In Unit 2 “Human Resource Management” of the IB Business and Management course, the understanding of motivation is one of the most keys in the discussion you will have in class or in the exams. Examiners often set questions based on this unit, so if you’re not sure about the concept, you can check the notes below and review it!

1. Indicators of Motivation

There are some criteria you can look at to see how much employees are motivated or demotivated. If one of the following things apply to employees, they are not motivated for work.

  1. Absenteeism – Demotivated employees are always absent from the workplace.
  2. Lateness – Demotivated employees are always late for work.
  3. Poor performance – Demotivated employees can’t focus on their work or do their job carelessly.
  4. Labour turnover – Demotivated employees may leave the job and labour turnover becomes higher.
  5. Complaints – Demotivated employees find their job pointless and they will start becoming rebellious.
  6. Poor response rate – It takes time for demotivated employees to respond to emails or take calls from coworkers or the boss.
  7. Accidents – Careless works done by demotivated employees might lead to an accident.

Motivation is divided into two types depending on where it comes from.

  • Extrinsic motivation: comes from external rewards for working on a task (e.g. motivation from salary)
  • Intrinsic motivation: comes from the satisfaction of working on a task (e.g. motivation from achieving your goal)

2. Financial Rewards

Financial rewards are given to employees and they may work to develop extrinsic motivation in employees.

Types of Financial Rewards Definition Examples
  • annual income paid monthly in a fixed amount
  • An employee gets $30,000 annually.


  • income usually paid to part-time workers in a fixed amount
    • per hour (time dependent)
    • per unit of work (piece rate)
  • An employee gets $10 per hour.
  • An employee gets $50 when they finish giving people a box of product samples.
  • a payment to a sales person for each sale they make
  • A car sales man gets $200 for selling a car to a customer
Profit-related pay
  • a bonus to employees based on the profit of the company
  • The comapny earned more profit than last year and an employee gets a bonus of 10% of the salary.
Performance-related pay
  • a bonus to an employee based on their performance
  • requires target-setting and appraisal
  • When the performance is the best in the department, the employee get a bonus 25% of their salary.
Employee share ownership schemes
  • when employees become part owners of the company by being allocated shares
  • A start-up company offers employees share options when they join the company
Fringe benefits
  • non-cash forms of financial rewards
  • School teachers get allowance for tuition for their children.  

3. Non-financial Rewards

Non-financial rewards are given to employees to develop intrinsic motivation.

Types of Financial Rewards Definition Examples
Job rotation
  • moving employees between different tasks to provide experience and variety
  • not necessarily more challenging
  • Different tasks are given to a new employee each day.

Job enrichment

  • giving employees jobs and responsibilities that use a full range of their abilities
  • often with more autonomy and challenge
  • assigning an employee to get a deal
Job enlargement
  • increasing the range of tasks on employees
    • broadening
    • deepening
  • may include the job rotation and job enrichment
  • assigning an employee to cover another segment of consumers
  • Production is organized for the group of workers to complete units of work together.
  • not just a pure division of labour
  • A team of five employees are assigned to do a research on the new market segmentation.
  • allowing employees authority
  • giving some degree of control over how a task should be done
  • delegation
  • worker participation in management
  • the opportunity to make a difference
  • do something meaningful to one self
  •  An employee in the coffee company moves to the department in Africa with a purpose of learning different kinds of coffee beans.

4. Motivation Theory

Motivation theories are the most important in the unit since each is used very often in existing companies and examiners like to give questions using these theories.

4.1 Taylor’s Scientific Management

Scientific management principle was introduced by F.W. Taylor. The management involves following steps to improve efficiency and productivity.

  1. measurement of what can be done better and how
  2. monitoring to ensure targets are met
  3. control through analysis

This theory is rather autocratic since managers have close control on employees and supervision. Financial rewards are given as piece rate, but this may lead ethical issues if the manager set a big amount of units for a low payment (e.g. Amazon, Primark, and Nike).

4.2 Daniel Pink

Daniel Pink’s motivational theory denies the significance of financial rewards in terms of increasing the productivity in creative tasks. In such tasks, these non-financial rewards can motivate employees.

  1. Autonomy: having a self-direction and control
  2. Mastery: trying to become an expert
  3. Purpose: connecting to meaning and a large cause

For example, in a start-up company that wants to sell a educational service, employees may be motivated by having a control over a wide range of tasks (autonomy), educating themselves about the situation of the market (mastery), and having a purpose of helping those following in their footsteps (purpose).

4.3 Maslow’s Hierarchy of Needs

Maslow’s hierarchy of needs is based on the theory that employees are motivated by what they need. Once all needs on the first level are met, they aim for needs at the second level because the needs at the previous level will no longer motivate them. There are five levels.

Types of levels Levels Examples of Needs

Application (Linkedin)

Basic needs

  • food, water, warm, shelter, sleep, clothing, etc.
  • Google provides bicycles and electric cars for its employees to make their lives more comfortable. (transportation)


  • security, employment, health, property, etc.
  • The CEO of Facebook is meeting with new employees regardless of their age and experience. (employment)
Psychological needs Belongingness/love
  • friendship, family, a sense of connections, etc.
  • HBO’s CSR team gathered its employees, talents, and non-profit partners to come up with ideas to tackle social issues related to the media industry. (a sense of community)
  • respect by others, status, recognition, freedom, confidence, etc.
  • Southwest allows employees to do whatever it takes to meet the vision of the company, to make customers happy. (freedom)
Self-fulfillment needs Self-actualization
  • meeting one’s full potential in morality, understanding, beauty, creativity, etc.
  • Google offers innovative work environments for its employees to explore their passion. Google maps and G-mail are examples of the products. (creativity)  

4.4 Adam’s Equity Theory

Adam’s equity theory focuses on the feeling of fairness. If employees feel they are putting more effort to the job than it pays them back, they may be demotivated. The extreme case of this can lead to a strike action. Workers also might not like receiving more payment than they think they deserve.

4.5 Herzberg’s Two Factor Theory

Herzberg’s two factor theory consist of motivating factors and hygiene factors. When motivating factors are present, they can motivate employees. But, hygiene factors don’t motivate employees because they are essential in working. So if they are not present or not in a good status, they demotivate employees. Examples for each factors are listed below.

Motivating factors

Hygiene factors

  • non-financial rewards
  • challenging
  • meaningful works
  • recognition
  • personal growth
  • payment
  • working condition
  • job security
  • policies and rules
  • coworker relations