IB DP Business Management: Motivation and demotivation – Revision Notes

These notes condense section 2.4, Motivation and demotivation, from Unit 2 (Human resource management) of the IB Business management guide, first assessment 2024. Full explanations and worked examples are in the study guide. Items marked HL only are labelled that way in the guide. Where the guide names an idea but gives no definition or formula, the wording here is the standard textbook form. Other pages: the Business Management hub, the printable checklist, the practice questions and the free diagnostics. Money amounts are in dollars.

Key definitions

Term	Meaning
Motivation	The drive that makes someone put effort into work
Demotivation	Loss of that drive, often shown by absence, errors or resignation
Intrinsic motivation	Drive from the task itself (interest, achievement)
Extrinsic motivation	Drive from outside rewards (pay, bonuses)
Hygiene factor	In Herzberg’s theory, a factor that prevents dissatisfaction but does not motivate
Motivator	In Herzberg’s theory, a factor that creates satisfaction
Labour turnover (HL only)	How many employees leave in a period, as a percentage of the average workforce

The three core theories (SL and HL)

Theory	Core claim	Business use	Main criticism
Taylor	Pay motivates; design jobs scientifically	Piece rate, specialized tasks, close supervision	Ignores social needs; boredom; quality may fall
Maslow	Five needs met in order; unmet need motivates	Match rewards to employee’s current level	Order varies; hard to test
Herzberg	Hygiene factors and motivators are separate	Fix hygiene factors, then enrich jobs	Based on a limited sample; ignores individuals who value pay

Maslow’s five levels, lowest to highest

1. Physiological
2. Safety
3. Love/belonging (social)
4. Esteem
5. Self-actualization

Herzberg sorting

• Hygiene factors: pay, working conditions, policy, supervision, job security.
• Motivators: achievement, recognition, responsibility, the work itself, advancement.

Must-know distinction: a pay rise removes a source of complaint (hygiene). Responsibility and recognition create commitment (motivators).

HL only: other theories

Theory	Key terms	One-line application
McClelland’s acquired needs	Achievement, affiliation, power	Give a high-achievement employee stretching targets with feedback
Deci and Ryan’s self-determination	Autonomy, competence, relatedness	Let staff choose how they meet a goal and give training
Equity theory	Fair comparison of inputs and rewards with others	Publish a clear pay structure
Expectancy theory	Effort leads to performance, performance leads to reward, reward is valued	Make targets reachable and rewards visible and wanted

Equity and expectancy are named together in the guide with no detail. The key terms above are the standard ones.

HL only: labour turnover

Standard form: labour turnover (%) = leavers in the period ÷ average number of employees × 100.

Method:

1. Find the average number of employees (opening plus closing, divided by 2, if both are given).
2. Divide leavers by that average.
3. Multiply by 100 and state the unit.

Reminders:

• 9 leavers from an average of 72 staff: 9 ÷ 72 × 100 = 12.5%.
• Opening staff 80, closing staff 100, leavers 27: average = 90, so turnover = 27 ÷ 90 × 100 = 30%.
• If each replacement costs 2,500 and there are 9 leavers, the replacement cost is 22,500.

Causes: low pay, poor management, no promotion, weak training, poor working conditions. Effects: recruitment and training costs, lost experience, lower morale. A low rate is not always good, because new staff can bring new ideas.

HL only: appraisal

Type	Purpose	Timing
Formative	Development, coaching	Ongoing
Summative	Judge performance (pay, promotion)	End of period
360-degree feedback	Views from managers, peers, subordinates, sometimes customers	Usually periodic
Self-appraisal	Employee reviews own performance	Before a meeting with the manager

HL only: recruitment

Standard methods: job advertisement, recruitment agency, headhunting, employee referral.

	Internal	External
For	Cheaper, faster, known person, promotion prospects	Larger pool, new skills and ideas
Against	Small pool, few new ideas, creates another vacancy	Costly, slower, longer induction, may upset existing staff

Financial rewards (SL and HL)

Reward	Detail	Watch for
Salary	Fixed annual amount	Not linked to effort
Wages	Time rate (per hour) or piece rate (per unit)	Rushing under piece rate
Commission	Percentage of sales	Pressure selling
Performance-related pay (PRP)	Linked to targets	Fair measurement
Profit-related pay	Share of profit	Depends on factors staff cannot control
Employee share ownership schemes	Employees hold shares	Value can fall
Fringe payments	Benefits in kind	Not tied to effort

Method for pay calculations:

1. Identify the pay type.
2. Calculate each part (rate × quantity, or percentage × base).
3. Add the parts and compare.

Reminders:

• Piece rate 3.10 for 180 units gives 558. Time rate 11.50 for 40 hours gives 460.
• Commission of 6% on sales of 48,000 gives 2,880.
• A profit-related pool of 5% of 320,000 is 16,000. Shared among 40 staff, it gives 400 each.

Non-financial rewards (SL and HL)

Reward	Meaning	Direction
Job enrichment	More responsibility and challenge	Vertical
Job enlargement	More tasks of similar level	Horizontal
Job rotation	Moving between tasks	Variety and skill
Empowerment	Authority to decide	Autonomy
Purpose/opportunity to make a difference	Work linked to a worthwhile outcome	Meaning
Teamwork	Shared tasks and group goals	Belonging

Training (SL and HL)

Type	Strength	Weakness
Induction	Settles new staff, covers safety and rules	Takes time; weak if rushed
On the job	Cheap, relevant	Depends on the trainer; may disrupt work
Off the job	Wider skills, expert input	Costly; time away from work

Linking rewards to theories

Reward or method	Theory it fits best	Reason
Piece rate	Taylor	Pay rises with output
Fringe payments such as health cover	Maslow (safety), Herzberg (hygiene)	Meets security needs without creating drive
Job enrichment	Herzberg	Adds responsibility and achievement
Empowerment	Herzberg, and self-determination (HL only)	Gives autonomy and trust
Teamwork	Maslow (belonging)	Meets social needs
Promotion and recognition	Maslow (esteem)	Status and respect
Employee share ownership	Equity theory (HL only)	Staff share in the gains they help produce

Signs and causes of demotivation

Signs: absence, lateness, falling output, more complaints, more errors, resignations.

Causes to link to a case:

• Pay seen as unfair compared with colleagues (equity, HL only).
• Boring, repetitive work with no say in how it is done.
• Poor supervision or no feedback.
• No route to promotion.
• Unsafe or uncomfortable conditions.
• Targets that feel impossible, so effort seems pointless (expectancy, HL only).

Possible responses: raise pay if it is clearly below the market, redesign jobs, add training, improve appraisal, and set fair targets. Always match the response to the cause the case describes.

Short answer routine

1. Define the term or name the theory in one line.
2. Apply it to the business with a fact from the case.
3. Explain the effect on motivation, and say who gains or loses.
4. For “evaluate” or “justify”, add a counter-argument and a judgment.

Quick self-test

1. Name Maslow’s highest level.
2. Is job security a hygiene factor or a motivator in Herzberg’s theory?
3. Which type of pay did Taylor favor?
4. Distinguish job enrichment from job enlargement in one sentence each.
5. Calculate piece-rate pay: 3.10 per unit, 180 units.
6. (HL only) Calculate labour turnover: 9 leavers, average workforce 72.
7. (HL only) Opening 80, closing 100, 27 leavers. Calculate labour turnover.
8. Calculate commission at 6% on sales of 48,000.
9. (HL only) State the three needs in McClelland’s theory.
10. (HL only) Which appraisal type is linked to pay and promotion decisions?
11. State one advantage of off the job training and one disadvantage.

Answers

1. Self-actualization.
2. Hygiene factor.
3. Piece rate.
4. Enrichment gives more responsibility and challenge. Enlargement gives more tasks at the same level.
5. 3.10 × 180 = 558.
6. 9 ÷ 72 × 100 = 12.5%.
7. Average = 90, so 27 ÷ 90 × 100 = 30%.
8. 0.06 × 48,000 = 2,880.
9. Achievement, affiliation and power.
10. Summative appraisal.
11. Advantage: wider skills from experts. Disadvantage: higher cost, or time away from work.

Evaluation prompts

• Which theory fits the case best, and what evidence in the case supports it?
• Would the reward still work for a different type of employee?
• What are the costs and the time frame?
• What is the risk of demotivation if the reward is removed or seems unfair?

Where marks are usually lost

• Describing Maslow or Herzberg in general terms but never tying them to the named firm in the stem.
• Treating job enrichment and job enlargement as the same thing.
• Using the opening headcount rather than the average in labour turnover.
• Forgetting the unit (percent or currency) in a calculation.
• Giving only one side in an “evaluate” or “justify” answer.
• Listing rewards without linking them to a theory or to the employees concerned.
• Saying pay “does not matter” because of Herzberg. His claim is that pay does not create lasting motivation, not that it is irrelevant.
• Answering an SL question with HL content that is not asked for.

Frequently asked questions

What is the difference between hygiene factors and motivators? In Herzberg’s theory, hygiene factors such as pay, working conditions, policy, supervision and job security prevent dissatisfaction. Motivators such as achievement, recognition, responsibility, the work itself and advancement create lasting satisfaction.

What are the five levels of Maslow’s hierarchy of needs? From lowest to highest, the levels are physiological, safety, love/belonging (social), esteem and self-actualization.

What is the difference between formative and summative appraisal? Formative appraisal is ongoing feedback aimed at development, such as coaching. Summative appraisal is a review at the end of a period that judges performance, often linked to pay or promotion; appraisal is HL only in section 2.4.

What are the signs of demotivation at work? Signs include absence, lateness, falling output, more complaints, more errors and resignations. Link them to a cause in the case, such as pay seen as unfair, repetitive work or no route to promotion.

Official syllabus

IB Diploma Programme Business management guide, first assessment 2024, International Baccalaureate Organization. Section 2.4, Motivation and demotivation, in Unit 2: Human resource management.