Griffin Ch10
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Chapter 10 Managing Employee Motivation and Performance
Learning Objectives After studying this chapter, you should be able to: 1. Characterize the nature of motivation. 2. Identify and describe the major content perspectives on motivation. 3. Identify and describe the major process perspectives on motivation. 4. Describe reinforcement perspectives on motivation. 5. Identify and describe popular motivational strategies. 6. Describe the role of organizational reward systems in motivation.
Copyright © Houghton Mifflin Company. All rights reserved.
10 | 2
Chapter Outline • The Nature of Motivation • Content Perspectives on Motivation – The Need Hierarchy Approach – The Two-Factor Theory – Individual Human Needs
• Process Perspectives on Motivation – Expectancy Theory – Equity Theory – Goal-Setting Theory
Copyright © Houghton Mifflin Company. All rights reserved.
10 | 3
Chapter Outline (cont’d) • Reinforcement Perspectives on Motivation – Kinds of Reinforcement in Organizations – Providing Reinforcement in Organizations
• Popular Motivational Strategies – Empowerment and Participation – Alternative Forms of Work Arrangements
• Using Reward Systems to Motivate Performance – – – – –
Merit Reward Systems Incentive Reward Systems Team and Group Incentive Reward Systems Executive Compensation New Approaches to Performance-based Rewards
Copyright © Houghton Mifflin Company. All rights reserved.
10 | 4
The Nature of Motivation • Motivation – The set of forces that cause people to behave in certain ways. • The goal of managers is to maximize desired behaviors and minimize undesirable behaviors.
• Determinants of Individual Performance – Motivation • The desire to do the job. – Ability • The capability to do the job. – Work environment • The resources needed to do the job. Copyright © Houghton Mifflin Company. All rights reserved.
10 | 5
Figure 10.1 The Motivation Framework
Copyright © Houghton Mifflin Company. All rights reserved.
10 | 6
Content Perspectives on Motivation • Content Perspectives – Focus on needs and deficiencies of individuals – Are approaches to motivation that try to answer the question, “What factors in the workplace motivate people?”
• Content Perspectives of Motivation – Maslow’s Hierarchy of Needs – Herzberg’s Two-Factor Theory – McClelland’s Achievement, Power, and Affiliation Needs
Copyright © Houghton Mifflin Company. All rights reserved.
10 | 7
The Need Hierarchy Approach (Maslow) • People must, in a hierarchical order, satisfy five needs: – Physiological needs for basic survival and biological function. – Security needs for a safe physical and emotional environment. – Belongingness needs for love and affection. – Esteem needs for positive self-image/self-respect and recognition and respect from others. – Self-actualization needs for realizing one’s potential for personal growth and development.
Copyright © Houghton Mifflin Company. All rights reserved.
10 | 8
Figure 10.2 Maslow’s Hierarchy of Needs
Copyright © Houghton Mifflin Company. All rights reserved.
10 | 9
The Need Hierarchy Approach • Weaknesses of Maslow’s Theory – Five levels of need are not always present. – Ordering or importance of needs is not always the same. – Cultural differences produce differences in need categories and hierarchical orderings.
Copyright © Houghton Mifflin Company. All rights reserved.
10 | 10
The Two-Factor Theory (Herzberg) • An individual’s satisfaction and dissatisfaction is influenced by two independent sets of factors— motivation factors and hygiene factors. • Theory assumes that job satisfaction and job dissatisfaction are on two distinct continuums: – Motivational factors (work content) are on a continuum that ranges from satisfaction to no satisfaction. – Hygiene factors (work environment) are on a separate continuum that ranges from dissatisfaction to no dissatisfaction.
Copyright © Houghton Mifflin Company. All rights reserved.
10 | 11
Figure 10.3 The Two-Factor Theory of Motivation
Copyright © Houghton Mifflin Company. All rights reserved.
10 | 12
The Two-Factor Theory (Herzberg) (cont’d) • Motivation becomes a two-stage process: – Ensuring that the hygiene factors are not deficient and not blocking motivation. – Providing employees the opportunity to experience increase motivational factors through the use of job enrichment and the redesign of jobs.
• Criticisms of the Two-Factor Theory – Interview findings are subject to different explanations. – Sample population was not representative. – Subsequent research has not upheld theory.
Copyright © Houghton Mifflin Company. All rights reserved.
10 | 13
Process Perspectives on Motivation • Process Perspectives – Focus on why people choose certain behavioral options to satisfy their needs and how they evaluate their satisfaction after they have attained their goals.
• Process Perspectives of Motivation – – – –
Expectancy Theory Porter-Lawler Extension of Expectancy Theory Equity Theory Goal-Setting Theory
Copyright © Houghton Mifflin Company. All rights reserved.
10 | 14
Expectancy Theory • Motivation depends on how much we want something and how likely we are to get it. • Theory assumes that: – Behavior is determined by a combination of personal and environmental forces. – People make decisions about their own behavior in organizations. – Different people have different types of needs, desires, and goals. – People choose among alternatives of behaviors in selecting one that that leads to a desired outcome.
Copyright © Houghton Mifflin Company. All rights reserved.
10 | 15
Expectancy Theory (cont’d) • Model of Motivation – Suggests that motivation leads to effort when combined with ability and environmental factors; effort results in performance; performance, in turn, leads to various outcomes that have value (valence) to employees.
Copyright © Houghton Mifflin Company. All rights reserved.
10 | 16
Figure 10.4 The Expectancy Model of Motivation
Copyright © Houghton Mifflin Company. All rights reserved.
10 | 17
Elements of Expectancy Theory • Effort-to-Performance Expectancy – The individual’s perception of the probability that effort will lead to a high level of performance.
• Performance-to-Outcome Expectancy – The individual’s perception of the probability that performance will lead to a specific outcome or consequence or reward in an organizational setting.
Copyright © Houghton Mifflin Company. All rights reserved.
10 | 18
Elements of Expectancy Theory (cont’d) • Outcomes (Consequences) and Valences – Valence is an index of how much an individual values a particular outcome. It is also the attractiveness of the outcome to the individual. – Attractive outcomes have positive valences and unattractive outcomes have negative valences. – Outcomes to which an individual is indifferent have zero valences.
Copyright © Houghton Mifflin Company. All rights reserved.
10 | 19
Elements of Expectancy Theory (cont’d) • For individual motivated behavior (effort) to occur: – Effort-to-performance expectancy (the belief that effort will lead to high performance) must be greater than zero. – Performance-to-outcome expectancy (performance will result in certain outcomes) must be greater than zero. – The sum of the valences must be greater than zero —the outcome/reward must have value to the individual.
Copyright © Houghton Mifflin Company. All rights reserved.
10 | 20
Porter-Lawler Extension of Expectancy Theory • Assumptions: – If performance in an organization results in equitable and fair rewards, people will be more satisfied. – High performance can lead to rewards and high satisfaction.
• Types of Rewards: – Extrinsic rewards • Outcomes set and awarded by external parties (e.g., pay and promotions). – Intrinsic rewards • Outcomes that are internal to the individual (e.g., self-esteem and feelings of accomplishment). Copyright © Houghton Mifflin Company. All rights reserved.
10 | 21
Figure 10.5 Porter-Lawler Extension of Expectancy Theory
Copyright © Houghton Mifflin Company. All rights reserved.
10 | 22
Equity Theory • Assumptions: – People are motivated to seek social equity in the rewards they receive for performance. – Equity is an individual’s belief that the treatment he or she receives should be fair relative to the treatment received by others. – Individuals view the value of rewards (outcomes) and inputs of effort as ratios and make subjective comparisons of themselves to other people: Outcomes (self) Inputs (self) Copyright © Houghton Mifflin Company. All rights reserved.
=
Outcomes (other) Inputs (other) 10 | 23
Equity Theory (cont’d) • Conditions of and reactions to equity comparisons: – Feeling equitably rewarded. • Maintain performance and accept comparison as fair estimate. – Feeling under-rewarded—try to reduce inequity. • Change inputs by trying harder or slacking off. • Change outcomes by demanding a raise. • Distort the ratios by altering perceptions of self or of others. • Leave situation by quitting the job. • Change comparisons by choosing another object person. Copyright © Houghton Mifflin Company. All rights reserved.
10 | 24
Goal-Setting Theory • Assumptions – Behavior is a result of conscious goals and intentions. – Setting goals influences the behavior of people in organizations.
• Characteristics of Goals – Goal difficulty • Extent to which a goal is challenging and requires effort. • People work harder to achieve more difficult goals. • Goals should be difficult but attainable. Copyright © Houghton Mifflin Company. All rights reserved.
10 | 25
Figure 10.6 The Expanded Goal-Setting Theory of Motivation
Copyright © Houghton Mifflin Company. All rights reserved.
10 | 26
Reinforcement Perspectives on Motivation • Reinforcement Theory – Focuses on the role of rewards as they cause behavior to change or remain the same over time. – Assumes that: • Behavior that results in rewarding consequences is likely to be repeated, whereas behavior that results in punishing consequences is less likely to be repeated.
Copyright © Houghton Mifflin Company. All rights reserved.
10 | 27
Kinds of Reinforcement in Organizations • Positive Reinforcement – Strengthens behavior with rewards or positive outcomes after a desired behavior is performed.
• Avoidance – Strengthens behavior by avoiding unpleasant consequences that would result if the behavior is not performed.
• Punishment – Weakens undesired behavior by using negative outcomes or unpleasant consequences when the behavior is performed.
• Extinction – Weakens undesired behavior by simply ignoring or not reinforcing that behavior.
Copyright © Houghton Mifflin Company. All rights reserved.
10 | 28
Providing Reinforcement in Organizations Schedules for Applying Reinforcement Fixed interval
Reinforcement applied at fixed time intervals, regardless of behavior.
Variable interval
Reinforcement applied at variable time intervals.
Fixed ratio
Reinforcement applied after a fixed number of behaviors, regardless of time.
Variable ratio
Reinforcement applied after a variable number of behaviors, regardless of time.
Copyright © Houghton Mifflin Company. All rights reserved.
10 | 29
Providing Reinforcement in Organizations (cont’d) • Behavior Modification (OB Mod) – A method for applying the basic elements of reinforcement theory in an organizational setting. – Specific behaviors are tied to specific forms of reinforcement.
Specific Behavior
Copyright © Houghton Mifflin Company. All rights reserved.
Specific Reinforcement
10 | 30
Popular Motivational Strategies • Empowerment and Participation – Empowerment • The process of enabling workers to set their own work goals, make decisions, and solve problems within their sphere of influence. – Participation • The process of giving employees a voice in making decisions about their work. – Areas of Participation for Employees • Making decisions about their jobs. • Making decisions about administrative matters. • Participating in decision making about broader issues of product quality. Copyright © Houghton Mifflin Company. All rights reserved.
10 | 31
New Forms of Working Arrangements Variable Work Schedules Compressed work schedule
Working a full forty-hour week in less than the traditional five days.
“Nine-eighty” schedule
Working one full week (five days) and one compressed week (four days), yielding one off-work day every other week.
Flexible work schedules (flextime)
Allowing employees to select, within broad parameters, the hours they will work.
Job sharing
When two part-time employees share one full-time job.
Copyright © Houghton Mifflin Company. All rights reserved.
10 | 32
Using Reward Systems to Motivate Performance • Organizational Reward System – The formal and informal mechanisms by which employee performance is defined, evaluated, and rewarded. • Performance-based rewards have the greatest impact on motivation and higher-levels of performance. • Rewards align employee self-interests with the organization’s interests. • Rewards foster behaviors desired by organizations.
Copyright © Houghton Mifflin Company. All rights reserved.
10 | 33
Effects of Organizational Rewards on Employees Attitudes
Behaviors
Motivation
• Satisfaction is influenced by how much is received and how much the person thinks should have been received.
• Extrinsic rewards affect employee satisfaction and reduce turnover.
• Employees will work harder when performance will be measured.
• Rewards influence patterns of attendance and absenteeism.
• Employees will work harder if performance is closely followed by rewards.
• Satisfaction is affected by comparison with others. • The rewards of others are often misperceived.
• Employees tend to work harder for rewards based on performance.
• Overall job satisfaction is affected by employee satisfaction with intrinsic and extrinsic rewards.
Copyright © Houghton Mifflin Company. All rights reserved.
10 | 34
Designing Effective Reward Systems • Reward system must meet an individual’s needs. • Rewards should compare favorably with other organizations. • Distribution of rewards must be perceived to be equitable. • Reward system must recognize different needs.
Copyright © Houghton Mifflin Company. All rights reserved.
10 | 35
Merit Reward Systems • Merit Pay Concept – Pay is awarded to employees on the basis of the relative value of their contributions to the organization.
• Merit Pay Plans – Compensation plans that formally base at least some portion of compensation on merit. – Provide employees with annual salary increases depending on their overall job performance.
Copyright © Houghton Mifflin Company. All rights reserved.
10 | 36
Incentive Reward Systems • Monetary Incentives – Piece-rate incentive plan • A reward system wherein the organization pays an employee a certain amount of money for every unit she or he produces. – Sales commissions plan • The percentage of an employee’s sales to customers that is paid to an employee as a reward for selling the firm’s products or services.
• Nonmonetary Incentives – Immediate and one-time rewards • Days off, additional paid vacation time, and special perks. Copyright © Houghton Mifflin Company. All rights reserved.
10 | 37
Team and Group Incentive Reward Systems • Gainsharing – Sharing the cost savings that result from productivity improvements.
• Scanlon Plan – Similar to gainsharing, but the distribution of gains is tilted toward the employees and is spread across the organization.
• Profit Sharing Plans – Provide an organization-wide incentive in the form of an annual bonus to all employees based on corporate profits.
Copyright © Houghton Mifflin Company. All rights reserved.
10 | 38
Executive Compensation • Standard Forms of Executive Compensation – Base salary is the guaranteed portion of an executive’s compensation. – Bonuses paid for performance of the organization.
• Special Forms of Executive Compensation – Stock options allow executives to purchase company stock at a predetermined price. • If the current stock price is above the predetermined price, the executive profits from exercising the option. • If the current stock price is below the predetermined price, the option has no value. Copyright © Houghton Mifflin Company. All rights reserved.
10 | 39
Criticisms of Executive Compensation • Levels of executive compensation are perceived as inordinately large. • Compensation levels for executives do not reflect the performance of their firms. • The earnings gap between the typical employee and the CEO is enormous. • Executive stock options represent potentially huge liabilities for companies, yet do not appear on their financial statements as such.
Copyright © Houghton Mifflin Company. All rights reserved.
10 | 40
New Approaches to Performance-Based Rewards • Employee Participation – Allowing employee participation in the deciding of distribution of rewards.
• Innovation in Incentive Programs – Offering stock options to all employees. – Individualizing reward systems such that different employees can be offered different incentives.
• More Effective Communication – Sharing information about how awards are earned and distributed.
Copyright © Houghton Mifflin Company. All rights reserved.
10 | 41
Learning Objectives After studying this chapter, you should be able to: 1. Characterize the nature of motivation. 2. Identify and describe the major content perspectives on motivation. 3. Identify and describe the major process perspectives on motivation. 4. Describe reinforcement perspectives on motivation. 5. Identify and describe popular motivational strategies. 6. Describe the role of organizational reward systems in motivation.
Copyright © Houghton Mifflin Company. All rights reserved.
10 | 2
Chapter Outline • The Nature of Motivation • Content Perspectives on Motivation – The Need Hierarchy Approach – The Two-Factor Theory – Individual Human Needs
• Process Perspectives on Motivation – Expectancy Theory – Equity Theory – Goal-Setting Theory
Copyright © Houghton Mifflin Company. All rights reserved.
10 | 3
Chapter Outline (cont’d) • Reinforcement Perspectives on Motivation – Kinds of Reinforcement in Organizations – Providing Reinforcement in Organizations
• Popular Motivational Strategies – Empowerment and Participation – Alternative Forms of Work Arrangements
• Using Reward Systems to Motivate Performance – – – – –
Merit Reward Systems Incentive Reward Systems Team and Group Incentive Reward Systems Executive Compensation New Approaches to Performance-based Rewards
Copyright © Houghton Mifflin Company. All rights reserved.
10 | 4
The Nature of Motivation • Motivation – The set of forces that cause people to behave in certain ways. • The goal of managers is to maximize desired behaviors and minimize undesirable behaviors.
• Determinants of Individual Performance – Motivation • The desire to do the job. – Ability • The capability to do the job. – Work environment • The resources needed to do the job. Copyright © Houghton Mifflin Company. All rights reserved.
10 | 5
Figure 10.1 The Motivation Framework
Copyright © Houghton Mifflin Company. All rights reserved.
10 | 6
Content Perspectives on Motivation • Content Perspectives – Focus on needs and deficiencies of individuals – Are approaches to motivation that try to answer the question, “What factors in the workplace motivate people?”
• Content Perspectives of Motivation – Maslow’s Hierarchy of Needs – Herzberg’s Two-Factor Theory – McClelland’s Achievement, Power, and Affiliation Needs
Copyright © Houghton Mifflin Company. All rights reserved.
10 | 7
The Need Hierarchy Approach (Maslow) • People must, in a hierarchical order, satisfy five needs: – Physiological needs for basic survival and biological function. – Security needs for a safe physical and emotional environment. – Belongingness needs for love and affection. – Esteem needs for positive self-image/self-respect and recognition and respect from others. – Self-actualization needs for realizing one’s potential for personal growth and development.
Copyright © Houghton Mifflin Company. All rights reserved.
10 | 8
Figure 10.2 Maslow’s Hierarchy of Needs
Copyright © Houghton Mifflin Company. All rights reserved.
10 | 9
The Need Hierarchy Approach • Weaknesses of Maslow’s Theory – Five levels of need are not always present. – Ordering or importance of needs is not always the same. – Cultural differences produce differences in need categories and hierarchical orderings.
Copyright © Houghton Mifflin Company. All rights reserved.
10 | 10
The Two-Factor Theory (Herzberg) • An individual’s satisfaction and dissatisfaction is influenced by two independent sets of factors— motivation factors and hygiene factors. • Theory assumes that job satisfaction and job dissatisfaction are on two distinct continuums: – Motivational factors (work content) are on a continuum that ranges from satisfaction to no satisfaction. – Hygiene factors (work environment) are on a separate continuum that ranges from dissatisfaction to no dissatisfaction.
Copyright © Houghton Mifflin Company. All rights reserved.
10 | 11
Figure 10.3 The Two-Factor Theory of Motivation
Copyright © Houghton Mifflin Company. All rights reserved.
10 | 12
The Two-Factor Theory (Herzberg) (cont’d) • Motivation becomes a two-stage process: – Ensuring that the hygiene factors are not deficient and not blocking motivation. – Providing employees the opportunity to experience increase motivational factors through the use of job enrichment and the redesign of jobs.
• Criticisms of the Two-Factor Theory – Interview findings are subject to different explanations. – Sample population was not representative. – Subsequent research has not upheld theory.
Copyright © Houghton Mifflin Company. All rights reserved.
10 | 13
Process Perspectives on Motivation • Process Perspectives – Focus on why people choose certain behavioral options to satisfy their needs and how they evaluate their satisfaction after they have attained their goals.
• Process Perspectives of Motivation – – – –
Expectancy Theory Porter-Lawler Extension of Expectancy Theory Equity Theory Goal-Setting Theory
Copyright © Houghton Mifflin Company. All rights reserved.
10 | 14
Expectancy Theory • Motivation depends on how much we want something and how likely we are to get it. • Theory assumes that: – Behavior is determined by a combination of personal and environmental forces. – People make decisions about their own behavior in organizations. – Different people have different types of needs, desires, and goals. – People choose among alternatives of behaviors in selecting one that that leads to a desired outcome.
Copyright © Houghton Mifflin Company. All rights reserved.
10 | 15
Expectancy Theory (cont’d) • Model of Motivation – Suggests that motivation leads to effort when combined with ability and environmental factors; effort results in performance; performance, in turn, leads to various outcomes that have value (valence) to employees.
Copyright © Houghton Mifflin Company. All rights reserved.
10 | 16
Figure 10.4 The Expectancy Model of Motivation
Copyright © Houghton Mifflin Company. All rights reserved.
10 | 17
Elements of Expectancy Theory • Effort-to-Performance Expectancy – The individual’s perception of the probability that effort will lead to a high level of performance.
• Performance-to-Outcome Expectancy – The individual’s perception of the probability that performance will lead to a specific outcome or consequence or reward in an organizational setting.
Copyright © Houghton Mifflin Company. All rights reserved.
10 | 18
Elements of Expectancy Theory (cont’d) • Outcomes (Consequences) and Valences – Valence is an index of how much an individual values a particular outcome. It is also the attractiveness of the outcome to the individual. – Attractive outcomes have positive valences and unattractive outcomes have negative valences. – Outcomes to which an individual is indifferent have zero valences.
Copyright © Houghton Mifflin Company. All rights reserved.
10 | 19
Elements of Expectancy Theory (cont’d) • For individual motivated behavior (effort) to occur: – Effort-to-performance expectancy (the belief that effort will lead to high performance) must be greater than zero. – Performance-to-outcome expectancy (performance will result in certain outcomes) must be greater than zero. – The sum of the valences must be greater than zero —the outcome/reward must have value to the individual.
Copyright © Houghton Mifflin Company. All rights reserved.
10 | 20
Porter-Lawler Extension of Expectancy Theory • Assumptions: – If performance in an organization results in equitable and fair rewards, people will be more satisfied. – High performance can lead to rewards and high satisfaction.
• Types of Rewards: – Extrinsic rewards • Outcomes set and awarded by external parties (e.g., pay and promotions). – Intrinsic rewards • Outcomes that are internal to the individual (e.g., self-esteem and feelings of accomplishment). Copyright © Houghton Mifflin Company. All rights reserved.
10 | 21
Figure 10.5 Porter-Lawler Extension of Expectancy Theory
Copyright © Houghton Mifflin Company. All rights reserved.
10 | 22
Equity Theory • Assumptions: – People are motivated to seek social equity in the rewards they receive for performance. – Equity is an individual’s belief that the treatment he or she receives should be fair relative to the treatment received by others. – Individuals view the value of rewards (outcomes) and inputs of effort as ratios and make subjective comparisons of themselves to other people: Outcomes (self) Inputs (self) Copyright © Houghton Mifflin Company. All rights reserved.
=
Outcomes (other) Inputs (other) 10 | 23
Equity Theory (cont’d) • Conditions of and reactions to equity comparisons: – Feeling equitably rewarded. • Maintain performance and accept comparison as fair estimate. – Feeling under-rewarded—try to reduce inequity. • Change inputs by trying harder or slacking off. • Change outcomes by demanding a raise. • Distort the ratios by altering perceptions of self or of others. • Leave situation by quitting the job. • Change comparisons by choosing another object person. Copyright © Houghton Mifflin Company. All rights reserved.
10 | 24
Goal-Setting Theory • Assumptions – Behavior is a result of conscious goals and intentions. – Setting goals influences the behavior of people in organizations.
• Characteristics of Goals – Goal difficulty • Extent to which a goal is challenging and requires effort. • People work harder to achieve more difficult goals. • Goals should be difficult but attainable. Copyright © Houghton Mifflin Company. All rights reserved.
10 | 25
Figure 10.6 The Expanded Goal-Setting Theory of Motivation
Copyright © Houghton Mifflin Company. All rights reserved.
10 | 26
Reinforcement Perspectives on Motivation • Reinforcement Theory – Focuses on the role of rewards as they cause behavior to change or remain the same over time. – Assumes that: • Behavior that results in rewarding consequences is likely to be repeated, whereas behavior that results in punishing consequences is less likely to be repeated.
Copyright © Houghton Mifflin Company. All rights reserved.
10 | 27
Kinds of Reinforcement in Organizations • Positive Reinforcement – Strengthens behavior with rewards or positive outcomes after a desired behavior is performed.
• Avoidance – Strengthens behavior by avoiding unpleasant consequences that would result if the behavior is not performed.
• Punishment – Weakens undesired behavior by using negative outcomes or unpleasant consequences when the behavior is performed.
• Extinction – Weakens undesired behavior by simply ignoring or not reinforcing that behavior.
Copyright © Houghton Mifflin Company. All rights reserved.
10 | 28
Providing Reinforcement in Organizations Schedules for Applying Reinforcement Fixed interval
Reinforcement applied at fixed time intervals, regardless of behavior.
Variable interval
Reinforcement applied at variable time intervals.
Fixed ratio
Reinforcement applied after a fixed number of behaviors, regardless of time.
Variable ratio
Reinforcement applied after a variable number of behaviors, regardless of time.
Copyright © Houghton Mifflin Company. All rights reserved.
10 | 29
Providing Reinforcement in Organizations (cont’d) • Behavior Modification (OB Mod) – A method for applying the basic elements of reinforcement theory in an organizational setting. – Specific behaviors are tied to specific forms of reinforcement.
Specific Behavior
Copyright © Houghton Mifflin Company. All rights reserved.
Specific Reinforcement
10 | 30
Popular Motivational Strategies • Empowerment and Participation – Empowerment • The process of enabling workers to set their own work goals, make decisions, and solve problems within their sphere of influence. – Participation • The process of giving employees a voice in making decisions about their work. – Areas of Participation for Employees • Making decisions about their jobs. • Making decisions about administrative matters. • Participating in decision making about broader issues of product quality. Copyright © Houghton Mifflin Company. All rights reserved.
10 | 31
New Forms of Working Arrangements Variable Work Schedules Compressed work schedule
Working a full forty-hour week in less than the traditional five days.
“Nine-eighty” schedule
Working one full week (five days) and one compressed week (four days), yielding one off-work day every other week.
Flexible work schedules (flextime)
Allowing employees to select, within broad parameters, the hours they will work.
Job sharing
When two part-time employees share one full-time job.
Copyright © Houghton Mifflin Company. All rights reserved.
10 | 32
Using Reward Systems to Motivate Performance • Organizational Reward System – The formal and informal mechanisms by which employee performance is defined, evaluated, and rewarded. • Performance-based rewards have the greatest impact on motivation and higher-levels of performance. • Rewards align employee self-interests with the organization’s interests. • Rewards foster behaviors desired by organizations.
Copyright © Houghton Mifflin Company. All rights reserved.
10 | 33
Effects of Organizational Rewards on Employees Attitudes
Behaviors
Motivation
• Satisfaction is influenced by how much is received and how much the person thinks should have been received.
• Extrinsic rewards affect employee satisfaction and reduce turnover.
• Employees will work harder when performance will be measured.
• Rewards influence patterns of attendance and absenteeism.
• Employees will work harder if performance is closely followed by rewards.
• Satisfaction is affected by comparison with others. • The rewards of others are often misperceived.
• Employees tend to work harder for rewards based on performance.
• Overall job satisfaction is affected by employee satisfaction with intrinsic and extrinsic rewards.
Copyright © Houghton Mifflin Company. All rights reserved.
10 | 34
Designing Effective Reward Systems • Reward system must meet an individual’s needs. • Rewards should compare favorably with other organizations. • Distribution of rewards must be perceived to be equitable. • Reward system must recognize different needs.
Copyright © Houghton Mifflin Company. All rights reserved.
10 | 35
Merit Reward Systems • Merit Pay Concept – Pay is awarded to employees on the basis of the relative value of their contributions to the organization.
• Merit Pay Plans – Compensation plans that formally base at least some portion of compensation on merit. – Provide employees with annual salary increases depending on their overall job performance.
Copyright © Houghton Mifflin Company. All rights reserved.
10 | 36
Incentive Reward Systems • Monetary Incentives – Piece-rate incentive plan • A reward system wherein the organization pays an employee a certain amount of money for every unit she or he produces. – Sales commissions plan • The percentage of an employee’s sales to customers that is paid to an employee as a reward for selling the firm’s products or services.
• Nonmonetary Incentives – Immediate and one-time rewards • Days off, additional paid vacation time, and special perks. Copyright © Houghton Mifflin Company. All rights reserved.
10 | 37
Team and Group Incentive Reward Systems • Gainsharing – Sharing the cost savings that result from productivity improvements.
• Scanlon Plan – Similar to gainsharing, but the distribution of gains is tilted toward the employees and is spread across the organization.
• Profit Sharing Plans – Provide an organization-wide incentive in the form of an annual bonus to all employees based on corporate profits.
Copyright © Houghton Mifflin Company. All rights reserved.
10 | 38
Executive Compensation • Standard Forms of Executive Compensation – Base salary is the guaranteed portion of an executive’s compensation. – Bonuses paid for performance of the organization.
• Special Forms of Executive Compensation – Stock options allow executives to purchase company stock at a predetermined price. • If the current stock price is above the predetermined price, the executive profits from exercising the option. • If the current stock price is below the predetermined price, the option has no value. Copyright © Houghton Mifflin Company. All rights reserved.
10 | 39
Criticisms of Executive Compensation • Levels of executive compensation are perceived as inordinately large. • Compensation levels for executives do not reflect the performance of their firms. • The earnings gap between the typical employee and the CEO is enormous. • Executive stock options represent potentially huge liabilities for companies, yet do not appear on their financial statements as such.
Copyright © Houghton Mifflin Company. All rights reserved.
10 | 40
New Approaches to Performance-Based Rewards • Employee Participation – Allowing employee participation in the deciding of distribution of rewards.
• Innovation in Incentive Programs – Offering stock options to all employees. – Individualizing reward systems such that different employees can be offered different incentives.
• More Effective Communication – Sharing information about how awards are earned and distributed.
Copyright © Houghton Mifflin Company. All rights reserved.
10 | 41
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