Non-financial Techniques to Improve Staff Performance (Edexcel A-Level Business): Revision Notes
Non-financial Techniques to Improve Staff Performance
Why non-financial techniques matter
Historically, businesses relied heavily on financial rewards to motivate employees and boost productivity. However, modern organizations have recognized several important limitations with this approach:
- Money isn't always motivating – the opportunity to earn more may not be an effective motivator for all employees
- Complex to operate – financial incentive schemes can be difficult and costly to administer properly
- Unsuitable for modern work – individual reward schemes don't fit well with group-based production methods
- Other factors matter more – research suggests that non-financial factors often have greater impact on employee motivation
Understanding which non-financial factors motivate workers is crucial. Only by identifying these can businesses create a genuinely motivated workforce.
Delegation
Delegation occurs when a manager assigns a more complex or higher-level task to a subordinate. The manager retains overall responsibility, but authority to complete the task passes down the organizational hierarchy.
How delegation motivates
Delegation can be a powerful motivator because employees feel trusted to handle more challenging work. This recognition of their capabilities boosts confidence and job satisfaction.
Conditions for effective delegation
Delegation is most likely to improve motivation when managers:
- Only delegate when genuinely overloaded – otherwise subordinates may feel resentful or manipulated
- Explain tasks thoroughly – take time to ensure subordinates understand requirements and have the necessary skills
- Grant complete authority – give subordinates full power to carry out the task and ensure colleagues recognize the delegation
- Avoid interference – resist the temptation to micromanage or constantly check on delegated tasks
- Provide adequate support – ensure subordinates have the resources and backing needed to succeed
Consultation
Consultation is the process of seeking employees' views and input before making changes or decisions that will affect them.
Why consultation improves motivation
Employees often resent changes imposed without warning. For example, introducing flexible working hours to enable seven-day opening without consulting staff would likely create resentment. When businesses consult employees about proposed changes, workers feel their opinions are valued, which strengthens motivation and engagement.
Additional benefits of consultation
Beyond motivation, consultation offers practical advantages:
- Reduced resistance to change – employees are less likely to oppose changes they've had input on
- Access to employee ideas – workers often have valuable suggestions that can benefit the business, but these can only emerge through proper consultation processes
Criticisms of consultation
Some argue that consultation has drawbacks:
- Time-consuming – the consultation process can slow down change implementation
- Cosmetic exercise – some view consultation as superficial, where employee views are heard but ultimately ignored
Empowerment
Empowerment means giving employees greater control over decision-making and trusting them to use their initiative. It involves several interconnected elements:
- Recognizing that employees can contribute more than their current roles require
- Making employees feel trusted to perform without constant supervision or checking
- Giving employees genuine control over decisions
- Building employee self-confidence
- Acknowledging and celebrating employee achievements
- Creating a work environment where employees feel motivated and interested
Benefits of empowerment
For employees:
- Enhanced motivation – feeling trusted and having talents recognized improves job satisfaction and should boost productivity
- Reduced stress – greater control over working lives can decrease workplace stress, potentially reducing illness and absenteeism
- Skills development – opportunities to develop new capabilities and grow professionally
For businesses:
- Better decision-making – decisions are made by those closest to the work and best equipped to make them
- Reduced frustration – employees feel less annoyed about senior staff making decisions they consider incorrect
- Organizational efficiency – businesses can streamline structures and reduce management layers by delegating decision-making
Criticisms of empowerment
Critics argue that empowerment can be problematic:
- Cost-cutting in disguise – some see it as a way to remove management layers and make workers redundant while giving remaining employees more work for the same pay
- Implementation failure – businesses may claim to want empowerment but fail to deliver in practice. Managers may feel insecure about subordinates making important decisions, leading to counter-productive interference
- Costly to implement – training employees and reorganizing workplaces requires significant investment
Teamworking
Teamworking involves organizing employees into groups that collectively decide how to distribute work and solve problems. Volvo's Swedish plants at Kalmar and Uddevalla provide well-known examples, where teams of eight to ten highly skilled workers decided amongst themselves how to organize work and address challenges. Similar systems have been used at Honda UK.
Benefits of teamworking
- Greater productivity – pooling talents and abilities can enhance overall output
- Specialization and knowledge sharing – team members can focus on strengths while drawing on others' skills and expertise
- Enhanced problem-solving – businesses increasingly find that complex problems require team capabilities rather than individual efforts
- Shared responsibility – distributing accountability means people may be more willing to take calculated risks
- Creative idea generation – brainstorming in teams can produce innovative solutions
- Flexibility – teams can adapt working arrangements more easily than rigid individual structures
Problems with teamworking
Research, particularly from US studies, has identified several potential issues that can undermine team effectiveness:
Common teamworking challenges:
- Excessive harmony – teams work best with room for disagreement. Avoiding conflict can lead to vague or bland outcomes
- Too much discord – conversely, excessive tension can destroy team effectiveness
- Inadequate preparation – team members must prepare thoroughly by focusing on facts and ensuring everyone works with the same detailed information
- Overemphasis on individualism – teams struggle when organizational culture prioritizes individual achievement over collective success
- Feeling powerless – teams must be able to genuinely influence decisions to work effectively
- Poor senior management teamwork – when senior leaders fail to collaborate well, team members receive mixed messages and conflicting priorities
- Meeting overload – teams shouldn't try to do everything together. Excessive meetings waste valuable time
- Inappropriate use – some tasks are better completed by individuals rather than groups
Flexible working
Flexible working arrangements allow employees to work outside traditional patterns – for example, choosing their own hours, working from home, or taking extended leave periods. While flexible working benefits businesses by helping them cope with demand fluctuations and extend opening hours, it can also motivate workers when they can genuinely choose their working arrangements.
Job enrichment
Job enrichment derives from Herzberg's two-factor theory. It involves giving employees greater responsibility by 'vertically' extending their role in the production process.
How job enrichment works
An enriched job might include responsibility for:
- Planning tasks
- Quality control
- Work supervision
- Ordering materials
- Maintenance
Benefits of job enrichment
The approach aims to provide employees with challenges that develop unused skills and encourage productivity. Workers should feel rewarded for their contribution and gain varied experience that may lead to future promotion.
Problems with job enrichment
Key challenges with job enrichment:
- Employee capability concerns – workers who feel unable to handle extra responsibilities, or who feel forced into them, may not respond positively
- Variable responses – not all workers react the same way to job enrichment
- Trade union opposition – unions sometimes argue these practices aim to reduce workforce numbers
- Payment disputes – disagreements may arise about compensation for additional responsibilities
- Limited applicability – job enrichment has proven most successful in administrative and technical positions rather than universally
Job rotation
Job rotation means employees change jobs or tasks periodically. This might involve moving to a different part of a production line to perform a different task, or transferring between departments (e.g., from human resources to marketing) where common skills apply.
Benefits of job rotation
- Reduced boredom – varying tasks helps prevent monotony
- Broader skills and experience – employees develop more diverse capabilities
- Flexible workforce – employers benefit from having more widely trained staff
Drawbacks of job rotation
- Productivity losses – any gains from increased motivation may be offset by reduced output as workers learn new jobs and settle in
- No guaranteed motivation – simply switching from one boring job to another doesn't necessarily improve motivation
- Employee resistance – some workers dislike the uncertainty that job changes create and may become dissatisfied
- Declining popularity – although companies like Volkswagen previously used job rotation for production tasks, the approach has become less common
Job enlargement
Job enlargement involves giving employees more work of a similar nature. Rather than performing just one small task, employees complete a larger portion of the process. For example, instead of only putting wheels on a bicycle, a worker would assemble the entire product.
Theory behind job enlargement
Proponents argue this variety prevents boredom with repetitive tasks and encourages employee satisfaction through completing whole processes. Job enlargement works more efficiently when workers are organized in groups, where each person can be trained to do all jobs and rotation can occur. Other forms include job rotation and job loading.
Criticisms of job enlargement
Major criticisms of job enlargement:
Horizontal loading problem – critics argue job enlargement simply gives workers "more of the same." Instead of turning five screws, the worker turns ten. This is often called horizontal loading.
Better done by machines – many repetitive tasks today are completed more effectively by machines, which can work quickly and efficiently without experiencing strain, boredom, or dissatisfaction.
Efficiency concerns – allowing employees to complete entire processes may actually reduce efficiency. The productivity loss from performing many different tasks can exceed any gains from increased worker satisfaction.
Exam guidance: Job enrichment vs job enlargement
Do not confuse these two similar but distinct concepts:
- Job enrichment = 'vertical' extension giving greater responsibility (planning, supervising, controlling quality)
- Job enlargement = 'horizontal' expansion giving more of the same type of work (more screws to turn, more units to assemble)
Case study: Kwik Fit Insurance Services
Kwik Fit Insurance Services (KFIS), owned by Ageas, provides general insurance from a call centre near Glasgow employing around 950 people. When operating as Kwik Fit Financial Services (KFFS) around 2010, the company decided to transform its organizational approach. KFFS wanted to empower and involve people while reducing staff turnover, raising morale, improving recruitment, and increasing financial performance.
The consultation process
KFFS invited all 650 workers (at the time) to attend a one-day workshop designed to generate improvement ideas. This event produced 6,500 proposals, including:
- Flexible benefits scheme – developed by an empowered, autonomous staff project team
- Proper career paths – coaching programmes for managers to help them guide staff development, challenging the view that call centres offered no career progression
- Employee recognition culture – internal call quality competitions and 'Going the Extra Mile' awards
- 'Ministry of Fun' – appointed to help staff engage in social networking
- Community involvement schemes – providing purpose and meaning for staff
Results achieved
By creating an involvement culture, KFFS achieved impressive outcomes:
- Staff turnover reduced to 34 per cent
- Sales per hour increased by 15 per cent in year one and 23 per cent in year two
- Customer complaints halved
- Customer retention rates reached their highest level in four years
This case demonstrates how combining consultation and empowerment can deliver significant business benefits alongside improved employee satisfaction.
Remember!
Key Points to Remember:
- Non-financial techniques often outperform money as motivators because they address psychological needs like recognition, trust, and personal development
- Delegation and empowerment work best when managers genuinely trust employees, provide proper support, and avoid interference
- Job enrichment (vertical) differs from job enlargement (horizontal) – enrichment adds responsibility and challenge, while enlargement simply adds more similar tasks
- Teamworking delivers results when properly organized with clear goals, adequate preparation, and balanced between harmony and constructive disagreement
- Consultation reduces resistance to change and can unlock valuable employee ideas, but must be genuine rather than cosmetic to maintain credibility