McGraw-Hill/Irwin© 2008 The McGraw-Hill Companies, Inc. All rights reserved. 6 6 Applied Performance Practices

McShane/Von Glinow OB4e© 2008 The McGraw-Hill Companies, Inc. All rights reserved. Slide 6-2 Applied Performance Practices at Nucor Nucor has survived and thrived in the turbulent steel industry through the benefits of performance-based rewards, job design, and empowerment. Courtesy Nucor

McShane/Von Glinow OB4e© 2008 The McGraw-Hill Companies, Inc. All rights reserved. Slide 6-3 Money has multiple meanings –Symbol of success –Reinforcer and motivator –Source of reduced anxiety Meaning of money varies –Higher value to men than to women –Cross-cultural differences Financial Reward Practices © Corel Corp. With permission.

McShane/Von Glinow OB4e© 2008 The McGraw-Hill Companies, Inc. All rights reserved. Slide 6-4 Types of Rewards in the Workplace Membership and seniority Job status Competencies Performance-based © Corel Corp. With permission.

McShane/Von Glinow OB4e© 2008 The McGraw-Hill Companies, Inc. All rights reserved. Slide 6-5 Membership/Seniority Based Rewards Fixed wages, seniority increases Advantages –Guaranteed wages may attract job applicants –Seniority-based rewards reduce turnover Disadvantages –Doesn’t motivate job performance –Discourages poor performers from leaving –May act as golden handcuffs

McShane/Von Glinow OB4e© 2008 The McGraw-Hill Companies, Inc. All rights reserved. Slide 6-6 Job Status-Based Rewards Includes job evaluation and status perks Advantages: –Job evaluation tries to maintain pay equity –Motivates competition for promotions Disadvantages: –Employees exaggerate duties, hoard resources –Focuses employees on own jobs, not customers –Inconsistent with workplace flexibility

McShane/Von Glinow OB4e© 2008 The McGraw-Hill Companies, Inc. All rights reserved. Slide 6-7 Competency-Based Rewards Pay increases with competencies acquired and demonstrated Skill-based pay –Pay increases with skill modules learned Advantages –More flexible work force, better quality, consistent with employability Disadvantages –Potentially subjective, higher training costs

McShane/Von Glinow OB4e© 2008 The McGraw-Hill Companies, Inc. All rights reserved. Slide 6-8 Performance Pay at Hugo Boss Hugo Boss Industries (HBI) attributes relies on a balanced scorecard that captures diverse performance measures across the Swiss company’s various product groups. “The scorecard serves a very important purpose in focussing attention on the things that are being measured and where we are trying to go,” explains Werner Lackas, HBI’s head of operations.

McShane/Von Glinow OB4e© 2008 The McGraw-Hill Companies, Inc. All rights reserved. Slide 6-9 Organizationalrewards Profit sharingProfit sharing Stock ownershipStock ownership Stock optionsStock options Balanced scorecardBalanced scorecard Team rewards BonusesBonuses GainsharingGainsharing Individualrewards BonusesBonuses CommissionsCommissions Piece ratePiece rate Performance-Based Rewards

McShane/Von Glinow OB4e© 2008 The McGraw-Hill Companies, Inc. All rights reserved. Slide 6-10 Evaluating Organizational Rewards Positive effects –Creates an “ownership culture” –Adjusts pay with firm's prosperity –Scorecards align rewards with several specific organizational outcomes Concerns with performance pay –Weak connection between individual effort and rewards –Reward amounts affected by external forces

McShane/Von Glinow OB4e© 2008 The McGraw-Hill Companies, Inc. All rights reserved. Slide 6-11 Improving Reward Effectiveness Link rewards to performance Ensure rewards are relevant Team rewards for interdependent jobs Ensure rewards are valued Watch out for unintended consequences © Corel Corp. With permission.

McShane/Von Glinow OB4e© 2008 The McGraw-Hill Companies, Inc. All rights reserved. Slide 6-12 Job Design Assigning tasks to a job, including the interdependency of those tasks with other jobs Organization's goal -- to create jobs that allow work to be performed efficiently yet employees are motivated and engaged

McShane/Von Glinow OB4e© 2008 The McGraw-Hill Companies, Inc. All rights reserved. Slide 6-13 Job Specialization Dividing work into separate jobs that include a subset of the tasks required to complete the product or service Scientific management –advocates job specialization –also emphasized person-job matching, training, goal setting, work incentives

McShane/Von Glinow OB4e© 2008 The McGraw-Hill Companies, Inc. All rights reserved. Slide 6-14 AdvantagesDisadvantages Evaluating Job Specialization Less time changing activities Lower training costs Job mastered quickly Better person-job matching Job boredom Discontentment pay Higher costs Lower quality Lower motivation

McShane/Von Glinow OB4e© 2008 The McGraw-Hill Companies, Inc. All rights reserved. Slide 6-15 WorkmotivationGrowthsatisfactionGeneralsatisfactionWorkeffectiveness Job Characteristics Model Feedback from job Knowledge of results Skill variety Task identity Task significance Meaningfulness AutonomyResponsibility Individualdifferences CriticalPsychologicalStates Core Job CharacteristicsOutcomes

McShane/Von Glinow OB4e© 2008 The McGraw-Hill Companies, Inc. All rights reserved. Slide 6-16 Job Rotation Moving from one job to another Benefits –Minimizes repetitive strain injury –Multiskills the workforce –Potentially reduces job boredom Job ‘A’ Job ‘B’ Job ‘C’ Job ‘D’

McShane/Von Glinow OB4e© 2008 The McGraw-Hill Companies, Inc. All rights reserved. Slide 6-17 Job Enlargement Adding tasks to an existing job Example: video journalist Employee 1 Operates camera Employee 2 Operates sound Employee 3 Reports story Traditional news team Video journalist Operates camera Operates sound Reports story

McShane/Von Glinow OB4e© 2008 The McGraw-Hill Companies, Inc. All rights reserved. Slide 6-18 Job Enrichment Given more responsibility for scheduling, coordinating, and planning one’s own work 1. Clustering tasks into natural groups –Stitching highly interdependent tasks into one job –e.g., video journalist, assembling entire product 2. Establishing client relationships –Directly responsible for specific clients –Communicate directly with those clients

McShane/Von Glinow OB4e© 2008 The McGraw-Hill Companies, Inc. All rights reserved. Slide 6-19 Kambuku Empowerment Pretoria Portland Cement introduced “Kambuku”, a companywide initiative that made the South African company more performance-oriented through employee empowerment. Courtesy Pretoria Portland Cement

McShane/Von Glinow OB4e© 2008 The McGraw-Hill Companies, Inc. All rights reserved. Slide 6-20 Dimensions of Empowerment Meaning Competence Employees believe their work is important Employees have feelings of self- efficacy Impact Employees feel their actions influence success Self- determination Employees feel they have freedom and discretion

McShane/Von Glinow OB4e© 2008 The McGraw-Hill Companies, Inc. All rights reserved. Slide 6-21 Supporting Empowerment Individual factors –Possess required competencies, able to perform the work Job design factors –Autonomy, task identity, task significance, job feedback Organizational factors –Resources, learning orientation, trust Courtesy Pretoria Portland Cement

McShane/Von Glinow OB4e© 2008 The McGraw-Hill Companies, Inc. All rights reserved. Slide 6-22 Self-Leadership The process of influencing oneself to establish the self-direction and self- motivation needed to perform a task Includes concepts/practices from: –Goal setting –Social learning theory –Sports psychology

McShane/Von Glinow OB4e© 2008 The McGraw-Hill Companies, Inc. All rights reserved. Slide 6-23 Elements of Self-Leadership Personal Goal Setting ConstructiveThoughtPatternsDesigningNaturalRewardsSelf-MonitoringSelf-Reinforce-ment Personal goal setting –Employees set their own goals –Apply effective goal setting practices

McShane/Von Glinow OB4e© 2008 The McGraw-Hill Companies, Inc. All rights reserved. Slide 6-24 Personal Goal Setting DesigningNaturalRewardsSelf-MonitoringSelf-Reinforce-mentConstructiveThoughtPatterns Elements of Self-Leadership Positive self-talk –Talking to ourselves about thoughts/actions –Potentially increases self-efficacy Mental imagery –Mentally practicing a task –Visualizing successful task completion

McShane/Von Glinow OB4e© 2008 The McGraw-Hill Companies, Inc. All rights reserved. Slide 6-25 DesigningNaturalRewardsConstructiveThoughtPatternsSelf-MonitoringSelf-Reinforce-mentPersonal Goal Setting Elements of Self-Leadership Finding ways to make the job itself more motivating –eg. altering the way the task is accomplished

McShane/Von Glinow OB4e© 2008 The McGraw-Hill Companies, Inc. All rights reserved. Slide 6-26 ConstructiveThoughtPatternsDesigningNaturalRewardsSelf-Reinforce-mentPersonal Goal Setting Self-Monitoring Elements of Self-Leadership Keeping track of your progress toward the self- set goal –Looking for naturally-occurring feedback –Designing artificial feedback

McShane/Von Glinow OB4e© 2008 The McGraw-Hill Companies, Inc. All rights reserved. Slide 6-27 Self-Reinforce-mentConstructiveThoughtPatternsDesigningNaturalRewardsSelf-MonitoringPersonal Goal Setting Elements of Self-Leadership “Taking” a reinforcer only after completing a self-set goal –eg. Watching a movie after writing two more sections of a report –eg. Starting a fun task after completing a task that you don’t like

McGraw-Hill/Irwin© 2008 The McGraw-Hill Companies, Inc. All rights reserved. 6 6 Applied Performance Practices