Leadership

Organizational Reward Systems Organizational Reward Systems include everything that an employee receives from an organization. Rewards may be:  Intrinsic  Extrinsic What type of rewards do you earn in school?

Organizational Reward Systems Intrinsic Rewards – Feelings or actions that are internal to the individual, such as:  Sense of achievement  Feelings of accomplishment  Informal recognition  Job satisfaction  Personal growth  Status

Organizational Reward Systems Extrinsic Rewards – controlled and distributed by the organization, such as:  Formal recognition  Fringe benefits  Incentive payments  Base wages  Promotion  Social relationships

Organizational Reward Systems Patagonia, the outerwear company provides extrinsic rewards to employees of the company, such as:  Child care  Sand Volleyball court  Yoga classes twice a week  Private beach for surfing in the Pacific

Relating Rewards for Performance Free Enterprise System – Based on the idea that rewards should be related to performance. The theory is that people will be motivated to improve their performance in order to achieve greater rewards.

Relating Rewards for Performance Merit Pay System – system where salaries increase based on performance and ties rewards to performance. Most U.S. companies do not employ this tactic, instead they will apply an across-the-board pay increases of a fixed percentage

Relating Rewards for Performance Employees should have a clear picture of how performance effects their pay Merit increases should be distinguishable from Seniority increases and cost-of-living adjustment

Motivation Motivation – the factors that give people a reason to act Motivation is concerned with 3 issues  What makes people act  Why people try to achieve particular goals  What makes individuals stick with their goals

Motivation Needs Drives or Motives Achievement of Goals Motivation begins with a need You may need to earn a lot of money, or work with an interesting group of people, or need to live abroad Needs produce drives or motives, which then lead people to try to achieve goals The desire to earn a lot of money may lead to taking business classes The desire to live abroad may lead to studying a foreign language To fulfill this need, individuals will set goals Receiving a college degree in Business Administration Mastering a foreign language

Theories of Motivation Researchers have studied how people are motivated. Theories of motivation are:  Maslow’s Hierarchy of Needs  Herzberg’s Motivation Maintenance Model  McClelland’s Achievement-Power-Affiliation Approach  Expectancy Theory  Reinforcement Theory

Theories of Motivation Maslow’s Hierarchy of Needs Maslow believes most people seek to meet lower- level needs before they address higher level ones  Example  A person will fulfill the need for shelter before that of personal satisfaction  Managers should ensure a safe and adequate working environment before creating interest and satisfying job requirements.

Theories of Motivation Herzberg’s Motivation-Maintenance Model Theory that states people are motivated by two sets of factors:  Motivators – factors that lead to job satisfaction  Hygiene Factors – primarily negative factors that are taken for granted until something goes wrong.

Theories of Motivation Herzberg’s Motivation-Maintenance Model Motivators include:  Achievement  Recognition  Work itself  Responsibility  Advancement possibilities  Growth on the Job

Theories of Motivation Herzberg’s Motivation-Maintenance Model Hygiene Factors include:  Company rules and policies  Quality of supervision  Interpersonal relations  Working conditions  Salary and benefits  Status  Job security

Theories of Motivation Herzberg’s Motivation-Maintenance Model People are satisfied at work if they encounter positive factors, such as motivators They are unhappy if they encounter negative factors, such as hygiene factors  Employees will be unhappy in a job where they are paid poorly, inadequately supervised, and unable to interact with others

Theories of Motivation McClelland Achievement-Power-Affiliation Approach McClelland believed people are motivated by 3 things  The need for achievement, or the desire to accomplish something  The need for power, or the desire to influence people and events  The need for affiliation, or the desire to have close relations with other people

Theories of Motivation Expectancy Theory Theory based on if employees believe that extra effort will result in better performance, they are likely to be motivated to work If they believe no matter how hard they work, they will not succeed, they will not be highly motivated

Theories of Motivation Expectancy Theory Employees need to believe improving performance will result in more extrinsic rewards  Pay raise  More vacation days

Theories of Motivation Reinforcement Theory The theory that punishing or rewarding people will affect their future behavior. This is a common parenting method

Theories of Motivation Reinforcement Theory This theory uses two kinds of reinforcement  Positive Reinforcement  Negative Reinforcement

Theories of Motivation Positive Reinforcement – rewarding people for actions or behavior that you wish to encourage Managers use positive reinforcement when they:  Praise for work well done  Offer a Pay raise  Offer extra vacation days Employees who are treated this way are likely to be motivated to behave the same way again

Theories of Motivation Negative Reinforcement – punishing or reprimanding people for actions or behavior that you wish to discourage Employees who receive negative reinforcement see that they did wrong and will be aware of and not repeat the behavior

Theories of Motivation Reinforcement Theory Many managers believe that positive reinforcement is more effective Negative reinforcement should be based on a learning experience of the employee to learn from mistakes made