Part IV: Managing Employees Introduction to Business 3e 10 Copyright © 2004 South-Western. All rights reserved. Motivating Employees

Copyright © 2004 South-Western. All rights reserved.10–2 Learning Goals Describe the theories on motivation. Describe how firms can enhance job satisfaction and thereby enhance motivation.

Copyright © 2004 South-Western. All rights reserved.10–3 Managing Employees

Copyright © 2004 South-Western. All rights reserved.10–4 Motivating Employees

Copyright © 2004 South-Western. All rights reserved.10–5 Theories on Motivation Motivation of employees is influenced by job satisfaction–the degree to which employees are satisfied with their jobs –Employees who are satisfied with their jobs are more motivated. –Managers can motivate employees by ensuring job satisfaction.

Copyright © 2004 South-Western. All rights reserved.10–6 Hawthorne Studies In 1920s, researchers studied workers in a Western Electric plant: –Attempted to identify how working conditions affected workers’ level of productivity.  Increases in lighting and decreases in lighting both improved productivity  Shorter breaks and longer breaks both increased productivity –Concluded that any changes in conditions that reflect increased attention toward employees increased productivity.

Copyright © 2004 South-Western. All rights reserved.10–7 Summary of the Hawthorne Studies Exhibit 10.1

Copyright © 2004 South-Western. All rights reserved.10–8 Maslow’s Hierarchy of Needs Maslow believed people rank their needs into five categories –Physiological: basic requirements for survival –Safety: job security and safe working conditions –Social: need to be part of a group –Esteem: respect, prestige, recognition –Self-actualization: need to fully reach one’s potential Once people achieve a given category of needs, they become motivated to reach the next category.

Copyright © 2004 South-Western. All rights reserved.10–9 Maslow’s Hierarchy of Needs Exhibit 10.2

Copyright © 2004 South-Western. All rights reserved.10–10 Herzberg’s Job Satisfaction Study Identified work-related factors that made employees feel dissatisfied with their jobs: –Hygiene factors that can fulfill basic needs and prevent job dissatisfaction  Working conditions, supervision, salary, job security, status –Motivational factors that can lead to job satisfaction and motivate employees  Achievement, responsibility, recognition, advancement, growth

Copyright © 2004 South-Western. All rights reserved.10–11 Summary of Herzberg’s Job Satisfaction Study Exhibit 10.3

Copyright © 2004 South-Western. All rights reserved.10–12 McGregor’s Theory X and Theory Y Each theory represents supervisors’ possible perception of workers –The way supervisors view employees can influence how they treat employees. –Treatment of employees influences their job satisfaction and motivation.

Copyright © 2004 South-Western. All rights reserved.10–13 Theory X and Theory Y Employees dislike work and job responsibilities and will avoid work if possible Employees are willing to work and prefer more responsibility Theory X Theory Y Supervisors cannot delegate responsibilities Supervisors should delegate responsibilities, which will satisfy and motivate employees Supervisors’ View of Employees Implications Exhibit 10.4

Copyright © 2004 South-Western. All rights reserved.10–14 Theory Z Based on the Japanese management style of allowing all employees to participate in decision making –Participation can increase job satisfaction because it gives employees responsibility. –Uses less specialized job descriptions. –Helps employees develop varied skills and have a more flexible career path.

Copyright © 2004 South-Western. All rights reserved.10–15 Expectancy Theory Employee’s efforts are most influenced by the expected outcome (reward) for those efforts: –When goals are achievable and offer desirable rewards. –Employees have a strong belief that they have a chance to earn the reward. Motivating rewards are difficult to offer when output cannot be measured easily.

Copyright © 2004 South-Western. All rights reserved.10–16 Equity Theory Compensation should be equitable, or in proportion to each employee’s contribution –If employees believe that they are under compensated, they may request greater compensation–a raise. –If their compensation is not increased, employees may reduce their contribution–quitting. –Employees become dissatisfied with their jobs if they feel that they are not equitably compensated. –Supervisors may prevent job dissatisfaction by attempting to provide equitable compensation.

Copyright © 2004 South-Western. All rights reserved.10–17 Example of Equity Theory Exhibit 10.5

Copyright © 2004 South-Western. All rights reserved.10–18 Reinforcement Theory Reinforcement influences behavior: –Positive reinforcement  Motivates employees by providing rewards for high performance  The more employees appreciate this form of reinforcement, the more they will be motivated to continue high performance. –Negative reinforcement  Motivating employees by encouraging them to behave in a manner that avoids unfavorable consequences.

Copyright © 2004 South-Western. All rights reserved.10–19 Summary of Reinforcement Theory Exhibit 10.6

Copyright © 2004 South-Western. All rights reserved.10–20 Motivational Guidelines If employees’ job satisfaction increases, they may become more productive –General conclusions  To prevent job dissatisfaction, supervisors should ensure that employees are compensated for their contributions.  Even though well compensated, employees may not be very satisfied if other needs (social, responsibility, self-esteem needs) are not fulfilled.  Employees may be motivated if they believe it is possible to achieve a performance level that will result in a desirable reward.

Copyright © 2004 South-Western. All rights reserved.10–21 business online

Copyright © 2004 South-Western. All rights reserved.10–22 Enhancing Job Satisfaction and Motivation Job enrichment programs –Designed to increase the job satisfaction of employees by increase their autonomy. Adequate compensation program –Merit system –Across-the-board system –Incentive plans

Copyright © 2004 South-Western. All rights reserved.10–23 Developing a Proper Compensation Plan Guidelines for compensation plans that motivate employees: –Align the compensation plan with business goals. –Align compensation with specific employee goals. –Establish achievable goals for employees. –Allow employee input in the compensation plan.

Copyright © 2004 South-Western. All rights reserved.10–24 Impact of New Employee Compensation Policy on the Stock Price of Paychex Exhibit 10.8

Copyright © 2004 South-Western. All rights reserved.10–25 Enhancing Job Satisfaction and Motivation (cont’d) Flexible work schedule (flextime) –Compressed work weeks that compress the work load into fewer days per week. –Job sharing by two or more persons who share a particular work schedules.

Copyright © 2004 South-Western. All rights reserved.10–26 Employee Involvement Programs Job enlargement –A program to expand (enlarge) the jobs assigned to employees Job enrichment –Increasing the variety of job tasks and the autonomy of employees Job rotation –Allowing employees to periodically rotate (switch) their job assignment

Copyright © 2004 South-Western. All rights reserved.10–27 Small Business Survey Do Employees Want More Influence in Business Decisions?

Copyright © 2004 South-Western. All rights reserved.10–28 Empowerment Empowerment and participative management –Allowing employees the power to make more decisions –Management by objectives (MBO) Teamwork –Open-book management  Employee education  Empowerment  Compensation

Copyright © 2004 South-Western. All rights reserved.10–29 Methods Used to Enhance Job Satisfaction Exhibit 10.9

Copyright © 2004 South-Western. All rights reserved.10–30 Methods Used to Enhance Job Satisfaction Exhibit 10.10

Copyright © 2004 South-Western. All rights reserved.10–31 Chapter Summary Hawthorne studies suggest that employees are more motivated when they receive more attention. Maslow’s theory suggests that employees are satisfied by different needs depending on their position in the hierarchy. Herzberg’s theory suggests that the factors that prevent job dissatisfaction are different from the factors that enhance satisfaction. McGregor’s Theories X and Y suggest that supervisors treat employees differently depending on their beliefs about employees.

Copyright © 2004 South-Western. All rights reserved.10–32 Chapter Summary Theory Z suggests that employees are more satisfied and motivated when they are involved in decision making Expectancy theory suggests that employees are more motivated if compensation is aligned with goals that are achievable and offer some reward Equity theory suggests that employees are more motivated if their compensation is aligned with their relative contribution to the firm’s total output Reinforcement theory suggests that employees are more motivated to perform well if they are rewarded for high performance