11.3. Improving the Productivity of Labour

Key words: job enlargement, job enrichment, job rotation, job satisfaction, motivation, performance-related pay (PRP), teamworking 

Why do people work

If a business organisation is to motivate workers to achieve higher levels of productivity and quality, it must first understand why people go to work. The obvious explanation is ‘because they need money’. However, the money is not the only need that is satisfied by working. A combination of factors, financial and non-financial, gives an employee job satisfaction, including:

• adequate wages and fringe benefits, e.g. pension, company car;

• holiday entitlement;

• pleasant working environment;

• challenging and interesting job tasks;

• variety in the working day;

• opportunity to learn and try new ideas;

• availability of training;

• working as part of a team;

• being consulted on management decisions;

• responsibility;

• regular feedback on performance;

• recognition of good work through pay bonuses or promotion;

• social relationships inside and outside of work with colleagues and managers.

A satisfied worker is likely to be more productive, and more committed to the organisation and the attainment of its business objectives.

Motivation strategies

A variety of strategies can be used by firms to increase job satisfaction and motivate employees to work harder:

Performance-related pay (PRP). Linking pay to the performance of individuals or groups of workers can provide an incentive to greater effort. PRP can be in the form of one-off bonuses, piece rates, profit-sharing, and employee share options.

Group working. Encouraging group working can develop team spirit, which can be beneficial to the organisation. Competition between groups may also help to raise output.

New methods of working. Jobs can be enriched or expanded so that workers can be given more responsibility, undertake a wider variety of tasks, be more involved in decision-making, and have a greater sense of achievement.

Innovations such as flexitime may also improve job satisfaction. Flexitime allows workers to choose when to start and finish work, as long as they complete an agreed number of hours per week.

Managerial communication. Perhaps the most basic motivational requirement for managers is simply to communicate well with their employees. Communication can satisfy such basic human needs as recognition, security, and a sense of belonging. Managers can praise staff for their efforts, ask their opinions on organisational issues, and, involve them in decision-making. In this way managers can change the attitudes of workers so that they are more positive about their work and employers.

Rewards and punishments. If managers want to modify workers’ behaviour, they must ensure that appropriate consequences occur as a result of that behaviour. For example, if a worker who arrives on time for work is rewarded in some way, the probability of their arriving on time more often is increased. Conversely, a worker who is reprimanded or punished in some way if late – for example, by loss of earnings – is less likely to repeat the behaviour. An appropriately designed system of rewards and punishments can reinforce good behaviour and help eliminate bad behaviour and poor performance. 

Motivation and financial rewards

Most workers receive wages or salaries based on the number of hours they work each week or year. Time rates are therefore used to reward workers for the amount of productive time they spend in work.

Performance-related pay (PRP) is a term used to describe systems that link the pay of workers to some measure of individual group or organisational effort. In recent years PRP schemes have been extended from manual workers to non-manual/white collar occupations. These incentive payment schemes can take many forms:

Individual payment by results or piecework – where an individual’s earnings are totally or partially based on their performance usually in terms of the quantity or value of output they produce. The more they produce the more they are paid.

Group payment by results – where the output or sales related performance pay is divided within a group of workers according to some pre-determined formula.

Plant- or enterprise-wide bonuses in which all employees receive a bonus.

Merit pay where the employee receives a level of bonus or basic pay linked to an assessment and appraisal of their performance by their superiors. This system is popular in white collar occupations.

Financial participation – for example, profit sharing and share option schemes, whereby individual employees receive a reward in terms of cash or company shares the size of which will normally depend on company profits over a given period.

Other forms of financial incentive include:

Commission – this will often be paid to workers involved in sales such as insurance and double-glazing salespeople, financial advisers, and travel agents, based on a percentage of the value of sales they achieve.

Non-monetary rewards – these are payments to labour in a form other than money, for example, free medical insurance, subsidised meals, and company cars.

Working methods and job design

As organisations become more aware of the importance of motivation, a growing number are introducing new methods of working to take into account the needs of employees to enjoy their work, display their creativity, and feel a sense of achievement and responsibility. It is argued that designing jobs with workers needs in mind will increase quality, productivity and added value, and reduce production costs, absenteeism, and staff turnover.

Various methods have been devised to incorporate workers’ needs into jobs. These include:

Job enlargement. This attempts to make a job more varied by removing the boredom associated with repetitive operations. It involves extending the scope of a job by adding similar tasks, but without increasing worker responsibility. For example, instead of an employee bolting the bumpers onto a new car, s/he may also be allowed to fix doors and bonnets. Job enlargement is often criticised because it simply adds to the amount of dull tasks a worker has to perform.

Job rotation. Instead of enlarging jobs, workers can be organised into small groups and trained to carry out all the jobs in the group. Workers can then swap or rotate their jobs on a regular basis to provide variety. Job rotation is often important in the training of work supervisors or managers. However, if each of the jobs performed is equally boring, motivation is hardly likely to improve as a result.

Job enrichment. This attempts to increase the sense of challenge and achievement in a job. A job may be enriched by giving workers:

• a greater variety of tasks;

• more freedom in deciding how to plan tasks, order materials, etc.;

• regular feedback on job performance;

• more involvement in analysing and changing physical aspects of their working environment, such as temperature control, office or plant layout, lighting, etc.

However, some workers may resent an increase in their responsibility, while others may find it hard cope with the added pressure. In other cases, technology may be a constraint. For example, jobs associated with the operation of specialised machinery and assembly-line techniques can never be particularly meaningful.

Teamworking. This involves dividing the workforce into teams and giving them responsibility for areas such as the planning and execution of their work, quality control, and physical aspects of their environment such as the layout of equipment and furniture. Teamwork allows a greater range of skills and experience to be used in problem-solving and fosters co-operation, rather than competition, among team members.

Advantages of teamworking:	Disadvantages of teamworking:
Variety of skills leads to greater efficiency Problem-solving is easier – ‘two heads are better than one’ Individuals feel less inhibited about making suggestions and decisions with the backing of others – ‘strength in numbers’ Groups may develop a team spirit Workers are motivated by team membership and committed to the achievement of group and organisational goals	Decision-making can be slow, especially in large groups Some members may be inhibited by dominant personalities within the team and prevented from making what could have been good suggestions Some teams may develop norms and attitudes at odds with the organisation, for example, “Don’t work too hard – they won’t thank you for it!” Team discussions may involve ‘too much talk and not enough action’