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

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

CHAPTER 5

ENHANCING EMPLOYEE

MOTIVATION USING

REWARDS, GOALS,

EXPECTATIONS, AND

EMPOWERMENT

Page 2: CHAPTER 5 ENHANCING EMPLOYEE MOTIVATION USING REWARDS, GOALS, EXPECTATIONS, AND EMPOWERMENT.

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

Page 3: CHAPTER 5 ENHANCING EMPLOYEE MOTIVATION USING REWARDS, GOALS, EXPECTATIONS, AND EMPOWERMENT.

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

Page 4: CHAPTER 5 ENHANCING EMPLOYEE MOTIVATION USING REWARDS, GOALS, EXPECTATIONS, AND EMPOWERMENT.

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

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

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

Page 6: CHAPTER 5 ENHANCING EMPLOYEE MOTIVATION USING REWARDS, GOALS, EXPECTATIONS, AND EMPOWERMENT.

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

Page 7: CHAPTER 5 ENHANCING EMPLOYEE MOTIVATION USING REWARDS, GOALS, EXPECTATIONS, AND EMPOWERMENT.

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

Page 8: CHAPTER 5 ENHANCING EMPLOYEE MOTIVATION USING REWARDS, GOALS, EXPECTATIONS, AND EMPOWERMENT.

Lawler’s studies (cont.)

• Suggests that no one single pay incentive plan exists; rather, one must consider the unique chararcteristics of each situation

Page 9: CHAPTER 5 ENHANCING EMPLOYEE MOTIVATION USING REWARDS, GOALS, EXPECTATIONS, AND EMPOWERMENT.

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

Page 10: CHAPTER 5 ENHANCING EMPLOYEE MOTIVATION USING REWARDS, GOALS, EXPECTATIONS, AND EMPOWERMENT.

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

Page 11: CHAPTER 5 ENHANCING EMPLOYEE MOTIVATION USING REWARDS, GOALS, EXPECTATIONS, AND EMPOWERMENT.

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

Page 12: CHAPTER 5 ENHANCING EMPLOYEE MOTIVATION USING REWARDS, GOALS, EXPECTATIONS, AND EMPOWERMENT.

Incentive Plans in the Future (cont.)

• Gain sharing ties an individual’s bonuses to the performance of a business unit

Page 13: CHAPTER 5 ENHANCING EMPLOYEE MOTIVATION USING REWARDS, GOALS, EXPECTATIONS, AND EMPOWERMENT.

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

Page 14: CHAPTER 5 ENHANCING EMPLOYEE MOTIVATION USING REWARDS, GOALS, EXPECTATIONS, AND EMPOWERMENT.

Variable Pay for Performance (cont.)

• Works better in service industries

Page 15: CHAPTER 5 ENHANCING EMPLOYEE MOTIVATION USING REWARDS, GOALS, EXPECTATIONS, AND EMPOWERMENT.

Goal Setting

• Managers and employees can work together to achieve specific outcomes with a clear understanding of explicit goals

Page 16: CHAPTER 5 ENHANCING EMPLOYEE MOTIVATION USING REWARDS, GOALS, EXPECTATIONS, AND EMPOWERMENT.

Goal Setting (cont.)

• Research suggests that three goal attributes greatly enhance goal-related performance:– Goal specificity– Goal difficulty– Goal acceptance

Page 17: CHAPTER 5 ENHANCING EMPLOYEE MOTIVATION USING REWARDS, GOALS, EXPECTATIONS, AND EMPOWERMENT.

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

Page 18: CHAPTER 5 ENHANCING EMPLOYEE MOTIVATION USING REWARDS, GOALS, EXPECTATIONS, AND EMPOWERMENT.

Management by Objective (cont.)

• Review dates are also established

Page 19: CHAPTER 5 ENHANCING EMPLOYEE MOTIVATION USING REWARDS, GOALS, EXPECTATIONS, AND EMPOWERMENT.

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

Page 20: CHAPTER 5 ENHANCING EMPLOYEE MOTIVATION USING REWARDS, GOALS, EXPECTATIONS, AND EMPOWERMENT.

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

Page 21: CHAPTER 5 ENHANCING EMPLOYEE MOTIVATION USING REWARDS, GOALS, EXPECTATIONS, AND EMPOWERMENT.

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%

Page 22: CHAPTER 5 ENHANCING EMPLOYEE MOTIVATION USING REWARDS, GOALS, EXPECTATIONS, AND EMPOWERMENT.

Expectations

• Performance expectations are communicated both verbally and nonverbally, often without conscious intent

Page 23: CHAPTER 5 ENHANCING EMPLOYEE MOTIVATION USING REWARDS, GOALS, EXPECTATIONS, AND EMPOWERMENT.

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

Page 24: CHAPTER 5 ENHANCING EMPLOYEE MOTIVATION USING REWARDS, GOALS, EXPECTATIONS, AND EMPOWERMENT.

Self-Fulfilling Prophecies (cont.)

• Managers can use self-fulfilling prophecy to foster motivation by displaying enthusiasm for the work unit’s mission

Page 25: CHAPTER 5 ENHANCING EMPLOYEE MOTIVATION USING REWARDS, GOALS, EXPECTATIONS, AND EMPOWERMENT.

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

Page 26: CHAPTER 5 ENHANCING EMPLOYEE MOTIVATION USING REWARDS, GOALS, EXPECTATIONS, AND EMPOWERMENT.

Self-Fulfilling Prophecies (cont.)

• Expectations influence both our perception of others and the behaviors of others

Page 27: CHAPTER 5 ENHANCING EMPLOYEE MOTIVATION USING REWARDS, GOALS, EXPECTATIONS, AND EMPOWERMENT.

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

Page 28: CHAPTER 5 ENHANCING EMPLOYEE MOTIVATION USING REWARDS, GOALS, EXPECTATIONS, AND EMPOWERMENT.

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

Page 29: CHAPTER 5 ENHANCING EMPLOYEE MOTIVATION USING REWARDS, GOALS, EXPECTATIONS, AND EMPOWERMENT.

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

Page 30: CHAPTER 5 ENHANCING EMPLOYEE MOTIVATION USING REWARDS, GOALS, EXPECTATIONS, AND EMPOWERMENT.

Methods of Job Redesign

• Job enlargement

• Job rotation

• Job enrichment

Page 31: CHAPTER 5 ENHANCING EMPLOYEE MOTIVATION USING REWARDS, GOALS, EXPECTATIONS, AND EMPOWERMENT.

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

Page 32: CHAPTER 5 ENHANCING EMPLOYEE MOTIVATION USING REWARDS, GOALS, EXPECTATIONS, AND EMPOWERMENT.

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

Page 33: CHAPTER 5 ENHANCING EMPLOYEE MOTIVATION USING REWARDS, GOALS, EXPECTATIONS, AND EMPOWERMENT.

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

Page 34: CHAPTER 5 ENHANCING EMPLOYEE MOTIVATION USING REWARDS, GOALS, EXPECTATIONS, AND EMPOWERMENT.

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

Page 35: CHAPTER 5 ENHANCING EMPLOYEE MOTIVATION USING REWARDS, GOALS, EXPECTATIONS, AND EMPOWERMENT.

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

Page 36: CHAPTER 5 ENHANCING EMPLOYEE MOTIVATION USING REWARDS, GOALS, EXPECTATIONS, AND EMPOWERMENT.

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

Page 37: CHAPTER 5 ENHANCING EMPLOYEE MOTIVATION USING REWARDS, GOALS, EXPECTATIONS, AND EMPOWERMENT.

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

Page 38: CHAPTER 5 ENHANCING EMPLOYEE MOTIVATION USING REWARDS, GOALS, EXPECTATIONS, AND EMPOWERMENT.

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

Page 39: CHAPTER 5 ENHANCING EMPLOYEE MOTIVATION USING REWARDS, GOALS, EXPECTATIONS, AND EMPOWERMENT.

Job Characteristics Theory (cont.)

• The entire model is moderated by individual differences, e.g. an individual’s respective desires to work in enriched jobs

Page 40: CHAPTER 5 ENHANCING EMPLOYEE MOTIVATION USING REWARDS, GOALS, EXPECTATIONS, AND EMPOWERMENT.

Other Job Redesign Approaches

• Flextime

• Modified work week

• Telecommuting

Page 41: CHAPTER 5 ENHANCING EMPLOYEE MOTIVATION USING REWARDS, GOALS, EXPECTATIONS, AND EMPOWERMENT.

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

Page 42: CHAPTER 5 ENHANCING EMPLOYEE MOTIVATION USING REWARDS, GOALS, EXPECTATIONS, AND EMPOWERMENT.

Flextime (cont.)

• Absenteeism and turnover are lower with flextime

Page 43: CHAPTER 5 ENHANCING EMPLOYEE MOTIVATION USING REWARDS, GOALS, EXPECTATIONS, AND EMPOWERMENT.

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

Page 44: CHAPTER 5 ENHANCING EMPLOYEE MOTIVATION USING REWARDS, GOALS, EXPECTATIONS, AND EMPOWERMENT.

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

Page 45: CHAPTER 5 ENHANCING EMPLOYEE MOTIVATION USING REWARDS, GOALS, EXPECTATIONS, AND EMPOWERMENT.

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

Page 46: CHAPTER 5 ENHANCING EMPLOYEE MOTIVATION USING REWARDS, GOALS, EXPECTATIONS, AND EMPOWERMENT.

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

Page 47: CHAPTER 5 ENHANCING EMPLOYEE MOTIVATION USING REWARDS, GOALS, EXPECTATIONS, AND EMPOWERMENT.

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

Page 48: CHAPTER 5 ENHANCING EMPLOYEE MOTIVATION USING REWARDS, GOALS, EXPECTATIONS, AND EMPOWERMENT.

Quality Circles (cont.)

– Members develop solutions to problems that they submit to management through formal presentations

– Members monitor the outcomes of their solutions

Page 49: CHAPTER 5 ENHANCING EMPLOYEE MOTIVATION USING REWARDS, GOALS, EXPECTATIONS, AND EMPOWERMENT.

Traits of SuccessfulQuality 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

Page 50: CHAPTER 5 ENHANCING EMPLOYEE MOTIVATION USING REWARDS, GOALS, EXPECTATIONS, AND EMPOWERMENT.

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

Page 51: CHAPTER 5 ENHANCING EMPLOYEE MOTIVATION USING REWARDS, GOALS, EXPECTATIONS, AND EMPOWERMENT.

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

Page 52: CHAPTER 5 ENHANCING EMPLOYEE MOTIVATION USING REWARDS, GOALS, EXPECTATIONS, AND EMPOWERMENT.

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

Page 53: CHAPTER 5 ENHANCING EMPLOYEE MOTIVATION USING REWARDS, GOALS, EXPECTATIONS, AND EMPOWERMENT.

Self-Directed Work Teams (cont.)

• Defining elements of SDWT’s: – Team meetings– Mandatory job rotation– Skill-based pay– Increased training

Page 54: CHAPTER 5 ENHANCING EMPLOYEE MOTIVATION USING REWARDS, GOALS, EXPECTATIONS, AND EMPOWERMENT.

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

Page 55: CHAPTER 5 ENHANCING EMPLOYEE MOTIVATION USING REWARDS, GOALS, EXPECTATIONS, AND EMPOWERMENT.

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

Page 56: CHAPTER 5 ENHANCING EMPLOYEE MOTIVATION USING REWARDS, GOALS, EXPECTATIONS, AND EMPOWERMENT.

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

Page 57: CHAPTER 5 ENHANCING EMPLOYEE MOTIVATION USING REWARDS, GOALS, EXPECTATIONS, AND EMPOWERMENT.

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

Page 58: CHAPTER 5 ENHANCING EMPLOYEE MOTIVATION USING REWARDS, GOALS, EXPECTATIONS, AND EMPOWERMENT.

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

Page 59: CHAPTER 5 ENHANCING EMPLOYEE MOTIVATION USING REWARDS, GOALS, EXPECTATIONS, AND EMPOWERMENT.

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

Page 60: CHAPTER 5 ENHANCING EMPLOYEE MOTIVATION USING REWARDS, GOALS, EXPECTATIONS, AND EMPOWERMENT.

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?

Page 61: CHAPTER 5 ENHANCING EMPLOYEE MOTIVATION USING REWARDS, GOALS, EXPECTATIONS, AND EMPOWERMENT.

Future of SDWT

• Likely to spread to a greater variety of organizations

• Replace quality circles


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