Chap 6: Motivating Behavior with Work and Rewards

Payment for time not worked, both on and off the job:

*Types of Benefits* On-the-job free time includes lunch, rest, coffee brakes, and wash-up or get-ready time. Off-the-job time not worked includes vacation, sick leave, holidays, and personal days.

Unemployment compensation

*Types of Benefits* People who have lost their jobs or are temporarily laid off get a percentage of their wages from an insurance-like program.

Social Security contributions

*Types of Benefits* The employer contributes half the money paid into the system established under the Federal Insurance Contributions Act (PICA). The employee pays the other half.

Merit pay plans

*Types of Incentive systems* which base pay raises on the employee's performance

Profit-sharing plans

*Types of Incentive systems* which distribute a portion of the firm's profits to all employees at a predetermined rate

Long-term compensation

*Types of Incentive systems* which gives managers additional income based on stock price performance, earnings per share, or return on equity

Gain-sharing programs

*Types of Incentive systems* which grant additional earnings to employees or workgroups for cost-reduction ideas

Bonus systems

*Types of Incentive systems* which provide managers with lump-sum payments from a special fund based on the financial performance of the organization or a unit

Types of individual rewards

1. Compensation package 2. Base Pay

Job Characteristics Theory 3 Components

1. Core Job Dimensions 2. Critical Psychological States 3. Personal and Work Outcomes

The balanced scorecard: 4 key components of organizational success

1. Customer perceptions 2. Financial performance 3. Internal business processes 4. Innovation and Learning

The appraiser: alternatives

1. Direct supervisor 2. Multiple-rater systems (including self-evaluation) 3. 360-degree feedback

Telecommuting's downside considerations (3)

1. Employees miss the workplace social interaction 2. Employees lack self-control/discipline 3. Difficulties arise in coordinating in-face meetings

Performance appraisal process (3)

1. Evaluate an employee's work behaviors by measurement and comparison with previously established standards 2. Document the results 3. Communicate the results to the employee

4 Goal Attributes in Goal Setting Theory

1. Goal difficulty 2. Goal specificity 3. Goal acceptance 4. Goal commitment

Related issues in rewarding performance

1. Linking performance and rewards 2. Flexible reward systems 3. Participative Pay System 4. Pay Secrecy 5. Expatriate Compensation

4 Necessary Conditions for Empowerment

1. Must be sincere in efforts to push spread power & autonomy to lower levels. 2. Organization must be committed to empowerment & participation. 3. Must be systematic and patient in efforts to empower. 4. Commitment to training.

Issues to Consider in Developing Reward Systems (8)

1. PAY SECRECY • Open, closed, partial • Link with performance appraisal • Equity perceptions 2. EMPLOYEE PARTICIPATION • By human resource department • By joint employee/management committee 3. FLEXIBLE SYSTEM • Cafeteria-style benefits • Annual lump sum or monthly bonus • Salary versus benefits 4. ABILITY TO PAY • Organization's financial performance • Expected future earnings 5. ECONOMIC AND LABOR • Inflation rate 6. MARKET FACTORS • Industry pay standards • Unemployment rate 7. IMPACT ON ORGANIZATIONAL PERFORMANCE • Increase in costs • Impact on performance 8. EXPATRIATE COMPENSATION • Cost-of-living differentials • Managing related equity issue

Types of Benefits (6)

1. Payment for time not worked 2. Social Security contributions 3. Unemployment compensation 4. Disability and workers' compensation benefits 5. Life and health insurance programs 6. Pensions or retirement plans

Types of Incentive systems (7)

1. Piecework programs 2. Gain-sharing programs 3. Bonus systems 4. Long-term compensation 5. Merit pay plans 6. Profit-sharing plans 7. Employee stock option plans

Purposes of performance appraisal (4)

1. Provide feedback 2. Decide and justify reward allocations 3. Determine training, development, and improvement 4. Forecast future human resource needs

Telecommuting's benefits to organizations (2)

1. Reduced absenteeism and turnover 2. Reduction in indirect expenses for facilities

Meanings of rewards (2)

1. Surface value: objective meaning or worth of a reward 2. Symbolic value: subjective and personal meaning or worth of a reward

Roles of compensation structures (3)

1. To be equitable and consistent 2. To be a fair reward for the individual's contribution 3. To be competitive in the external labor market

Purposes of setting goals in organizations (3)

1. To provide a useful framework for managing motivation to enhance employee performance 2. To serve management as a control device for monitoring how well the organization is performing 3. Social learning theory

To provide useful information for the decision maker, performance appraisals must be three things:

1. Valid 2. Reliable 3. Free from bias

Management by Objectives (MBO)

A collaborative goal-setting process through which organizational goals cascade down throughout the organization - EX: After organizational and subsidiary goals are set, each manager meets with each subordinate to explain the unit goals to the subordinate. Together the two determine how the subordinate can contribute to the unit's goals most effectively.

Goal

A desirable/meaningful objective

Participative pay system

A participative pay system may involve the employee in the system's design, administration, or both. - EX: To ensure that your organization's new reward system best meets your employees' needs, you create a task force comprised of people from all ranks and locations across the company to provide input into the new system.

Reward System

All organizational components, including people, processes, rules and procedures, and decision-making activities, involved in allocating compensation and benefits to employees in exchange for their contributions to the organization

Flexible reward systems

Allows employees to choose the combination of benefits that best suits their needs, increases employee satisfaction with benefits and administrative costs for the employer - EX: If some of your employees need daycare, some want greater retirement contributions, and some want a more generous healthcare plan, which is the best reward system to implement?

Expanded goal setting theory

Edwin Locke Goal-directed effort is a function of goal attributes

Indirect compensation (employee benefits)

Employee benefits provided as a form of compensation - EX: Dental insurance

Linking performance and rewards

Employee perception of link between pay and performance results in symbolic value of pay

Job Design

How organizations define and structure jobs

Direct Supervisor

In most appraisal systems, the employee's primary evaluator is the supervisor

Personal and Work Outcomes

In the job characteristics theory, the five job characteristics, operating through the critical psychological states, affect all 4 personal and work outcomes

Broader Perspectives on Goal Setting

Management by Objectives

Benefits

Rewards and incentives provided to employees in addition to their wages or salaries

Awards

Rewards for seniority to perfect attendance, from zero defects (quality work) to cost reduction suggestions

Job Rotation

Systematically moving workers from one job to another in an attempt to minimize monotony and boredom - EX: Some companies use this approach to decrease the likelihood of repetitive motion injuries from repetitive physical work.

Performance appraisal

The process of assessing and evaluating an employee's work behaviors by measurement

Job Sharing

Two or more part-time employees share one full-time job - EX: You were recently promoted to a management position at a warehouse facility. One of your new responsibilities is motivating the warehouse staff and enhancing their engagement and performance. Both Jane and Alison currently work full-time and want to work fewer hours. You would hate to lose either of them, so what type of intervention would be best for this job and situation?

Individual abilities and traits

are the skills and other personal characteristics necessary to do a job.

4 Variable Work Schedules/Alternative Work Arrangements

can enhance employee motivation and performance 1. Compressed Work Schedule 2. Job Sharing 3. Extended Work Schedule 4. Flexible Work Schedule

The need based perspective and process-based perspective on motivation

explain some of the factors involved in increasing the potential for motivated behavior directed at enhanced performance. Managers can then use such means as: 1. Job design 2. Employee Participation 3. Flexible work arrangements 4. Goal setting 5. Performance management, 6. Organizational Rewards, to help translate this potential into actual enhanced performance.

Quality Circles

is a group of employees who voluntarily meet regularly to identify and propose solutions to problems related to quality. - EX: Because product quality has recently begun to decline in your unit, you createquality circles so that employees can work in groups to identify what is causing the quality issues and what to do about them.

The core of performance management

measuring the performance of an individual or a group

Social learning theory

suggests that feelings of pride or shame about performance are largely related to how well people achieve their goals. - This theory best describes the role and importance of goal setting in organizations - A person who achieves a goal will be proud of having done so, whereas a person who fails to achieve a goal will feel personal disappointment and perhaps even shame. - People's degree of pride or disappointment is affected by their self-efficacy, the extent to which they feel that they can still meet their goals even if they failed to do so in the past.

Multiple-rater systems (including self-evaluation)

that incorporates the ratings of several people familiar with the employee's performance.

Goal specificity

the clarity and precision of a goal - EX: Because Jeff told his subordinate to "do her best" she did not perform as well as she would have if Jeff had given her an actual number of phone calls to make during her shift.

Knowledge of results

the degree to which individuals continuously understand how effectively they are performing the job - Core Characteristics/Dimensions that lead to Knowledge of results: feedback

Experienced responsibility for work outcomes

the degree to which individuals feel personally accountable and responsible for the results of their work - Core Characteristics/Dimensions that lead to experienced responsibility for work outcomes: Autonomy

Feedback

the degree to which the job activities give the individual direct and clear information about the effectiveness of his or her performance

Purposes of rewards

to attract, retain, and motivate qualified employees

The foundation of good performance management is correctly identifying _____ and choosing the best method(s) for measuring it.

what should be measured

Organizational Support

whatever the organization does to help or hinder performance. - Positive support might mean providing whatever resources are needed to meet the goal; negative support might mean failing to provide such resources, perhaps due to cost considerations or staff reductions.

Measuring performance: Considerations

▪ Desired decisions to be made based on job-related criteria ▪ Instruments must be valid, reliable, and free of bias (EEOC regulations)

Measuring performance: Choices of measurement methods

▪ Graphic rating scales, checklists, essays/diaries, behaviorally anchored rating scales, forced-choice systems ▪ Comparative methods such as ranking, forced distribution, paired comparisons, multiple raters

Measuring performance: Common problems

▪ Tendency to rate individuals equally ▪ Inability to discriminate among variable levels of performance

Job specialization

(Frederick Taylor) - Job should be scientifically studied, breaking jobs down into small component tasks and standardizing them across all workers doing those jobs - Follows Adam Smith's concept of the division of labor - Jobs designed for efficiency can become boring and monotonous, resulting in job dissatisfaction - EX: Rather than being a human resources generalist, Alice only handles payroll for her company.

Job Enlargement

(Horizontal job loading) - Giving workers more tasks to perform - EX: Rather than having employees perform only one step of the product packaging process, management let each packaging employee package an entire product to reduce boredom from repetitively doing a single task.

Job Enrichment

(Vertical job loading) - based on the two-factor theory of motivation and entails giving workers more tasks to perform and more control over how to perform them. - EX: Giving employees more responsibility over their work and letting them set their own hourly goals as long as their company-assigned daily goals are met

3 Critical Psychological States

*Job Characteristics Theory* 1. Experienced meaningfulness of the work 2. Experienced responsibility for the outcomes of work 3. Knowledge of the actual results of the work activity

4 Personal and Work Outcomes

*Job Characteristics Theory* 1. High internal work motivation 2. High quality work performance 3. High satisfaction with the work 4. Low absenteeism and turnover

5 Core Job Dimensions/Characteristics

*Job Characteristics Theory* 1. Skill Variety 2. Task Identity 3. Task Significance 4. Autonomy 5. Feedback

Disability and workers' compensation benefits

*Types of Benefits* Employers contribute funds to help workers who cannot work due to occupational injury or ailment.

Life and health insurance programs

*Types of Benefits* Most organizations offer insurance at a cost far below what individuals would pay to buy insurance on their own.

Pension or retirement plans

*Types of Benefits* Most organizations offer plans to provide supplementary income to employees after they retire.

Employee stock option plans

*Types of Incentive systems* which set aside stock in the company for employees to purchase at a reduced rate - EX: You believe that employees work more efficiently and are more committed to their employer if they share in the ownership of the company.

Piecework programs

*Types of Incentive systems* which tie a worker's earnings to the number of units produced

Compensation package

*Types of individual rewards* The total array of money (wages, salary, commission), incentives, benefits, perquisites, and awards provided by the organization to an individual.

Base pay

*Types of individual rewards* ▪ Symbolizes an employee's worth ▪ Can improve motivation and performance if part of an effectively planned and managed pay system ▪ Is a major cost of doing business ▪ Can reduce turnover and increase morale when well-designed - EX: You receive a job offer with a $55,000 salary.

Goal Setting Theory Illustration Explained

- 4 Goal Attributes (difficulty, acceptance, commitment, and specificity) ---> Goal Directed Effort - Goal Directed Effort, Organization Support, and Individual Abilities and Traits ---> determine actual performance - Performance ---> Extrinsic Rewards and Intrinsic Rewards - Extrinsic Rewards and Intrinsic Rewards --> Satisfaction

Frequency of appraisals

- Often done annually - Determined by convenience for administrative purposes, cultural appropriateness, and relevance

3 Basic Alternatives to Job Specialization (or ways to overcome its shortcomings)

1. Job Rotation 2. Job Enlargement 3. Job Enrichhment

How to conduct an appraisal: Three of the most important issues are

1. who does the appraisals 2. how often they are done 3. how performance is measured.

Balanced scorecard or BSC

A relatively structured performance management technique that identifies financial and nonfinancial performance measures and organizes them into a single model

Telecommuting

Alternative Workplaces Work arrangement in which employees spend part of their time working off-site - EX: Technology has made it much easier for your employees to work from home during bad weather. You are able to hold video calls to make sure everyone knows what they are supposed to do and email to share documents during the day. It has gone so well and employees have liked it so much that you are considering letting employees do this one or two days a week.

Compressed Work Schedule

Employees work a full 40-hour week in fewer than the traditional 5 days - EX: You decide to reward your highest performing employee with this flexible work arrangement so that she can work four ten-hour days and have every Friday off as long as she maintains her high performance.

Participation

Entails giving employees a voice in making decisions about their own work - suggestion boxes and question-and-answer sessions are examples of participation.

The Expatriate Compensation Balance Sheet

Organizations that ask employees to accept assignments in foreign locations usually must adjust their compensation levels to account for differences in cost of living and similar factors. Amoco uses the system shown here. The employee's domestic base salary is first broken down into the three categories shown on the left. Then adjustments are made by adding compensation to the categories on the right until an appropriate, equitable level of compensation is achieved.

Incentive systems

Plans in which employees can earn additional compensation in return for certain types of performance - EX: Every year, you get a raise based on your job performance.

Perquisites

Special privileges awarded to selected members of an organization, usually top managers - Add to the status of their recipients and thus may increase job satisfaction and reduce turnover - EX: A car and driver, first-class travel, and a golf club membership are given to all employees at the Vice President level or higher. - EX: In the United States, the Internal Revenue Service has ruled that some privileges awarded to select organizational members constitute a form of income and thus can be taxed.

Balanced Scorecard

The balanced scorecard is a structured performance management technique. In its most basic form, managers establish both goals and measures for how they want to assess customer perceptions, financial performance, internal business process, and innovation and learning. Each of these sets of goals and measures need to be consistent with each other as well as with the organization's overall vision and strategy.

Empowerment

The process of enabling workers to set their own work goals, make decisions, and solve problems within their sphere of responsibility and authority - Empowerment is somewhat broader than participation in that it promotes participation in a wide variety of areas, including but not limited to work itself, work context, and work environment.

Management tools—practical approaches to empowerment (6)

Things you should do to effectively empower employees 1. Articulate a clear vision and goal 2. Foster personal mastery experiences 3. Modeling successful behaviors 4. Send positive messages, arouse positive emotions 5. Give effective feedback 6. Display competency, honesty, fairness

Job Characteristics Theory

Uses five motivational properties of tasks and three critical psychological states to improve outcomes - is an important contemporary model of how to design jobs. - By using five core job characteristics, managers can enhance three critical psychological states. - These states, in turn, can improve a variety of personal and work outcomes. - Individual differences also affect how the job characteristics affect people.

Extended Work Schedule

Work schedule that requires relatively long periods of work followed by relatively long periods of paid time off - EX: Many state police officers live at the barracks and work long hours for one week and then have a full week off.

Flexible Work Schedule

also called "flextime," Employees more personal control over the hours they work each day - With a flexible work schedule the workday is broken down into two categories: flexible time and core time. All employees must be at their workstations during core time, but they can choose their own schedules during flexible time, allowing them to better meet their personal obligations. - EX: Because employees complained that they were having trouble meeting their personal needs such as running errands or going to the doctor because their 8-5 work hours made it difficult to do anything else on weekdays you decide to implement flexible work schedules

360-degree feedback

also called multi-source feedback A performance appraisal method in which employees receive performance feedback from those on all sides of them in the organization - One of the more interesting multi-rater approaches being used in some companies today

Experienced meaningfulness of the work

the degree to which the individual experiences the job as generally meaningful, valuable, and worthwhile - Core Characteristics/Dimensions that lead to experienced meaningfulness of the work: Skill Variety, Task Identity, and Task Significance

Task significance

the degree to which the job affects the lives or work of other people, both in the immediate organization and in the external environment

Autonomy

the degree to which the job allows the individual substantial freedom, independence, and discretion to schedule the work and determine the procedures for carrying it out

Skill Variety

the degree to which the job requires a variety of activities that involve different skills and talents

Task identity

the degree to which the job requires completion of a "whole" and an identifiable piece of work; that is, the extent to which a job has a beginning and an end with a tangible outcome

Goal Difficulty

the extent to which a goal is challenging and requires effort - EX: Once Molly reached her goal she stopped working hard and ended up performing much lower than she could have.

Goal acceptance

the extent to which a person accepts a goal as his/her own - EX: James did not like the fact that he had no input in his productivity goal. Because of this, his Goal acceptance was low and he did not take it as seriously as if he had set the same goal himself.

4. Goal commitment

the extent to which a person is personally interested in reaching a goal - EX: Carol always tries extremely hard to reach her performance goal. She takes it personally when she falls short, which rarely happens because she is so dedicated to reaching it. Carol's Goal commitment is high. - EX: Because Marie really wanted to reach her goal and earn the bonus she worked really hard and put in extra hours to make sure that she succeeded.