McGraw-Hill/Irwin Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved Chapter 1010 Motivating Employees 10-1

McGraw-Hill/Irwin Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved People are motivated by a variety of things. a.An INTRINSIC REWARD is the good feeling you have when you have done a good job. b.An EXTRINSIC REWARD is something given to you by someone else as recognition for good work; extrinsic rewards include pay increases, praise, and promotions. NOTE:Although MOTIVATION, the drive to satisfy a need; ultimately comes from WITHIN AN INDIVIDUAL there are ways to stimulate people to do a good job. Intrinsic vs. Extrinsic Rewards

McGraw-Hill/Irwin Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved Intrinsic vs. Extrinsic Rewards Intrinsic = Inside Feeling of Job Well Done Pride Sense of Achievement Extrinsic = Outside Praise SalaryIncrease Status Recognition Promotions Gifts

McGraw-Hill/Irwin Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved Frederick Taylor, Called the Father of Scientific Management His book The Principles of Scientific Management was published in Taylor’s goal was to INCREASE WORKER PRODUCTIVITY in order to benefit both the firm and the worker. Viewed workers as machines. The way to improve productivity was through SCIENTIFIC MANAGEMENT, scientifically study the most efficient way to do things then teach people those methods, e.g. shoveling rice and coal. TIME ‑ MOTION STUDIES, begun by Frederick Taylor, study which tasks must be performed to complete the job and the time needed to do each task. As the most efficient ways of doing things were determined, efficiency became the standard for setting goals. This became the dominant strategy for improving productivity in the early 1900s.

McGraw-Hill/Irwin Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved What led to more human managerial styles? Management theories moved away from Taylor’s scientific management and toward theories that stress human factors of motivation. The greatest impact on motivation theory was generated by the Hawthorne studies in the late 1920s and early 1930s.

McGraw-Hill/Irwin Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved The Hawthorne Studies The HAWTHORNE STUDIES were conducted by Elton Mayo at the Western Electric Company’s Hawthorne plant in Cicero, Illinois. a.Begun in 1927, the studies ended six years later. b.The PURPOSE of the studies was to determine the best lighting for optimum productivity. c.A second series of studies were conducted to see if OTHER FACTORS, such as temperature and humidity, contributed to increased production. d.PRODUCTIVITY INCREASED during each of the 13 experimental periods.

McGraw-Hill/Irwin Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved Mayo hypothesized that some HUMAN or PSYCHOLOGICAL FACTORS caused the increases. The workers in the test room thought of themselves as a SOCIAL GROUP—they felt special and worked hard to stay in the group. The workers were involved in the PLANNING of the experiments—they felt that their ideas were respected. The workers enjoyed the SPECIAL ATMOSPHERE and ADDITIONAL PAY for the increased productivity. The term HAWTHORNE EFFECT refers to the tendency for people to behave differently when they know they’re being studied. The Hawthorne studies results encouraged researchers to STUDY HUMAN MOTIVATION and the MANAGERIAL STYLES that lead to more productivity. The Hawthorne Studies

McGraw-Hill/Irwin Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved Maslow’s Hierarchy of Needs Physiological Needs Safety Needs Social Needs Esteem Needs Self- Self-Actualization Unsatisfied Satisfied

McGraw-Hill/Irwin Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved This is a theory of motivation based on unmet needs, from basic physiological needs to safety, social, and esteem needs to self- actualization needs. When one need is satisfied, another, higher ‑ level need emerges and motivates the person to do something to satisfy it. 1.PHYSIOLOGICAL NEEDS, basic survival needs including the need for food, water, and shelter. 2.SAFETY NEEDS, the need to feel secure at work and at home. 3.SOCIAL NEEDS, the need to feel loved, accepted, and part of the group. 4.ESTEEM NEEDS, the need for recognition and acknowledgment from others, as well as self-respect and a sense of status or importance. 5.SELF ‑ ACTUALIZATION NEEDS, the need to develop to one’s fullest potential. Maslow’s Hierarchy of Needs

McGraw-Hill/Irwin Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved Why Good Workers Leave Source: Source: USA Today-Snapshot, 10/16/00

McGraw-Hill/Irwin Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved Herzberg’s Theory FREDERICK HERZBERG tried to identify the factors that are most effective in generating enthusiastic work effort. He surveyed workers to find out how they rank JOB-RELATED FACTORS, e.g. Sense of achievement, Earned recognition, Interest in the work itself, etc. Ref p. 306 & 306FREDERICK HERZBERG tried to identify the factors that are most effective in generating enthusiastic work effort. He surveyed workers to find out how they rank JOB-RELATED FACTORS, e.g. Sense of achievement, Earned recognition, Interest in the work itself, etc. Ref p. 306 & 306

McGraw-Hill/Irwin Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved Herzberg’s Theory HERZBERG’S CONCLUSIONS: 1.In Herzberg’s theory of motivating factors, MOTVATORS are job factors that cause employees to be productive and that give them satisfaction. 2.HYGIENE FACTORS are job factors that can cause dissatisfaction if missing but that do not necessarily motivate employees if increased. 3.The best way to motivate employees is to make the job interesting.

McGraw-Hill/Irwin Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved Figure 10.5 Comparison of Maslow and Herzberg Herzberg’s Theory

McGraw-Hill/Irwin Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved Job-Oriented Motivational Techniques   Job Enrichment/Redesign: a motivational strategy that emphasizes motivating the worker via the job itself. Skill Variety Task Identity/Significance Autonomy Feedback

McGraw-Hill/Irwin Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved Job-Oriented Motivational Techniques   Job Enlargement: an enrichment strategy that involves combining a series of tasks into one challenging and interesting assignment.   Job Rotation: an enrichment strategy that involves moving employees form on job to another.

McGraw-Hill/Irwin Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved McGregor’s Theories DOUGLAS MCGREGOR observed that managers’ attitudes generally fall into one of two different sets of managerial assumptions: THEORY X and THEORY Y.

McGraw-Hill/Irwin Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved McGregor’s Theories Theory X- Autocratic Dislike WorkDislike Work Avoid ResponsibilityAvoid Responsibility Little AmbitionLittle Ambition Force/Control/ Direct/ThreatenForce/Control/ Direct/Threaten Motivated by Fear & MoneyMotivated by Fear & Money Theory Y- Democratic Like WorkLike Work Naturally Works Toward GoalsNaturally Works Toward Goals Seeks ResponsibilitySeeks Responsibility Imaginative, Creative, CleverImaginative, Creative, Clever Motivated by EmpowermentMotivated by Empowerment

McGraw-Hill/Irwin Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved Ouchi’s Theory Z   In the 1980s WILLIAM OUCHI researched why Japanese firms seemed to be outperforming American firms. TYPE J firms are based on the culture of Japan; TYPE A firms are based on the culture of America.   Ouchi realized that American managers could not be expected to accept a concept based on another culture.   Ouchi recommended a hybrid of the two approaches, THEORY Z.

McGraw-Hill/Irwin Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved Ouchi’s Theory Z  Long-Term Employment  Collective Decision-making  Individual Responsibility  Slow Evaluation/ Promotion  Specialized Career Path  Holistic Concern for Employees

McGraw-Hill/Irwin Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved Goal-Setting Theory (MBO)   Management By Objectives (MBO) : it’s a system of goal setting and implementation that involves a cycle of discussion, review, evaluation of objectives among all management and employees. Hewlett-Packard (HP) & Ford Motor Company are good examples of using MBO.

McGraw-Hill/Irwin Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved Steps to Improve Performance 1)Determine Rewards Valued 2)Determine Standards 3)Ensure Standards are Attainable 4)Tie Rewards to Performance 5)Are Rewards Considered Adequate?

McGraw-Hill/Irwin Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved Employee-Oriented Motivational Techniques Expectancy Theory: The amount of effort employees exert on a specific task depends on their expectations of the outcome. Vroom contends that employees ask THREE QUESTIONS before committing maximum effort to a task:

McGraw-Hill/Irwin Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved Expectancy Theory: Employee Questions   What is the probability that I can perform at the required level if I try?   What is the likelihood my performance will lead to the desired outcomes?   What value do I place on the outcome?

McGraw-Hill/Irwin Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved  Determine rewards valued by employees.  Evaluate performance level you seek.  Make performance level attainable.  Make reward valuable to employee. How to Use Expectancy Theory

McGraw-Hill/Irwin Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved Employee-Oriented Motivational Techniques Equity Theory: It’s the idea that employees try to maintain equity between inputs and outputs compared to people in similar positions. When workers do perceive inequity, they will try to REESTABLISH EQUITABLE EXCHANGES. They can reduce or increase their efforts or rationalize the situation. In the workplace, inequity leads to lower productivity, reduced quality, increased absenteeism, and voluntary resignation.

McGraw-Hill/Irwin Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved Teamwork & Open Communication  Self-Managed Teams = Open Communication  Identify Procedures  Apply Procedures  Change Not Easy  Employee Empowerment

McGraw-Hill/Irwin Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved Keys to Building Employee Trust  Start from a position of trust  Be consistent  Listen with an open mind & respect others’ opinions  Admit your mistakes  Give credit where credit is due Source: Source: Communication Solutions

McGraw-Hill/Irwin Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved Keys to Keeping Morale High 1)Keep Your Ear To The Ground 2)Talk Things Out 3)Know What Your People Value 4)Laugh And Your Staff Laughs With You 5)Get Everyone Involved

McGraw-Hill/Irwin Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved Warning Signs of Employee Stress  Drops in productivity  Chronic lateness  Absenteeism  Careless with details  Unable to work with others  Negative attitudes about work  Withdrawal from co- workers  Easily upset/angered

McGraw-Hill/Irwin Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved How Stressed Are You? Rate 1-5 1)Conditions at work are unpleasant or sometimes even unsafe. 2)I feel that my job is making me physically or emotionally sick. 3)I have too much work or too many unreasonable deadlines. 4)I can’t express my opinions or feelings about my job to my boss. 5)My work interferes with my family or personal life. 6)I have no control over my life at work. 7)My good performance goes unrecognized and unrewarded. 8)My talents are underutilized.