The Student Room Group

Business 7/9 Answer - Could Someone Confirm?

One reason why MTB shouldn’t use financial methods of motivation, is because it could be costly for the business. The business currently employs 10 experienced workers, and are looking to employ more to meet their objective of increasing profit by 50% in 2023. By using financial methods to reward their staff, Jemma and Prianka may find it harder to finance the materials needed in its busiest seasons (Christmas and Valentine’s Day). In addition, many workers are needed to help make these bears, as demand for them is high at this time of year. If money is spent on existing workers, Jemma and Prianka may find it difficult to afford more workers, especially if there was a sudden rise in demand at this time of year. By not having the labour to cater for production of these bears, this may mean that customers are unsatisfied with the lower quality of bear, or do not have their order made for them - meaning that they’ll be refunded, and likely opt for a competitor who offers a quicker, more reliable service. Moreover, if they do decide to employ more workers, it could be that a loan is required. This will lead to them having to pay more back than they have borrowed. The extent to which this affects the business does depend on the interest rates though, as the higher they are, the more it would eat away at’s finances. By using non-financial methods of motivation, Jemma and Prianka are still able to keep their staff productive and invested in the job - meaning that the bears can be produced more efficiently, but don’t risk having their finances run low.

One reason why they should use financial methods of motivation, is because staff could become demotivated with the tasks in hand. During the festive season and Valentine’s Day, production takes a long time, whilst demand is high - due to staff having to cut and stuff the bears, these tasks are simpler ones. Workers also currently specialise in tasks. These tasks could become mundane and repetitive for staff, as they each specialise in one - meaning that they’ll have to do more of this in the time given, at a greater intensity during these periods of time, which could cause burn out - or demotivation, as they’ll be doing more work, but still having the same pay. By financially rewarding staff for the work done, they’ll feel recognised and valued, this means that’s staff retention may go up, and this’ll be important, as during seasonal times, when employees are most needed, won’t have as high a turnover, meaning that they don’t have to spend as much on recruitment costs, and are able to operate more efficiently, and produce these bears at a greater volume, so that they can satisfy customer demand. By satisfying customer demand, they will be on track to expand, allowing them to get closer to the objective set - 50% increase in profits by 2023. However, this does depend on the amount of finance is able and willing to compensate the workers, as small amounts may not mean much to staff, still making them feel undervalued - it must be enough to compensate them for this extra work and effort they put in during times with high demand.

In conclusion, I agree that using financial methods is the best course of action for By having their staff feel valued, they also are able to improve their relationship with them, meaning that these staff will be more likely to refer a friend to the business (one of the ways recruitment works at currently). Moreover, it allows them to hold on to a reliable group of staff, who all live locally, and are able to commute quickly, if ever needed overtime for anything (during times of seasonal demand). Whilst it may mean that Jemma and Prianka have to sacrifice some money towards their employees, and find it harder to expand other areas of the business, having a motivated bunch who are able to deliver on time will mean that production can run more efficiently, giving time to focus on improving other areas of the business’s operations - such as advertising the bears.

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