Define the term public sector.

Explain one advantage and one disadvantage for CSS of introducing an employee share ownership scheme.

Explain one advantage and one disadvantage for CSS of implementing a projectbased organizational structure (Change 1).

With reference to Adams’s equity theory and Daniel Pink’s motivation theory, discuss Ebru’s decision to eliminate performance-related pay (PRP) (Change 2) and to allow employees to spend 20 % of their time on any project they wish (Change 3).

The public sector involves those areas of the economy that are provided by the government and typically include what is deemed government itself (local, regional, state, national) and the various services provided by government, including education, health care, public transportation, police, fire brigades and other functions.

Award [1] for a basic definition that conveys partial knowledge and understanding or if the candidate merely writes the formula for calculating contribution.

Award [2] for a full, clear definition that conveys knowledge and understanding.

Advantages of introducing an employee share ownership scheme include:
• employees have a greater economic stake in the business and, thus, may be more motivated
• CSS has a means to offer additional compensation to employees that does not increase salary/bonus expenses
• employee share ownership plans usually decrease labour turnover and make it easier to recruit people.

Disadvantages of introducing an employee share ownership scheme include:
• management of CSS, Ebru, will have to answer to shareholders other than herself
• once the plan is in place, it will have administrative and legal costs
• if the business is not publicly traded, valuation of shares may prove difficult.

Accept any other relevant advantage or disadvantage.

Mark as a 2 + 2.

Award [1] for identification of an appropriate advantage/disadvantage and an additional [1] for an explanation and application to the stimulus. Application may not be merely nominal.

Maximum award per advantage/disadvantage: [2]

PLEASE NOTE: Project based organizational structure is not included in the syllabus for 2024 exams onward, but question could be adapted for use with Matrix organization (2.2.1 Different types of organizational structure).

Advantages for CSS of implementing a project-based organizational structure include:
• improved communication between people with different areas of expertise
• sense of teamwork, which can increase motivation.

Disadvantages for CSS of implementing a project-based organizational structure include:
• blurred lines of authority, which may create confusing circumstances for employees
• often, project-based structures are more expensive than traditional structures, as there may be dual levels of management, one on the team and one over groups of teams
• potential for internal conflict within a team.

Accept any other relevant advantage or disadvantage.

Mark as 2 + 2.

Award [1] for identification of an appropriate advantage/disadvantage and an additional [1] for an explanation and application to the stimulus. Application may not be merely nominal.

Maximum award per advantage/disadvantage: [2]

PLEASE NOTE: For 2024 exams onward, 2.4.2. Adams equity theory appears as Equity and Expectancy Theory and is HL only. Daniel Pink's motivation theory is not included in 2024 exams onward.  Related parts of this multi-part question may be used.

Adams’s equity theory asserts that employee motivation emerges out of employees’ perceived sense of fairness, both between the employee and the firm and among the employees. With respect to the firm, employees must believe that an equitable relationship exists between their inputs (hours work, effort, etc) and outputs (compensation, benefits, etc). With respect to other employees, an employee must believe that fairness exists: that there is an equitable relationship between the inputs of other employees and their outputs.

Daniel Pink’s theory of motivation rests on the notion of autonomy, mastery, and purpose. Money is not the chief motivator of professional level employees, but rather their desire for autonomy (or near autonomy) in the workplace, their ability to master their profession or skill set, and their sense of doing something with purpose beyond themselves.

The elimination of PRP could affect some employees’ sense of equity. If, before the elimination, employees had considered that an equitable relationship existed between inputs and outputs, they now might think that the relationship is no longer equitable, especially if they continued to work on CSS-assigned projects during their 20 % dream project time. Though elimination of PRP would save CSS money, it may negatively affect the motivation of some employees.

On the other hand, Daniel Pink’s theory helps to explain why some employees like the changes, especially the introduction of the 20 % dream project time. To these employees, money was not the most important consideration, but having the freedom and flexibility to pursue their own ideas. They would have, at least during the 20 % time, autonomy. The time would allow them to strengthen their skill set in areas where they were weak or to work on issues that played to the skills they had already mastered. And, by working on a dream project, they had a greater sense of purpose. Giving employees 20 % of their time to work on whatever they wanted has the potential to be costly in terms of CSS’s core activities. The question is whether it will sufficiently improve employee motivation to make up for the time lost or if it will lead to some valuable new products and services.

Accept any other relevant evaluation.

Marks should be allocated according to the Paper 2 markbands for May 2016 forward with further guidance below.

For one of the two motivation theories that is one-sided, award up to [3]. For more than one relevant motivation theories that is one-sided, award up to a maximum of [4].

If a candidate evaluates / addresses only one motivation theory, award a maximum of [5].

Award a maximum of [6] if the answer is of a standard that shows balanced analysis and understanding throughout the response with reference to the stimulus material but there is no judgment/conclusion.

Candidates cannot reach the [7–8] markband if they give judgment/conclusions that are not based on analysis/explanation already given in their answer.