Ch 6: Designing a Motivating Work Environment

Structural v felt empowerment

The empowerment process starts with structure that leads to felt empowerment

Gainsharing

a companywide program in which employees are rewarded for performance gains compared to past performance

What Makes an Effective Appraisal System?

1) Adequate notice 2) Fair hearing 3) Judgement based on evidence

Learning Objectives

1) Describe the history of job design approaches 2) Understand how to increase the motivating potential of a job 3) Understand why goals should be SMART 4) Set SMART goals 5) Give performance feedback effectively 6) Describe the individual-, team-, and organization-based incentives that can be used to motivate the workforce

Why Do SMART Goals Motivate?

1) Goals give us direction and tell us what to focus on 2) Goals energize people and tell them not to stop until the goal is accomplished 3) Having a goal provides a challenge and and when they are reached, it gives us a sense of accomplishment 4) Goals urge people to think outside the box and rethink how they are working

Are There Downsides to Goal Setting?

1) Learning decreases Setting goals for specific outcomes may hamper employee performance if employees are lacking skills and abilities needed to reach the goals 2) Adaptability declines Goal setting may prevent employees from adapting and changing their behavior in response to unforeseen threats 3) Single mindedness develops Goals focus employee attention on the activities that are measured; this focus may lead to sacrificing other important elements of performance 4) Ethical problems increase An aggressive pursuit of goal may lead to unethical behaviors

Five job characteristics

1) Skill variety 2) Task identity 3) Task significance 4) Autonomy 5) Feedback

Three psychological states

1) They view their work as MEANINGFUL (most important for employee attitudes and behaviors!) 2) They feel RESPONSIBLE for the outcomes 3) They acquire KNOWLEDGE OF RESULTS

What is the Purpose of a Performance Appraisal

1) important tool to give employees feedback and aid their development 2) used to distribute rewards such as bonuses, annual pay raises, and promotions 3) may also be used to document termination of employees

MOTIVATING EMPLOYEES THROUGH JOB DESIGN

6.2 Learning Objectives 1) Learn about the history of job design approaches 2) Consider alternatives to job specialization 3) Identify job characteristics that increase motivating potential 4) Learn how to empower employees

MOTIVATING EMPLOYEES THROUGH GOAL SETTING

6.3 Learning Objectives 1) Describe why goal setting motivates employees 2) Identify characteristics of a goal that make it effective 3) Identify limitation of goals 4) Understand how to tie individual goals to strategic goals

MOTIVATING EMPLOYEES THROUGH PERFORMANCE APPRAISALS

6.4 Learning Objectives 1) Understand why companies use performance appraisals 2) Describe basic characteristics of performance appraisals 3) List the characteristics of an effective performance appraisal 4) Compare the advantages and disadvantages of relative versus absolute appraisals 5) Learn how to conduct a performance appraisal meeting 6) Understand the biases inherent in performance appraisals

MOTIVATING EMPLOYEES THROUGH PERFORMANCE INCENTIVES

6.5 Learning Objectives: 1) Learn the importance of financial and nonfinancial incentives to motivate employees 2) Understand the benefits of different types of incentive systems, such as piece rate and merit pay 3) Learn why nonfinancial incentives can be effective motivators 4) Understand the tradeoffs involved in rewarding the individual, group, and organizational performance

Absolute Rating versus Relative Ranking Appraisals

Absolute rating: evaluation with respect to some objective criteria; rating depends only on your performance with respect to the objective criteria •preferred by most employees! Relative ranking: your rating depends on how your objective performance compares with the rest of your peers •downsides: danger of potential lawsuit; not consistent with creating team spirit and may create a competitive, cutthroat environment; have limited value in giving employees concrete feedback about what to do next year to get a better ranking •one advantage: they prevent performance rating from becoming inflated by forcing raters to differentiate among employees

6.5 Key Takeaway

Companies use a wide variety of incentives to reward performance. This is consistent with motivation theories showing that rewarded behavior is repeated. Piece rate, individual bonuses, merit pay, and sales commissions tie pay to individual performance. Team bonuses are at the department level, whereas gainsharing, profit sharing, and stock options tie pay to company performance. While these systems may be effective, people tend to demonstrate behavior that is being rewarded and may neglect other elements of their performance. Therefore, reward systems should be designed carefully and should be tied to a company's strategic objectives.

Conducting the Appraisal Meeting

During the performance appraisal, after the rater rates the performance of the ratee, both sides meet to discuss positive and negative instances of performance. Thus the meeting serves as an important forum during which the rater gives feedback to the ratee. The goal of providing performance feedback is to help the ratee solve performance problems and to motivate the employee to change behavior. Most effective meetings: 1) feedback is presented in a constructive manner •discuss the performance problems and aid the employee in resolving these problems, instead of criticizing the person •move the focus of the conversation from the person to the behaviors to reduce employee defensiveness! •helps employees develop a more positive view of the appraisal system 2) increase employee participation •allow employees to present their side of the story so they feel that the system is fair 3) supervisors should be knowledgeable about the employee's performance

Aggressive

Effective goals are difficult, not easy! Aka stretch goals •people with difficult goals outperform those with easier goals •because easy goals do not provide a challenge •when goals are aggressive and require people to work harder or smarter, performance tends to be dramatically high •people who have high self-efficacy and people who have high need for achievement tend to set more difficult goals for themselves

Specific and measurable

Ex) "increasing sales to a region by 10%" When goals are specific and measurable, performance tends to be higher, because, if goals are not specific and measurable, how would you know whether you have reached the goal? •certain aspects of performance are easier to quantify Ex) productivity, sales, number of defects, turnover rates •not everything that is easy to measure should be measured!! •some of the most important elements of someone's performance may not be easily quantifiable (such as employee or customer satisfaction)

6.3 Key Takeaway

Goal-setting theory is one of the most influential theories of motivation. In order to motivate employees, goals should be SMART (specific, measurable, aggressive, realistic, and time-bound). SMART goals motivate employees because they energize behavior, give it direction, provide a challenge, force employees to think outside the box, and devise new and novel methods of performing. Goals are more effective in motivating employees when employees receive feedback on their accomplishments, have the ability to perform, and are committed to goals. Poorly derived goals have the downsides of hampering learning, preventing adaptability, causing a single-minded pursuit of goals at the exclusion of other activities, and encouraging unethical behavior. Companies tie individual goals to company goals using management by objectives.

Importance of Job Design

How a job is designed has a major impact on employee motivation, job satisfaction, commitment to an organization, absenteeism, and turnover

6.2 Key Takeaway

Job specialization is the earliest approach to job design, originally described by the work of Frederick Taylor. Job specialization is efficient but leads to boredom and monotony. Early alternatives to job specialization include job rotation, job enlargement, and job enrichment. Recently, researchers also recognized the proactive role employees play in their own job design by job crafting. Research shows that there are five job components that increase the motivating potential of a job: skill variety, task identity, task significance, autonomy, and feedback. Finally, empowerment is a contemporary way of motivating employees through job design. These approaches increase worker motivation and have the potential to increase performance.

MPS equation

MPS = [(Skill variety + Task identity + Task Significance) / 3] x Autonomy x Feedback Hackman and Oldman's model; the five job characteristics do no have uniform effects Autonomy and feedback are the more important elements in deciding motivating potential •if someone's job is lacking in autonomy (or feedback), regardless of levels of variety, identity, and significance, the motivating potential score will be very low IN THE EYE OF THE BEHOLDER

Positive outcomes

Overall job satisfaction Internal motivation Higher performance Lower absenteeism and turnover

6.4 Key Takeaway

Performance appraisals involve observing and measuring an employee's performance during an appraisal period, recording these observations, communicating results to the employee, and recognizing high performance while devising ways of improving deficiencies. Most appraisals are conducted by the supervisor, but there are many advantages to using 360-degree appraisals. Appraisals that are more effective give employees adequate notice, fair hearing, and judgment based on evidence. Some companies use relative rankings in which employees are compared to each other, but this system has many disadvantages. A performance appraisal meeting should be planned and executed carefully, with the supervisor demonstrating empathy and supportiveness. There are intentional and unintentional biases inherent in appraisals and being aware of them, increasing rater accountability, and training managers may be useful in dealing with some of them.

When Are Goals More Effective?

Three conditions that contribute to effectiveness: 1) Feedback 2) Ability 3) Goal Commitment

Job crafting

a recent approach to job enrichment; proactive changes employees make to their own job descriptions--expanding certain elements that are a better fit to their own personality, or reducing the scope of the job to achieve better work-life balance •take an active role in shaping their own job roles and responsibilities to fit the realities of their interests, passions, and goals 3 Types: 1) Task crafting (changing the content of the job) 2) Relational crafting (changing the quality and amount of interactions involved with other people) 3) Cognitive crafting (changing the way the person thinks about the job)

One-on-one meetings

a short, frequent, and regular meeting with an employee to provide timely feedback and support •meetings held in addition to the performance appraisal meeting •supplements the feedback provided in a regular and more formal review

Management by Objectives (MBO)

a system approach to ensure that individual and organizational goals are aligned Involves the following process: 1) Setting company goals derived from corporate strategy 2) Determining team- and department-level goals 3) Collaboratively setting individual-level goals that are aligned with corporate strategy 4) Developing an action plan 5) Periodically reviewing performance and revising goals

360-degree feedback

a system where feedback is gathered from supervisors, peers, subordinates, and sometimes even customers •feedback is shared with the employee for developmental purposes

Scientific Management and Job Specialization

aka Taylorism; scientific methods used to increase productivity •increase efficiency •standardized job performance methods were an important element of these techniques •carefully plan jobs in advance and pay employees to perform tasks in the way specified by management Job specialization was one of the major advances of this approach

Performance appraisal

aka performance review or performance evaluation; a process in which employee performance is measured •may be measured objectively in jobs such as sales, or subjectively in the form of having managers rate the employee's performance using preestablished criteria •many organizations use performance appraisals to make decisions about employees, including distributing pay raises, promotion decisions, and terminations

Job enlargement

alternative to job specialization; a job redesign technique allowing workers more control over how they perform their own tasks Advantages: •positive outcomes such as reduced turnover, increased productivity, and reduced absences •with more authority of their work, employees can be more efficient, eliminate unnecessary tasks, take shortcuts, and increase overall performance Disadvantages: •may sometimes cause dissatisfaction among certain employees •employees who are given additional autonomy/responsibility may expect greater levels of pay or other types of compensation, and if this expectation is not met they may feel frustrated •not suitable for everyone! not all employees desire to have control over how they work

Job rotation

alternative to job specialization; involves moving employees from job to job at regular intervals Advantages: •relieves monotonous aspects of job specialization •effective way for employees to acquire new skills, in turn for orgs to increase overall skill level of their employees •cross-training to perform different tasks increases flexibility of managers to assign employees to differ parts of the org when needed •transfer knowledge between departments •side effect: increased accountability and more ethical behavior

Employee recognition awards

awards, plaques, or other symbolic methods of recognition that convey appreciation for employee contribution

Job specialization

breaking down tasks to their simplest components and assigning them to employees so that each person would perform fewer tasks in a repetitive manner Advantages: •reduces skill requirements of the jobs •decreases effort and cost of staffing •shorter training times Disadvantages: •boring and repetitive and associated with negative outcomes like absenteeism •behavior that counteracts/is counterproductive to the benefits gained from job specialization, such as tardiness Ex) McDonald's first fast-food restaurant

SMART goals

effective goals are... Specific Measurable Aggressive/Achievable Realistic/Relevant Time-bound Are quantifiable, have a timeline, are relevant to corporate objectives, are difficult so they challenge individuals but are not so difficult that they are dismissed out of hand

Fair hearing

ensuring that there is two-way communication during the appraisal process and the employee's side of the story is heard

Job Characteristics Model

five core job dimensions, leading to three critical psychological states, which lead to work-related outcomes the core job characteristics in the model are highly relevant for employee job attitudes these five dimensions lead employees to experience 3 psychological states these psychological states are related to positive outcomes

Stock option

giving an employee the right, but not the obligation, to purchase company stocks at a predetermined price •purpose is to align company and employee interests by making employees owners

Merit pay

giving employees a permanent pay raise based on past performance

Goal-Setting Theory

goal setting improves performance at least 10% and up to 25%; implemented by thousands of companies

Realistic

goals should be based on reality; goals should not be viewed as impossible to reach •if a goal is viewed as impossible to reach, it will not have any motivational value •setting impossible goals and punishing people for not reaching these goals is cruel and will demotivate employees

Judgement based on evidence

involves documenting performance problems and using factual evidence, as opposed to personal opinions, when rating performance

Adequate notice

involves letting employees know what criteria will be used during the appraisal

Ensuring Goal Alignment Through Management by Objectives

it is crucial for individual goals to support team goals and team goals to support company goals, since goals direct employee attention toward a common end •MBO is a systematic approach to ensure that individual and organizational goals are alligned

Growth need strength

the degree to which a person has higher order needs, such as self-esteem and self-actualization

Leniency

one of the common problems in appraisals is that managers give employees rating higher than warranted; may be for reason such as the desire to avoid confrontation, having a very agreeable personality, the desire to avoid hurting the employee's chances for a bonus, the desire to motivate employees by giving them high ratings, or liking the employee as a person •leniency is a problem because it makes ratings relatively useless for determining raises, bonuses, or promotions •also makes it harder for employees to change their behaviors •should make managers more accountable for the rating they give

Stereotypes

one of the factors that create bias in appraisals is the stereotypes that rates may have regarding the gender, race, age, or another characteristic of the person being rated; beliefs about these groups may be generalized to the person •when factors that have no bearing on one's job performance are used to evaluate the person, employees overall will be demoralized, the appraisals will lose their effectiveness, and the company will face costly lawsuits •must understand the importance of eliminating stereotypes from performance appraisals and training managers to accurate observe and evaluate perfromance

Bonuses

one-time rewards that follow specific accomplishments of employees

Piece rate incentives

payment to employees made on the basis of their individual output •may encourage employees to work fast, but may also increase the number of errors made •might be more effective to reward employee performance minus errors

Managing Potential Bias in Performance Appraisals

performance appraisal is a subjective event by nature; raters, intentionally or unintentionally, make mistakes or exhibit biases •being aware of these tendencies is the first step to managing their influence over the appraisal system! Liking Leniency Stereotypes

Profit-sharing

programs involving sharing a certain percentage of company profits with all employees; companywide incentives •not very effective in tying employee pay to individual effort since each employee has a limited role in influencing company profitability •may be effective in creating loyalty and commitment to the company by recognizing all employees for their contribution throughout the year

Sales commissions

rewarding sales employees with a percentage of sales volume or profits generated

Structural empowerment

the aspects of the work environment that give employees discretion and autonomy, and enable them to do their jobs effectively •the presence of certain structural factors helps empower people, but in the end empowerment is a perception

Performance Management

the collection of tools, methods, and procedures aiming to support and improve employee performance

Goal commitment

the degree to which a person is dedicated to reaching the goal •making goals public may increase commitment to the goal, because it creates accountability to peers •goal commitment tends to be higher when individuals have a supportive and trust-based relationship with managers •goal commitment is higher when employees participate in goal setting •rewarding people for their goal accomplishment may increase commitment to future goals

Task identity

the degree to which a person is in charge of completing an identifiable piece of work from start to finish

Autonomy

the degree to which people have the freedom to decide how to perform their tasks •increases motivation at work •employees can respond to workplace problems more quickly and effectively •speeds the quality of decision-making •employees are proactive and creative •can arise from workplace features, such as telecommuting, company structure, organizational climate, and leadership style

Feedback

the degree to which people learn how effective they are being at work •may come from other people, such as supervisors, peers, subordinates, and customers, or from the job itself

Skill variety

the extent to which the job requires a person to utilize multiple high-level skills

Time-bound

the goal should contain a statement when the proposed performance level will be reached Ex) add "by December of the current fiscal year" •gives employees a sense of time urgency

Performance Incentives

the most tangible way in which companies put motivation theories into action is by instituting incentive systems; incentives are reward systems that tie pay to performance Ex) pay-for-performance systems: achieve higher productivity, profits, and customer service Effective for 2 reasons: 1) Employees try harder to increase their effort when they are paid for their performance 2) These systems encourage less productive workers to quit, and they are often replaced by workers who are more productive, resulting in net productivity gains for organizations Downsides: •may create a risk-averse environment that diminishes creativity; may happen if employees are rewarded for doing things in a certain way •tend to focus employee energy to goal-directed efforts, and behaviors such as helping team members or being a good citizen of the company may be neglected

Liking

the rater and ratee have an existing relationship; if they like or dislike each other, these feelings may bias the ratings

Empowerment

the removal of conditions that make a person powerless •employees who feel empowered believe that their work is meaningful •they tend to feel that they are capable of performing their jobs effectively, have the ability to influence how the company operates, and can perform their jobs in any way they see fit, without close supervision and other interference •these liberties enable employees to feel powerful

Who is the Rater?

traditionally the rater has been the supervisor •supervisors have more at stake when an employee is not performing well, and they have access to greater resources that can be used to improve performance •however, relying solely on supervisors may lead to a BIASED appraisal system •therefore, organizations are introducing additional raters into the system, such as peers, customers, and subordinates; introducing more perspectives may provide richer feedback to employees in question

Task significance

whether a person's job substantially affects other people's work, health, or well-being