Chapter 10: Motivation Applications

3 Ways Merit Pay Systems Can Work

1) be able to accurately document and measure employee performance 2) be fair and have the employee view the system as fair and valid as well 3) provide a meaningful increase in money (if the increase is small, the employee will see little relationship between performance and pay and it will have little effect on performance).

Progressive disciplinary procedures

A development in the severity of the consequences when a work site has escalating infraction levels.

Intangible Rewards (Autonomy and Freedom)

As the employee works at an organization for long periods of time, the employee can be trusted more and supervisors may grant them extra control over their job.

Piece-rate pay

Employees are expected to produce a certain standard and they get paid more if the produce more than that. If employees and managers disagree on what the standard should be, employees may purposely produce less in order to change the standard.

Employee stock options (ESOPs)

Employees are given the ability to purchase stock in the company.

Proactive motivation

Employees making things happen rather than watching things happen. Leads employees to set goals for changing their behavior in order to better adapt to changing work demands.

Merit Pay

Employees receive a percentage increase in their pay based on a formal performance review.

Gain Sharing

Extra pay is based on performance of the organization as a whole. Payments made to employees reflect cost savings rather than profits. Whole organization is involved. Easy for employees to see the connection between their behaviors and cost reductions

Job Rotation

Form of humanistic job design. The employee periodically goes between different jobs and thus provides them with greater skill variety and less boredom.

Intangible Rewards (Recognition)

Formally recognizing the effort and accomplishments of individuals or groups.

Employee Stock Options (Issues)

Hard for employees to establish a clear connection between performance and reward

Fringe Benefits

Health and dental coverage, life insurance, pensions, 401K are forms of this benefit Usually there is little connection to motivation as employees are usually unaware of the different programs or they underestimate their value Can have a large impact on attraction

Perks

Meal discounts, free uniforms, discounts on store items, company car are forms of this benefit They have little impact on day-to-day behaviors, as they represent a small portion of their incentives Most employees view them as standard

Incentive Pay (Pay for Performance)

Pay is directly linked to a quantifiable level of performance. Two types: Piece-rate and Bonuses

Vertical Loading

Primary form of job enrichment. Providing employees with more tasks as well as greater freedom and discretion as to how they perform those tasks.

Intangible rewards (Four Types)

Recognition, Status Symbols, Autonomy and freedom

Tangible rewards

Rewards that can be easily assigned a financial value (incentive/merit pay, bonuses, piece-rate, ESOPs, Fringe benefits, perks, etc.)

Bonuses

Similar to incentive pay except it is contingent on different criteria. Often in lump-sums while other incentive programs are payed paycheck to paycheck

Profit Sharing

The organization sets a monetary margin and once they actually exceed this margin, the excess is shared with the employees. Can decrease competition and enhance cooperation among employees as they gain more by working together rather than towards individual goals.

Stewardship Theory

The theory that executives are intrinsically motivated to succeed not because of self-interest, but because of an intrinsic desire to see the entire organization to succeed. Typically founders of organizations require less money because they have a greater interest in the organization.

Organizational Reward Systems

The use of tangible and intangible rewards to shape desired behavior. Assumes that rewarding good behavior will lead to an increased likelihood of their occurrence

Job Crafting

Type of proactive motivation that involves employees changing their jobs or perceptions of their jobs in order to better see the significance of their work and the connection with their work and their KSAs. This can involve changing the amount of time you spend on certain tasks, trying to interact with new people within your organization, and thinking about the impact your work has on others.

Zero tolerance policy

Used when an organization cannot tolerate even one instance of a certain behavior occurring (e.g. sexual assault), so it is known that employees will be fired immediately if one of these behaviors occurs.

Intangible Rewards (Status Symbols

Ways in which an organization communicates an employee's worth or value. Examples include: size or location of their office, title, or parking space.

Employee Stock Option (Benefits)

if the company is performing well this can attract new talent to the organization Because it is a long term benefit, it can help retain employees Also creates investment