exploiting unexpected disturbance occurs, the managers
opportunities or solving problems, and taking must take actions to correct the situation.
action to improve the existing situation. And
all that is not possible without taking risk.

3) RESOURCES ALLOCATOR ROLE 4) NEGOTIATOR ROLE

■ Managers are responsible for achieving ■ To satisfy various stakeholder group;
organizational objectives through best manager participate in negotiation activity
utilizing available organisational resources. with other individuals or organisation, for
Manager use formal authority to decide example a new agreement with a trade
where effort will be required, and make union.
choices on the allocation of various ■ That role of managers is called of a
resources such as money, time, materials negotiator.
and staff.

EVALUATION OF MINTZBERG’S EVALUATION OF MINTZBERG’S

MANAGERIAL ROLE MANAGERIAL ROLE
■ Mintzberg emphasizes that this set of ten ■ The ten roles are not easily isolated in
roles is a more realistic division of the practice but form an integrated whole. If
manager’s activities. any role is removed, this affects the
effectiveness of the manager’s overall
■ Therefore; it is one of the many possible performance.
ways of categorizing the view of managerial ■ The ten roles suggest that the manager is in
roles. fact a specialist required to perform a
particular set of specialized roles.
■ Mintzberg argues that this set of roles is
common to the work of all managers
regardless their positions and depts.

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NOTES OF BUSINESS AS – UNIT 2, PEOPLE .

PRACTISE QUESTIONS
■ Why management of a business is
important for achievement of the objective?
[Marks 12]
■ Briefly explain two decisional roles of a
manager. (3 marks)

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NOTES OF BUSINESS AS – UNIT 2, PEOPLE .

SYLLABUS
• Understanding of the leadership concept.
• The purpose of leadership.
• Leadership roles in business (Directors,
LEADERSHIP Managers, Supervisors, Worker
Representatives).
• Qualities of a good leader.
• Leadership styles: Autocratic, Democratic,
Laissez faire.
• McGregor’s leadership styles.
LECTURE: 3

LEADERSHIP LEADERSHIP
The art of motivating and inspiring a group of Not all mangers possess such skills and
people towards achieving a common objective therefore they can’t drive the organisation to
is generally referred as leadership. their goals – especially in the times of crisis
Leadership is a key characteristic of a and change.
successful manager. Leadership is not merely
the routine activities of coordination, control Some theorists argue that leadership is an
or organizing…rather; aspect of personality and cannot be learned.
It is more geared toward strong Others argue that leadership can be learned.
communication, inspiring, instill courage and This leads to the study of the relationships
hope, showing strong character and through between leader and the led, and how
strong interpersonal skills, leading people to leadership styles can be adapted to different
the goals. situations.

IMPORTANT LEADERSHIP ROLES IMPORTANT LEADERSHIP ROLES IN

BUSINESS
Leaders play various roles in a business. Directors
They are usually head of a major functional
Directors. department, such as marketing.
Manager (at various levels) • They will be responsible for delegating
within their department.
Supervisors. • Assisting in the recruitment of senior staff in
the department.
Worker-representatives. • Meeting the objectives for the department
set by the board of directors.

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NOTES OF BUSINESS AS – UNIT 2, PEOPLE .

IMPORTANT LEADERSHIP ROLES IN IMPORTANT LEADERSHIP ROLES IN

BUSINESS BUSINESS
Managers Worker’s Representatives
■ They will have some authority over other Trade union officials or as representatives on
staff below them in the hierarchy. works councils, in order to discuss areas of
■ They will lead, motivate and, discipline the common concern with managers.
staff in their section or department.

IMPORTANT LEADERSHIP ROLES IN QUALITIES OF A GOOD BUSINESS

BUSINESS LEADER
SUPERVISORS: Positive self image & confidence.
■ These are appointed by management to watch
over the work of others. Creative & innovative.
■ This is usually not a decision-making role, but
they will have responsibility for leading a team Must have a vision.
of people, working towards pre-set goals.
■ The modern role is less of an inspector and
Must be expert in their field.
much more of a work colleague who is
appointed to help staff achieve objectives in a Must be a good guide.
cooperative spirit.
Ability to sense change & can respond to it.

QUALITIES OF A GOOD BUSINESS MANAGEMENT/ LEADERSHIP

LEADER STYLES
Refers to the ways in which manager/ leaders
Honest.
take decisions & deal with their staff.
There are 4 basic styles;
Must be able to explore individual’s potential.

Must be able to get the core of problems & can Autocratic (Authoritarian) Leadership.
handle them.
Democratic Leadership.
Must posses good communication skills. Laissez-Faire Leadership.

Ambitious & determined. Paternalistic Leadership.

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NOTES OF BUSINESS AS – UNIT 2, PEOPLE .

1. AUTOCRATIC LEADERSHIP POSSIBLE APPLICATION

Main features:
Used in Defense forces & Police.
Leaders make all the decisions by themselves with no
participation of workers. Used in small businesses, which depends
on owner’s skill.
Workers are given orders with little information about
job & organisation. Ideal to use when quick decisions are
needed.
Close supervision of employees by leaders.
Best to use at time of crisis.
One way communication – just orders are given and
no feedback is allowed. Suitable when disclosure of info may lead to
problems.

POTENTIAL DRAWBACKS 2. DEMOCRATIC LEADERSHIP

Main Features:
De-motivation of staff, who want to
contribute to the decision making process. Leaders allow participation of workers in decision
making.
No personal development of workers as their
decision making skills are not improved. Workers are given information about job &
organisation to allow staff involvement.
Lack of ideas & rigid decisions due to no
Tow way communication. Workers are allowed for
consultation. feedback.

Decisions may be inappropriate to certain Decisions are favored by majority.

conditions & locations.

POSSIBLE APPLICATION POTENTIAL DRAWBACKS

■ Used in large & geographically expanded
■ Consultation may consume time, therefore
organisations.
delayed decisions.
■ Beneficial where new ideas & new way of
■ Some issues cannot be disclosed &
thinking are needed.
discussed with workers.
■ Allows flexibility in decisions.
■ Will be useless if staff is not experienced or
■ Better to use in marketing, production and not skilled enough to make decisions.
R&D Depts.
■ Possible loss of control of top management.
■ Satisfies worker’s esteem & self
actualization needs.

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NOTES OF BUSINESS AS – UNIT 2, PEOPLE .

4. LAISSEZ-FAIRE (LET THEM DO!) POSSIBLE APPLICATION

Main Features: • Best to use in Research and development.
• Managers can retain control through
A style of leadership that leaves much defining the scope and objectives.
of the running and decision making of • Some leaders hire very talented managers
the business to the workforce. and use this approach e.g. Warren Buffet.

Objectives and scope is clearly defined

to them.

POTENTIAL DRAWBACKS 3. PATERNALISTIC LEADERHIP

Main Features:
• They may misuse this authority.
Some consultation is done with workers but the
• They may not be capable enough to final decision is still taken by the leader.
execute the work and feel demotivated for
lack of directions. Leaders do what they think is better for workers
and organisation.

Benefits of the decision are shown to the workers.

Two way communication with workers.

Also called persuasive democratic management.

POSSIBLE APPLICATION POTENTIAL DRAWBACKS

• Used when workers are young & not
experienced enough. • Staff may show reluctance in accepting
• Some issues cannot be disclosed to responsibility with limited control &
workers. Therefore partial consultation is direction.
made. • The lack of feedback from leaders /
• Some situations require more mature managers may de-motivate some
approach. subordinates, as they feel left alone.
• Interests of workers are still safeguarded.

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NOTES OF BUSINESS AS – UNIT 2, PEOPLE .

FEATURES OF THEORY “X”

THEORY “X” &
• These type of managers believe the workers
THEORY “Y” are lazy, dislike work.
• They believe that worker will avoid
• Douglas McGregor presented this theory in responsibility and are not creative.
1960.
• In response, they naturally adopt an
• McGregor made an attempt to differentiate autocratic style and do not delegate
between the two different management responsibility and keep a close supervision
approaches about the workers & the way over the workers.
they can be motivated, termed as Theory
“X” & Theory “Y”.

FEATURE OF THEORY “Y” GENERAL VIEW

■ These managers believe that workers can ■ Many researcher now believe that workers
derive as much enjoyment from work as will behave as a result of management
from rest and play. attitudes and the worker attitude is actually
■ They will accept responsibility and are the indirect result of the management
creative. leadership style.
■ Therefore manager naturally adopt a
democratic style of leadership.
■ They delegate authority, empower worker
and regularly engage the workers in
decision making.

EMOTIONAL BRIEF EXPLANATION

Emotion is a wide range of observable behaviors and
INTELLIGENCE expressed feelings. They give our lives meaning and cause us
to be happy or unhappy, satisfied or dissatisfied.
Intelligence is the ability to acquire and apply knowledge and
In 1995 Goleman, an American Harvard skills.
Management specialist, introduced the term Emotional Intelligence is the ability to deal with other people
emotional intelligence. successfully. There are five main elements of emotional
intelligence. THE 5 COMPONENT
1. Self Awareness
It is the ability of a person to sense and 2. Self Regulation
understand their own and others emotions 3. Motivation
and to apply that understanding to achieve
4. Empathy
better business performance.
5. Social Control

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NOTES OF BUSINESS AS – UNIT 2, PEOPLE .

THE 5 COMPONENT 1. SELF AWARENESS

There are five main elements of emotional
intelligence. This is the ability to recognize and understand
1. Self Awareness one’s moods, motivations, and abilities. Also
2. Self Regulation understanding the effects they have on others.
Traits that prove an individual as emotionally
3. Motivation mature include: confidence, the ability to
4. Empathy laugh at ones self and their mistakes, and the
5. Social Control awareness of how you are perceived by
others.

2. SELF-REGULATION 3. MOTIVATION
This is the ability to control ones impulses, This is having an interest in learning and self-
the ability to think before you speak/react, improvement. It is having the strength to
and the ability to express yourself keep going when there are obstacles in life. It
appropriately. Goleman defines emotional is setting goals and following through with
maturity in this component as being able to them.
being able to adapt to change, and the ability An emotional mature individual in this
to respond appropriately to other peoples category to have traits such as having
irrational emotions or behavior. initiative and the commitment to complete a
(Goleman). task, and having perseverance in the face of
adversity.

4. EMPATHY 5. SOCIAL SKILLS

This is the ability to understand other peoples This is the ability to understand other peoples
emotions and reactions. emotions and reactions.
Empathy can only be achieved if self-awareness Empathy can only be achieved if self-awareness
is achieved. Goleman believes that one must be is achieved. Goleman believes that one must be
able to understand themselves before they can able to understand themselves before they can
understand others. understand others.
Emotional maturity in this category includes Emotional maturity in this category includes
people having traits such as perception of others, people having traits such as perception of others,
being interested in other peoples worries and being interested in other peoples worries and
concerns, the ability to anticipate someones concerns, the ability to anticipate someone's
emotional response to a problem or situation, emotional response to a problem or situation,
and the understanding of societies norms and and the understanding of societies norms and
why people act the way they do. why people act the way they do.

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NOTES OF BUSINESS AS – UNIT 2, PEOPLE .

IMPORTANCE OF EMOTIONAL EVALUATION OF EMOTIONAL

INTELLIGENCE INTELLIGENCE

Increased workplace productivity. Emotional intelligence is not

about being emotional but about
Reduced conflicts. being smart with your emotions.
Better workers management relationships.

Helps in reducing stress.

Application requires training and
Improved workers motivation. skills on the part of leader.
Improved sense of belongingness.

PRACTISE QUESTIONS
■ Briefly explain two disadvantages of
democratic leadership style? [Marks 2]
■ Explain two of the Goleman's emotional
intelligence skills? [Marks 4]
■ Discuss the appropriateness of any two
leadership styles for a growing business.
[Marks 12]

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NOTES OF BUSINESS AS – UNIT 2, PEOPLE .

LEARNING OUTCOMES
■ An understanding about the concept of
motivation.
■ The need to motivate employees to achieve
MOTIVATION & the objectives of a business.
■ A simple explanation of human need.
THEORIES OF ■ How human needs may or may not be
MOTIVATION satisfied at work.
■ Ideas of the main content theorists
(Maslow, Taylor, Mayo, Hertzberg) and
process theorists (McClelland, Vroom).
LECTURE: 3 ■ Evaluation.

MOTIVATION DEFINED WHY TO MOTIVATE EMPLOYEES?

• High level of output & productivity – lower
Motivation is the desire of workers to see a cost of production – low process – can be
job done quickly and well. competitive & profitable.
Or • Employees enjoy their work.
• Better quality of products – competitive
The internal and external factors that advantage.
stimulate people to take actions that lead to • Low level of wastage – low cost.
achieving a goal. • Low level of Absenteeism – higher
productivity.

WHY TO MOTIVATE EMPLOYEES? SATISFACTION OF NEEDS AND

MOTIVATION
• Low level of labour turnover – lower
recruitment cost. • People work for satisfaction of needs – so
can be motivated if needs are better
• Better Image – can attract quality human satisfied.
resource.
• Better workers management relations.
• Especially if un-satisfied needs are satisfied,
workers can be easily motivated.
So achievement of business
objectives.

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24 | P a g e M. IMRAN FAWAD CA (INTER), ACCA, M.COM, ICMA
NOTES OF BUSINESS AS – UNIT 2, PEOPLE .

MASLOW’S HIERARCHY OF CLASSIFICATION OF NEEDS

NEEDS
■ Physiological Needs: wages must be enough
Abraham Maslow presented this theory and to meet basic needs.
described the relationship of employee needs ■ Safety Needs: Job security & safe working
with their motivation. conditions.
Two Parts of the ■ Love & Belonging Needs: Social interaction
Theory of workers & team working.
■ Esteem Needs: Recognition for efforts.
■ Self Actualisation: Utilizing one’s potential &
The hierarchy of
5 Classifications sense of achievement.
needs on a
of Needs.
pyramid.

MAIN ARGUMENTS ADVANTAGES OF MASLOW’S

HIERARCHY OF NEEDS
1. Human needs start at the lowest level.
2. Once satisfied, that need no more motivate • Helps to understand employee’s / human’s
a person. Only next level can motivate a needs.
person.
• This theory helps management in finding
3. Reversion to previous level is possible. out the factors which motivates employees.
4. Self-actualization is not achieved by most, • Helps to decide rewards for each level of
though it is possible for all. needs.
• Helps in recognizing potential of extra
ordinary employees.

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25 | P a g e M. IMRAN FAWAD CA (INTER), ACCA, M.COM, ICMA
NOTES OF BUSINESS AS – UNIT 2, PEOPLE .

LIMITATION OF THEORY TAYLOR’S SCIENTIFIC

• Some rewards satisfies more than one needs,
so more needs will be satisfied at a time. MANAGEMENT
Whereas Maslow believes that needs should
be satisfied on after another.
• F.W Taylor presented
• Not everyone has the same needs as assumed this theory in 1911.
by the Maslow.
• Practically, it is difficult to know the level met • It was first attempt
and the level being worked on. to organize the work
• Money does fulfill the physiological need but it scientifically.
also fulfills higher needs too. Maslow believed
that advanced needs are not dependent on • Designed to reduce
money. inefficiency &
• Self-actualization is never permanently improving output.
achieved. Rather it is an ongoing process

BACKGROUND TAYLORISM (SCIENTIFIC

■ His main aim was to reduce the level of
MANAGEMENT) DEFINED
inefficiency that existed in US manufacturing 1. Scientific Management is taking business
plants. The scope of efficiency gain was huge decision making based on data that are
at that time. researched and tested quantitatively in
■ Most of workers were untrained and non- order to improve efficiency of an
specialized, poorly led by supervisors and organisation.
managers with no training in people
2. He widely used the scientific method of
management. There was no proper system of
selection and appraisal of workers. And there
observation, hypothesis, testing and
was no job security. He believed that conclusion on the different work methods
efficiency gains can be shared by workers and to improve productivity.
owners.

THE KEY ELEMENTS OF TAYLORISM THE KEY ELEMENTS OF TAYLORISM

1. There is only one best way of doing thing, 4. Right people should be chosen for the job.
to be chosen by manager – not worker. (That is to select the best person for each
2. There should be division of labour. That is different job based on the precise
breaking a job into small repetitive tasks, specialized need of the each task. Tight
each of which can be done at a speed with management controls over work methods
little training. were ensured.)
3. Worker is economic man. - They are 5. There should be piece rate system. (since
motivated by money. workers are economic men)
6. “Time and motion theory” should
determine the best way of doing thing.

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NOTES OF BUSINESS AS – UNIT 2, PEOPLE .

TAYLOR SCIENTIFIC APPROACH: BENEFITS OF TAYLOR’S SCIENTIFIC

MANAGEMENT
1. Select worker to perform the task.
2. Observe them and note key elements. • Tylor established management as a scientific
subject worthy of research and study.
3. Record the time taken to perform each part of
the task. • His approach was adopted by many premier
figures in the business community including
4. Identify the quickest method recorded. Henry Ford.
5. Train all workers in this quickest method. • His techniques encouraged the use of mass
Worker cannot change this method. production and the conveyor belt system.
6. Supervise and ensure this method is being • Improved working methods – increased
followed.
productivity.
7. Pay workers on the basis of the work
• Rational basis for piece-rate & incentive
performed.
schemes.

DRAWBACKS OF TAYLOR’S ELTON MAYO’S THEORY ON

SCIENTIFIC MANAGEMENT
It is easy to dismiss Taylor and his ideas.
HUMAN RELATIONS
• He was a believer of only financial motivation. • Elton Mayo is best known for his
He ignored any social dimension of “Hawthorne effect” conclusion, which were
employment.
based on a series of experiments.
• Boring, Monotonous & repetitive jobs due to
excessive specialization. • The research was to examine the effects of
• Workers are treated as machines & are changes in lighting/ temprature on the
expected to produce standard performance productivity of workers at the company’s
resulting low motivation of workers. Hawthorne plant.
• His ideas resulted in opposition from
politicians and the business community.

RESULTING OF EXPERIMENTS CONCLUSION OF MAYO’S WORK

• Changes in working conditions & financial
• Resulting of experiment proved that rewards have little or no effect on productivity.
working conditions in themselves were not • Management’s consultation with workers &
that important in determining productivity their interest in workers job motivates them.
levels. • Team working & team spirit improves
• There was no difference in productivity of productivity.
control group & that of others. • Control of workers on their working life
improves their morale.
• Therefore; other motivational factors
needed to be investigated further. • Groups / teams should be given authority to
decide their work targets.
• Productivity of workers is also effected by
informal leaders of the group.

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NOTES OF BUSINESS AS – UNIT 2, PEOPLE .

USEFULNESS OF ELTON MAYL’S THEORY OF HERZBERG’S TWO FACTORS

HUMAN RELATIONS
THEORY
• Elton Mayo laid the foundation for modern
human relations management methods. • Fredrick Herzberg presented this theory in
• Human relations were recognized as the real 1966.
source of employee motivation. • Herzberg’s two factor theory was the result of a
• Laying the groundwork for later approaches to study designed to test the view that people
team building and group dynamics. face two major sets of influences at work. One
potentially causing dissatisfaction and other
• Superiority of relational factors such as causing satisfaction.
attention and team work over monetary • Herzberg’s resulting theory was based on the
rewards or environmental factors such as results to questions asked of 200 accountants
lighting, humidity, etc. and engineers in the USA.

HERZBERG’S TWO FACTORS THEORY HYGIENE FACTORS

• These are the factors whose absence can
• Herzberg divided the work factors into two dissatisfaction but presence make workers
categories, called: work normal, not motivated. Example include;
• Motivator factors are the aspect of a 1. Company policies and administration.
worker’s job that can lead to positive job
satisfaction. And 2. Supervision of employees.
• Hygiene factors are the aspects of a 3. Basic pay & benefits.
worker’s job that have the potential to 4. Working conditions.
cause dissatisfaction. 5. Job security.
• And this division enables the managers to 6. Relations with management.
either satisfy or motivate the workers. 7. Relationship with fellow workers.

MOTIVATORS CONSEQUENCES ON BUSINESS

• These are the factors whose absence don’t ■ Pay and work condition can only remove
cause dissatisfaction but presence make dissatisfaction. They do not motivate employee
workers motivated. Examples include; to work more or excellently.
1. Achievement of personal goals. ■ Pay can attract people to job (he called it
movement), but pay cannot make them want
2. Recognition for achievement. to do the job, that require motivation.
3. Interesting work. ■ Higher pay, improved working condition and
no-tight supervision will soon be taken for
4. Responsibility for greater & complex duties. granted. To motivate work need to be
5. Personal growth and advancement. interesting, rewarding or challenging, the
worker will not be motivated.
6. Delegation of Power – status. ■ c)He suggested adopting the principal of ‘job
7. Promotion. enrichment’” for motivation.

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NOTES OF BUSINESS AS – UNIT 2, PEOPLE .

THERE ARE, McClelland ARGUES, THREE

McCLELLAND’S MANAGERIAL BASIC NEEDS, WHICH MOTIVATES EMPLOYEES
NEEDS
• David McClelland suggested that the way Need for Achievement.
employees are motivated is related to what
they learn in early childhood. They develop
needs based on this behavior.
Need for Affiliation.
• For example, a girl may have a great need
to achieve, encouraged by parents who
help her to be successful at school. When Need for Power.
she becomes employed, she will behave in
a similar way.

I. THE NEED FOR ACHIEVEMENT (n-ach) II. THE NEED FOR AFFILIATION (n.affil)
• This is one of the keys to a company’s • A person with a need for affiliation, friendly
success. People who have high achievement relationships and interaction with other
people. They are good team member and
needs often become successful wished to be liked
entrepreneurs.
• Such people like to take responsibility and III. THE NEED FOR POWER (n.pow)
risks, and want quick feedback on how they •A person with a domination need is ‘authority
have performed. They like to set their own
motivated’. They wish to control other and seek
goals and standards and achieve these on
status in higher position.
their own.
•Need power is often seen as undesirable (where one
• However, these people will not work well in person dominated others).
groups. •But positively it might reflect the ability of an
individual to persuade, influence or lead people.

MAIN ARGUMENT
• McClelland believed all worker and manager
possess these needs but to a varying
degree. His main point was that (n-ach)
people are the one that make thing happen.
However, they may demand too much from
other subordinates. And n-affil are good
team members.

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NOTES OF BUSINESS AS – UNIT 2, PEOPLE .

VROOM’S EXPECTANCY 3 BELIEFS OF EXPECTANCY THEORY

THEORY • Expectancy: the degree of belief that
Vroom suggested that individuals choose to increased efforts will lead to better
behave in ways that they believe will lead to performance (target)
their desired outcomes. His expectancy • Instrumentality: The confidence of getting
theory states that individuals have different actually what is desired if performance
sets of goals. They can be motivated if they targets achieved; even if promised by
believe that: managers.
I. There is a positive link between effort & • Valence: the depth of the want of an
performance targets. employee for an extrinsic or intrinsic
II. Favorable Performance i-e targets will reward.
result in a desirable reward. • STRENGTH OF MOTIVATION = VALENCE X EXPECTANCY
X INSTRUMENTALITY
III. The reward will satisfy an imp need.

PRACTISE QUESTIONS
• With reference to motivation theories discuss the
ways a manager can choose to motivate its
workers in a hotel. (12 marks)

• Evaluate the importance of financial rewards for

motivating employees. (12 marks)

• With reference to Taylor theory, explain how Elton

Mayo Human relation theory has opened a new
way at looking at staff motivation? [Marks 12]

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NOTES OF BUSINESS AS – UNIT 2, PEOPLE .

SYLLABUS
• The theories in practical situations.
• Different payment methods (time based, piece
rate, salary, commission, bonuses, profit
sharing, performance related pay).
MOTIVATION IN • Different types of non-financial motivators
PRACTICE (training, induction, opportunities for
promotion, development, status, job re-
design, team working, empowerment,
participating, perks).
• Ways in which employees can participate in
the management and control of business
LECTURE: 4 activity.

Time based Training

Induction
Piece rate
Opportunity for Promotion

Development
Rewards

Salary Rewards
Non- Status
Financial Rewards Bonus Financial
Rewards Job redesign

Commission Team working

Empowerment
Profit sharing
Participation
Performance
related pay Fringe Benefit/ Perks

FINANCIAL REWARDS PAYMENT SCHEMES

Rewards offered to the workers in financial or ■ Payment Schemes consist of all those
monetary terms. methods which are used to pay or
Can be classified into compensate the workers for their efforts.

Two major categories: ■ Payments are necessarily made to all

workers, regardless of their level of
Payment Schemes performance. Payments are not attached to
any standards.

Incentive Schemes

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NOTES OF BUSINESS AS – UNIT 2, PEOPLE .

INCENTIVE SHCEMES VARIOUS PAYMENT SCHEMES

Can be grouped into:
• Incentive Schemes consist of all those
methods which are used to reward the Payment schemes for production
workers for their extra ordinary efforts. workers.

Payment schemes for

• Incentives are made to only those workers, administrative staff.
who perform up to or above certain
standards. Incentives are always attached to Payment schemes for sales staff.
some standards.

Payment schemes for employees

hired for specific jobs.

PAYMENT SCHEMES FOR PRODUCTION PAYMENT SCHEMES FOR PRODUCTION

WORKERS WORKERS – Piece rate system
1. Piece-Rate System: Advantages Disadvantages
Workers are paid according to their a) It encourages a) If products are different, it would not
greater effort be possible to apply. Standardized,
output produced. A per unit rate is decided to
and faster measurable products are must.
make payment to the workers. Their earning
working b) Quality may be compromised.
is calculated by multiplying piece rate with b) The labour cost c) Worker may settle for a set pay level
the number of units produced. of each unit is and do not work more.
determined in d) Low security of pay level.
advance, helping e) Workers may discourage any change
in pricing the that result in pay loss.
product.

PAYMENT SCHEMES FOR PRODUCTION PAYMENT SCHEMES FOR

WORKERS ADMINISTRATIVE STAFF
2. TIME RATE / HOURLY WAGE RATE: 1. Salary:
AN hourly wage rate is decided and workers Salary is annual sum of money that is usually
are paid on the basis of the time they spend paid on monthly basis. It is most common
on production. Their earning is calculated by form of payment for professional, supervisory
multiplying hourly wage rate with the number or management staff. Organisation create
of hours worked. different band of salary based on technical
knowledge/skill and /or experience.
A good way to increase quality as labour are
not pushed for more output but may result in
loss of efficiency. Needs supervision.

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NOTES OF BUSINESS AS – UNIT 2, PEOPLE .

PAYMENT SCHEMES FOR PAYMENT SCHEMES FOR

ADMINISTRATIVE STAFF - salary ADMINISTRATIVE STAFF
Advantages Disadvantages 2. PERFORMANCE RELATED PAY (PRP):
a) security of income a) Income is not A financial reward system for employees where some
b) It gives status compared to time related to efforts or all of their monetary compensation is related to
based or piece rate or productivity how their performance is assessed relative to stated
c) helps in costing easier b) It may lead to criteria. Performance related pay can be used in a
d) Suitable for job where output is complacency business context for how an individual, a team or the
not measurable c) Regular appraisal entire company performs during a given time frame. It
require:
e) Suitable for management needed to assess
position, where responsibility promotion to next a) Regular target setting, setting objective
force people to work extra band (could be b) Annual appraisal against the target
hours advantage) c) Paying according to the level of target exceeded

PAYMENT SCHEMES FOR ADMINISTRATIVE PAYMENT SCHEMES FOR SALES STAFF

STAFF – Performance related Pay
1. Commission Payment:
Advantages Disadvantages Commission payment is a specific percentage
a) Staff are motivated to a) It may fail to motivate if
of total sales amount, paid to sales staff
against the sales produced by them.
improve performance staff is not driven by the
to secure reward need for financial reward
2. Salary Plus Commission:
Sales staff is paid a fixed salary plus a
b) Target setting can b) Team spirit may be percentage of total sales amount, paid to
help to give purpose damaged by rivalry for sales staff against the sales produced by
c) Annual appraisal reward them.
offers the c) Claims of favoritism may Its advantages and disadvantages are same as
opportunity for hamper performance, if low piece rate system plus the disadvantage of using
feedback on targets or wrong appraisal unethical or pressure sales technique that may
performance is done affect company reputation

INCENTIVE SCHEMES FOR PROFIT SHARING:

ADMINISTRATIVE STAFF A bonus for staff based on the profits of the business.
Sometime it’s paid in shares.
1. Bonus: Advantages Disadvantages
A payment made in addition to contracted a) Potential conflict between a) The reward is not linked
wage or salary. Employer may pay them to workers and owners is reduced to individual efforts. (Why
congratulate achievements like increase in b) Higher worker effort, more should one work more
output, productivity or annual turnover. willingness to reduce cost that then?)
benefit business. b) Small profit shares at year
c) Attractive to high quality worker end may not produce
to join this firm. continuous motivation
d) Does not add business cost c) Reduce retained earnings
(appropriation of profit) and dividend
e) Increase business profitability d) May increase shares and
due to high motivation dilute the value

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NOTES OF BUSINESS AS – UNIT 2, PEOPLE .

Training JOB DESIGN & RE-DESIGN

Induction
Job Design:
Opportunity for Promotion Job design is a process of deciding the duties
Development & responsibilities for an employee; according
Rewards

to his/her expertise qualification, skills

Non- Status experience, and aptitude. In order to get the
Financial best performance.
Rewards Job redesign
Job Re-Design:
Team working
Job re-design is a process of changing the
Empowerment tasks & activities of a job, perhaps in an
attempt to motivate workers. These include
Participation
job enlargement, rotation and enrichment.
Fringe Benefit/ Perks

TEAM WORKING TEAM WORKING

Advantages Disadvantages
• This is when employees are not given a) Better motivation because of a) Not everyone is a
individual responsibilities but are organized fulfillment of social needs and team player. Some
into small formal groups to carry out a esteem needs (Maslow) and are isolationist.
bigger task. In this method the jobs are not empowerment (through job b) Team culture may
assigned individually but to the whole team.
enrichment-Herzberg) contradict
• Traditionalist believes this is against b) Better motivated staff to reduce organisation culture
“division of labour” and would decrease labour turnover and increase c) Team forming is
efficiency through wastage of time in team productivity. sometime
meeting. Supporter of job enrichment argue c) Team working can reduce disruptive and may
that this will increase motivation through
management cost- delayering entail some cost
different means
d) Complete unit production
produced enrichment

EMPOWERMENT TRAINING TO MOTIVATE

• This is when individuals and teams are A process of learning some new skills or
given some degree of control over how knowledge by the employees or their learning
their task should be undertaken. This gives to carry out their jobs in a better way is
employees greater control over the work. known as training.
• This will help in making on-time & most • Training motivates an employee as it helps
appropriate decisions. in increasing productivity and helps in
• Empowerment is also a motivating factor. meeting targets.
• Training results in increased earnings of
employees and organisation.

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34 | P a g e M. IMRAN FAWAD CA (INTER), ACCA, M.COM, ICMA
NOTES OF BUSINESS AS – UNIT 2, PEOPLE .

INDUCTION TRAINING OPPORTUNITIES FOR PROMOTION/

DEVELOPMENT FOR MOTIVATION
The process of introducing new employees to Development can be defined as a process of
the business, its policies, their job & their preparing employees to meet & accept future
colleagues is known as induction training. requirements of their Job & Org.

Opportunity for promotion:

Induction training is provided to those who Promotion is the advancement of an employee's
recently joins a business. This increases the rank or position in a hierarchical structure. This
amount of confidence among employees, may mean higher level work and responsibility
and similarly reward. This matches with Herzberg
motivates them and helps to overcome motivator factor.
induction crises. A opportunity for promotion in itself motivate a
person to achieve higher level performance to
qualify for such promotion

STATUS & PARTICIPATION AS WAYS TO VERY IMPORTANT

MOTIVATE
■ Better status given to an employee motivates them. • While answering questions on motivation; it
As they feel more important and gets chances to is required to give reference of the related
contribute significantly.
■ PARTICIPATION:
motivation theory to get higher marks for
When employees get a chance to participate in the ANALYSIS.
decision making process and their ideas &
suggestions are taken while making their concerned • But only the reference should be given.
decisions, that helps in improving their morale. There is no need to state or explain the
They feel important and significant for the
organisation. theory itself. That will be just a waste of
■ “Worker director” is an advanced example of this time and will not be given any credit.
idea. Or worker representative may be engaged in
decision making. Time consumption is one down
side of this approach. Autocratic manager may use
it only for show off.

PRACTISE QUESTIONS

• Evaluate the importance of financial rewards in

motivation of school employees. (12 marks)
• Money is not the only method to motivate;
there are other non-financial rewards that can
motivate. Describe two such rewards to
motivate employees in a manufacturing
concern? [Marks 8]

• Discuss how a manager can ensure improved

efficiency and morale of his workers in a
factory. (12 marks)

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35 | P a g e M. IMRAN FAWAD CA (INTER), ACCA, M.COM, ICMA