1. COPYRIGHT 2001 PEARSON EDUCATION CANADA INC. CHAPTER 6 1 CHAPTER 6 MOTIVATION IN PRACTICE

2. COPYRIGHT 2001 PEARSON EDUCATION CANADA INC. CHAPTER 6 2 LEARNING OBJECTIVES Discuss how to tie pay to performance on production jobs and the difficulties of wage incentive plans. Explain how to tie pay to performance on white-collar jobs and the difficulties of merit pay plans. Understand how to use pay to motivate team work. Describe the details of the Job Characteristics Model.

3. COPYRIGHT 2001 PEARSON EDUCATION CANADA INC. CHAPTER 6 3 Discuss the motivational properties of job enrichment. Understand the connection between goal setting and Management by Objectives. Explain how alternative work schedules respect employee diversity. Review the motivational aspects of total quality management.

4. COPYRIGHT 2001 PEARSON EDUCATION CANADA INC. CHAPTER 6 4 MONEY AS A MOTIVATOR According to Maslow and Alderfer, pay should prove especially motivational to people who have strong lower- level needs. If pay has this capacity to fulfill a variety of needs, then it should have good potential as a motivator.

5. COPYRIGHT 2001 PEARSON EDUCATION CANADA INC. CHAPTER 6 5 LINKING PAY TO PERFORMANCE ON PRODUCTION JOBS Piece-rate – A pay system in which individual workers are paid a certain sum of money for each unit of production.

6. COPYRIGHT 2001 PEARSON EDUCATION CANADA INC. CHAPTER 6 6 Wage incentive plans – Various systems that link pay to performance on production jobs.

7. COPYRIGHT 2001 PEARSON EDUCATION CANADA INC. CHAPTER 6 7 POTENTIAL PROBLEMS WITH WAGE INCENTIVES Lowered quality Differential opportunity Reduced cooperation

8. COPYRIGHT 2001 PEARSON EDUCATION CANADA INC. CHAPTER 6 8 Incompatible job design Restriction of productivity

9. COPYRIGHT 2001 PEARSON EDUCATION CANADA INC. CHAPTER 6 9 HYPOTHETICAL PRODUCTIVITY DISTRIBUTIONS

10. COPYRIGHT 2001 PEARSON EDUCATION CANADA INC. CHAPTER 6 10 LINKING PAY TO PERFORMANCE OF WHITE-COLLAR JOBS Merit pay plans – Systems that attempt to link pay to performance on white-collar jobs.

11. COPYRIGHT 2001 PEARSON EDUCATION CANADA INC. CHAPTER 6 11 POTENTIAL PROBLEMS WITH MERIT PAY PLANS Low discrimination – Managers unable to discriminate between good performers and poor performers. Small increases – Merit increases are too small to be effective motivators. Lump sum bonuses get people’s attention.

12. COPYRIGHT 2001 PEARSON EDUCATION CANADA INC. CHAPTER 6 12 Pay secrecy – Salaries are confidential information. Many organizations fail to inform employees about the average raise received by those doing similar work.

13. COPYRIGHT 2001 PEARSON EDUCATION CANADA INC. CHAPTER 6 13 MANAGER’S ESTIMATES OF PAY EARNED BY OTHERS

14. COPYRIGHT 2001 PEARSON EDUCATION CANADA INC. CHAPTER 6 14 USING PAY TO MOTIVATE TEAMWORK Profit sharing  The return of some company profit to employees in the form of a cash bonus or retirement supplement.

15. COPYRIGHT 2001 PEARSON EDUCATION CANADA INC. CHAPTER 6 15  Employee stock ownership plans are incentive plans that allow employees to own a set amount of a company’s shares and provide employees with a stake in the company’s future earnings and success.

16. COPYRIGHT 2001 PEARSON EDUCATION CANADA INC. CHAPTER 6 16 Gainsharing  A group pay incentive plan based on productivity or performance improvements over which the work force has some control.

17. COPYRIGHT 2001 PEARSON EDUCATION CANADA INC. CHAPTER 6 17 Skilled-Based Pay or pay for knowledge  A system in which people are paid according to the number of job skills they have acquired.

18. COPYRIGHT 2001 PEARSON EDUCATION CANADA INC. CHAPTER 6 18 CHARACTERISTICS OF TEAM-ORIENTED INCENTIVE PLANS PROFIT SHARING AND EMPLOYEE STOCK OWNERSHIP  How it works: Employees receive a varying annual bonus based on corporate profits and/or can purchase a certain amount of the company’s shares. Payments can be made in cash or deferred into a retirement fund.

19. COPYRIGHT 2001 PEARSON EDUCATION CANADA INC. CHAPTER 6 19  What it requires to be effective:  Participating employees collectively must be able to influence profits.  Owners must value employees’ contributions enough to be willing to share profits and ownership.

20. COPYRIGHT 2001 PEARSON EDUCATION CANADA INC. CHAPTER 6 20  Advantages:  The incentive formula is simple and easy to communicate.  The plan is guaranteed to be affordable: It pays only when the firm is sufficiently profitable.  It unites the financial interests of owners and employees.

21. COPYRIGHT 2001 PEARSON EDUCATION CANADA INC. CHAPTER 6 21  Disadvantages:  Annual payments may lead employers to ignore long-term performance.  Factors beyond the employee’s control can influence profits.  The plan forces private companies to open their books.

22. COPYRIGHT 2001 PEARSON EDUCATION CANADA INC. CHAPTER 6 22 GAIN SHARING  How it works: When a unit beats predetermined performance targets, all members get bonuses. Objectives often include better productivity, quality, and customer service.

23. COPYRIGHT 2001 PEARSON EDUCATION CANADA INC. CHAPTER 6 23  What it requires to be effective:  Objectives must be measurable.  Management must encourage employee involvement.  Employees must have a high degree of trust in management.

24. COPYRIGHT 2001 PEARSON EDUCATION CANADA INC. CHAPTER 6 24  Advantages:  The plan enhances coordination and teamwork.  Employees learn more about the business and focus on objectives.  Employees work harder and smarter.

25. COPYRIGHT 2001 PEARSON EDUCATION CANADA INC. CHAPTER 6 25  Disadvantages:  Plans that focus only on productivity may lead employees to ignore other important objectives, such as quality.  The company may have to pay bonuses even when unprofitable.

26. COPYRIGHT 2001 PEARSON EDUCATION CANADA INC. CHAPTER 6 26 SKILL-BASED PAY  How it works: An employee’s salary or wage rises with the number of tasks he or she can do, regardless of the job performed.

27. COPYRIGHT 2001 PEARSON EDUCATION CANADA INC. CHAPTER 6 27  What it requires to be effective:  Skills must be identified and assigned a pay grade.  The company must have well-developed employee assessment and training procedures.

28. COPYRIGHT 2001 PEARSON EDUCATION CANADA INC. CHAPTER 6 28  Advantages:  By increasing flexibility, the plan lets the company operate with a leaner staff.  The plan gives workers a broader perspective, making them more adept at problem solving.

29. COPYRIGHT 2001 PEARSON EDUCATION CANADA INC. CHAPTER 6 29  Disadvantages:  Most employees will learn all applicable skills, raising labour costs.  Training costs are high. Source: Perry, N.J. (1988, December 19). Here come richer, riskier pay plans. Fortune, 50-58, p. 52.

30. COPYRIGHT 2001 PEARSON EDUCATION CANADA INC. CHAPTER 6 30 JOB SCOPE AS A FUNCTION OF JOB DEPTH AND JOB BREADTH

31. COPYRIGHT 2001 PEARSON EDUCATION CANADA INC. CHAPTER 6 31 THE JOB CHARACTERISTIC MODEL Several core job characteristics that have a certain psychological impact on workers. This leads to certain outcomes that are relevant to the worker and the organization. Moderators influence the extent to which these relationships hold true.

32. COPYRIGHT 2001 PEARSON EDUCATION CANADA INC. CHAPTER 6 32 THE JOB CHARACTERISTICS MODEL

33. COPYRIGHT 2001 PEARSON EDUCATION CANADA INC. CHAPTER 6 33 CORE JOB CHARACTERISTICS Skill variety - The opportunity to do a variety of job activities using various skills and talents. Autonomy – The freedom to schedule one’s own work activities and decide work procedures. Task significance – The impact that a job has on other people.

34. COPYRIGHT 2001 PEARSON EDUCATION CANADA INC. CHAPTER 6 34 Task identity – The extent to which a job involves doing a complete piece of work, from beginning to end. Feedback – Information about the effectiveness of one’s work performance.

35. COPYRIGHT 2001 PEARSON EDUCATION CANADA INC. CHAPTER 6 35 EXAMPLES OF CORE JOB CHARACTERISTICS SKILL VARIETY  High variety: The owner-operator of a garage who does electrical repair, rebuilds engines, does body work, and interacts with customers.  Low variety: A body shop worker who sprays paint eight hours a day.

36. COPYRIGHT 2001 PEARSON EDUCATION CANADA INC. CHAPTER 6 36 TASK IDENTITY  High variety: A cabinet maker who designs a piece of furniture, selects the wood, builds the object, and finishes it to perfection.  Low variety: A worker in a furniture factory who operates a lathe solely to make table legs.

37. COPYRIGHT 2001 PEARSON EDUCATION CANADA INC. CHAPTER 6 37 TASK SIGNIFICANCE  High variety: Nursing the sick in a hospital intensive care unit.  Low variety: Sweeping hospital floors.

38. COPYRIGHT 2001 PEARSON EDUCATION CANADA INC. CHAPTER 6 38 AUTONOMY  High variety: A telephone installer who schedules his or her own work for the day, makes visits without supervision, and decides on the most effective techniques for a particular installation.  Low variety: A telephone operator who must handle calls as they come according to a routine, highly specified procedure.

39. COPYRIGHT 2001 PEARSON EDUCATION CANADA INC. CHAPTER 6 39 JOB FEEDBACK  High variety: An electronics factory worker who assembles a radio and then tests it to determine if it is working properly.  Low variety: An electronics factory worker who assembles a radio and then routes it to a quality control inspector who tests it for proper operation and makes needed adjustments.

40. COPYRIGHT 2001 PEARSON EDUCATION CANADA INC. CHAPTER 6 40 LEVELS OF CORE JOB CHARACTERISTICS

41. COPYRIGHT 2001 PEARSON EDUCATION CANADA INC. CHAPTER 6 41 JDS FORMULA TO CALCULATE THE MOTIVATING POTENTIAL Motivating potential score = Skill variety + Task variety + Task significance x Autonomy 3 x Job feedback

42. COPYRIGHT 2001 PEARSON EDUCATION CANADA INC. CHAPTER 6 42 MODERATORS Knowledge and Skill Growth Need Strength “Context” Satisfactions

43. COPYRIGHT 2001 PEARSON EDUCATION CANADA INC. CHAPTER 6 43 JOB ENRICHMENT The design of jobs to enhance intrinsic motivation and the quality of the working life.

44. COPYRIGHT 2001 PEARSON EDUCATION CANADA INC. CHAPTER 6 44 JOB ENRICHMENT Combining tasks Establishing external client relationships Establishing internal client relationships

45. COPYRIGHT 2001 PEARSON EDUCATION CANADA INC. CHAPTER 6 45 Reducing supervision or reliance on others Forming work teams Making feedback more direct

46. COPYRIGHT 2001 PEARSON EDUCATION CANADA INC. CHAPTER 6 46 POTENTIAL PROBLEMS WITH JOB ENRICHMENT Poor Diagnosis Lack of Desire or Skill Demand for Rewards

47. COPYRIGHT 2001 PEARSON EDUCATION CANADA INC. CHAPTER 6 47 Union Resistance Supervisory Resistance

48. COPYRIGHT 2001 PEARSON EDUCATION CANADA INC. CHAPTER 6 48 MANAGEMENT BY OBJECTIVES (MBO) An elaborate, systematic, ongoing program designed to facilitate goal establishment, goal accomplishment and employee development.

49. COPYRIGHT 2001 PEARSON EDUCATION CANADA INC. CHAPTER 6 49 THE PROCEDURES OF MBO 1. The superior meets with the subordinate to develop and agree on subordinate objectives. 2. Periodic meetings monitor the subordinate’s progress in achieving the objectives. 3. An appraisal meeting evaluates objectives and diagnoses reasons for success and failure. 4. The MBO cycle is repeated.

50. COPYRIGHT 2001 PEARSON EDUCATION CANADA INC. CHAPTER 6 50 FLEX-TIME An alternative work schedule in which arrival and quitting times are flexible.

51. COPYRIGHT 2001 PEARSON EDUCATION CANADA INC. CHAPTER 6 51 COMPRESSED WORK WEEK An alternative work schedule in which employees work fewer than the normal five days a week, but still put in a normal number of hours per week.

52. COPYRIGHT 2001 PEARSON EDUCATION CANADA INC. CHAPTER 6 52 JOB SHARING An alternative work schedule in which two part-time employees divide the work of a full-time job.

53. COPYRIGHT 2001 PEARSON EDUCATION CANADA INC. CHAPTER 6 53 TELECOMMUTING A system by which employees are able to work at home but stay in touch with their offices through the use of communications and technology.

54. COPYRIGHT 2001 PEARSON EDUCATION CANADA INC. CHAPTER 6 54 TOTAL QUALITY MANAGEMENT (TQM) A systematic attempt to achieve continuous improvement in the quality of an organization’s products and/or services.

55. COPYRIGHT 2001 PEARSON EDUCATION CANADA INC. CHAPTER 6 55 TQM AND MOTIVATION An obsession with customer satisfaction. A concern for good relations with suppliers. A search for continuous improvement of processes.

56. COPYRIGHT 2001 PEARSON EDUCATION CANADA INC. CHAPTER 6 56 The prevention (not just detection) of quality errors. Frequent measurement and assessment. Extensive training. High employee involvement and teamwork.

57. COPYRIGHT 2001 PEARSON EDUCATION CANADA INC. CHAPTER 6 57 TQM AND GOAL SETTING / MBO Continuous improvement places a high premium on specific goal setting. Benchmarking - A systematic process for examining the products, services and work processes of firms that are recognized as illustrating the best practices for organizational improvement.

58. COPYRIGHT 2001 PEARSON EDUCATION CANADA INC. CHAPTER 6 58 TQM AND JOB DESIGN Empowerment Giving people the authority, opportunity and motivation to take initiative and solve organizational problems.