Part 4 Creating the Human Resource Advantage McGraw-Hill/Irwin Copyright © 2014 by The McGraw-Hill Companies, Inc. All rights reserved.

2 Your Pet at Work Is Good Business Approximately 20% of companies allow their employees to bring their pets to work at least part of the time Provides many benefits: a more relaxed and flexible atmosphere, higher staff morale, and more productivity and collaboration Challenges include: people with allergies or who are afraid of animals may get distracted from their jobs ? Why can a nonfinancial benefit such as being able to bring your pet to work motivate employees? ? What type of businesses are appropriate for a pet-friendly workplace policy? ? How do you personally feel about having other people’s pets in an office where you work or a store where you shop?

9-3 Nature of Human Relations Human Relations The study of the behavior of individuals and groups in organizational settings Involves motivating employees to achieve organizational objectives efficiently and effectively Become increasingly important over the years Motivation An inner drive that directs a person’s behavior toward goals A goal is the satisfaction of some need, and a need is the difference between a desired state and an actual state Both needs and goals can be motivated © 2016 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

9-4 Motivation ~ Many companies offer onsite day care as a benefit for employees who have children ~ Company benefits such as these tend to increase employee satisfaction and motivation © 2016 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Motivating the Workforce  Human relations is concerned with the needs of employees, their goals and how they try to achieve them, and the impact of those needs and goals on job performance  Motivating employees to stay engaged is a key responsibility of management Engagement involves emotional involvement and commitment Being engaged results in carrying out the expectations and obligations of employment 9-5

The Motivation Process 9-6

Morale  A prominent aspect of human relations  High morale contributes to high levels of productivity, high returns to stakeholders, and employee loyalty Morale An employee’s attitude toward his or her job, employer, and colleagues 9-7

Morale High morale contributes to: High levels of productivity High returns to stakeholders Employee loyalty Low morale may cause: High rates of absenteeism Absenteeism can cost a company as much as 36% of payroll High rates of employee turnover 9-8

Morale Boosters RespectPositive organizational culture AppreciationAdequate compensation PromotionsA pleasant work environment Involvement 9-9

Tips for the Leader about Employee Motivation 9-10

Rewards The personal satisfaction and enjoyment that you feel after attaining a goal In this class, you may feel personal enjoyment in learning how business works and aspire to have a career in business or to operate your own business one day Intrinsic Rewards Benefits and/or recognition received from someone else In this class, your grade is extrinsic recognition of your efforts and success in the class Extrinsic Rewards 9-11

9-12 Costco’s Happy Employees Costco Wholesale, the second largest retailer in America, knows how to retain happy employees  Pays an average annual rate of $20.89/hour plus overtime  Gives 5 weeks of vacation/year  Matches 401(k) contributions  ~90% of employees are covered by company-sponsored health insurance  Was even able to give raises when the economic recession hit  Has not had any major labor disputes in its more than 30 years of existence © 2016 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Top 10 Ways to Retain Great Employees 9-13

Historical Perspectives on Employee Motivation Theory suggesting that money is the sole motivator for workers Early 20 th century Frederick W. Taylor and Frank & Lillian Gilbreth Analyzed how workers perform specific work tasks in an effort to improve the employees’ productivity Led to the application of scientific principles to management Classical Theory of Motivation 9-14

Classical Theory of Motivation  To improve productivity managers should: Break down each job into its component tasks (specialization) Determine the best way to perform each task Specify the output to be achieved by a worker performing the task  Incentives motivate employees to be more productive Link workers’ pay directly to their output 9-15

Historical Perspectives on Employee Motivation at the Hawthorne Works Plant Marks beginning of concern for human relations in the workplace Elton Mayo: Postulated that physical conditions in workplace stimulate productivity Productivity increased regardless of the physical conditions (the Hawthorne effect) Findings show that social and psychological factors could significantly affect productivity and morale The Hawthorne Studies 9-16

Hawthorne Studies  Working conditions are important  However, the Hawthorne studies, which were carried out at the electric company shown here beginning in the 1920s, found that the workers became more productive because of the attention they received—regardless of their working conditions. 9-17

9-18 Job Aspects Important to Employee Satisfaction Aside from salary, which one of the following aspects of your job is most tied to your satisfaction? © 2016 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Going Green Whole Foods: Loved by Employees and the Environment Employees often work in small self-directed teams to discuss issues and develop solutions to improve the company’s operations Employees are empowered to make decisions that will achieve the company’s goals Implemented a voluntary program to encourage employees to stay healthy and makes them eligible to receive an additional 10% discount on products ? How does Whole Foods use teams to improve its operations? ? What are some ways that Whole Foods empowers its employees? ? What are some of the benefits of the Whole Foods Healthy Living Challenge? 9-19

Theories of Employee Motivation Maslow’s Hierarchy of Needs Herzberg’s Two-Factor Theory McGregor’s Theory X and Theory Y Theory Z Variations on Theory Z Equity Theory Expectancy Theory 9-20

Maslow’s Hierarchy of Needs Maslow’s Hierarchy A theory that arranges the five basic needs of people—physiological, security, social, esteem, and self- actualization—into the order in which people strive to satisfy them 9-21

Maslow’s Hierarchy of Needs Physiological Needs The most basic human needs to be satisfied—water, food, shelter, and clothing Security Needs The need to protect oneself from physical and economic harm Social Needs The need for love, companionship, and friendship—the desire for acceptance by others Esteem Needs The need for respect—both self-respect and respect from others Self-Actualization Needs The need to be the best one can be; at the top of Maslow’s hierarchy 9-22

Herzberg’s Two-Factor Theory Hygiene Factors Aspects of Herzberg’s theory of motivation that focus on the work setting and not the content of the work; these aspects include adequate wages, comfortable and safe working conditions, fair company policies, and job security Motivational Factors Aspects of Herzberg’s theory of motivation that focus on the content of the work itself; these aspects include achievement, recognition, involvement, responsibility, and advancement 9-23

9-24 Herzberg’s Hygiene and Motivational Factors  Salary and security make it possible for employees to satisfy physiological and security needs identified by Maslow  Herzberg’s motivational factors and Maslow’s esteem and self-actualization needs are similar © 2016 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

9-25 McGregor’s Theory X Theory X McGregor’s traditional view of management whereby it is assumed that workers generally dislike work and must be forced to do their jobs  The average person naturally dislikes work and will avoid it when possible  Most workers must be coerced, controlled, directed, or threatened with punishment to get them to work toward the achievement of organizational objectives  The average worker prefers to be directed and to avoid responsibility, has relatively little ambition, and wants security  Theory X style of management focuses on physiological and security needs and virtually ignores the higher needs discussed by Maslow © 2016 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

9-26 McGregor’s Theory Y Theory Y McGregor’s humanistic view of management whereby it is assumed that workers like to work and that under proper conditions employees will seek out responsibility in an attempt to satisfy their social, esteem, and self-actualization needs  Theory Y managers:  Maintain less control and supervision  Do not use fear as the primary motivator  Are more democratic in decision making Allowing subordinates to participate in process © 2016 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

9-27 McGregor’s Theory Y Assumptions  Theory Y assumes:  The expenditure of physical and mental effort in work is as natural as play or rest  People will exercise self-direction and self-control to achieve objectives to which they are committed  People will commit to objectives when they realize that the achievements of those goals will bring them personal reward  The average person will accept and seek responsibility  Imagination, ingenuity, and creativity can help solve organizational problems, but most organizations do not make adequate use of these characteristics in their employees  Organizations today do not make full use of workers’ intellectual potential © 2016 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Theory Z  Incorporates many elements associated with the Japanese approach to management (trust and intimacy) but Japanese ideas have been adapted for use in the U.S.  Results in employees feeling organizational ownership  Research has found that such feelings of ownership may produce positive attitudinal and behavioral effects for employees Theory Z A management philosophy that stresses employee participation in all aspects of company decision making 9-28

Comparison of American, Japanese, and Theory Z Management Styles 9-29

Variations on Theory Z  Theory Z has been adapted and modified for use in a number of U.S. companies  Quality circles (quality-assurance teams) – Are small, usually having 5-8 members who discuss ways to reduce waste, eliminate problems, and improve quality, communication, and work satisfaction  Often modified and operate under names such as: participative management, employee involvement, or self-directed work teams  They strive to give employees more control over their jobs while making them more responsible for the outcome of their efforts 9-30

Equity Theory  Equity is a subjective notion  Equity theory might explain why many consumers are upset about CEO compensation  Corporations have now begun to tie CEO compensation with company performance  Feelings of inequity may underlie some unethical or illegal behavior in business Equity Theory An assumption that how much people are willing to contribute to an organization depends on their assessment of the fairness, or equity, of the rewards they will receive in exchange 9-31

Expectancy Theory  A person who wants something and has reason to be optimistic will be strongly motivated  If you do not believe you are likely to get what you want, you may not be motivated to try to get it, even though you really want it Expectancy Theory The assumption that motivation depends not only on how much a person wants something but also on how likely he or she is to get it 9-32

9-33 What Motivation Depends On… Your motivation depends not only on how much you want something, but also on how likely you are to get it 1.You really want a promotion 2.Taken night classes to improve skills 3.Made a large, significant sale 4.Feel confident you are qualified to handle new position 5.Therefore, you are motivated to try to get promotion © 2016 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

9-34 Positive Reinforcement  When employees are recognized for a job well done, they are more likely to put forth the same amount of effort or more in their future tasks  Positive reinforcement is so effective because it clearly and immediately defines the kind of behaviors that are appreciated by employers  This tactic works especially well with employees who naturally take pride in their work and are inherently motivated to do well  However, it still has positive results among the less naturally motivated employees  Positive reinforcement also empowers employees through self- confidence making them more adaptable and open to change © 2016 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Strategies for Motivating Employees  Behavior that is rewarded will tend to be repeated  Behavior that is punished will tend to be eliminated  The two strategies may not be equally effective  Punishing unacceptable behavior may provide quick results but may lead to employee dissatisfaction and increased turnover  In general, rewarding appropriate behavior is a more effective way to modify behavior Behavior Modification Changing behavior and encouraging appropriate actions by relating the consequences of behavior to the behavior itself 9-35

9-36 Job Rotation, Job Enlargement, and Job Enrichment Job Rotation Movement of employees from one job to another in an effort to relieve the boredom often associated with job specialization Job Enlargement The addition of more tasks to a job instead of treating each task as separate Job Enrichment The incorporation of motivational factors, such as opportunity for achievement, recognition, responsibility, and advancement, into a job © 2016 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

9-37 Flexible Scheduling Strategies  Many managers have turned to flexible scheduling strategies  Due to poor morale and high absenteeism as well as a diverse workforce with changing needs Flextime A program that allows employees to choose their starting and ending times, provided that they are at work during a specified core period Compressed Workweek A four-day (or shorter) period during which an employee works 40 hours © 2016 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

9-38 Flextime, Showing Core and Flexible Hours Flextime provides many benefits, including improved ability to recruit and retain workers who wish to balance work and home life More flexible schedules are associated with healthier lifestyle choices such as increased physical activity and healthier sleep habits © 2016 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Strategies for Motivating Employees Flexible scheduling strategies: Allowing full-time workers to work part time for a certain period Allowing workers to work from home either full or part time Job Sharing Performance of one full-time job by two people on part-time hours 9-39

Responding to Business Challenges Bad Moods Contribute to Decreased Productivity A study found that employees who start the day in a bad mood can see their productivity levels reduced by more than 10% With economic uncertainty and businesses cutting back, employees are often taking on greater roles with fewer benefits Offering small incentives that make employees feel appreciated can help significantly ? Why might an uncertain economic climate contribute to decreased productivity? ? Why do employee bad moods have such a negative effect on an organization? ? What can employers do to improve the moods of its employees? 9-40

41 Bad Moods Contribute to Decreased Productivity A study found that employees who start the day in a bad mood can see their productivity levels reduced by more than 10% With economic uncertainty and businesses cutting back, employees are often taking on greater roles with fewer benefits Offering small incentives that make employees feel appreciated can help significantly ? Why might an uncertain economic climate contribute to decreased productivity? ? Why do employee bad moods have such a negative effect on an organization? ? What can employers do to improve the moods of its employees?

9-42 Importance of Motivational Strategies  Fosters employee loyalty  Boosts productivity  Influences many areas such as pay, promotion, job design, training opportunities, and reporting relationships  Employees are motivated by the nature of the relationships they have with their supervisors, by the nature of their jobs, and by characteristics of the organization Businesses have come up with different ways to motivate employees, including rewards to show the company’s appreciation © 2016 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Importance of Motivational Strategies  The economic environment can change an employee’s motivation:  In a recession economy, morale can drop because of the need to cut jobs Firm may have to work harder to keep good employees and to motivate all employees to work to overcome obstacles  In good economic times, employees may be more demanding and be on the lookout for better opportunities New rewards or incentives may help motivate workers 9-43

9-44 Companies with Excellent Motivational Strategies © 2016 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.