Module 2: Management of People

Objectives:
Explain the theories and practices of motivation
 The Need for Motivation

 Motivation refers to the factors within an individual that

stimulate, maintain and direct behavior towards
achieving a goal. Motivation has a major influence on a
person’s behavior at work. 
 Factors that stimulate and influence motivation:

  Individual needs – the opportunity to satisfy one’s needs through work is a great motivator. Food,
shelter and clothing.
  Self-motivation (intrinsic motivation) – being able to have some form of self-direction is a great
source of motivations for many individuals.
  Ability to make choices - the opportunity to make choices with our time and money creates a sense
of motivation.

 Environmental opportunities (extrinsic motivation) – for choices to be meaningful there have to

be realistic alternatives available. If the economic and business environment gives us the opportunity
to work, earn money and advance our career then this will create motivational forces in people.
 Theories of Motivation (Content Theories)

   Maslow’s Hierarchy of Needs

 The first comprehensive attempt to classify needs was by
Abraham Maslow in 1954. Maslow’s theory consisted of
two parts. The first concerned classification of needs. The
second concerned how these classes are related to each
other. The importance of his work to business managers is
this. Our needs determine our actions – we will always try
to satisfy them, and we will be motivated to do so. If work
can be organized so that we can satisfy some or all our needs
at work, then we will become more productive and
satisfied.
The classifications of needs are:

 Physiological needs – income from employment – high

enough to meet essential needs.
  Safety needs – job security, safe working conditions.
  Social needs (love, belonging) – love and belonging to a
group, working with colleagues that give support,
teamwork, good communication.
  Esteem needs – offering recognition for work done well.
  Self-actualization – offer challenging work that stretches
the individual. Being promoted and given the
responsibility to develop and introduce new ideas.
Maslow argued that needs at the bottom of the pyramid are basic needs.
These needs must be satisfied before a person can move to the next level
Herzberg’s Two Factor Theory
 Frederick Herzberg (1966) developed the ideas of the two-
factor theory. Those factors that lead to job satisfaction he
referred to as motivators and those that lead to job
dissatisfaction he referred to as hygiene factors.
 
Motivators (job satisfaction) include:

 Achievement - workers ability to reach various

goals
 Recognition for achievement – employee of the month, bonus, vacation,
award for top achiever
 The work itself
 Responsibility for tasks – job enlargement
 Advancement – Promotion
 
Hygiene (job dissatisfaction) factors include:

 Company policy and administration – rules and

Regulations
 Supervision – micromanaging employees
 Salary – level of compensation received
 Relationships with others – social relationships
 Working conditions – environment, equipment,
protective gears
Herzberg argued that people do not work any harder if the hygiene factors are present at work but that their output
can decline if conditions deteriorate and poor hygiene factors can cause job dissatisfaction, on the other hand
motivators which are all related to the intrinsic nature of the work itself produce job satisfaction and higher output.
 Financial and Non-financial Motivational Strategies

 Financial incentives:
 Payment systems – pay is necessary to encourage work effort- all theorists recognize this. The most
common payment systems are:

1. Hourly or time wage rate – an hourly ‘time rate’ is set for the job and the wage level is determine by
multiplying this by the number of hours worked.
Regular pay: 40 hrs x $50 = $2000
Overtime (double time) 5 hrs x $100 = $500
Total Week’s pay = $2 500
2. Piece rate – a rate is fixed for the production of each unit, and workers wage therefore depend on the
quantity of output produced.
  $100 x 60 pants = $6 000
3. Salary – this is an annual sum that is usually paid on a monthly basis. It is the
most common form of payment for professional, supervisory and management
staff.
 
4. Commission – this is most frequently used in personal selling, where the
salesperson is paid a proportion of the sales gained. It can make up 100% of total
income or it can be paid in addition to a base salary.
 Performance-Related Pay (PRP) – this is a scheme to reward staff for above-average work
performance. It is usually in the form of a bonus payable in addition to the basic salary.

 Profit sharing – this scheme shares some of the company profits with not just the shareholders
(dividends) but also with the workers. The essential idea behind these arrangements is that staff
will feel more committed to success of the business and will strive to achieve higher
performances and cost savings.
 
 Fringe benefits – these are non-monetary forms of reward – and there are many alternatives that
can be used. They include company cars, free insurance and pension schemes, private health
insurance, discounts on company products and low interest rates loans.
 Non-financial incentives
 Job enrichment - this involves the principle of organizing work so that employees are
encouraged and allowed to use their full abilities – not just physical effort. The process often
involves a slackening of direct supervision as workers take more responsibility for their own work
and are allowed some degree of decision making authority.
  Job enlargement – this is a term used to refer to any attempt to increase the scope of a job by
broadening or deepening the tasks undertaken. It can include both job rotation and job
enrichment but it also refers to increasing the ‘loading’ of tasks on existing workers.
 Job rotation – this is simply encouraging a worker to do more than one task by switching from
one job to another. Rotation may relieve the boredom of doing one task and it can give the
worker multi-skills.
 
 Appraisal - Appraisal is often undertaken annually. It is an essential component
of a staff development programme. The analysis of performance against pre-set
and agreed targets combined with the setting of new targets allows the future
performance of the worker to be linked to the objectives of the business.
 Job evaluation – this is a formal process of comparing jobs so that a rank order
is obtained based upon the demands of each job. It is important to note that job
evaluation is about comparing jobs, not about assessing the work of individuals.
The main purpose of job evaluation is to allow for the creation of wage structure
that is seen to be fair and objective.
 - Ranking
 Classification
 Point evaluation
 Market evaluation

 Work study – this includes a number of different techniques that are all aimed at
improving the effective use of labour. (Time and Motion Study)
 opportunities for promotion

 individual job needs – materials and equipment

 Participation – decision making

 job satisfaction - recognition

Objectives:
Differentiate between types of leadership skills, styles.
 Leadership

 There are many diverse definitions of leadership. Many of them include the
following features:

 Exerting influence,
 Motivating and inspiring others,
 Setting a good example,
 Helping team/organisation members to realize their potential.
 Therefore a short example of leadership could be influencing and directing
the performance of group members towards achieving the goals of the
organisation. The ability to lead within organisations is of growing interest to
businesses. This has resulted from the need to lead companies through change,
brought about by an increase in competition and changes in technology and
economic conditions. To be a good leader in business it has to be suggested that
a manager must know what direction needs to be taken by the business and plan
how to achieve them.
Leadership skills

 Communication – to lead others effectively it is essential to be able to communicate with them. By

communicating with clarity and authority, leaders should be able to inspire their ‘followers’ to want to
achieve the aims of the organisation.
  
 Problem-solving – leaders should solve problems by gathering data and weighing up alternatives before
making a decision.
 Critical thinking – this means thinking logically and not being influenced by personal wants or desires.  
 Listening – the best communication is ‘two-way’ which means that the leader must be able to send
messages clearly and with authority, but must be able to listen to others.
Leadership Theory
 

 McGregor’s Theory X and Theory Y

  According to Douglas McGregor an important determinant of the
style of leadership used by managers should be based on the
attitude of managers towards their worker. He identified two
distinct management approaches to the workforce and he called
these Theory X and Theory Y.
 s.  
  Theory X Managers (work oriented managers)
The manager assumes that:
 People dislike work and will avoid it,
 People must be forced, controlled, direct and threaten in order to get them to
work,
 The average person prefers to be directed, has little ambition and avoids
responsibility.
 Theory Y Managers (people centered managers)

 The manager assumes that:

 Work is as natural as play
 People can exercise self-direction (work on own initiative)
 People seek responsibility- job enlargement, job enrichment
 The potential in people is not fully exploited by managers.

 Read on Trait Theory, Paternalistic leadership Style

Leadership styles

 1. Autocratic/Authoritarian
 2. Democratic/Participative
 3. Laissez-faire
 Autocratic/Authoritarian/Directive Leader
 This is adopted by leaders who believe in having full control when making
decision. They do not involve the workers in the decision making, yet he is
able to get persons to carry out the required tasks. This type of leader issues
threats and instil fear in workers. The leader usually has a personality
that depicts his or her general style of leadership too. It is best suited for
military and paramilitary groups such as the army, police and fire
services that are dictatorial by nature and function.
 Advantages of Autocratic Leadership
 There is a clear chain of command – how workers are ranked within the organisation
 Decision making is easy
 Suitable for businesses with an unskilled labour force
 
 Disadvantages of Autocratic Leadership
 Does not encourage feedback – one way flow of communication
 Creates resentment and frustration among followers
 Does not contribute to team building because the leader is detached from followers
 Democratic/Participative
 This type of leadership style requires the leader to involve the
workers in decision making. The aim is to persuade the workers to
get the job done. This type of leader accepts ideas, suggestions
and recommendations from the workers thus fostering the idea of
participative leadership.
Advantages of Democratic Leadership

 Workers are more willing to participate thus making the matter of leadership less difficult.
 Greater job satisfaction is achieved because workers are able to contribute to the decision
making process.
 It enhances personal commitment in achieving the goals of the organization.
Disadvantages of Democratic Leadership
 The leader is more open to suggestions therefore he or she could face great difficulty if he
tries apply certain measures of control.
 Decision making process is time consuming because the views of everyone must be
considered.
Laissez-faire Leadership

 The leader gives the workers freedom to operate, and

interferes minimally if at all. The supervisors who adopt a
laissez-faire leadership style believe that the workers will be
more receptive to them. The supervisors just do not want to
offend anyone. Sometimes they do not care about the
workers.
 Advantages
 Permits workers to be innovative and use their own initiative
 Staff are able to work with little or no guidance
 Encourages horizontal communication – communication between persons on the
same level within organizations. Collaborate.

 Disadvantages
 Decision making may become tardy through numerous discussions and deliberation;
it may be difficult to arrive at a consensus.
 Workers may become complacent and not perform their duties effectively
 Paternalistic Leadership
 With this leadership style the leader acts as a ‘father figure’ who
gives attention to the social needs and opinions of the employees.
 Advantages
 1. workers are consulted on decisions
 2. the social needs of workers are met

 Disadvantages
 1. slow decision making process
 2. still dictatorial to some extent
 Informal leadership

 In any group of people, at work or in a social context, it is very common for

‘informal’ leaders to be established. These informal leaders are people who have
the ability to lead without formal power, perhaps because of their experiences
and personality. They may have more influence over the activities of the group
than formal leaders. In an ideal business situation, where workers and employers
work together in a trusting relationship, managers should attempt to work with
the informal leaders to help achieve the aims of the business.
 
 Advantages
1. Can motivate the workforce, which could eventually improve
productivity.
2. Informal leaders know how to get the word out and so can be used
to communicate directly with employees

Disadvantages
3. The informal leader could use his/her influence to resist changes in
the firm.
4. Could result in employees being ill informed about matters within
the organization.
 Review questions

 . Explain the directive or authoritarian style of leadership.

1

 2. Explain one business situation when the directive style

of leadership would be most effective.
 3. Outline three roles of a business leader.
 4. What is the key difference between formal and informal
leadership.
 5. In what ways might a business benefit from informal
leadership?