Class Business
12 Studies
Maslow‟s Need Need and desire is a very
Hierarchy Theory important element in motivation.
of Motivation
The employees get motivated only
for their needs.
If the needs are fulfilled completely then
it is not possible to motivate the
employees.
Assumptions :
1) People's behaviour is based on their needs. Satisfaction with such needs influences
their behaviour.
2) People's needs are in hierarchical order, starting from basic needs to other higher-
level
needs.
3) A satisfied need can no longer motivate a person; only the next higher-level need
can motivate him.
4) A person moves to the next higher level of the hierarchy only when the lower one
Self-actualization needs
Desire to become the most that one can be
Esteem needs
Respect, self-esteem, status, recognition, strength, freedom
Love and belonging/Social needs
Friendship, intimacy, family, sense of connection
Safety needs/Security needs
Personal security, employment, resources, health,
property
Physiological needs
Air, water, food, shelter, sleep, clothing, reproduction
Abraham Maslow is a well-known psychologist. His theory was based
on human needs. He felt that within every human being, there exists
a hierarchy of five needs.
1) Basis Physiological
These
Needs : needs include basic requirements for the survival
and maintenance of human life.
The common physiological needs are food, shelter and clothing.
These needs are the most basic in the hierarchy and correspond
to primary needs.
These needs can be satisfied when monetary incentives are
offered by employers.
2) Safety and Security Needs :
Physiological needs get fulfilled then people start thinking about their future
as they want to secure their future by making sure that in future also
continue to satisfy their physiological needs.
Under safety and security needs there are two categories :
a) Physical security : This means safety from illness, accident, fire, etc.
b) Economic security : Which means having sufficient funds to meet future
physiological needs and to come out of physical security threats.
The people who have more safety and security need to get motivated by
monetary incentives.
3) Affiliation/ Belonging Needs :
It means the need for love, affection, companionship, friendship, etc.
Once the people satisfy their physiological and safety needs
then their social needs become more active and to fulfil the
social needs the manager prefers teamwork, and arranging
formal and
informal get- together so that employees can develop social
relationships.
4) Esteem Needs :
These needs are related to respect and recognition. When the above three
needs get satisfied then people start demanding respect for themselves in a
group.
This need is more common in higher-level employees. Esteem needs can
be satisfied through non-monetary incentives.
5) Self-actualization Needs :
This need refers to realizing or reaching the aim of your life.
Monetary or Financial
Financial incentivesIncentives
refer to incentives which are in direct monetary form or measurable in
monetary terms and services to satisfy basic physiological and safety/security needs of the
employees, financial incentives are important for better performance.
It involves linking the payment of wages of employees to the increase in
Productivity
their productivity at the individual or group level.
Linked Wage For example, under the differential piece wages system, efficient workers are
Incentive paid higher wages as compared to inefficient workers.
Bonus is a one-time extra reward offered to the
employees for sharing high performance.
Bonus It involves offering some funds over and above
the wages/salary to the employees.
It involves providing a share in the profits of the organization to the employees.
Under this generally, the companies fix a percentage of profit and if the
Profit profit exceeds that percentage then the surplus profit is distributed among
Sharing the employees.
Sharing the profit does not give ownership rights to the employees.
Under stock option or co-partnership, the employees are offered the
Co-partnership
company's shares at a set price which is lower than the market price.
/ Stock Option
The allotment of shares creates a feeling of ownership for the employees
and makes them contribute to the growth of the organization.
The commission is a common incentive offered to
employees working in the sales department.
Commission Generally, the sales person gets a basic salary and
along with this, a commission on every sales order.
Retirement benefits such as pension, provident, fund, gratuity, etc.
Retirement
provide financial security to employees after their retirement.
Benefit These incentives are suitable for employees who have security and safety
needs.
Perks / It refers to special benefits such as medical facilities,
Fringe
free education for children, housing facilities, etc.
Benefits /
Perquisites
Non-monetary / Non-financial Incentives
Money is not the only motivator, the employees who have more
esteem and self-actualization need to be active in them and get
satisfied with the non-monetary incentives only.
1) Status :
Status refers to the rank, authority, responsibility, recognition and prestige related
to the job positions in the organization.
By offering higher status or rank in the organization, managers can
motivate employees to have esteem and self-actualization needs active in
them.
2) Organizational Climate :
It indicates the characteristics which describe an organization and distinguish one organization from the other.
It refers to the relationship between superior and subordinate.
A positive approach adopted by managers creates better organizational climates
whereas a negative approach may spoil the climate.
3) Career Advancement :
Managers must provide opportunities for employees to improve their skills
and efficiency and can be promoted to higher-level jobs.
Appropriate skill development programs and sound promotion policies will
help employees to achieve promotion.
Promotion works as a tonic and encourages employees to exhibit improved
4) Job Enrichment/ Assignment of Challenging Job :
Employees get bored by performing routine jobs. They enjoy doing jobs which offer them a variety and opportunities to show
their skill.
By offering challenging jobs, autonomy to perform jobs, and interesting jobs, employees get satisfied and they are motivated.
Job enrichment is also concerned with providing the opportunity for personal growth and meaningful work experience.
5) Employee Recognition Programs :
Recognition means giving special regard or respect which satisfies the ego of the subordinates.
Ego satisfaction is a very good motivator. Whenever good efforts or a positive attitude are
shown by the subordinate then it must be recognized by the superior in public.
Whenever there is any negative attitude or mistake made by a subordinate then it should
be discussed in private by calling the employee in the cabin.
For example : Congratulating an employee for good performance, rewarding an employee for
valuable suggestions etc.
6) Job Security :
Job security means lifetime bonding between employees and the organization. It means giving
a permanent or confirmation letter.
Employees want certain stability in future income and work so that they do not feel worried about these aspects and work
with greater zeal.
When people feel that they are not likely to lose their jobs, they may become complacent.
7) Employee‟s Participation :
It means involving employees in decision making especially when decisions are related to the employees.
In many companies, these programs are in practice in the form of joint management committees, work committees etc.
For example, if target production is fixed by a consulting employee then he will try to achieve the target more sincerely.
8) Autonomy / Employee Empowerment :
It means giving more autonomy, freedom and power to subordinates. This empowerment
develops confidence in employees.
Leadership
“Leadership is the activity of influencing people to
strive willingly for group objectives”.
-- George Terry
Leadership is the art or process of
influencing the behaviour of
people so that they will strive
willingly and enthusiastically
towards the achievement of
group goals.
Features of
Leadership
1) Leadership indicates the ability of
an individual to influence others.
2) Leadership tries to bring change in
the behaviour of others.
3) Leadership is exercised to achieve
the common goals of the
organization.
4) Leadership is a continuous process.
5) Leadership indicates interpersonal
relations between leaders and
Leadership
Styles
Leadership styles refer to a leader‟s behaviour.
A leadership style is the result of the leader's philosophy,
personality, experience and value system.
The most popular classification of leadership styles is based on the
'use of
authority'.
Depending on the use of authority, their basic
styles of leadership :
Autocratic or Authoritative
leadership
Democratic or Participative
leadership Laissez-faire or Free-rein
Autocratic or
Authoritarian An autocratic leader exercises
Leadership
complete control over his
Style (Boss-
subordinates.
centred
Leadership) : The leader is dogmatic i.e., does
not change or wish to be
contradicted.
A (Leader)
Under this style, communication is
only one-way with the subordinate
only acting according to the command
B E given by the manager.
C D His following is based on the
Boss – Centered – Leadership
assumption that reward or punishment
(A is the leader who bosses can be given depending upon the
around and gives orders) result.
The leader gives orders and expects
Advantages :
1) Quickly decision making.
2) Provides strong motivation and satisfaction to the leader who dictates terms.
3) Less competent subordinates are needed at a lower level.
Disadvantages :
1) Leads to frustration and lower morale among subordinates.
2) The initiative level of subordinates goes down.
3) No development of subordinates takes place.
Suitability :
This method is used on rare occasions :
1) Subordinates are uneducated, unskilled, and lack of knowledge
and experience on part of subordinates.
2) The company follows fear and punishment disciplinary technique.
3) Leader prefers to be dominant in decision-making.
4) When Quick-decision making is required.
Example :
Adolf Hitler : He discouraged his cabinet to meet independently. He
expected absolute obedience from his cabinet members.
Democratic or
Participative
Under this style, the leader
Leadership
(Group takes decisions in consultation
Centred) : and participation with
employees.
B
He delegates and decentralizes
A C the authority.
Leaders follow the opinion of the
A
majority. He provides freedom
F D
of thinking and expression.
E
He listens to the suggestions,
Group – Centered – Leadership
(A is the leader, who consults with the
grievances and opinions of
group)
the subordinates.
Advantages :
1) Improving the job satisfaction and morale of the employees.
2) Improves the decision-making ability of subordinates.
3) Develops a positive attitude and reduce labour turnover and labour
absenteeism.
Disadvantages :
1) Time-consuming and may result in a delay in decision.
2) It may not yield positive results when subordinates prefer
minimum interaction with the leader.
3) Consultation with subordinates may be considered a sign
of the incompetence of the leader.
Suitability :
1) When the goal of a company is to increase job satisfaction
and independence of employees.
2) When the leader wants to share decision-making with the
subordinates.
Free-rein or
Laissez Faire
Leadership. (“No These styles involve complete
Interference In the delegation of authority so that
Affairs of
Others”) : subordinates themselves take
decisions and set their own
A
goals and work out their
B C
problems.
In this style, the leader
avoids power. He serves only
D E as a contact to bring
Subordinate – Centered – Leadership information and resources
(A is the leader, who avoids the use of
power and gives freedom to subordinates) needed by the
subordinates. A manager
Advantages
1) Positive effect on the job:satisfaction and morale of subordinates.
2) Maximum scope for development of subordinates as they
assume responsibility for the work to be performed.
3) Full utilization of potential and capacity of employees.
Disadvantages :
1) Subordinates do not get the guidance and support of the
leader.
2) It ignores the contribution of leaders.
3) Subordinates may work in different directions and result in
chaos.
Suitability :
1) Subordinates are well-trained and highly knowledgeable.
Differences between Different Styles of Leadership are
: Basis Autocratic style Democratic style Laissez faire style
The leader decides Subordinates
Leader only makes
Decision-making in consultation with themselves make
a decision.
subordinates. decisions.
One way i.e. Free flow
Communication Two-way communication.
downward communication .
communication.
Motivation Fear and punishment Reward and Self-direction and
Technique (negative motivation). involvement (positive self- control.
motivation).
Delegation of Delegation of authority to Complete delegation
No delegation.
Authority some extent. of authority.
Focus Leader control. Group centred. Individual centred.
Provides support
Role of Leader Provides Direction. Maintains teamwork.
and resources.
Growth and No scope for initiative Scope for initiative Full scope for
Development and creativity „I‟ and creativity “We initiative and style
Style. Style”. “You Style”.
