Motivation: financial and non-financial methods
Motivation theories help explain why financial and non-financial rewards affect how hard employees work. Frederick Taylor's scientific management, from the early 1900s, assumed workers were motivated mainly by money and worked hardest when paid strictly according to their output, known as piece rate.
Before you start
No specific prerequisites - this is a good place to start.
Method
- Identify whether the method described in the case is financial, involving money, or non-financial, not involving extra pay.
- Learn a clear definition and one business example for each named method: wages, salary, commission, bonus, job rotation, job enrichment, and empowerment.
- For explain questions, give one point about how the method affects employee behaviour or effort, plus a linked consequence for output, quality or retention.
- Learn that financial methods often suit simple or repetitive roles, while non-financial methods often suit roles needing initiative or where money alone is not the main driver, linking to Herzberg's theory in BUS.HR9.
- For evaluate or recommend questions on which method suits a business, weigh the cost to the business, the nature of the job, and the likely effect on the specific employees described in the case.
Worked example
A double-glazing sales team is paid a low basic salary plus commission on every sale they make. Explain one reason why commission might motivate the sales team to work harder.
- Identify the reward: commission, extra money paid for each sale made.
- Identify the link between effort and reward: the more sales an employee makes, the more commission they personally earn.
- Identify the effect on behaviour: employees have a direct financial incentive to sell more, for example by working longer hours or persuading more customers to buy.
- Link this to the business: higher effort from the sales team should increase the business's total sales revenue.
- Write the explained answer, combining the link between individual effort and reward with its effect on total sales.
Practice questions
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Q1State the difference between a wage and a salary.Show answer
Answer: A wage is usually paid per hour worked; a salary is a fixed annual amount, often paid monthly regardless of hours worked.
Q2Identify one financial method of motivation.Show answer
Answer: Commission, bonus, profit sharing, wages, or salary.
Q3Give one non-financial method of motivation.Show answer
Answer: Job rotation, job enrichment, empowerment, or improved working conditions.
Q4State what job rotation means.Show answer
Answer: Moving employees between different tasks to reduce boredom and build a wider range of skills.
Q5Explain one drawback of relying only on financial rewards to motivate staff.Show answer
Answer: Employees may only work hard while the reward is offered and can still become dissatisfied once pay no longer feels sufficient, rather than being motivated by the work itself.
Q6Identify one example of job enrichment.Show answer
Answer: Giving an employee a more challenging or varied task with greater responsibility, for example letting a shop assistant manage stock ordering.
Q7State one non-financial reward that could improve staff motivation without extra pay.Show answer
Answer: Praise or recognition, more responsibility, better working conditions, or flexible hours.
Exam-style questions
Written in the style of a GCSE Business exam paper, with a full mark scheme.
Explain two non-financial methods a business could use to motivate its employees.
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A call centre pays staff a low, fixed hourly wage with no bonus or commission. Staff turnover is high, and exit interviews show many leavers say the job feels repetitive and that they have no say in how they do their work. The manager is deciding between introducing a sales bonus scheme, or introducing job rotation and giving staff more control over how they handle calls. Evaluate whether the call centre should introduce job rotation and empowerment rather than a bonus scheme to improve staff motivation.
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See real GCSE Business past-paper questions, with official mark schemes →
Free printable worksheet
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