Managing employees is cited as being the biggest problem to small business owners. This is because employers very often don't know how to handle employees. Effectively managing employees is a skill acquired through training and practice. Many books have been written on the subject, and courses are regularly offered through educational institutions.
Motivation theories were developed or built upon the "human relations" findings. The new focus for motivation theory was on the search for satisfaction of human needs. This new approach swept through management thinking in the 1950's.
Maslow (1954) offered his "needs hierarchy" according to which human beings have their needs arranged in a hierarchy such that they are motivated to seek satisfaction of the lower levels of need first. Once that level of need is satisfied it is no longer a motivator, and the person is motivated by the next level up the hierarchy. Basic needs such as shelter, food and warmth are in the bottom level of Maslow's hierarchy, which then progresses through physical well being, social acceptance, self esteem, to "Self-actualization" (realizing one's own potential).
Another writer from this period, Herzberg (1959; also 1968 and 1987) theorized that human beings needed their "hygiene factors" dealt with adequately, before they would work at all. However, he argued that they were only motivated to work productively by "motivator factors", primarily by enriched jobs. McGregor (1960) warned us against Theory X (the view that people are reluctant to work) and offered us Theory Y, with its emphasis on people's need for achievement and satisfaction from a job done well. McClelland (1967), following the work of Murray in the 1930's, emphasized the Importance of needs for achievement, power and affiliation
Fortunately for us, there have always been researchers putting theories to the test. When they found that behavior at work could not be explained by reference to the pure desire to earn as much money as possible, the first reaction was not to abandon belief in the primacy of money, but to look for intervening variables. A new theory was put forward proposing that the reason why some workers slowed down their effort towards the end of their day must result from some factor which was preventing these workers from keeping up their effort. The most likely factor was fatigue; workers were not strong enough or not sufficiently well nourished to keep their effort up all day. This led to research studies by Elton Mayo and his team from Harvard University. Their initial work in the 1920's found that workers (in a Philadelphia textile mill) who were given extra breaks and subsidized meals at work did improve their productivity; and when these extra rewards were taken away their effort fell back (see Mayo 1949). The research team then set up a major series of studies at the Hawthorne Works of the Western Electric Company which continued for ten years. Their aim was to study the effects of a range of fatigue-inducing factors such as levels of lighting, temperature, frequency of breaks, etc. in combination with an incentive payment by results system. If this research had produced the results expected at the outset, we would have had a prescription for high productivity based on lighting levels, temperature, frequency of meal breaks, health levels, etc. In some of their experiments the working environment was changed drastically to assess how this influenced productivity, but the results were a surprise at the time. There was a steady improvement in productivity throughout all the changes, even for instance when the lighting intensity was raised in imperceptible stages over a long period to a very bright intensity and then gradually reduced to that of a moonlit night. In their attempts to ensure that no other variables intervened in their experiments, the researchers had unwittingly changed one of the most important...