1. HRM: Leading teams – G. Grote ETHZ, Spring Semester 08 Topics HRM: Leading teams

2. HRM: Leading teams – G. Grote ETHZ, Spring Semester 08

3. Goal-oriented theories of leadership Assumption 1: Process theory of motivation  Motivation = Value x Instrumentality x expectancy  Motivation driven by maximizing expected utility Assumption 2: Psychological importance of goals –directing attention –energizing action –strengthening persistence –activating knowledge and action strategies Two approaches: – Path-goal theory – Goal-setting theory

4. HRM: Leading teams – G. Grote ETHZ, Spring Semester 08 Path-goal theory (Evans, 1970; House, 1971/1996) The manager's task is to develop team members' expectations, values, and instrumentalities towards achieving the company's goals. Criticisms: –overrationalization of behavior –manipulation of employees' goals and decisions

5. HRM: Leading teams – G. Grote ETHZ, Spring Semester 08 Goal-setting theory (Locke & Latham, 1990, 2003) SMART goals  Stretching  Measurable  Achievable  Results-based  Time-specific Productivity Mediators  Attention  Energy  Persistence  Knowledge Moderators  Knowledge and ability  Complexity of task  Participation  Commitment  Feedback 1. 3. 2.

6. HRM: Leading teams – G. Grote ETHZ, Spring Semester 08 Goal-oriented leadership in practice: Management by objectives (Drucker, 1954) Systematic alignment of individual and organizational goals –Cascading strategic goals down to all operational levels (taking task interdepencies into account) –Participative agreement on SMART goals for everyone –Clear timelines for goal achievement –Constructive feedback and performance appraisal –Link goal attainment with pay-for-performance systems and personal development But: "MbO is just another tool, it is not the great cure for management inefficiency. It works if you know the objectives, 90% of the time you don't."

7. HRM: Leading teams – G. Grote ETHZ, Spring Semester 08 MbO Cycle (Dinesh & Palmer, 1998)

8. HRM: Leading teams – G. Grote ETHZ, Spring Semester 08 Goal definition SMART goals (Shaw, 2004) S: specific, stretching M: measurable A: achievable R: results-oriented T: time-based „Stretch goals“ (Latham, 2004)  Specific and tough but not unrealistici

9. HRM: Leading teams – G. Grote ETHZ, Spring Semester 08 Types of goals Individual versus group goals: –if tasks highly interdependent esclusive use of individual goals should be avoided (Mitchell & Silver, 1990) Learning versus performance goals: –for very complex tasks, learning goals are more effective than performace goals (Winters & Latham, 1996) Behavior versus outcome goals: –behavior goals are more difficult to measure, but are more concrete and can be influenced more directly by the individual

10. HRM: Leading teams – G. Grote ETHZ, Spring Semester 08 Link rewards to goals: Pay-for-performance (Locke, 2004) Option 1: Goals and rewards tightly coupled –Define (multiple) performance goal(s) and bonus for each goal before the fact Option 2: Goals and rewards loosely coupled –Define goals but make decision about bonus rewards after the fact by taking into account context factors, e.g.: How did the company as a whole perform? How difficult were goals really – in the light of market conditions, available resources etc.?

11. HRM: Leading teams – G. Grote ETHZ, Spring Semester 08 Consequences of MbO for employees +more autonomy in goal setting and in operational goal attainment +Recognition of personal effort -Direct impact of market and customer pressures -Danger of quantitative and qualitative overload

12. HRM: Leading teams – G. Grote ETHZ, Spring Semester 08 MbO: Paths to failure Goal incongruence across hierarchical levels, and units, teams, and individuals Interdependencies among levels, units, teams, and individuals are not taken into account No clear priorities and posteriorities Employees have no control over objectives Short-term goals can reduce long-term thinking MbO can undermine collaboration and helping behavior Setting challenging goals over an extended time period can lead to exhaustion

13. HRM: Leading teams – G. Grote ETHZ, Spring Semester 08 MbO: How to make it work Coherent company strategy Increasing personal resources through job design and personnel development for dealing with complex goals and tasks Sufficient control over the work situation (transparency, predictability, means of influence) Leadership through coaching instead of command- and-control Systematic, transparent and participative goal agreement and evaluation of goal attainment Rules for handling conflicts

14. HRM: Leading teams – G. Grote ETHZ, Spring Semester 08 Complementing MbO: Designing psychological contracts Psychological contracts... …complement and super- impose legal contracts. …contain reciprocal, though not necessarily correspon- ding expectations and offers between employee and employer. …are derived from verbal agreements as well as from behaviors of contract partners and other members of the organization.  The more corresponding and  the more explicit the agreement  the sounder the psychological contract.

15. HRM: Leading teams – G. Grote ETHZ, Spring Semester 08 Formerly Firm $ t Employee Legal and psychological contracts Job security Hard Work Loyalty Employee Firm Today Employee t + Goal achievement Firm $ + Goals Hard Work Loyalty Employability Employee Firm Work flexibility, Downsizing Legal contract Psychological contract

16. HRM: Leading teams – G. Grote ETHZ, Spring Semester 08 Flexible working: Change from a traditional to a new contract? (Raeder & Grote, 2001)

17. HRM: Leading teams – G. Grote ETHZ, Spring Semester 08 (Mis-)Fit of employer offers and employee expectations (Wittekind, Raeder & Grote, 2005)

18. HRM: Leading teams – G. Grote ETHZ, Spring Semester 08 (Mis-)Fit of employee offers and employer expectations (Wittekind, Raeder & Grote, 2005)

19. HRM: Leading teams – G. Grote ETHZ, Spring Semester 08 Psychogical contract as crucial influence on job satisfaction (Schweizer HR-Barometer, Grote & Staffelbach, 2007)

20. HRM: Leading teams – G. Grote ETHZ, Spring Semester 08 Using the psychological contract to handle employment uncertainties Communicate and match reciprocal expectations and offers Early, comprehensive information also on uncertain developments (individual and organizational) Support employability through training, job design, and systematic career management  Distribute risks between organization and employee according to individual coping capabilities  Further organizational commitment which allows for flexibility and "thinking in options"