Importance Of Motivation In Organizations Commerce Essay


In a nutshell motivation is attracting/persuading a person to do something because he or she wants to do it. In other words, can be deemed as both the powerhouse behind behaviour, and also a person's reasons for doing something (or nothing). Motivation involves both feelings (emotions) and thinking (cognition).

According to Buchanan "Motivation is a decision-making process, through which the individual chooses the desired outcomes and sets in motion the behaviour appropriate to them"


While it is important, motivation alone does not dictate all of a person's behaviour. A person's ability clearly also matters, and so do factors like the resources a person is given to do his or her job. Two people doing similar jobs may both be successful but for very different motives. For example, one salesperson may be motivated by the commission earned on sales, while another may be more concerned about rising to the challenge of meeting sales targets, perhaps for his or her own satisfaction, or perhaps because of a desire to please the boss.

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Why is motivation important for businesses?

It is often said that the best businesses have the best motivated workers and well-motivated employees are usually characterised by:

Better productivity

Lower levels of absenteeism as the employees are content with their working lives

Lower levels of staff turnover (the number of employees leaving the business)

Improved industrial relations with trade unions

Contented workers give the firm a good reputation.

Motivated employees are likely to improve product quality or the customer service.

Theories of Motivation

Over the years many theories of motivation have been put forward. Some of them are broad theories of human behaviour, others more specific to the workplace.

The most commonly held views or theories are discussed below and have been developed over the last century. However these theories do not seem to reach the same conclusions!


Frederick Winslow Taylor (1856 - 1917) put forward the idea that workers are motivated mainly by pay. His Theory of Scientific Management argued the following:

Workers do not naturally enjoy work and so need close supervision and control.

Therefore managers should break down production into a series of small tasks.

Workers should then be given appropriate training and tools so they can work as efficiently as possible on one set task.

Workers are then paid according to the number of items they produce in a set period of timepiece-rate pay.

As a result workers are encouraged to work hard and maximise their productivity.

Taylor's methods were widely adopted and saw the benefits of increased productivity levels and lower unit costs.

However workers soon came to dislike Taylor's approach as they were only given boring, repetitive tasks to carry out and were being treated little better than human machines.

This led to an increase in strikes and other forms of industrial action by dis-satisfied workers.


Elton Mayo (1880 - 1949) believed that workers are not just concerned with money but could be better motivated by having their social needs met whilst at work (something that Taylor ignored). He introduced the Human Relation School of thought, which focused on managers taking more of an interest in the workers, treating them in a better way.

Mayo explained that workers are best motivated by:

Better communication between managers and themselves( Workers).

Greater involvement by management employees working lives

Working in groups or teams

In practice therefore businesses should re-organise production to encourage greater use of team working and introduce personnel departments to encourage greater manager involvement in looking after employees' interests. His theory most closely fits in with a paternalistic style of management.


Abraham Maslow (1908 - 1970) along with Frederick Herzberg (1923-) introduced the Neo-Human Relations School in the 1950's, which focused on the psychological needs of employees. Maslow put forward a theory that there are five levels of human needs which employees need to have fulfilled at work.

All of the needs are structured into a hierarchy and only once a lower level of need has been fully met, would a worker be motivated by the opportunity of having the next need up in the hierarchy satisfied. For example a person who is dying of hunger will be motivated to achieve a basic wage in order to buy food before worrying about having a secure job contract or the respect of others.

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A business should therefore offer different incentives to workers in order to help them fulfill different needs in turn and progress up the hierarchy.

Managers should also recognise that workers are not all motivated in the same way and do not all move up the hierarchy at the same pace. They may therefore have to offer a slightly different set of incentives from worker to worker.


As Marslow says, workers are not motivated by money alone. Individuals are motivated by different things. Motivation can be about shaping a worthwhile career or it may involve having more flexibility with time.

Employees at RBS enjoy Total Reward - a specific benefits package designed by RBS that goes far beyond salary. It offers benefits for each member of staff that include not just money, but also personal choice in working hours and security.

The RBS Total Reward package also offers flexible pension funding, health and medical benefits, paid holidays, and a confidential advice service. Employees have a generous holiday allowance (between 25 and 30 days for full-time staff), with the option of buying or even selling days. Employees may also choose from a wide range of lifestyle benefits, including discounted shopping vouchers, childcare facilities and RBS financial products, such as mortgages, currency exchange, personal loans and banking at special staff discounted rates.

Results Based Payments

At the core of the package is a competitive salary based on skills and experience regardless of where in the world RBS staff are based. Providing competitive pay means comparing what you are offering against salaries for similar jobs in other financial services companies.

The terms and conditions of their employment specify the basic rate of pay and any further payments that they may be eligible to receive.

However, within RBS the basic salary is only the starting point from which a number of additional bonus payments can be earned. All employees share in RBS' success through its profitsharing scheme. If the company meets its overall profit targets, then all employees will receive a bonus worth 10% of their salary. On top of the profit-share bonus, as mentioned before, there is also the chance to earn an individual performance-related bonus when employees achieve or exceed their personal performance targets. So in a year when the company does well and the individual performs well, the additional payments may be quite substantial.

Non Financial Rewards

Whilst money may be an incentive to go to work; at work, pay cannot motivate people to give more. Theorists have long understood that staff needs a combination of motivators. This is why RBS offers so many non-financial rewards which can improve personal lifestyle.

One of the most important motivators for RBS employees is the recognition of good performance by graded progression. At RBS, people are encouraged to grow and develop their skills and abilities.

Employees identify development needs with their line manager at their annual performance review. These are documented in a personal development plan. Development can involve more training, attending courses or gaining new understanding and skills. This can improve the prospects of promotion and allow employees to move up the organisation and increase their Total Reward.

Lloyds TSB developed its own flexible working approach in 1999 to help attract and retain the best staff. The Group's own 'leaver surveys' showed that flexibility was a prime reason for them joining initially. This is supported by a national survey which showed that flexible working was a more important factor than pay for graduates in choosing an employer.

Research shows that people are more productive and experience less stress when they have control over the hours they work. 

Therefore, flexible working helps Lloyds TSB to gain the long term commitment and motivation of well qualified and experienced staff. It is far more expensive to recruit and train new staff than to retain existing ones.

Traditional work patterns usually involved fixed hours between 9.00 a.m. and 5.00 p.m. Work beyond these hours was paid by employers at overtime rates, e.g. 'time and a half' or more, driving up staff costs. In today's world, people with busy lifestyles require financial services at any time. Peak customer demand does not follow a traditional 9.00 a.m. to 5.00 a.m. working day either. For Lloyds TSB, flexible arrangements permit it to offer its employees personal benefits to suit their own lives and deliver a more complete service to customers.

As per Marslow's Hierarchy of needs the most basic needs are at the bottom. The more complex needs are at the top.

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Siemens provides the opportunity for employees to fulfil their higher-order needs. For skilled, creative workers, like engineers, these are likely to be of great importance. Esteem is about having self-respect and the respect of others.

Recognition of an employee's achievements by the employer also helps to meet esteem needs. For example, Siemens runs schemes in which suggestions and projects for improvements are rewarded. This could be financially, either individually or as part of a team, or in terms of peer or management recognition of their achievements.

Self-actualisation is concerned with workers fulfilling their potential. Engineering work allows employees to do this by enabling them to get involved and take responsibility for their own jobs. An engineering environment generates excitement and challenges. Original solutions and ideas are required to solve problems on a regular basis. These appeal to the higher needs of employees. It is also possible to use technology to identify new ways of working and new processes.

Siemens offers engineering staff training and development opportunities. This links with self-actualisation as it helps engineers to extend their capabilities which may lead to a progression up the career ladder. Training and development also helps individuals to meet the changing demands of the business' global markets.


As expressed in these case studies motivating employees is an important role for managers. In the past, as the work of Frederick Taylor illustrated, motivation theory linked very closely to pay and output.

Individuals now need to be motivated in a completely different way. They have higher order needs and organizations should provide world-class employment packages for every employee, at every level, wherever they work. It adopts an attitude that motivates its staff in both financial and personal ways.

Modern companies are able to compete for the best people and attract them to their businesses. In a world where local labour market conditions can fluctuate from region to region, organisations must be sensitive to local conditions and individual needs.

Employees at all levels should be in a work environment where effort is seen to be valued, where achievement is recognised, where individual progress is rewarded and where a long term career is available for those who are able to grow with the business.

Where individuals are made to feel a part of the bigger picture and where the rewards available are varied, practical, personal and tailored to the individual, there are motivators for all.