Ch. 6 - Applied Performance Practices

Gainsharing plan

- a form of team-based performance reward - calculates bonuses from the department's or business unit's cost savings and productivity improvement - tends to improve team dynamics, knowledge sharing, and pay satisfaction - creates a reasonably strong link between effort and performance, because much of the cost reduction and labor efficiency is within the team's control

Employee stock ownership plan (ESOP)

- a reward system that encourages employees to buy company stock, usually at a discounted price - the financial incentive occurs in the form of dividends and market appreciation of the stock

Stock options

- a reward system that gives employees the right to purchase company stock at a future date at a predetermined price - the right to purchase company stock at a predetermined price up to a fixed expiration date Ex: An employer might offer employees the right to purchase 100 shares at $50 each at any time between two and six years from now. If the stock price is, say, $60 two years later, employees could earn $10 per share from these options, or they could wait up to 6 years for the stock price to rise further. If the stock price never rises above $50 during that time, employees are "out of the money" and they would let the options expire - the intention of stock options is to motivate employees to make the company more profitable, thereby raising the company's stock price and enabling them to reap the value above the predetermined price of the stock options

Profit-sharing plan

- a reward system that pays bonuses to employees on the basis of the previous year's level of corporate profits - rather than distributing cash bonuses, many US firms assign the profit-share funds either into the company pension or employee stock ownership plan

Psychological empowerment

- an outcome of job enrichment - a perceptual and emotional state in which people experience more self-determination, meaning, competence, and impact regarding their role in the organization - self-determination (employees feel that they have freedom, independence, and discretion over their work activities) - meaning (employees care about their work and believe that what they do is important) - competence (employees are confident about their ability to perform the work well and have a capacity to grow with new challenges - impact (employees view themselves as active participants in the organization; that is, they believe their decisions and actions have an influence on the company's success

Why would companies divide work into such tiny bits? Continued

- better person-job matching (job specialization tends to increase work efficiency by enabling employers to more precisely match employees with specific aptitudes, skills, knowledge, interests, and other characteristics to the jobs for which these talents are best suited

Ensure that rewards are relevant

- companies need to align rewards with performance within the employee's control - the more employees see a :line of sight" between their daily actions and the reward, the more they are motivated to improve performance - higher-level managers earn bonuses based more on overall fleet performance, whereas branch managers are rewarded more for parts and inventory efficiencies at their local operations - reward systems also need to correct for situational factors - salesperson in one region may have higher sales because the economy is stronger there than elsewhere, so sale bonuses need to be adjusted for such economic factors

Organizational rewards

- company wide performance bonus - employee stock ownership plan (ESOP) - stock options - profit-sharing plan

Companywide performance bonus

- distributes bonuses to some or all employees for achieving preset organizational goals or companywide productivity improvements

Supporting psychological empowerment continued

- empowerment also requires corporate leaders to trust employees and be willing to take the risks that empowerment creates - depends on personal characteristics' - employees must possess the skills and knowledge necessary to perform the work and to handle the additional decision-making requirements - can substantially improve motivation and performance - organizational and cultural circumstances can limit the extent to which the conditions for empowerment produce feelings of empowerment - whether employees feel empowered when structural conditions for empowerment are present also depends on how much they trust the company's leaders

Social feedback

- feedback from other people - jobs that include social feedback may be just as motivating as jobs that provide feedback from the task itself - feedback from others may be communicated explicitly through conversation or more implicitly through subtle nonverbal cues

Team rewards

- gainsharing plan

Different perspectives and attitudes toward money

- in almost all societies, males attach more importance or value to money than do females - males are more likely than females to view money as a symbol of power and status as well as the means to autonomy - females are more likely to view money in terms of things for which it can be exchanged and particularly a symbol of generosity and caring by using money to buy things for others - meaning of money varies across cultures - people in China, Japan, and other countries with high power distance (acceptance of unequal distribution of power in a society) tend to have a high respect and priority for money - people in countries with a strong egalitarian culture (ex: Denmark, Austria, and Israel) are discouraged from openly talking about money or displaying their personal wealth - Swiss culture values saving money, whereas Italian culture places more value on spending it

Individual rewards

- individual incentives exist in a wide variety across a range of industries and occupations - ex: housekeeping staff in many hotels are paid a piece rate - a specific amount earned for each room cleaned - real estate agents and other salespeople typically earn commissions, in which the amount of pay earned depends on sales volume

Components of mental imagery

- involves mentally practicing the task, anticipating obstacles to goal accomplishment, and working out solutions to those hypothetical obstacles (by mentally walking through the activities required to accomplish the task, we begin to see problems that may occur; we can then imagine what response would be best for each contingency - involves successful completion of the task (you might imagine the experience of completing the task and the positive results that follow, such as being promoted, receiving a prestigious aware, or taking time off work; visualizing successful performance and its rewards activities energizing emotions, which increases the individual's goal commitment and motivation to complete the task effectively

Frequent job rotation

- involves moving employees through two or more jobs each day - this rotation differed from career development transfers, which involved rotating employees once or twice each year through different jobs

Supporting psychological empowerment

- means that the leaders are changing the work environment to support psychological empowerment - structural empowerment practices (a wide variety of workplace conditions) potentially enhance or support psychological empowerment - job characteristics clearly influence the degree to which people feel empowered - employees are much more likely to experience self-determination when working in jobs with a high degree of autonomy and minimal bureaucratic control - experience more meaningfulness when working in jobs with high levels of task identity and task significance - experience more self-confidence when working in jobs that allow them to receive feedback about their performance and accomplishments - several organizational and work-context factors also influence empowerment - people experience more empowerment in organizations that provide easily accessible information and other resources, providing formal training, and that encouraged employees to learn through informal experimentation

Membership-based and seniority-based rewards

- membership-based and seniority-based rewards (pay for pulse) represent the largest part of most paychecks - some employee benefits are provided equally to everyone, such as free or subsidized meals at work - other rewards increase with seniority - employees with 10 or more years of service at the Paul Scherrer Institute near Zurich, Switzerland, receive an annual loyalty bonus equal to half a month's salary - those with 20 or more years of service at the research organization receive a bonus equal to a full month's salary - companies have also ramped up various types of loyalty or retention bonuses in response to skill shortages and high turnover - Shaker Cuisine and Mixologies hands out CAD $1,000 loyalty bonuses every six months to chefs at its dozen restaurants in Quebec, Canada

Link rewards to performance

- organizational behavior modification theory and expectancy theory both recommend that employees with better performances should be rewarded more than those with poorer performance (difficult to apply) - inconsistencies and bias can be minimized through gainsharing, ESOPs, and other plans that use objetive performance measures - when subjective measures of performance are necessary, companies should rely open multiple sources of information - companies also need to apply rewards soon after the performance occurs, and in large-enough dose (such as a bonus rather than a pay increase), so employees experience positive emotions when they receive the reward

Watch out for unintended consequences

- performance-based rewards sometimes have unexpected and undesirable effects on employee motivation and behavior

Job specialization affects output quality, but in two opposing ways

- positive = employees in specialized jobs tend to produce higher quality output because they master their work faster compared to people in jobs with a wide variety of tasks - negative = many specialized jobs are so tedious that they reduce work attentiveness and motivation, both of which undermine quality of output and by performing tiny piece of the overall product or service, employees in specialized jobs have difficulty for striving better quality of even noticing flaws with the work unit's overall output

Benefits of frequent job rotation

- potentially reduces the risk of repetitive strain and heavy lifting injuries - employees learn how to perform multiple jobs - employees who perform multiple jobs within a production or service process develop a clearer picture of that process and ways to improve quality - employees use a wider variety of skills throughout the workday (their daily work has more skill variety) which potentially improves their motivation and satisfaction

Ensure that rewards are valued

- rewards are most effective when they are valued, yet companies sometimes miscalculate the reward's valence for some or all employees

Personal and situational predictors of self-leadership

- self-leadership behaviors are more frequently found in people with higher levels of conscientiousness, openness to experience, and extroversion - people with a positive self-concept evaluation (self-esteem, self-efficiency, and internal locus of control) are also more likely to apply self-leadership strategies - the work environment influences the extent to which employees engage in self-leadership - employees require some degree of autonomy to engage in most aspects of self-leadership - they feel more confident with self-leadership when their boss is empowering rather than controlling, using motivating language, and demonstrates trust in employees - employees are more likely to engage in self-monitoring in companies that emphasize continuous measurement of performance - an important concept and practice for improving employee motivation and performance

Effectiveness of self-leadership

- self-leadership is shaping up to be a valuable applied performance practice in organizational settings - seem to work just as well across cultures - constructive indicate that constructive thought processes improve individual performance in various sports activities (almost all Olympic athletes rely on mental rehearsal and positive self-talk to achieve their performance goals

Personal goal setting

- self-leadership refers to leading oneself toward objectives, so the process necessarily begins by setting goals - these goals are self-determined, rather than assigned by or jointly decided with a supervisor - research suggests that employees are more motivated and perform better when they set their own goals, particularly in combination with other self-leadership practices - these goals also tend to be more challenging and therefore more effective when set some time (rather than immediately) before the task - personal goal setting also requires a high degree of self-awareness, because people need to understand their current behavior and performance before establishing meaningful goals for personal development

Skill-based pay structures

- skill-based pay structures are more measurable competency-based reward systems in which employees receive higher pay based on how quickly or accurately they perform specific tasks and operate equipment

Social job characteristics

- social interaction requirements - social feedback

Problems with job specialization

- specialization adversely affects employee attitudes and motivation - some jobs (such as scanning grocery items) are so specialized and repetitive that they become tedious, socially isolating, and cognitively dysfunctional - specialized jobs with very short cycle times often produce higher employee turnover and absenteeism - companies sometimes have to pay higher wages to attract job applicants to this dissatisfying, narrowly defined work

Main information processing demands

- task variability - task analyzability

Use Team Rewards for Interdependent Jobs

- team rewards are better than individual rewards when employees work in highly interdependent jobs because it is difficult to measure individual performance in these situations - team rewards also encourage cooperation, which is more important when work is highly interdependent - employees also favor team-based work when rewards are determined by team performance - a concern = employees (particularly the most productive employees) in the U.S. and many other low-collectivism cultures prefer rewards based on their individual performance rather than team performance

Social interaction requirements

- the job requires employees to interact with coworkers, clients, suppliers, and other stakeholders - jobs with higher social interaction requirements tend to be more motivating because employees need greater use of emotion regulation skills - increases the complexity of the work due to the person's interdependence with these other people

Autonomy

- the key contributor to intrinsic motivation - in jobs with high levels of autonomy, employees make their own decisions rather than rely on detailed instructions from supervisors or procedure manuals - these jobs provide freedom, independence, and discretion in scheduling the work and determining the procedures to be used to complete the work

Job design

- the process of assigning tasks to a job, including the interdependency of those tasks with other jobs - tries to balance these potentially competing effects of efficiency and motivation

Membership-based and seniority-based rewards continued

- these membership-based and seniority-based rewards potentially reduce turnover and attract job applicants (particularly those who desire predictable income) - does not directly motivate job performance - discourages the poor performers from seeking work better suite to their abilities - good performers are more easily lured to better-paying jobs - some of these rewards are also "golden handcuffs" = they discourage employees from quitting because of deferred bonuses or generous benefits that are not available elsewhere' - golden handcuffs potentially weaken job performance because they generate continuance rather than affective commitment

Unintended consequences

1.) rewards can motivate employees to "game" the system, that is, to do things that directly influence the size of the reward, rather than behaviors intended by the reward 2.) another unintended consequence = rewards motivate people to manipulate the information that affects the reward (ex: some hospital managers have unethically upcoded or miscoded patients, which produced higher revenue and better outcome statistics 3.) another unintended consequence = rewards motivate people to select work that achieves the reward more easily or results in a larger reward (known as cherry picking or cream skimming) 4.) rewards tend to focus employees on measured outcomes and away from unmeasured outcomes 5.) rewards sometimes shift employees from a relational to a transactional employment relationship 6.) rewards may reduce costs in expected ways but these benefits are offset by much higher hidden costs

Job characteristics model

A job design model that relates the motivational properties of jobs to specific personal and organizational consequences of those properties - identifies 5 core job characteristics that produce three psychological states - employees who experience higher levels of these psychological states tend to have higher levels of intrinsic motivation, work performance (quality and efficiency), and job satisfaction with the work itself - core job characteristics = skill variety, task identity, task significance, autonomy, and job feedback - critical psychological states = felt meaningfulness of the work, felt responsibility for work outcomes, and knowledge of work results - personal and work outcomes = intrinsic motivation, work performance (quality and efficiency), and satisfaction with the work itself

Job

A set of tasks performed by one person

Competency-based rewards

Competency-based pay structures identify clusters of skills, knowledge, and experience specific to each broad job group as well as clusters relevant across all job groups - employees progress through the pay range within their job group as they demonstrate higher levels of those competencies - each of the company's four broad organizational levels also has a specific set of competencies

Self-reinforcement

Part of social cognitive theory - occurs whenever an employee has control over a reinforcer, but doesn't take the reinforcer until completing a self-set goal - ex: taking a break after reaching a predetermined stage of your work (the work break is a self-induced form of positive reinforcement) - self-reinforcement also occurs when you decide to do a more enjoyable task after completing work that you dislike

Self-leadership

Specific cognitive and behavioral strategies to achieve personal goals and standards through self-direction and self-motivation - people establish the self-direction and self-motivation needed to perform a task without their managers generating that motivation or initiative - includes a toolkit of behavioral activities borrowed from social cognitive theory and goal setting - includes constructive though processes that have been extensively studied in sports psychology

Job evaluation

Systemically rating the worth of jobs within an organization by measuring the required skill, effort, responsibility, and working conditions - almost every organization rewards employees to some extent on the basis of the status or worth of the jobs they occupy - most job evaluation methods try to quantify the value of the job by giving higher points to jobs that require more skill and effort, have more responsibility, and have more difficult working conditions - the higher the estimated worth of a job, the higher the minimum pay range received by people in that job - employees with more valued jobs sometimes also receive larger offices, company-paid vehicles, and other perks

Task significance

The degree to which a job has a substantial impact on the organization and/or larger society - is most strongly felt when employees regularly and directly see how their work affects customers or others in society

Task identity

The degree to which a job requires completion of a whole or an identifiable piece of work

Job feedback

The degree to which employees can tell how well they are doing from direct sensory information from the job itself

Task analyzability

The degree to which job duties allow the application of established procedures and rules to guide decisions and behavior (high analyzability) - employee creativity and judgement are necessary to perform jobs with low task analyzability - referring to how much the job can be performed using known procedures and rules - jobs with high task analyzability have low information processing demand because job incumbents rely on established guidelines for most decisions and actions - employees are less motivated when performing jobs with high task analyzability - jobs with low task analyzability have higher motivational potential because employees need to rely on their creativity and judgment to determine the best courses of action for most tasks - the novel or complex work activities in low task analyzability jobs make it difficult to create fixed procedures and rules

Task variability

The degree to which job duties are no routine and unpredictable - employees perform diverse tasks from one day to the next because they are faced with unfamiliar and unexpected issues - increases employee motivation because employees in these jobs have no routine work patterns - perform different type of tasks from one day to the next, and don't know which tasks are required until that time - jobs with low task variability are less motivating because the work is repetitive (employees perform similar tasks using similar skills in the same way every day

Skill variety

The extent to which employees must use different skills and talents to perform tasks within their jobs

Job enrichment

The practice of giving employees more responsibility for scheduling, coordinating, and planning their own work - relates to all aspects of the job characteristics model, but it is particularly about autonomy and its psychological outcome of felt responsibility for work outcomes - potentially increases job satisfaction and work motivation, and reduces absenteeism and turnover - productivity is also higher when task identity and job feedback are improved - product and service quality tend to improve because job enrichment increases the jobholder's felt responsibility and sense of ownership over the product or service

Job enlargement

The practice of increasing the number and variety of related tasks assigned to a job held by an employee - might involve combining two or more complete jobs into one or just adding more tasks requiring different skills to an existing job - skill variety increases because the additional tasks require distinct skills from the original job with fewer tasks

Scientific management

The practice of systematically partitioning work into its smallest elements and standardizing tasks to achieve maximum efficiency - consists of a toolkit of activities - some of these interventions (employee selection, training, goal setting, and work incentives) are common today but were rare back then - mainly associated with high levels of job specialization and standardization of tasks to achieve maximum efficiency - most effective companies should have detailed procedures and work practices developed by engineers, enforced by supervisors, and executed by employees - supervisory tasks should be divided among different people (operations, inspection, discipline) Does improve work efficiency in many situations - these productivity gains are partly due to training, goal setting, and work incentives, but job specialization quickly became popular in its own right

Self-monitoring

The process of keeping track at regular intervals of one's progress toward a goal by using naturally occurring feedback - improves employee performance - some people can receive feedback from the job itself - but many of us are unable to observe our work output so quickly or easily - instead, feedback mechanisms need to be designed - research suggests that people who have control over the timing of performance feedback perform their tasks better than do those with feedback assigned by others

Mental imagery

The process of mentally practicing a task and visualizing its successful completion

Self-talk

The process of talking to ourselves about our own thoughts or actions - problem = most self-task are negative; we criticize much more than encourage or congratulate ourselves

Job specialization

The result of a division of labor, in which work is subdivided into separate jobs assigned to different people - each resulting job includes a narrow subset of tasks, usually completed in a short cycle time

Cycle time

The time required to complete task before starting over with another item or client

Why would companies divide work into such tiny bits?

better person-job matching (job specialization tends to increase work efficiency by enabling employers to more precisely match employees with specific aptitudes, skills, knowledge, interests, and other - fewer skills and less knowledge to learn (employees can master specialized jobs more quickly because there are fewer physical and mental skills and knowledge to learn and therefore less time required to become proficient in the job) - more frequent practice (more specialized jobs typically have short cycle times; shorter task cycles give employees more frequent practice with the task, so jobs are mastered more quickly) - less attention residue from changing tasks (employees experience "attention residue" after they change from one type of task to another; their cognitive attention lingers on the previous type of work, which shows down performance on the new task; specialized jobs have fewer and less varied tasks, so there is less changeover and less attention and productivity loss)