Worked example 1

A mobile phone assembly plant uses a piece-rate system based on Taylor's principles. An employee earns a basic weekly wage of $480 for a 40-hour week, with an expected standard output of 120 phones. For each phone assembled above the standard, a bonus of $3.50 is paid. In one week, an employee assembles 145 phones. Calculate their total weekly pay.

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Step 1: Calculate the bonus-qualifying output. This is the number of units produced above the standard level.

Bonus Output = Actual Output - Standard Output $\text{Bonus Output} = 145 - 120 = 25 \text{ phones}$

Step 2: Calculate the total bonus payment. This is the bonus-qualifying output multiplied by the piece rate.

Total Bonus = Bonus Output × Bonus Rate $\text{Total Bonus} = 25 \times \text{\textdollar}3.50 = \text{\textdollar}87.50$

Step 3: Calculate the total weekly pay. This is the sum of the basic wage and the total bonus.

Total Pay = Basic Weekly Pay + Total Bonus Total Pay = $480.00 + $87.50 = $567.50

Final Answer: The employee's total weekly pay is $567.50. This system directly links financial reward to productivity, a core tenet of Taylor's Scientific Management, by providing a clear monetary incentive to exceed the standard output.

Worked example 2

A software company with 10 developers is experiencing low morale. The CEO is considering two options. Option 1: A permanent 4% salary increase. Option 2: A 'Job Enrichment' program with a profit-share scheme, awarding 10% of profits above $500,000 to the team. The current average salary is $80,000. It is estimated that Option 2 could increase profits from $500,000 to $750,000. Using Herzberg's theory, calculate the financial implications and recommend a course of action.

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Step 1: Analyse Option 1 (Salary Increase) - A Hygiene Factor. Calculate the total annual cost of a 4% pay rise for the team.

Cost per employee = 4% × $80,000 = 0.04 × $80,000 = $3,200 Total annual cost = 10 developers × $3,200 = $32,000

Herzberg Analysis: This is a hygiene factor. It will increase fixed costs by $32,000 annually. While it may reduce dissatisfaction over pay, it is unlikely to create long-term motivation.

Step 2: Analyse Option 2 (Job Enrichment & Profit Share) - A Motivator. Calculate the total bonus pool and the bonus per developer based on the estimated profit increase.

Profit above threshold = $750,000 - $500,000 = $250,000 Total bonus pool = 10% × $250,000 = 0.10 × $250,000 = $25,000 $\text{Bonus per developer} = \frac{\text{\textdollar}25,000}{10} = \text{\textdollar}2,500$

Herzberg Analysis: This option introduces motivators (job enrichment, achievement, recognition via profit share). The financial cost ($25,000) is directly linked to improved performance and is less than the fixed salary increase in this scenario.

Step 3: Recommendation. Option 1 provides a guaranteed pay increase ($3,200 per employee) but addresses only a hygiene factor at a fixed annual cost of $32,000.

Option 2 provides a smaller, variable bonus ($2,500 per employee) but is combined with powerful motivators (job enrichment) that drive the profit increase. The cost is contingent on success.

Recommendation: Option 2 is recommended. It aligns with Herzberg's theory by focusing on intrinsic motivators which are more likely to lead to sustained job satisfaction and higher performance. The financial cost is also directly tied to business success, making it a more efficient use of resources for motivation.

Motivation theories — practice questions

Worked example 1

Worked example 2