Course: Master of Business Administration (MBA) Organisational Behaviour (OB) Lecture 7 Motivation: From concept to applications

Motivation Management by objective (MBO): MBO emphasizes participative set goals that are tangible, verifiable, and measurable. It is not a new idea. It originated more than 50 years ago. What is MBO?

Motivation MBO’s appeal lies in its emphasis on converting overall organizational objectives into specific objectives for organizational units and individual members. MBO operationalises objectives by devising a process by which objectives cascade down through the organization What is MBO?

Motivation Four ingredients common to MBO programs are: -goal specificity, -participative decision-making, -an explicit time period, and -performance feedback. What is MBO?

Motivation Goal specificity: The objectives in MBO should be concise statements of expected accomplishments. Example: -to cut departmental costs by seven percent, -to improve service by ensuring that all telephone orders are processed within 24 hours of receipt, or -to increase quality by keeping returns to less than one percent of sales. What is MBO?

Motivation Participative decision making: –The objectives in MBO are not unilaterally set by the boss and then assigned to employees. –The manager and employee jointly choose the goals and agree on how they will be measured. What is MBO?

Motivation An explicit time period: –Each objective has a specific time period in which it is to be completed. –Typically three months, six months, or a year What is MBO?

Motivation Performance feedback: -MBO seeks to give continuous feedback on progress toward goals so that workers can monitor and correct their own actions. What is MBO?

Motivation Goal-setting theory demonstrates that: Hard goals result in a higher level of individual performance than do easy goals. Specific hard goals result in higher levels of performance than no goals at all or generalized goals. Feedback on one’s performance leads to higher performance. Linking MBO and Goal-Setting Theory

Motivation MBO directly advocates specific goals and feedback: -Implies that goals must be perceived as feasible -Is most effective when the goals are difficult enough to require stretching. The only area of possible disagreement with goal setting theory is participation—MBO strongly advocates it. Goal-setting theory—assigning goals to subordinates—frequently works just as well participation. Linking MBO and Goal-Setting Theory

Motivation Reviews of studies suggest that MBO is a popular technique—it is used in business, health care, educational, government, and nonprofit organizations MBO in Practice

Motivation MBO’s popularity should not be construed to mean that it always works. –Where it has failed, the problems rarely lie with MBO’s basic components. –Rather, factors such as unrealistic expectations regarding results, lack of top-management commitment, and an inability or unwillingness by management to allocate rewards based on goal accomplishment are the cause. Linking MBO and Goal-Setting Theory MBO in Practice

Motivation What Are Employee Recognition Programs? -Employee recognition programs consist of personal attention, expressing interest, approval, and appreciation for a job well done. They can take numerous forms. -The best ones use multiple sources and recognize both individual and group accomplishments. Employee Recognition Programs

Early Theories of Motivation Linking Recognition Programs and Reinforcement Theory -Fifteen-hundred employees were surveyed in a variety of work settings about what they considered to be the most powerful workplace motivator. Their response was “recognition! -Consistent with reinforcement theory, rewarding a behavior with recognition immediately following that behavior is likely to encourage its repetition. Linking MBO and Goal-Setting Theory Employee Recognition Programs

Early Theories of Motivation Recognition can take many forms: –Personally congratulate an employee. –Send a handwritten note or an message. –“Bragging Boards,” etc. Linking MBO and Goal-Setting Theory Employee Recognition Programs

Early Theories of Motivation Most organizations are under severe cost pressures, which is why recognition programs are particularly attractive. Recognizing an employee’s superior performance often costs little or no money. Employee Recognition Programs in Practice

Early Theories of Motivation One of the most well known and widely used recognition devices is the use of suggestion systems. -Employees offer suggestions for improving processes or cutting costs and are recognized with small cash awards. Employee Recognition Programs in Practice

Early Theories of Motivation The Japanese have been especially effective at making suggestion systems work. -A typical high performing Japanese plant generates 47 suggestions per employee a year and pays approximately the equivalent of U.S. $35 per suggestion. Employee Recognition Programs in Practice

Early Theories of Motivation What Is Employee Involvement? -Employee involvement has become a catchall term to cover a variety of techniques. -It encompasses employee participation or participative management, workplace democracy, empowerment, and employee ownership. -A process in which subordinates share a significant degree of decision-making power with their immediate superiors. Employee Involvement Programs

Early Theories of Motivation -Employee involvement is a participative process that uses the entire capacity of employees and is designed to encourage increased commitment to the organization’s success. Employee Involvement Programs

Early Theories of Motivation - The underlying logic is that by involving workers in those decisions that affect them and by increasing their autonomy and control over their work lives, employees will become more motivated, more committed to the organization, more productive, and more satisfied with their jobs. Employee Involvement Programs

Early Theories of Motivation - Participation and employee involvement are not synonyms. Participation is a more limited term and is a subset within the larger framework of employee involvement. Employee Involvement Programs

Early Theories of Motivation Example of Employee Involvement Programs (cont’d) Representative Participation Workers participate in organizational decision making through a small group of representative employees. Works Councils Groups of nominated or elected employees who must be consulted when management makes decisions involving personnel. Board Representative A form of representative participation; employees sit on a company’s board of directors and represent the interests of the firm’s employees.

Early Theories of Motivation Example of Employee Involvement Programs (cont’d) Quality Circle A work group of employees who meet regularly to discuss their quality problems, investigate causes, recommend solutions, and take corrective actions.

Early Theories of Motivation Example of Employee Involvement Programs (cont’d) Employee Stock Ownership Plans (ESOPs) Company-established benefit plans in which employees acquire stock as part of their benefits.

Motivation: From concept to applications Summary Recognize individual differences -Employees have different needs. -Do not treat them all alike. -Moreover, spend the time necessary to understand what is important to each employee. -This will allow you to individualize goals, level of involvement, and rewards to align with individual needs.

Motivation: From concept to applications Use goals and feedback. - Employees should have hard, specific goals, as well as feedback on how well they are faring in pursuit of those goals.

Motivation: From concept to applications Allow employees to participate in decisions that affect them. -Employees can contribute to a number of decisions that affect them: -setting work goals -choosing their own benefits packages -solving productivity and quality problems, and the like. -This can increase employee productivity, commitment to work goals, motivation, and job satisfaction.

Motivation: From concept to applications Link rewards to performance. -Rewards should be contingent on performance. - Importantly, employees must perceive a clear linkage.

Motivation: From concept to applications -Regardless of how closely rewards are actually correlated to performance criteria, if individuals perceive this relationship to be low, the results will be low performance, a decrease in job satisfaction, and an increase in turnover and absenteeism statistics.

Motivation: From concept to applications Check the system for equity. -Rewards should also be perceived by employees as equating with the inputs they bring to the job. -At a simplistic level, this should mean that experience, skills, abilities, effort, and other obvious inputs should explain differences in performance and, hence, pay, job assignments, and other obvious rewards.

Group Discussion Group 1 -What does goal specificity mean to you? Group 2 -What does participative decision- making to you?

Group 3 -Explain the term “an explicit time period” Group 4 -Why is performance feedback important?.

GROUP PRESENTATIONS