Chapter 5 Motivation in Action Organizational Behaviour 5-1 Fifth Canadian Edition Langton / Robbins / Judge Copyright © 2010 Pearson Education Canada 5-1

Chapter Outline From Theory to Practice: The Role of Money Creating Effective Reward Systems Caveat Emptor: Apply Motivation Theories Wisely Can We Just Eliminate Rewards? Job Redesign Creating More Flexible Workplaces Motivation: Putting It All Together Langton, Robbins and Judge, Organizational Behaviour, Fifth Cdn. Ed. Copyright © 2010 Pearson Education Canada 5-2

Motivation in Action Is money an important motivator? What does an effective reward system look like? What kinds of mistakes are made in reward systems? Are rewards overrated? How can jobs be designed to increase motivation? How can flexible workplaces increase motivation? Can we simplify how we think about motivation? This material is found at the beginning of the chapter. Langton, Robbins and Judge, Organizational Behaviour, Fifth Cdn. Ed. Copyright © 2010 Pearson Education Canada 5-3

From Theory to Practice: The Role of Money Money is the most commonly used reward in organizations. Money certainly helps needs get met. But, money is not the top priority for many employees Many emphasize relationships in the workplace. Developing rewards programs is a complex process Consider the value individuals place on specific rewards Material pertinent to this discussion is found under “From Theory to Practice: The Role of Money.” Langton, Robbins and Judge, Organizational Behaviour, Fifth Cdn. Ed. Copyright © 2010 Pearson Education Canada 5-4

Creating Effective Reward Systems – Employee Recognition Employee recognition programs use multiple sources and recognize both individual and group accomplishments. recognizing an employee’s superior performance often costs little or no money Material pertinent to this discussion is found under “Creating Effective Reward Systems.” Langton, Robbins and Judge, Organizational Behaviour, Fifth Cdn. Ed. Copyright © 2010 Pearson Education Canada 5-5

What to Pay: Establishing a Pay Structure Setting pay levels requires a balance between external and internal equity Internal Equity- the worth of the job to the organization (job evaluation) External Equity- the competitiveness of an organization’s pay relative to industry standards Setting pay levels (above, at, or below market rates) is a key strategic decision with important trade-offs Material pertinent to this discussion is found under “Creating Effective Reward Systems.” Langton, Robbins and Judge, Organizational Behaviour, Fifth Cdn. Ed. Copyright © 2010 Pearson Education Canada 5-6

How to Pay: Rewarding Individuals Through Variable Pay Programs Many firms are moving towards Variable-Pay Programs A portion of an employee’s pay is based on some individual and/or organizational measure of performance. Individual-based Piece-rate wages, merit-based pay, bonuses, skill-based pay Group-based Gainsharing Organizational-based Profit sharing Employee stock ownership plans (ESOPs) Material pertinent to this discussion is found under “Creating Effective Reward Systems.” Langton, Robbins and Judge, Organizational Behaviour, Fifth Cdn. Ed. Copyright © 2010 Pearson Education Canada 5-7

Variable Pay Programs Piece-rate pay plans Gain sharing Merit Based Individual-Based Incentives Piece-rate pay plans Pay a fixed sum for each unit of production completed. Merit Based Pay is based on performance appraisal ratings Bonuses One-time rewards for defined work rather than ongoing entitlements. Group-Based Incentives Gain sharing Focus on productivity gains Improvements in group productivity determine the rewards to be shared. Material pertinent to this discussion is found under “Creating Effective Reward Systems.” Langton, Robbins and Judge, Organizational Behaviour, Fifth Cdn. Ed. Copyright © 2010 Pearson Education Canada 5-8

Variable Pay Programs: Organizational-Based Incentives Profit-Sharing Plans Organization wide programs that distribute compensation based on some established formula designed around a company’s profitability. Employee Stock Ownership Plans (ESOPs) Company-established benefit plans in which employees acquire stock as part of their benefits. Material pertinent to this discussion is found under “Creating Effective Reward Systems.” Langton, Robbins and Judge, Organizational Behaviour, Fifth Cdn. Ed. Copyright © 2010 Pearson Education Canada 5-9

Challenges to Pay-for-Performance Programs What constitutes performance and how is it measured? Other barriers: Rate of inflation raises Salary scales keyed to competitors Traditional compensation systems Appraisal practices that inflate evaluations and expectations Material pertinent to this discussion is found under “Creating Effective Reward Systems.” Langton, Robbins and Judge, Organizational Behaviour, Fifth Cdn. Ed. Copyright © 2010 Pearson Education Canada 5-10

Other Challenges to Pay-for-Performance Programs The challenges for pay-for-performance programs can be affected by how and where they are implemented. Teamwork Unions Public Sector Employees Ethical Considerations Material pertinent to this discussion is found under “Creating Effective Reward Systems.” Teamwork: If you pay individuals for their performance, this does not generate a healthy team atmosphere. Unions: Unions worry that variable pay may negatively impact their members, and they worry about possible unfairness. Public sector: Public sector work is often difficult to measure work accurately, particularly the important work, such as helping people. Ethical considerations: Is the system designed well enough to make real distinctions in performance? Langton, Robbins and Judge, Organizational Behaviour, Fifth Cdn. Ed. Copyright © 2010 Pearson Education Canada 5-11

Skill-Based Pay: An Alternative to Job Based Pay Pay levels are set based on how many skills employees have or how many jobs they can do Also known as competency-based or knowledge-based pay Skill-based pay helps to increase workforce flexibility Filling staffing needs is easier when employee skills are interchangeable Communication can also be improved On the other hand skill-based pay can lead to problems Does not address the level of performance Employees may acquire skills for which there is no immediate need. Material pertinent to this discussion is found under “Creating Effective Reward Systems.” Langton, Robbins and Judge, Organizational Behaviour, Fifth Cdn. Ed. Copyright © 2010 Pearson Education Canada 5-12

Flexible Benefits: Developing a Benefits Package A Flexible Benefits plan permits each employee to create a package to suit their individual needs Replaces the “one-benefit-plan-fits-all” approach Selections based on marital status, age, number of dependents etc. Three most popular benefit plans: Modular Plans Core-Plus Plans Flexible Spending Plans Material pertinent to this discussion is found under “Creating Effective Reward Systems.” Langton, Robbins and Judge, Organizational Behaviour, Fifth Cdn. Ed. Copyright © 2010 Pearson Education Canada 5-13

Intrinsic Rewards: Employee Recognition Programs from private “thank you” to high profile recognition According to Expectancy Theory the key component of motivation is the link between: Performance and Reward Using Reinforcement Theory, providing recognition immediately following positive behaviour leads to repetition. Material pertinent to this discussion is found under “Creating Effective Reward Systems.” Source: Courtesy of Phoenix Inn Suites. Reprinted with permission of VIP’s Industries, Inc. Langton, Robbins and Judge, Organizational Behaviour, Fifth Cdn. Ed. Copyright © 2010 Pearson Education Canada 5-14

Caveat Emptor: Apply Motivation Theories Wisely Motivation Theories Are Culture-Bound Canadian and US firms rely on extrinsic rewards more than firms in other countries. Japanese and German firms rarely use individual incentives. Chinese firms are more likely to give bonuses to everyone. Mexican employees prefer immediate feedback on their work; therefore, daily incentives work better Consider the internal norms of a country when developing incentive plans Material pertinent to this discussion is found under “Caveat Emptor: Apply Motivation Theories Wisely.” Langton, Robbins and Judge, Organizational Behaviour, Fifth Cdn. Ed. Copyright © 2010 Pearson Education Canada 5-15

Exhibit 5-3 Reward Preferences in Different Countries Material pertinent to this discussion is found under “Caveat Emptor: Apply Motivation Theories Wisely.” Langton, Robbins and Judge, Organizational Behaviour, Fifth Cdn. Ed. Copyright © 2010 Pearson Education Canada 5-16

Beware the Signals That Are Sent By Rewards Often reward systems do not reflect organizational goals: Individuals are stuck in old patterns of rewards and recognition. Stick to rewarding things that can be easily measured. Organizations don’t look at the big picture. Subunits compete with each other. Management and shareholders focus on short-term results. Material pertinent to this discussion is found under “Caveat Emptor: Apply Motivation Theories Wisely.” Langton, Robbins and Judge, Organizational Behaviour, Fifth Cdn. Ed. Copyright © 2010 Pearson Education Canada 5-17

Exhibit 5-4 Management Reward Follies We hope for: Teamwork and collaboration Innovative thinking and risk taking Development of people skills] Employee involvement and empowerment High achievement Long-term growth Commitment to total quality Candour But we reward: The best individual team members Proven methods and no mistakes Technical achievements and accomplishments Tight control over operations, resources Another year’s efforts Quarterly earnings Shipment on schedule, even with defects Reporting good news Material pertinent to this discussion is found under “Caveat Emptor: Apply Motivation Theories Wisely.” A recent survey suggests that three themes seem to account for some of the biggest obstacles in dealing with the folly. First, individuals are unable to break out of old ways of thinking about reward and recognition practices. This is demonstrated in such things as an emphasis on quantifiable behaviours, to the exclusion of non-quantifiable behaviours; employees having an entitlement mentality (i.e., they don’t support changing the reward system because they are comfortable with the current behaviours that are rewarded), and management being reluctant to change the existing performance system. A second factor is that organizations often don’t look at the big picture of their performance system. Consequently, rewards are allocated at subunit levels, with the result that units often compete against each other. Finally, both management and shareholders often focus on short-term results, rather than rewarding employees for planning for longer ranges. Source: Constructed from S. Kerr, “On the Folly of Rewarding A, While Hoping for B,” Academy of Management Executive 9, no. 1 (1995), pp. 7-14; and “More on the Folly,” Academy of Management Executive 9, no. 1 (1995), pp. 15-16. Reprinted by permission. Langton, Robbins and Judge, Organizational Behaviour, Fifth Cdn. Ed. Copyright © 2010 Pearson Education Canada 5-18

Providing Performance Feedback Why are managers often reluctant to provide feedback? Managers might be nervous pointing out weaknesses Employees can get very defensive Employees often have inflated opinions of their performance Managers must be trained to conduct constructive feedback sessions What are the key to effective feedback sessions? Sincere managers A constructive climate Employee perception of fair treatment Langton, Robbins and Judge, Organizational Behaviour, Fifth Cdn. Ed. Copyright © 2010 Pearson Education Canada 5-19

Can We Just Eliminate Rewards? Alfie Kohn suggests that organizations should focus less on rewards, more on creating motivating environments: Abolish Incentive Pay Re-evaluate Evaluation Create Conditions for Authentic Motivation Encourage Collaboration Enhance Content Provide Choice Material pertinent to this discussion is found under “Can We Just Eliminate Rewards?” Abolish incentives: Pay people generously and fairly, make sure people don’t feel exploited, and then make sure that pay is not on their minds. Re-evaluate evaluation: Rather than making performance appraisals look and feel like a punitive effort—who gets raises, who gets promoted, who is told they’re performing poorly—the performance evaluation system might be structured more like a two-way conversation to trade ideas and questions, done continuously, not as a competition. Create the conditions for authentic motivation: A noted economist recently summarized the evidence about pay for productivity as follows: “Changing the way workers are treated may boost productivity more than changing the way they are paid.” Collaboration: People are more likely to perform better in well-functioning groups where they can get feedback and learn from each other. Content: People are generally the most motivated when their jobs give them an opportunity to learn new skills, provide variety in the tasks that are performed, and enable them to demonstrate competence. Choice: “We are most likely to become enthusiastic about what we are doing—and all else being equal, to do it well—when we are free to make decisions about the way we carry out a task.” Langton, Robbins and Judge, Organizational Behaviour, Fifth Cdn. Ed. Copyright © 2010 Pearson Education Canada 5-20

Job Redesign Job Rotation Job Enlargement Periodic shifting of workers from one task to another. Reduces boredom, increases motivation Job Enlargement Increasing the number and variety of tasks performed Attacks the lack of diversity in overspecialized jobs Does little to instill challenge or meaning to a worker’s activities. Material pertinent to this discussion is found under “Job Redesign.” Managers have several options at their disposal if they want to redesign or change the makeup of employee jobs. Langton, Robbins and Judge, Organizational Behaviour, Fifth Cdn. Ed. Copyright © 2010 Pearson Education Canada 5-21

Job Redesign Job Enrichment Job Characteristic Model (JCM) identifies five core job dimensions and their relationship to personal and work outcomes. Skill Variety, Task Identity, Task Significance, Autonomy, Feedback Job Enrichment The vertical expansion of jobs Employee completes a full activity Expands the employee’s freedom and independence Increases responsibility, and provides feedback. Material pertinent to this discussion is found under “Job Redesign.” Langton, Robbins and Judge, Organizational Behaviour, Fifth Cdn. Ed. Copyright © 2010 Pearson Education Canada 5-22

Exhibit 5-5 Examples of High and Low Job Characteristics Material pertinent to this discussion is found under “Job Redesign.” Langton, Robbins and Judge, Organizational Behaviour, Fifth Cdn. Ed. Copyright © 2010 Pearson Education Canada 5-23

JCM – Critical Psychological States The five core job dimensions link to three critical psychological states: Experienced meaningfulness Experienced responsibility for outcomes Knowledge of the actual results Material pertinent to this discussion is found under “Job Redesign.” Langton, Robbins and Judge, Organizational Behaviour, Fifth Cdn. Ed. Copyright © 2010 Pearson Education Canada 5-24

Exhibit 5-6 The Job Characteristics Model Material pertinent to this discussion is found under “Job Redesign.” Langton, Robbins and Judge, Organizational Behaviour, Fifth Cdn. Ed. Copyright © 2010 Pearson Education Canada 5-25

Exhibit 5-7 Computing a Motivating Potential Score Material pertinent to this discussion is found under “Job Redesign.” Langton, Robbins and Judge, Organizational Behaviour, Fifth Cdn. Ed. Copyright © 2010 Pearson Education Canada 5-26

Creating More Flexible Workplaces Compressed Workweek Employees work 4 days a week, 10hrs a day Or employees work 9 days over two weeks Flextime Employees work a set amount of hours but have some flexibility Core period for all + flexible set of hours determined by workers Job Sharing Two or more people splitting a 40 hour a week job Telecommuting Employees complete their work at home Computer is linked to their office Material pertinent to this discussion is found under “Creating More Flexible Workplaces.” Langton, Robbins and Judge, Organizational Behaviour, Fifth Cdn. Ed. Copyright © 2010 Pearson Education Canada 5-27

Exhibit 5-8 Example of a Flextime Schedule 6 a .m . 9 12 noon 1 p.m 3 Time during the day Material pertinent to this discussion is found under “Creating More Flexible Workplaces.” Employees work during a common core time period each day but have discretion in forming their total workday from a flexible set of hours outside the core. Flextime is being offered in more and more organizations, and the benefits for flextime are numerous. Flextime works well in jobs where it can be used, but it is not applicable to every job. For example, in an auto assembly plant where the line has to move at a certain speed, all the line workers have to be there at the same time to get the work done properly. Langton, Robbins and Judge, Organizational Behaviour, Fifth Cdn. Ed. Copyright © 2010 Pearson Education Canada 5-28

Telecommuting: Pros and Cons Increased productivity Decreased stress Leads to better service Reduced turnover Reduced absenteeism Cons Miss important meetings and informal contact Feelings of isolation Risk of burnout Not conducive to team building Can lead to decreased commitment to the organization Material pertinent to this discussion is found under “Creating More Flexible Workplaces.” Langton, Robbins and Judge, Organizational Behaviour, Fifth Cdn. Ed. Copyright © 2010 Pearson Education Canada 5-29

Motivation: Putting it All Together What motivates people? How can we use this information to make sure that the organizational processes motivate our employees? Four basic emotional drives (needs) guide people: Drive to Acquire Met through organizational rewards Drive to Bond Promoted through commitment to teamwork, friendship & openness Drive to Comprehend Based on effective job design Drive to Defend Based on performance management & resource allocation process Material pertinent to this discussion is found under “Motivation: Putting It All Together.” Langton, Robbins and Judge, Organizational Behaviour, Fifth Cdn. Ed. Copyright © 2010 Pearson Education Canada 5-30

Exhibit 5-9 How To Fulfill the Drives that Motivate Employees Material pertinent to this discussion is found under “Motivation: Putting It All Together.” Langton, Robbins and Judge, Organizational Behaviour, Fifth Cdn. Ed. Copyright © 2010 Pearson Education Canada 5-31

Summary and Implications Is money an important motivator? Money is the most commonly used reward. However, there is varying opinion as to how large a role it plays in motivating different employees. What does an effective reward system look like? An effective reward system links pay to performance, which is consistent with expectancy theory predictions. What kinds of mistakes are made in reward systems? Often reward systems do not reward the performance that is expected. Also, systems sometimes do not recognize that rewards are culture-bound. Are rewards overrated? Individuals often motivate themselves intrinsically and can achieve quite high levels of performance. Material pertinent to this discussion is found at the end of the chapter. Langton, Robbins and Judge, Organizational Behaviour, Fifth Cdn. Ed. Copyright © 2010 Pearson Education Canada 5-32

Summary and Implications 5. How can jobs be designed to increase motivation? Employers can use work design to motivate employees. Jobs that have variety, autonomy, feedback, and similar complex task characteristics tend to be more motivating for employees. 6. How can flexible workplaces increase motivation? Alternative work schedules has become a popular tool to motivate employees by accommodating employees’ need for flexibility. Can we simplify how we think about motivation? Recent research suggests that we should match organizational processes to four basic individual drives: acquire, bond, comprehend, and defend. Material pertinent to this discussion is found at the end of the chapter. Langton, Robbins and Judge, Organizational Behaviour, Fifth Cdn. Ed. Copyright © 2010 Pearson Education Canada 5-33

OB at Work Material pertinent to this discussion is found at the end of the chapter. Langton, Robbins and Judge, Organizational Behaviour, Fifth Cdn. Ed. Copyright © 2010 Pearson Education Canada 5-34

For Review What role, if any, does money play in employee recognition and job redesign? What are the pros and cons of variable-pay programs from an employee’s viewpoint? From management’s viewpoint? Why is employee recognition an important reward? What is the difference between gainsharing and profit-sharing? What is an ESOP? How might it positively influence employee motivation? Material pertinent to this discussion is found at the end of the chapter. Langton, Robbins and Judge, Organizational Behaviour, Fifth Cdn. Ed. Copyright © 2010 Pearson Education Canada 5-35

For Review 6. What can firms do to create more motivating environments for their employees? 7. Describe three jobs that score high on the JCM. Describes three jobs that score low. 8. What are the advantages of flextime from an employee’s perspective? From management’s perspective? 9. What are the advantages of job sharing from an employee’s perspective? From management’s perspective? 10. From an employee’s perspective, what are the pros and cons of telecommuting? Material pertinent to this discussion is found at the end of the chapter. Langton, Robbins and Judge, Organizational Behaviour, Fifth Cdn. Ed. Copyright © 2010 Pearson Education Canada 5-36

For Critical Thinking “Employee recognition may be motivational for the moment, but it doesn’t have any staying power. Why? Because employees can’t take recognition to Roots or the Bay!” Do you agree or disagree? Discuss. “Performance can’t be measured, so any effort to link pay with performance is a fantasy. Differences in performance are often caused by the system, which means the organization ends up rewarding the circumstances. It’s the same thing as rewarding the weather forecaster for a pleasant day.” Do you agree or disagree with this statement? Support your position. Material pertinent to this discussion is found at the end of the chapter. Langton, Robbins and Judge, Organizational Behaviour, Fifth Cdn. Ed. Copyright © 2010 Pearson Education Canada 5-37

For Critical Thinking 3. Describe five different bases (other than productivity) by which organizations can compensate employees. Based on your knowledge and experience, do you think productivity is the basis most used in practice? Discuss. 4. “Job redesign is a way of exploiting employees by increasing their responsibilities.” Comment on this statement, and explain whether you agree with it or not. 5. What can management do to improve employees’ perceptions that their jobs are interesting and challenging? Material pertinent to this discussion is found at the end of the chapter. Langton, Robbins and Judge, Organizational Behaviour, Fifth Cdn. Ed. Copyright © 2010 Pearson Education Canada 5-38

Breakout Group Exercises Form small groups to discuss the following: How might the job of student be redesigned to make it more motivating? What is your ideal job? To what extent does it match up with the elements of the job characteristics model (JCM)? Would you prefer working from home or working at the office? Why? Material pertinent to this discussion is found at the end of the chapter. Langton, Robbins and Judge, Organizational Behaviour, Fifth Cdn. Ed. Copyright © 2010 Pearson Education Canada 5-39

Exhibit 5-10 2004 Compensation of Canada’s Five “Most Overpaid” CEOs Material pertinent to this discussion is found at the end of the chapter. Langton, Robbins and Judge, Organizational Behaviour, Fifth Cdn. Ed. Copyright © 2010 Pearson Education Canada 5-40

From Concepts to Skills: Designing Enriched Jobs Combine tasks. This increases skill variety and task identity. Create natural work units. This increases employee “ownership” of the work and improves the likelihood that employees will view their work as meaningful and important. Establish client relationships. This increases skill variety, autonomy, and feedback for the employee. Expand jobs vertically. This seeks to partially close the gap between the “doing” and the “controlling” aspects of the job. Open feedback channels. Material pertinent to this discussion is found at the end of the chapter. This slide can be used to debrief the exercise, showing what can be done to enrich the job. Langton, Robbins and Judge, Organizational Behaviour, Fifth Cdn. Ed. Copyright © 2010 Pearson Education Canada 5-41