1. CHAPTER 5 ENHANCING EMPLOYEE MOTIVATION USING REWARDS, GOALS, EXPECTATIONS, AND EMPOWERMENT

2. Reward Systems Are used to motivate employees Extrinsic rewards come from sources that are outside of the individual, e.g. pay and benefits Intrinsic rewards are self-administered, i.e., arising from within the person, e.g. accomplishment, responsibility

3. The Role of Compensation The most obvious form of reward that employees receive in the work environment Edward E. Lawler III studied the use of many different types of rewards and the use of pay as a means of motivating employees

4. The Role of Compensation (cont.) Pay is an optimal reward for several reasons: –Virtually all recipients value it –Its size is flexible, i.e., it can be divided into various-sized portions –Its value is relatively constant –The relationship of pay to performance upon which it is paid must be obvious, must be visible

5. Relating Pay and Performance Attempts to relate pay and performance vary widely, but generally differ on three dimensions: Organizational Unit Method of measuring performance Form of monetary reward

6. Lawler’s Studies Combinations of the various ways in which companies have tried to link pay with performance, across all three of the dimensions –Unit –Performance –Pay

7. Lawler’s Studies (cont.) Findings: –Perception that pay is tied to performance is enhanced when rewards are administered on basis of individual performance, rather than group –Objective measures of performance also elicit higher ratings –Bonus schemes link pay with performance better than salaries

8. Lawler’s studies (cont.) Suggests that no one single pay incentive plan exists; rather, one must consider the unique chararcteristics of each situation

9. How Effective are Incentive Plans? They can increase productivity by 15% to 35%, but their popularity has declined in recent decades Adversarial relationships resulted from employees’ feelings that management was trying to manipulate employees; workers may slow down work pace in order to deceive time study consultants

10. How Effective are Incentive Plans? (cont.) Class consciousness may result when employees note that incentive schemes are used more often for lower level workers than they are for upper level management employees Societal Changes have reduced the effectiveness of incentive schemes

11. Incentive Plans in the Future Lawler suggests combination of profit sharing, stock ownership, gain sharing Profit sharing and stock ownership are more commonly used than gain sharing; employees share directly in profits of total organization

12. Incentive Plans in the Future (cont.) Gain sharing ties an individual’s bonuses to the performance of a business unit

13. Variable Pay-for-Performance Typically starts with reduced wages or salary Offers attractive bonuses to employees for attaining specific performance targets or goals 35% of Fortune 500 companies are experimenting with some form of pay- for-performance plan

14. Variable Pay for Performance (cont.) Works better in service industries

15. Goal Setting Managers and employees can work together to achieve specific outcomes with a clear understanding of explicit goals

16. Goal Setting (cont.) Research suggests that three goal attributes greatly enhance goal-related performance: –Goal specificity –Goal difficulty –Goal acceptance

17. Management by Objective MBO sets goal theory into practice Employees engage in one-on-one goal setting sessions with supervisors; both providing inputs Deadlines are established for measurement of accomplishment Paths to the desired goals and removal of possible obstacles are discussed

18. Management by Objective (cont.) Review dates are also established

19. Controversy over MBO Lack of support from top-level management Inability of managers to assume coaching posture due to their own insecurities System is so results oriented that some people believe that the ends justify the means and engage in illegal or unethical activities

20. Controversy over MBO (cont.) System relies heavily on trust between subordinates and superiors or it fails Some scholars view the system as a tool that is justifiable only under exactly the right conditions

21. Track Record of MBO Fairly good One recent literature review examined findings from 70 MBO programs –Productivity gains averaged 47% –Employee attendance improved by 24% –When top level managers were committed to programs, productivity increased by 57%

22. Expectations Performance expectations are communicated both verbally and nonverbally, often without conscious intent

23. Self-Fulfilling Prophecies Self-fulfilling prophecies: behavioral responses that an employee may engage in based on their perception that someone expected them to behave in that fashion Pygmalion in the Classroom: study conducted by Rosenthal and Jacobson focuses on the power of self-fulfilling prophecies

24. Self-Fulfilling Prophecies (cont.) Managers can use self-fulfilling prophecy to foster motivation by displaying enthusiasm for the work unit’s mission

25. Self-Fulfilling Prophecies (cont.) Self-fulfilling prophecy plays a role in performance appraisals if they rely too heavily on subjective appraisals of performance; employees may subsequently perform in exactly the way they perceive they are expected to perform

26. Self-Fulfilling Prophecies (cont.) Expectations influence both our perception of others and the behaviors of others

27. Employee Empowerment Motivation can be enhanced by increasing one’s self-control at work Empowerment encompasses a number of specific techniques: –Job redesign –Quality circles –Self-directed work teams

28. Job Redesign Division of labor is a principle that has served to industrialize our nation Specialization of labor can improve productivity up to a point, but beyond that worker dissatisfaction can set in, with workers becoming hostile, and absenteeism or turnover resulting

29. Job Redesign (cont.) Challenge is to achieve just the right amount of job simplification which maximizes productivity without risking worker discontent Trends now point toward more humanization of work, with less simplification

30. Methods of Job Redesign Job enlargement Job rotation Job enrichment

31. Job Enlargement Known as horizontal job expansion, involves an increase in the variety of an employee’s activities Findings indicate that job enlargement does improve worker satisfaction and the quality of production It does not appear to affect the quantity of production

32. Job Rotation Job remains the same, but the personnel who perform the task are systematically changed Organizations use it as a training device to improve a worker’s flexibility Findings suggest that job rotation may be the only available means to introduce variety in some job settings

33. Job Enrichment Known as vertical job expansion Introduced by Fred Herzberg Involves changing the content of jobs by introducing autonomy and self- regulation, where both factors lead to positive changes in worker behavior

34. Job Enrichment (cont.) Jobs are enriched by introducing motivating factors, detailed in two-factor theory Controversy over job enrichment is rooted in the assertion that some people simply are not motivated by enriched jobs

35. Job Characteristics Theory Authored by Hackman and Oldham to provide a comprehensive theory of job enrichment Explains how various job dimensions affect worker behavior Accounts for the possible influence of individual differences on the desire for enriched work

36. Job Characteristics Theory (cont.) Explains the interaction between characteristics of a given job and the impact these characteristics have on three key psychological states that we experience in our work efforts (Fig 5.2) The three psychological states are: –Experience meaningfulness of work

37. Job Characteristics Theory (cont.) –Experience responsibility for outcomes of work –Knowledge of actual results of work activities Each state is critical and affected by job characteristics: skill variety, task significance, task identity, task significance, autonomy, and feedback

38. Job Characteristics Theory (cont.) The psychological states and the job characteristics, in turn, indicate job “outcomes”, e.g. high internal work motivation, high general job satisfaction, high growth satisfaction, low turnover and absenteeism, high quality work

39. Job Characteristics Theory (cont.) The entire model is moderated by individual differences, e.g. an individual’s respective desires to work in enriched jobs

40. Other Job Redesign Approaches Flextime Modified work week Telecommuting

41. Flextime Work schedule that gives employees some discretion in arranging their working hours Employer specifies some core time that the employee must be present at work, leaving the remaining work week open for discretion

42. Flextime (cont.) Absenteeism and turnover are lower with flextime

43. Modified Work Weeks Use “unusual” work schedules compared to traditional 9 to 5 grind, e.g. working 10 hours a day, four days a week Employees may experience increased levels of fatigue Research produced mixed findings with regard to the effectiveness of such programs, but many forecasters predict that a 4-40 workweek lies in our future

44. Telecommuting The linking of one’s home computer with the employer’s computer system which permits the completion of all or part of one’s job at home Tends to occur in information-intensive and information-processing industries

45. Telecommuting (cont.) Advantages to employers include reduced need for office space, employee’s content over being close to families, higher job satisfaction levels Downside include employees that telecommute are out of the information and political loop of communication, e.g. social isolation

46. Quality Circles Created in the U.S., introduced to Japan after WWII Employee committees of eight to ten workers who meet once a week, on company time, to discuss production and problems with product quality

47. Quality Circles (cont.) Characteristics of Quality Circles –Membership is voluntary –Members are trained in problem-solving techniques –Members of circles must be assured that they will not lose their jobs or have their responsibilities reduced as a result of their suggestions

48. Quality Circles (cont.) –Members develop solutions to problems that they submit to management through formal presentations –Members monitor the outcomes of their solutions

49. Traits of Successful Quality Circles Commitment by top-level management Successful programs are more likely to have group facilitators who have been trained in group relations and problem- solving strategies Recognition must be given to individuals and circles for suggesting workable solutions to operational problems

50. Criticisms of Quality Circles Question of cost effectiveness, employees taken away from jobs Motives of people who volunteer to serve in circles is not understood Not possible to study them via rigorous scientific fashion because they are voluntary

51. Self-Directed Work Teams Groups of 6 to 18 employees that are fully responsible for creating a specified product Each member shares responsibility for performance Information shared openly

52. Self-Directed Work Teams (cont.) Domains once reserved for superiors, e.g. setting priorities, production planning, work assignments, given to group; even interpersonal problems Attractive due to success stories that recount improved productivity coupled with reduced cost, e.g. Xerox Corporation

53. Self-Directed Work Teams (cont.) Defining elements of SDWT’s: –Team meetings –Mandatory job rotation –Skill-based pay –Increased training

54. Self-Directed Work Teams (cont.) Mandatory job rotation is a key element Members gain knowledge of a broader range and are able to help others Less “downtime” due to a single member lacking the know-how to remedy problems Employees have an incentive to learn a greater variety of tasks or skills

55. Self-Directed Work Teams (cont.) Organization gains by having a more flexible and more talented workforce In order to learn new skills, employees must spend more time in on-the-job training Positive motivational effect helps make up for time lost due to training

56. Total Quality Management Set of principles that embodies a strong emphasis on establishing and maintaining a high level of quality Key principles: –Getting it right the first time –Focusing on the customer or client –Emphasizing continuous improvement –Mutual respect among coworkers

57. Total Quality Management (cont.) Downside: Slack needs to be built into production schedules to allow for training time SDWT’s are often introduced into companies as part of an overall change in emphasis that focuses on enhancing the quality of output or services

58. Consequence of SDWT Fewer supervisors Flatter organizations with fewer layers of hierarchy Sizable investment required in area of training Employees that have received maximum of training opportunities have little other incentive to continue to prosper

59. Potential Problems and Criticisms of SDWT Unionized organizations that use SDWT’s are sometimes less successful –Retrofitting=introducing SDWT’s to unionized environments –Greenfield Site=entirely new facility based on SDWT principles –Organized labor founded on principle of seniority based job assignments often suspicious of SDWT’s

60. Potential Problems and Criticisms of SDWT (cont.) Criticisms of SDWT –Unethical to try to build employee’s commitment in a calculated and deliberate manner –Countered by focusing on management’s basic intent: is it to attain a basic level of effectiveness that is mutually beneficial to employees and management?

61. Future of SDWT Likely to spread to a greater variety of organizations Replace quality circles