Motivating and Rewarding Employee Performance 13 Chapter Motivating and Rewarding Employee Performance McGraw-Hill/Irwin Principles of Management © 2008 The McGraw-Hill Companies, Inc., All Rights Reserved.

Learning Objectives Diagram and summarize the MARS model. Describe four-drive theory and explain how these drives influence motivation and behavior. Describe the characteristics of effective goal setting and feedback. Diagram the expectancy theory model and discuss its practical implications for motivating employees. Discuss the advantages and disadvantages of the four reward objectives. Discuss ways to measure employee performance more accurately. Summarize the equity theory model, including how people try to reduce feelings of inequity. Diagram the job characteristics model of job design. Define empowerment and identify strategies to support empowerment.

Employee Engagement Employees emotional and rational motivation Their perceived ability to perform the job Their clear understanding of the organization’s vision Their belief that they have been given the resources to get the job done It encompasses the four main factors that contribute to employee performance See Learning Objective 1: Diagram and summarize the MARS model. See text page: 316

Motivation: True or False? I can motivate people Fear is a damn good motivator I know what motivates me, so I know what motivates my employees Increased job satisfaction means increased job performance See Learning Objective 1: Diagram and summarize the MARS model. Motivation Myths This slide presents some common myths of motivation. Ask the students – True or False on each: People have to motivate themselves. Fear is a good motivator in a very short term but long term, it doesn’t work. Different things motivate different people. Research shows that increased job satisfaction doesn’t necessarily increase performance. Source: Managementhelp.org Source: Managementhelp.org

MARS Model Situational factors Ability Motivation (effort) *Direction *Intensity *Persistence Employee behavior and results See Learning Objective 1: Diagram and summarize the MARS model. See text page: 317 Role Perceptions

Ability & Role Perceptions Ability – consists of both the natural aptitudes and learned capabilities required to successfully complete a task Important factor of employee development Role perceptions – they understand the specifics, importance, and preferred behaviors of the tasks. Ways to improve is through job description and ongoing coaching See Learning Objective 1: Diagram and summarize the MARS model. See text page: 317

Managing Employee Motivation 1. Drives and needs Motivation (effort) *Direction *Intensity *Persistence Employee behavior and results 3. Extrinsic and intrinsic rewards See Learning Objective 1: Diagram and summarize the MARS model. See text page: 319 2. Goals, expectations, and feedback

Maslow’s Needs Hierarchy Challenging tasks, freedom to try new ideas Job status, recognition, mastering the job Human interaction, being accepted as a team member Job security, employee benefits, safe workplace Work hours, nourishments, air quality, temperature See Learning Objective 1: Diagram and summarize the MARS model. See text page: 320

Called in Sick? See Learning Objective 1: Diagram and summarize the MARS model. Called in Sick? This slide presents the top three reasons why workers took a sick day when not sick. About 49% say they called in sick because they just needed a break. 22% indicated an illness in the family, and 9% said they needed to run errands. Ask the students – have they used similar excuse in a job or attending a class? Why? What other reasons may compel individuals to call in sick? (Possibility of loosing the sick days if not taken, looking for another job, etc.) What can managers do to create an atmosphere of trust and loyalty among workers? Source: USA Today Snapshots Source: USA Today Snapshots

Question Money is a powerful motivator. If an organization wants to be motivate employees, all its managers need to do is give them more money. Do you agree? Explain. See Learning Objective 1: Diagram and summarize the MARS model. Question Students should be able to argue against this point with many examples. In a recent survey of teens, it was found that 78 percent indicated that personal fulfillment was more important to them than money. Ask the students, where do they stand? What do they want?

Management Implications of Maslow’s Theory Employees have different needs at different times Employees have several interdependent needs, not just one dominant need At some point, most employees want to achieve their full potential (self-actualization) Employee needs are influenced by values and norms See Learning Objective 1: Diagram and summarize the MARS model. See text page: 321

Learned Needs Theory Need for Achievement (nAch) Need for Affiliation (nAff) See Learning Objective 1: Diagram and summarize the MARS model. See text page: 322 Need for Power (nPow)

Four-Drive Theory Motivation Drive to acquire Social norms Past experience Personal values Drive to bond Mental skill set resolves competing drive demands Goal-directing choice and effort Drive to learn See Learning Objective 2: Describe four-drive theory and explain how these drives influence motivation and behavior. See text page: 324 Drive to defend

Goal Setting The process of motivating employees and clarifying their role perceptions by establishing performance objectives A goal is a desirable future state that an organization or person attempts to realize Goal setting improves role perceptions and consequently clarifies the direction of employee effort See Learning Objective 3: Describe the characteristics of effective goal setting and feedback. See text page: 325

Question Precise and measurable Equitable Expectancy-oriented Timely Raj, a new manager at Telcom International, in his first meeting at the company told his employees that the sales goals were significantly enhanced for this year and he expects all of his employees to buckle down and work hard to meet the goals. Raj’s instructions violates which of the aspects of effective goal-setting? Precise and measurable Equitable Expectancy-oriented Timely See Learning Objective 3: Describe the characteristics of effective goal setting and feedback. See text page: 325-26 Answer: A

Expectancy Theory of Motivation Outcome valence (the outcome’s positive or negative value to the employee) E-to-P expectancy (probability that effort will result in a specific level of performance) P-to-O expectancy (probability that performance will result in specific outcomes) Outcome 1 + or - See Learning Objective 4: Diagram the expectancy theory model and discuss its practical implications for motivating employees. See text page: 327 Effort Outcome 1 + or - Performance Outcome 1 + or -

Rewards Extrinsic Rewards – anything received from another person that the recipient values and is contingent on his or her behavior or results Paychecks, performance bonuses, praise, and other forms of recognition Intrinsic Rewards – a positive emotional experience resulting directly and naturally from the individual’s behavior or results Learning a new task, feeling of accomplishment, etc. See Learning Objective 5: Discuss the advantages and disadvantages of the four reward objectives. See text page: 329

Motivation Through Extrinsic Rewards Membership & seniority-based rewards Nonfinancial rewards Job status-based rewards Improving performance appraisals Competency-based rewards Rewards employees equitably Performance-based rewards See Learning Objective 5: Discuss the advantages and disadvantages of the four reward objectives. See text pages: 329-334

How to Accurately Evaluate Employee Performance? Use more objective measures of performance Use anchored performance appraisal instruments Use multiple sources of performance information Use performance appraisal training See Learning Objective 6: Discuss ways to measure employee performance more accurately. See text pages: 332-333

Best Practices at Nucor Pay for performance – On average two-thirds of a Nucor steelworker’s pay is based on a production bonus Listen to the frontline – According to the Execs, almost all of the best ideas come from the factory floor Push-down authority – minimizing layers of management Protect your culture –compatibility of culture with its egalitarian philosophy and team spirit is a big focus of its acquisition research See Learning Objective 6: Discuss ways to measure employee performance more accurately. Best Practices at Nucor This slide presents some of the best practices at Nucor that has help the company forge a highly profitable partnership with employees. With pay for performance and added profit-sharing layer, average employee received $91,293 in 2005. With best ideas coming from workers, and pushing down authority and responsibilities, jobs are more enriched and worker motivation enhanced. Ask the students – would you like to work for a company like Nucor? Why or why not? Source: Business Week, May 1, 2006 Source: Business Week, May 1, 2006

Correcting Inequity Feelings Change Inputs Change Outcomes Change Perceptions Leave the Situation See Learning Objective 7: Summarize the equity theory model, including how people try to reduce feelings of inequity. See text pages: 334-335

Job Characteristics Model Core job characteristics Critical psychological states Outcomes Skill variety Task identity Task significance Work motivation Growth satisfaction General Satisfaction Work effectiveness Meaningfulness Autonomy Responsibility See Learning Objective 8: Diagram the job characteristics model of job design. See text page: 336 Feedback from job Knowledge of results Individual differences *Knowledge and skill *Context satisfaction *Growth need strength

Core Job Characteristics Skill variety – the use of different skills and talents to complete a variety of work activities Task identity – the degree to which a job requires completion of a whole or identifiable piece of work Task significance – the degree to which the job affects the organization and society Autonomy – provide freedom, independence, and discretion in scheduling work and procedures Job feedback – the degree to which employees can tell how well they are doing See Learning Objective 8: Diagram the job characteristics model of job design. See text pages: 336-337

Job enrichment A job design practice in which employees are given more responsibility for scheduling, coordinating, and planning their own work Combine highly interdependent tasks into one job Establishing client relationships Give employees more autonomy over their work See Learning Objective 9: Define empowerment and identify strategies to support empowerment. See text page: 337

Loyal vs. Trapped? See Learning Objective 9: Define empowerment and identify strategies to support empowerment. Loyal or Trapped? This slide presents the results of a workplace loyalty study. Only about 30% were classified as truly loyal, i.e., who would go an extra mile to satisfy the customers and are highly motivated. About 34% were classified as high risk (neither committed to work nor planning to stay with the company) and another 31% were classified as “trapped” (neither committed to work nor the employer but without prospect for another job). What can managers do to create an atmosphere of trust and loyalty among workers? (Some of the things managers can do to breed loyalty and commitment are: Care and concern for employees, fairness of pay and evaluation, developmental opportunities, recognition of work, and work-life balance. Also refer to the slide on inspiring employees.) Source: CIO, October 1, 2003 Source: CIO, October 1, 2003

Empowerment A psychological concept represented by four dimensions: Self-determination – they have freedom, interdependence, and discretion over their work activities Meaning – they care about their work and believe that what they do is important Competence – their ability to perform the work well and have a capability to grow with new challenges Impact – Active participants in the organization; that is, their decisions and actions influence the company’s success See Learning Objective 9: Define empowerment and identify strategies to support empowerment. See text page: 338

Inspiring Employees Don’t ask for worker input – use it. Tell your people you care about them. Show employees what they are learning Support people when they make a mistake. Set clear goals and celebrate accomplishments. See Learning Objective 9: Define empowerment and identify strategies to support empowerment. Inspiring Employees Money isn’t the only way to recognize and reward employees. This slide presents various alternatives. Ask the students – do they agree with these suggestions? Why or why not? What other items could help make the jobs more meaningful? (For example: sharing priorities and focusing on career development of employees.) Source: Business Week, May 1, 2006 Source: Business Week, May 1, 2006