Unit III Assignment Org Ther BH
chapter6
Applied Performance Practices
learning objectives
After reading this chapter, you should be able to:
6-1 Discuss the meaning of money and identify several individual-, team-, and organizational-level performance-based rewards.
6-2 Describe five ways to improve reward effectiveness.
6-3 List the advantages and disadvantages of job specialization.
6-4 Diagram the job characteristics model and describe three ways to improve employee motivation through job design.
6-5 Define empowerment and identify strategies that support empowerment.
6-6 Describe the five elements of self-leadership and identify specific personal and work environment influences on self-leadership.
Shopify develops the world’s most popular e-commerce platform and is one of North America’s fastest-growing technology companies. That’s quite an accomplishment for a business that didn’t exist a dozen years ago and is headquartered far from Silicon Valley in Ottawa, Canada. Shopify’s success is partly because it hires people who are naturally inclined to motivate and lead themselves. “I look for people who are self-starters—people who have a bit of a founder mentality,” says chief operating officer Harley Finkelstein. Cofounder and CEO Tobias Lütke refers to Shopify’s motto—Draw the Owl—meaning that the company wants talented people with the self-motivation and self-direction to transform a couple of circles into a finished masterpiece. “You get the tools you need to do great things, but it’s up to you to make it happen,” says Lütke.
Draw the Owl also reflects Shopify’s approach to job design. “There’s a lot of autonomy, no micro-managing,” explains one current employee. Another adds: “Huge opportunities for growth. I have complete agency in what I work on, and what skills I focus on developing.” User interface designer Ryan Langlois also points to work variety, autonomy, and significance as key motivators.Page 153 “Shopify allows you to work on exciting, challenging projects with some amazingly talented people,” he says.
Shopify employees are also motivated by peer recognition and rewards aligned with how well the company is doing. Employees regularly give “thumbs up” to coworkers through Unicorn, the company’s peer-based recognition tool. At the end of each calendar year, every Shopify employee receives a surprise bonus, such as a three-day ski trip or $1,000 to spend at any of Shopify’s Internet-based merchants. Everyone also gets stock options, which gives them a vested interest in the company’s success. “This is a place where we really encourage people to act like owners,” says Harley Finkelstein. 1
Shopify’s incredible success is attributed to talented and highly motivated employees who keep the technology company at the forefront of the e-commerce revolution. Employee motivation is supported by self-leadership, enriched jobs, performance-based rewards, and an empowering work environment. These four themes provide the framework for this chapter.
The chapter begins by examining the meaning of money. This is followed by an overview of financial reward practices, including the different types of rewards and how to implement rewards effectively. Next, we look at the conceptual foundations of job design, followed by specific job design strategies for motivating employees. We then consider the elements of empowerment, as well as conditions that support empowerment. The final part of the chapter explains how employees manage their own performance through self-leadership.
© Kevin Van Paassen/Bloomberg/Getty Images
Shopify has a highly motivated workforce, driven by enriched jobs, rewards aligned with the company’s success, and employees with strong self-leadership skills.
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The Meaning of Money in the Workplace
6-1
Rewarding people with money is one of the oldest and most pervasive applied performance practices. At the most basic level, money and other financial rewards represent a form of exchange; employees provide their labor, skill, and knowledge in return for money and benefits from the organization. From this perspective, money and related rewards align employee goals with organizational goals. This concept of economic exchange can be found across cultures. The word for pay in Malaysian and Slovak means “to replace a loss”; in Hebrew and Swedish it means “making equal.” 2
However, money is much more than an object of compensation for an employee’s contribution to organizational objectives. Money relates to our needs and our self-concept. It generates a variety of emotions, many of which are negative, such as anxiety, depression, anger, and helplessness. 3 Money is a symbol of achievement and status, a motivator, a source of enhanced or reduced anxiety, and an influence on our propensity to make ethical or risky decisions. To some extent, the influence of money on human thoughts and behavior occurs nonconsciously. 4 According to one source, “Money is probably the most emotionally meaningful object in contemporary life.” 5
The meaning of money varies considerably from one person to the next. 6 Studies report that money is viewed as a symbol of status and prestige, as a source of security, as a source of evil, or as a source of anxiety or feelings of inadequacy. It is considered a taboo topic in many social settings. Recent studies depict money as both a “tool” (i.e., money is valued because it is an instrument for acquiring other things of value) and a “drug” (i.e., money is an object of addictive value in itself). A widely studied model of money attitudes suggests that people have a strong “money ethic” or “monetary intelligence” when they believe that money is not evil; that it is a symbol of achievement, respect, and power; and that it should be budgeted carefully. These attitudes toward money influence an individual’s ethical conduct, organizational citizenship, and many other behaviors and attitudes. 7
SELF-ASSESSMENT 6.1: What Is Your Attitude toward Money?
Money is a fundamental part of the employment relationship, but it is more than just an economic medium of exchange. Money affects our needs, our emotions, and our self-concept. People hold a variety of attitudes toward money. One widely studied set of attitudes is known as the “money ethic.” You can discover your attitude toward money by locating this self-assessment in Connect if it is assigned by your instructor.
The meaning and effects of money differ between men and women. 8 One study revealed that in almost all societies men attach more importance or value to money than do women. Men are more likely than women to view money as a symbol of power and status as well as the means to autonomy. Women are more likely to view money in terms of things for which it can be exchanged and particularly as a symbol of generosity and caring by using money to buy things for others.
The meaning of money also seems to vary across cultures. 9 People in countries with high power distance (such as China and Japan) tend to have a high respect and priority for money, whereas people in countries with a strong egalitarian culture (such as Denmark, Austria, and Israel) are discouraged from openly talking about money or displaying their personal wealth. One study suggests that Swiss culture values saving money, whereas Italian culture places more value on spending it.
The motivational effect of money is much greater than was previously believed, and this effect is due more to its symbolic value than to what it can buy. 10 Philosopher John Stuart Mill made this observation 150 years ago when he wrote: “The love of money is not only one of the strongest moving forces of human life, but money is, in many cases, desired in and for itself.” 11 People who earn higher pay tend to have higher job performance because the higher paycheck enhances their self-concept evaluation. Others have noted that the symbolic value of money depends on how it is distributed in the organization and how many people receive that financial reward.
Overall, current organizational behavior knowledge indicates that money is much more than a means of exchange between employer and employee. It fulfills a variety of needs, influences emotions, and shapes or represents a person’s self-concept. These findings are important to remember when the employer is distributing financial rewards in the workplace. Over the next few pages, we look at various reward practices and how to improve the implementation of performance-based rewards.
Financial Reward Practices
Financial rewards come in many forms, which can be organized into the four specific objectives identified in Exhibit 6.1 : membership and seniority, job status, competencies, and performance.
EXHIBIT 6.1 Reward Objectives, Advantages, and Disadvantages
MEMBERSHIP- AND SENIORITY-BASED REWARDS
Membership-based and seniority-based rewards (sometimes called “pay for pulse”) represent the largest part of most paychecks. Some employee benefits are provided equally to everyone, such as the end-of-year $1,000 shopping bonus, free meals, and twice-monthly housekeeping services that Shopify employees receive. Other rewards increase with seniority. For example, employees with 10 or more years of service at the Paul Scherrer Institut near Zurich, Switzerland, receive an annual loyalty bonus equal to a half month’s salary; those with 20 or more years of service at the natural and engineering sciences research center receive a bonus equal to a full month’s salary. 13
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Mega Reward for Tiens Group Employees
Many companies show a token of appreciation to employees for their loyalty and past performance. But to celebrate its twentieth year in business, Chinese multinational conglomerate Tiens Group rewarded 6,400 employees (about half of its workforce) with an all-expenses-paid trip to France.
The group boarded 84 commercial planes from China to Paris, stayed in 140 three- and four-star hotels, were given a private tour of the Louvre, and enjoyed a private shopping session at a luxury department store. The entire entourage then traveled by high-speed train to the south of France, where they stayed in 4,760 rooms at high-quality hotels from Monaco to Cannes. Before returning to China, the group boarded 146 tour buses to the resort town of Nice, where they lined up to spell “Tiens’ dream is Nice in the Côte d’Azur.” The human sentence achieved a Guinness world record. 12
© Franck Fernandes/Newscom
These membership- and seniority-based rewards potentially reduce turnover and attract job applicants (particularly those who desire predictable income). However, they do not directly motivate job performance; on the contrary, they discourage poor performers from seeking work better suited to their abilities. Instead, the good performers are lured to better-paying jobs. Some of these rewards are also “golden handcuffs”—they discourage employees from quitting because of deferred bonuses or generous benefits that are not available elsewhere. However, golden handcuffs potentially weaken job performance because they generate continuance rather than affective commitment (see Chapter 4).
JOB STATUS–BASED REWARDS
Almost every organization rewards employees to some extent on the basis of the status or worth of the jobs they occupy. In some parts of the world, companies measure job worth through job evaluation . Most job evaluation methods give higher value to jobs that require more skill and effort, have more responsibility, and have more difficult working conditions. 14 The higher the worth assigned to a job, the higher the minimum and maximum pay for people in that job. Along with receiving higher pay, employees with more valued jobs sometimes receive larger offices, company-paid vehicles, and other perks.
Job status–based rewards try to improve feelings of fairness by distributing more pay to people in higher-valued jobs. These rewards also motivate employees to compete for promotions. However, at a time when companies are trying to be more cost-efficient and responsive to the external environment, job status–based rewards potentially do the opposite by encouraging a bureaucratic hierarchy. These rewards also reinforce a status mentality, whereas Generation-X and Generation-Y employees expect a more egalitarian workplace. Furthermore, status-based pay potentially motivates employees to compete for higher-status jobs and to raise the value of their own jobs by exaggerating job duties and hoarding resources. 15
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COMPETENCY-BASED REWARDS
Over the past two decades, many companies have shifted reward priorities from job status to skills, knowledge, and other competencies that lead to superior performance. The most common practices identify a list of competencies relevant across all job groups, as well as competencies specific to each broad job group. Employees progress through the pay range within that job group based on how well they demonstrate each of those competencies. 16
Skill-based pay plans are a more specific variation of competency-based rewards in which people receive higher pay determined by their mastery of measurable skills. 17 High Liner Foods, one of North America’s largest frozen seafood companies, assigns pay rates to employees at its Portsmouth, New Hampshire, plant based on the number and difficulty of skills they have mastered. “We’re setting our sites up for a skill-based pay system, so as employees learn and demonstrate certain skills, they move into a different pay bracket,” explains a High Liner executive.
Competency-based rewards motivate employees to learn new skills. 18 This tends to support a more flexible workforce, increase employee creativity, and allow employees to be more adaptive to embracing new practices in a dynamic environment. Product or service quality also tends to improve because employees with multiple skills are more likely to understand the work process and know how to improve it. However, competency-based pay plans have not always worked out as well as promised by their advocates. They are often overdesigned, making it difficult to communicate these plans to employees. Competency definitions tend to be abstract, which raises questions about fairness when employers are relying on these definitions to award pay increases. Skill-based pay systems measure specific skills, so they are usually more objective. However, they are expensive because employees spend more time learning new tasks. 19
PERFORMANCE-BASED REWARDS
Performance-based rewards have existed since Babylonian days 4,000 years ago, but their popularity has increased dramatically over the past few decades. Here is an overview of some of the most popular individual, team, and organizational performance-based rewards.
Individual Rewards Many employees receive individual bonuses or other rewards for accomplishing a specific task or exceeding annual performance goals. Housekeeping staff in many hotels are paid a piece rate—a specific amount earned for each room cleaned. 20 Other hotels pay an hourly rate plus a per-room bonus. Real estate agents and other salespeople typically earn commissions, in which their pay depends on the sales volume they generate.
Team Rewards Organizations have shifted their focus from individuals to teams, and accompanying this transition has been the introduction of more team-based rewards. Nucor Inc. relies heavily on team-based rewards. The steelmaker’s employees earn bonuses that can exceed half their total pay, determined by how much steel is produced by the team. This team-based bonus system also includes penalties. If employees catch a bad batch of steel before it leaves the mini-mill, they lose their bonus for that shipment. But if a bad batch makes its way to the customer, the team loses three times its usual bonus. 21
Another form of team-based performance reward, called a gainsharing plan , calculates bonuses from the work unit’s cost savings and productivity improvement. Whole Foods Market uses gainsharing to motivate cost savings in its grocery stores. The food retailer assigns a monthly payroll budget to teams operating various departments within a store. If payroll money is unspent at the end of the month, the surplus is divided among members of that Whole Foods Market team. 22 Several hospitals have cautiously introduced a form of gainsharing, whereby physicians and medical staff in a medical unit (cardiology, orthopedics, etc.) are collectively rewarded for cost reductions in surgery and patient care. These cost reductions mainly occur through negotiating better prices of materials. 24 Gainsharing plans tend to improve team dynamics, knowledge sharing, and pay satisfaction. They also create a reasonably strong link between effort and performance, because much of the cost reduction and labor efficiency is within the team’s control. 25
Global Variations in Performance-Based Pay 23
Percentage of employees surveyed in selected countries who say their pay is “variable, such that a portion is dependent upon your individual performance/productivity targets.” Data were collected from more than 120,000 people in 31 countries for Kelly Services. The global average includes respondents from all 31 countries, not just those shown in this chart.
Organizational Rewards Along with individual and team-based rewards, many firms motivate employees with organizational-level rewards. Texas-based Hilcorp Energy Company recently gave each of its employees $100,000 for exceeding three challenging targets over five years: doubling the company’s value, its oil field production rate, and its net oil and gas reserves. This companywide incentive followed a “Double Drive” reward five years earlier in which employees received a new vehicle or $50,000 for surpassing the same targets. 26
Employee stock ownership plans (ESOPs) are organizational rewards that encourage employees to buy company stock, usually at a discounted price. The financial incentive occurs in the form of dividends and market appreciation of the stock. Due to tax concessions in the United States and a few other countries, most ESOPs are designed as retirement plans. Today, more than 20 percent of Americans working in the private sector hold stock in their companies. 27 Publix Super Markets has one of the largest and oldest ESOPs in America. The Lakeland, Florida, grocery chain distributes a portion of company profits to employees in the form of company stock. Employees can also purchase additional stock from the privately held company. 28
While ESOPs involve purchasing company shares, stock options give employees the right to purchase company stock at a predetermined price up to a fixed expiration date. Shopify, the e-commerce technology company described at the beginning of this chapterPage 159, awards stock options to most of its employees. Here’s how stock options work: An employer might offer employees the right to purchase 100 shares at $50 each at any time between two and six years from now. If the stock price is, say, $60 two years later, employees could earn $10 per share from these options, or they could wait up to six years for the stock price to rise further. If the stock price never rises above $50 during that time, employees are “out of the money,” and they would let the options expire. The intention of stock options is to motivate employees to make the company more profitable, thereby raising the company’s stock price and enabling them to reap the value above the exercise price of the stock options.
Another type of organizational-level reward is the profit-sharing plan , in which employees receive a percentage of the previous year’s company profits. An interesting application of this reward occurs at Svenska Handelsbanken AB. In years when the Swedish bank is more profitable than the average of competing banks, it transfers one-third of the difference in profits to an employee fund. Every employee receives one share in the fund for each year of service, which can be cashed out at 60 years of age (even if they continue working for the bank beyond that age). 29
Evaluating Organizational-Level Rewards How effective are organizational-level rewards? Research indicates that ESOPs and stock options tend to create an ownership culture in which employees feel aligned with the organization’s success. 30 There is also some evidence that both increase firm performance under some circumstances, but the effects are fairly weak. 31 Profit sharing tends to create less ownership culture, yet one major study of 200 Korean manufacturing firms found that it had a stronger influence on productivity than did ESOPs or stock options. 32 Profit sharing also has the advantage of automatically adjusting employee compensation with the firm’s prosperity, thereby reducing the need for layoffs or negotiated pay reductions during recessions.
One reason why organizational rewards don’t improve motivation or performance very much is that employees perceive a weak connection between their individual effort and the determinants of those rewards (i.e., corporate profits or stock price). Even in small firms, the company’s stock price or profitability are influenced by economic conditions, competition, and other factors beyond the employee’s immediate control. This low individual performance-to-outcome expectancy suppresses the incentive’s motivational effect. However, a few studies have found that ESOPs and other organizational rewards have a more robust influence on motivation and firm performance when employees are also involved in organizational decisions. 33 We discuss employee involvement in the next chapter (Chapter 7).
IMPROVING REWARD EFFECTIVENESS
6-2
Performance-based rewards have come under attack over the years for discouraging creativity, distancing management from employees, distracting employees from the meaningfulness of the work itself, and being quick fixes that ignore the true causes of poor performance. One study even found that very large rewards (relative to the usual income) can result in lower, rather than higher, performance. 34 While these issues have kernels of truth under specific circumstances, they do not necessarily mean that we should abandon performance-based pay. On the contrary, top-performing companies are more likely to have performance-based (or competency-based) rewards, which is consistent with evidence that these rewards are one of the high-performance work practices (see Chapter 1). 35 Reward systems do motivate most employees, but only under the right conditions. Here are some of the more important strategies for improving reward effectiveness.
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debating point
IS IT TIME TO DITCH THE PERFORMANCE REVIEW?
More than 90 percent of Fortune 500 companies use performance reviews to link rewards to the performance of some or most employees. Advocates argue that these evaluations provide critical documentation, communication, and decisions necessary to reward contributors and remove those who fail to reach the minimum standard. Indeed, it can be difficult to fire poor performers in some jurisdictions unless the company has systematically documented the employee’s shortfalls. Evaluations provide clear feedback about job performance, so employees know where they stand and are motivated to address their weaknesses. Performance reviews have their faults, but supporters say these problems can be overcome by using objective information (such as goal setting and 360-degree feedback) rather than subjective ratings, being supportive and constructive throughout the review, and providing informal performance feedback throughout the year.
Several experts—and most employees—disagree. 36 In spite of mountains of advice over the years on how to improve performance reviews, this activity seems to inflict more damage than deliver benefits. Apple Inc. trashed its formal performance evaluation process a decade ago. Zappos and dozens of other companies have since followed Apple’s lead. Most companies that ditched their performance reviews never brought them back again.
According to various polls and studies, performance reviews are stressful, morale sapping, and dysfunctional events that typically descend into political arenas and paperwork bureaucracies. Even when managers actively coach employees throughout the year, the annual appraisal meeting places them in the awkward and incompatible role as an all-powerful and all-knowing evaluator. Another issue is that rating employees, even on several factors, grossly distorts the complexity of performance in most jobs. A single score on customer service, for instance, would hide variations in knowledge, empathy, efficiency, and other elements of service. “Who am I to tell somebody they’re a three out of five?” asks Don Quist, cofounder of industrial recruiting firm Sixth Sense and engineering firm Hood Group. Quist is so opposed to performance reviews that employees at Hood Group were issued badges with a big “X” through the phrase “Employee Evaluation.” 37
Many perceptual biases—halo, recency, primacy, stereotyping, fundamental attribution error—are common in performance reviews and difficult to remove through training. Seemingly objective practices such as goal setting and 360-degree feedback are fraught with bias and subjectivity. Various studies have also found that managers across the organization use different criteria to rate employee performance. One study discovered that management’s evaluations of 5,000 customer service employees were unrelated to ratings that customers gave those employees. “The managers might as well have been rating the employees’ shoe sizes, for all the customers cared,” quipped one investigator. 38
Is there an alternative to the performance evaluation? One repeated suggestion is to conduct “performance previews” or “feedforward” events that focus on future goals and advice. Instead of a postmortem dissection of the employee’s failings, managers use past performance as a foundation for development. 39 Also, substantial rewards should never be based on performance reviews or similar forms of evaluation. Instead, they should be linked to measurable team- and organizational-level outcomes and, judiciously, to individual indicators (sales, project completion, etc.), where appropriate.
LINK REWARDS TO PERFORMANCE
Organizational behavior modification theory and expectancy theory (Chapter 5) both recommend that employees with better performance should be rewarded more than those with poorer performance. Unfortunately, this simple principle seems to be unusually difficult to apply. Few employees see a relationship between job performance and the amount of pay they and coworkers receive. One recent global survey reported that only 42 percent of employees globally say they think there is a clear link between their job performance and pay. Only 25 percent of Swedish employees and 36 percent of American employees see a pay–performance link. 40
How can companies improve the pay–performance linkage? Inconsistencies and bias can be minimized through gainsharing, ESOPs, and other plans that use objective performance measures. Where subjective measures of performance are necessary, companies should rely on multiple sources of information. Companies also need to apply rewards soon after the performance occurs, and in a large-enough dose (such as a bonus rather than a pay increase), so employees experience positive emotions when they receive the reward. 41
ENSURE THAT REWARDS ARE RELEVANT
Companies need to align rewards with performance within the employee’s control. The more employees see a “line of sight” between their daily actions and the reward, the more they are motivated to improve performance. United Rentals, the world’s largest equipment rental company, rewards managers at each level for their performance of controllable business factors. “We call it return on controllable assets,” explains United CEO Michael Kneeland. The bonuses that United managers earn are determined by how profitably they manage assets within their control. Higher-level managers earn bonuses based more on overall fleet performance, whereas branch managers are rewarded more for parts and inventory efficiencies at their local operations. “These are things within their control that they are assessed on,” says Kneeland. 42 Reward systems also need to correct for situational factors. Salespeople in one region may have higher sales because the economy is stronger there than elsewhere, so sales bonuses need to be adjusted for such economic factors.
USE TEAM REWARDS FOR INTERDEPENDENT JOBS
Team rewards are better than individual rewards when employees work in highly interdependent jobs, because it is difficult to measure individual performance in these situations. Nucor Corp. relies on team-based bonuses for this reason; producing steel is a team effort, so employees earn bonuses based on team performance. Team rewards also encourage cooperation, which is more important when work is highly interdependent. A third benefit of team rewards is that they tend to support employee preferences for team-based work. One concern, however, is that employees (particularly the most productive employees) in the United States and many other low-collectivism cultures prefer rewards based on their individual performance rather than team performance. 43
ENSURE THAT REWARDS ARE VALUED
It seems obvious that rewards work best when they are valued. Yet companies sometimes make false assumptions about what employees want, with unfortunate consequences. For instance, one manager honored an employee’s 25th year of service by buying her a box of doughnuts to be shared with other staff. The employee was insulted. She privately complained later to coworkers that she would rather receive nothing than “a piddling box of doughnuts.” 44 The solution, of course, is to ask employees what they value. Campbell Soup did this several years ago at one of its distribution centers. Executives thought the employees would ask for more money in a special team reward program. Instead, distribution staff said the most valued reward was a leather jacket with the Campbell Soup logo on the back. The leather jackets cost much less, yet were worth much more than the financial bonus the company had intended to distribute. 45
WATCH OUT FOR UNINTENDED CONSEQUENCES
Performance-based reward systems sometimes have unexpected—and undesirable—effects on employee motivation and behavior. 46 Consider the following example: A food processing plant discovered that insect parts were somehow getting into the frozen peas during processing. To solve this serious problem, management decided to reward production staff for any insect parts they found in the peas. The incentive worked! Employees found hundreds of insect parts that they dutifully turned in for the bonus. The problem was that many of these insect pieces came from the employees’ backyards, not from the production line. 47 Avoiding unintended consequences of rewards isn’t easy, but they can often be averted by carefully thinking through what the rewards actually motivate people to do and, where possible, test the incentives in a pilot project before applying them across the organization.
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When Rewards Go Wrong
For many years, the paychecks of almost all public transit bus drivers in Santiago, Chile, were determined by the number of fare-paying passengers. This incentive motivated the drivers to begin their route on time, take shorter breaks, drive efficiently, and ensure that passengers paid their fare.
But the drivers’ reward system also had horrendous unintended consequences. To take on more passengers, bus drivers aggressively raced with competing buses to the next passenger waiting area, sometimes cutting off each other and risking the safety of people in nearby vehicles. Drivers reduced time at each stop by speeding off before passengers were safely on board. They also left the bus doors open, resulting in many passenger injuries and fatalities during the journey. Some drivers drove past waiting areas if there was only one person waiting. They completely skipped stops with schoolchildren because those passengers paid only one-third of the regular fare. Studies reported that Santiago’s transit buses caused one fatal accident every three days, and that drivers paid per passenger caused twice as many traffic accidents as drivers paid per hour.
Santiago later integrated its public transit system and drivers earned only hourly pay. Unfortunately, under this reward system drivers were no longer motivated to ensure that passengers pay the fare (about one-third are freeloaders), and some skipped passenger stops altogether when they were behind schedule or at the end of their workday. Santiago recently changed driver pay once again to a combination of fixed pay and bonuses determined by several performance indicators and reduced fare evasion. 48
Source: José González Spaudo/Flickr
Financial rewards come in many forms and, as was mentioned at the outset of this section, influence employees in complex ways. But money isn’t the only thing that motivates people. Employees are usually much more engaged in their work through intrinsic rather than extrinsic sources of motivation. As we discussed in Chapter 5, intrinsic motivation occurs when the source of motivation is controlled by the individual and experienced from the activity itself. In other words, companies motivate employees mainly by designing interesting and challenging jobs, which is the topic we discuss next.
JOB DESIGN PRACTICES
6-3
How do you build a better job? That question has challenged organizational behavior experts, psychologists, engineers, and economists for a few centuries. Some jobs have very few tasks and usually require very little skill. Other jobs are immensely complex and require years of experience and learning to master them. From one extreme to the other, jobs have different effects on work efficiency and employee motivation. The ideal, at least from the organization’s perspective, is to find the right combination so that work is performed efficiently but employees are engaged and satisfied. 49 This objective requires careful job design —the process of assigning tasks to a job, including the interdependency of those tasks with other jobs. A job is a set of tasks performed by one person. To understand this issue more fully, let’s begin by describing early job design efforts aimed at increasing work efficiency through job specialization.
JOB DESIGN AND WORK EFFICIENCY
By any measure, supermarket cashiers have highly repetitive work. One consulting firm estimated that cashiers should be able to scan each item in an average of 4.6 seconds. A British tabloid recently reportedPage 163 that cashiers at five supermarket chains in that country actually took between 1.75 and 3.25 seconds to scan each item from a standardized list of 20 products. Along with scanning, cashiers process the payment, move the divider stick, and (in some stores) bag the checked groceries. 50
Supermarket cashiers perform jobs with a high degree of job specialization . Job specialization occurs when the work required to serve a customer—or provide any other product or service—is subdivided into separate jobs assigned to different people. For instance, supermarkets have separate jobs for checking out customers, stocking shelves, preparing fresh foods, and so forth. Except in the smallest family grocery stores, one person would not perform all of these tasks as part of one job. Each resulting job includes a narrow subset of tasks, usually completed in a short cycle time. Cycle time is the time required to complete the task before starting over with another item or client. Supermarket cashiers have a cycle time of about 4 seconds to scan each item before they repeat the activity with the next item. They also have a cycle time for serving each customer, which works out to somewhere between 20 and 40 times per hour in busy stores.
Why would companies divide work into such tiny bits? The simple answer is that job specialization potentially improves work efficiency. One reason for this higher efficiency is that employees have less variety of tasks to juggle (such as checking out customers versus stocking shelves), so there is less time lost changing over to a different type of activity. Even when people can change tasks quickly, their mental attention lingers on the previous type of work, which slows down performance on the new task. 51 A second reason for increased work efficiency is that employees can become proficient more quickly in specialized jobs. There are fewer physical and mental skills to learn and therefore less time to train and develop people for high performance. Third, shorter work cycles give employees more frequent practice with the task, so jobs are mastered more quickly. Fourth, specialization tends to increase work efficiency by allowing employees with specific aptitudes or skills to be matched more precisely to the jobs for which they are best suited. 52
The benefits of job specialization were noted more than 2,300 years ago by the Chinese philosopher Mencius and the Greek philosopher Plato. Scottish economist Adam Smith wrote 250 years ago about the advantages of job specialization. Smith described a small factory where 10 pin makers collectively produced as many as 48,000 pins per day because they performed specialized tasks. One person straightened the metal, another cut it, another sharpened one end of the cut piece, yet another added a white tip to the other end, and so forth. In contrast, Smith explained that if these 10 people worked alone producing complete pins, they would collectively manufacture no more than 200 pins per day. 53
SCIENTIFIC MANAGEMENT
One of the strongest advocates of job specialization was Frederick Winslow Taylor, an American industrial engineer who introduced the principles of scientific management in the early 1900s. 54 Scientific management consists of a toolkit of activities. Some of these interventions—employee selection, training, goal setting, and work incentives—are common today but were rare until Taylor popularized them. However, scientific management is mainly associated with high levels of job specialization and standardization of tasks to achieve maximum efficiency.
According to Taylor, the most effective companies have detailed procedures and work practices developed by engineers, enforced by supervisors, and executed by employees. Even the supervisor’s tasks should be divided: One person manages operational efficiency, another manages inspection, and another is the disciplinarian. Taylor and other industrial engineers demonstrated that scientific management significantly improves work efficiency. No doubt, some of the increased productivity can be credited to training, goal setting, and work incentives, but job specialization quickly became popular in its own right.
The Arsenal of Venice introduced job specialization 200 years before economist Adam Smith famously praised this form of job design. Founded in AD 1104, the state-owned shipbuilder eventually employed up to 4,000 people in specialized jobs (carpenters, iron workers, warehouse supervisors, etc.) to build ships and accessories (e.g., ropes). In 1570, the Arsenal had become so efficient through specialization that it built 100 ships in two months. The organization even had an assembly line along the waterway where workers apportioned food, ammunition, and other supplies from specially designed warehouses to the completed vessels.55© Leemage/Universal Images Group/Getty Images
PROBLEMS WITH JOB SPECIALIZATION
Frederick Winslow Taylor and his contemporaries focused on how job specialization reduces labor “waste” by improving the mechanical efficiency of work (i.e., skills matching, faster learning, less switchover time). Yet they didn’t seem to notice how this extreme job specialization adversely affects employee attitudes and motivation. Some jobs—such as scanning grocery items—can be so specialized that they soon become tedious, trivial, and socially isolating. Employee turnover and absenteeism tend to be higher in specialized jobs with very short cycle times. Companies sometimes have to pay higher wages to attract job applicants to this dissatisfying, narrowly defined work.56
Job specialization affects output quality, but in two opposing ways. Job incumbents of specialized jobs potentially produce higher-quality results because, as we mentioned earlier, they master their work faster than do employees in jobs with many and varied tasks. This higher proficiency explains why specialist lawyers tend to provide better quality service than do generalist lawyers.57 But many jobs (such as supermarket cashiers) are specialized to the point that they are highly repetitive and tedious. In these repetitive jobs, the positive effect of higher proficiency is easily offset by the negative effect of lower attentiveness and motivation caused by the tedious work patterns.
Job specialization also undermines work quality by disassociating job incumbents from the overall product or service. By performing a small part of the overall work, employees have difficulty striving for better quality or even noticing flaws with that overall output. As one observer of an automobilePage 165 assembly line reports: “Often [employees] did not know how their jobs related to the total picture. Not knowing, there was no incentive to strive for quality—what did quality even mean as it related to a bracket whose function you did not understand?”58
Job Design and Work Motivation
6-4
Frederick Winslow Taylor may have overlooked the motivational effect of job characteristics, but it is now the central focus of many job design initiatives. Organizational behavior scholar Frederick Herzberg is credited with shifting the spotlight in the 1950s when he introduced motivator-hygiene theory.59 Motivator-hygiene theory proposes that employees experience job satisfaction when they fulfill growth and esteem needs (called motivators), and they experience dissatisfaction when they have poor working conditions, low job security, and other factors categorized as lower-order needs (called hygienes). Herzberg argued that only characteristics of the job itself motivate employees, whereas the hygiene factors merely prevent dissatisfaction. It might seem obvious to us today that the job itself is a source of motivation, but the concept was radical when Herzberg proposed the idea.
Motivator-hygiene theory has been soundly rejected by research studies, but Herzberg’s ideas generated new thinking about the motivational potential of the job itself.60 Out of subsequent research emerged the job characteristics model, shown in Exhibit 6.2. The job characteristics model identifies five core job dimensionsPage 166 that produce three psychological states. Employees who experience these psychological states tend to have higher levels of internal work motivation (motivation from the work itself), job satisfaction (particularly satisfaction with the work itself), and work effectiveness.61
EXHIBIT 6.2 The Job Characteristics ModelSource: J.R. Hackman and G. Oldham, Work Redesign (Reading, MA: Addison-Wesley, 1980), p. 90. Used with permission.
CORE JOB CHARACTERISTICS
The job characteristics model identifies five core job characteristics. Under the right conditions, employees are more motivated and satisfied when jobs have higher levels of these characteristics:
· Skill variety. Skill variety refers to the use of different skills and talents to complete a variety of work activities. For example, sales clerks who normally only serve customers might be assigned the additional duties of stocking inventory and changing storefront displays.
· Task identity. Task identity is the degree to which a job requires completion of a whole or identifiable piece of work, such as assembling an entire broadband modem rather than just soldering in the circuitry.
· Task significance. Task significance is the degree to which the job affects the organization and/or larger society. It is an observable characteristic of the job (you can see how it benefits others) as well as a perceptual awareness. For example, Rolls-Royce Engine Services improved task significance among its employees by inviting customers to talk to production staff about the importance of their engine repairs to their company. As one Rolls-Royce executive observed, “[These talks give] employees with relatively repetitive jobs the sense that they’re not just working on a part but rather are key in keeping people safe.”62
· Autonomy. Jobs with high levels of autonomy provide freedom, independence, and discretion in scheduling the work and determining the procedures to be used to complete the work. In autonomous jobs, employees make their own decisions rather than rely on detailed instructions from supervisors or procedure manuals. Autonomy is considered the core motivational element of job design.63 As we learned in Chapter 4, autonomy is also an important mechanism to reduce stress in some situations.
· Job feedback. Job feedback is the degree to which employees can tell how well they are doing from direct sensory information from the job itself. Airline pilots can tell how well they land their aircraft, and road crews can see how well they have prepared the roadbed and laid the asphalt.
CRITICAL PSYCHOLOGICAL STATES
The five core job characteristics affect employee motivation and satisfaction through three critical psychological states, shown in Exhibit 6.2. Skill variety, task identity, and task significance directly contribute to the job’s experienced meaningfulness—the belief that one’s work is worthwhile or important. Autonomy directly contributes to feelings of experienced responsibility—a sense of being personally accountable for the work outcomes. The third critical psychological state is knowledge of results—an awareness of the work outcomes based on information from the job itself.
KPMG executives recognize that it is easier for a doctor to experience task significance when caring for patients than for an auditor to experience it when reviewing financial documents. To remedy this, KPMG’s American employees were shown a video documenting the company’s historic contributions to society. They were also invited to share stories about how their jobs have a positive impact. The company was overwhelmed with 42,000 submissions. The company’s surveys reported that employees were half as likely to think about quitting if their manager discussed KPMG’s impact on society. KPMG’s ranking on the list of best 100 companies to work for in America jumped 17 places the year after the higher purpose campaign was launched.64Source: KPMG.
INDIVIDUAL DIFFERENCES
Job design doesn’t increase work motivation for everyone in every situation. Employees must have the required skills and knowledge to master the more challenging work. Otherwise, job design tends to increase stress and reduce job performance. The original model also states that employees will be motivated by the five core job characteristics only when they are satisfied with their work context (e.g., working conditions, job security) and have a high growth need strength. Growth need strength refers to an individual’s need for personal growth and development, such as work that offers challenges, cognitive stimulation, learning, and independent thought and action.65 However, research findings have been mixed, suggesting that employees might be motivated by job design no matter how they feel about their job context or how high or low they score on growth needs.66
SOCIAL AND INFORMATION PROCESSING JOB CHARACTERISTICS
The job characteristics model overlooks two clusters of job features: social characteristics and information processing demands.67 One social characteristic is the extent to which the job requires employees to interact with other people (coworkers, clients, government representatives, etc.). This required social interaction is associated with emotional labor, discussed in Chapter 4, as well as with task interdependence, which is the extent to which employees need to share materials, information, or expertise with each other (see Chapter 8). A second social characteristic of the job is feedback from others. In Chapter 5 we learned that feedback is a source of motivation. This extends from the manager to coworkers, clients, and others. Jobs that enable this social feedbackPage 168 may be just as motivating as jobs that provide feedback from the task itself.
The other cluster of job characteristics missing from the job characteristics model relates to the information processing demands of the job.68 One information processing demand is how predictable the job duties are from one day to the next (called task variability). Employees in jobs with high task variability have nonroutine work patterns; they perform different types of tasks from one day to the next, and don’t know which tasks are required until that time. The second information processing demand, called task analyzability, refers to how much the job can be performed using known procedures and rules. Jobs with high task analyzability have a ready-made “cookbook” to guide job incumbents through most decisions and actions, whereas jobs with low task analyzability require employee creativity and judgment to determine the best course of action. Task variability and task analyzability are important job characteristics to consider when designing organizational structures, so we discuss them further in Chapter 13.
JOB DESIGN PRACTICES THAT MOTIVATE
Three main strategies can increase the motivational potential of jobs: job rotation, job enlargement, and job enrichment.
JOB ROTATION
Bang & Olufsen has always had fairly complex jobs at its manufacturing plants. When the Danish government established guidelines for employers to reduce monotonous and repetitive work, however, the Danish audio and multimedia company took further steps by training employees on all assembly stations and rotating them through different jobs every three or four hours.69 Bang & Olufsen executives have introduced the practice of moving employees from one job to another for the purpose of improving the motivational and physiological conditions of the work.
There are three potential benefits of job rotation. First, it increases skill variety throughout the workday, which seems to improve employee motivation and satisfaction to some extent. A second benefit of job rotation is that it minimizes health risks from repetitive strain and heavy lifting because employees use different muscles and physical positions in the various jobs. A third benefit is that job rotation supports multiskilling (employees learn several jobs), which increases workforce flexibility in staffing the production process and in finding replacements for employees on vacation.
Job rotation is a valued practice at EYE Lighting International. “Every employee on the factory floor changes positions at least once a day,” says Tom Salpietra, president of the Ohio-based subsidiary of Iwasaki Electric of Japan. “The employees love it because they don’t get bored in their daily job. Ergonomically it’s good for them because they’re not doing the same repetitive task day-in and day-out when they come here.” Salpietra adds that job rotation “allows us a tremendous amount of flexibility” in work assignments. It also gives employees a better picture of the entire production process, which helps when they look for ways to improve productivity.70© Frederick Florin/AFP/Getty ImagesPage 169
JOB ENLARGEMENT
Job enlargement adds tasks to an existing job. This might involve combining two or more complete jobs into one or just adding one or two more tasks to an existing job. Either way, skill variety increases because there are more tasks to perform. A video journalist is an example of an enlarged job. As Exhibit 6.3 illustrates, a traditional news team consists of a camera operator, a sound and lighting specialist, and the journalist who writes and presents or narrates the story. One video journalist performs all of these tasks.
EXHIBIT 6.3 Job Enlargement of Video Journalists
Job enlargement significantly improves work efficiency and flexibility. However, research suggests that simply giving employees more tasks won’t affect motivation, performance, or job satisfaction. These benefits result only when skill variety is combined with more autonomy and job knowledge.71 In other words, employees are motivated when they perform a variety of tasks and have the freedom and knowledge to structure their work to achieve the highest satisfaction and performance. These job characteristics are at the heart of job enrichment.
JOB ENRICHMENT
Job enrichment occurs when employees are given more responsibility for scheduling, coordinating, and planning their own work.72 For example, customer service employees at American Express go “off-script,” meaning that they use their own discretion regarding how long they should spend with a client and what to say to them.73 Previously, employees had to follow strict statements and take a fixed time for specific types of customer issues. People who perform enriched jobs potentially have higher job satisfaction and work motivation, along with lower absenteeism and turnover. Productivity is also higher when task identity and job feedback are improved. Product and service quality tend to improve because job enrichment increases the jobholder’s felt responsibility and sense of ownership over the product or service.74
One way to increase job enrichment is by combining highly interdependent tasks into one job. This natural grouping approach is reflected in the video journalist job. Along with being an enlarged job, video journalism is an example of job enrichment because it naturally groups tasks together to complete an entire product (i.e., a news story). By forming natural work units, jobholders have stronger feelings of responsibility for an identifiable body of work. They feel a sense of ownership and, therefore, tend to increase job quality. Forming natural work units increases task identity and task significance because employees perform a complete product or service and can more readily see how their work affects others.
A second job enrichment strategy, called establishing client relationships, involves putting employees in direct contact with their clients rather than using another job group or the supervisor as the liaison between the employee and the customer. Telus recently adopted this job enrichment strategy by redesigning service technician jobs so they communicate directly with customers as well as perform the technical work. Previously, service technicians at the Canadian telecommunications company performed only the technical tasks whereas customer service staff communicated with clients. “I’m able to pick up my work and go directly to the customers,” says Telus service technician Sukh Toor. “It’s great for me personally, because I have a lot more ownership of the customer relationship.” Establishing client relationships increases task significance because employees see a line-of-sight connection between their work and consequences for customers. By being directly responsible for specific clients, employees also have more information and can make better decisions affecting those clients. 75
Forming natural task groups and establishing client relationships are common ways to enrich jobs, but the heart of the job enrichment philosophy is to give employees more autonomy over their work. This basic idea is at the core of one of the most widely mentioned—and often misunderstood—practices known as empowerment.
Empowerment Practices
6-5
Empowerment is a term that has been loosely tossed around in corporate circles and has received considerable debate among academics. However, the most widely accepted definition is that empowerment is a psychological experience represented by four dimensions: self-determination, meaning, competence, and the impact of the individual’s role in the organization. 76
· Self-determination. Empowered employees feel that they have freedom, independence, and discretion over their work activities.
· Meaning. Employees who feel empowered care about their work and believe that what they do is important.
· Competence. Empowered people are confident about their ability to perform the work well and have a capacity to grow with new challenges.
· Impact. Empowered employees view themselves as active participants in the organization; that is, their decisions and actions have an influence on the company’s success.
SELF-ASSESSMENT 6.2: Are you Empowered as a Student?
Empowerment is a psychological concept represented by feelings of self-determination, meaning, competence, and impact. The empowerment concept applies to people in a variety of situations, not just the workplace. This self-assessment specifically refers to your position as a student at your college or university. You can discover your level of empowerment as a student by locating this self-assessment in Connect if it is assigned by your instructor.
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global connections 6.3
Svenska Handelsbanken’s Branch-Level Empowerment
One of Europe’s most successful banks doesn’t believe in centralized financial targets, corporate incentives, or budgets. Instead, Stockholm-based Svenska Handelsbanken AB gives managers and staff at its 800 branches in 24 countries considerable autonomy to run the local branches as their own businesses. “We put customer satisfaction first, and believe local branches are best-placed to make all customer decisions,” says Dermot Jordan, manager of Handelsbanken’s branch in Chiswick, UK. “We are empowered to make these decisions in the branch, free from targets or bonus incentives.”
Handelsbanken’s branches decide on which customers to attract, how much to lend, what products to advertise, and how many staff to hire. This autonomy provides more personalized banking to clients and, by knowing them better, reduces the bank’s risk of loan defaults. Handelsbanken doesn’t even have centralized operations for customer calls. “There are no call centres, so customers deal direct with their account manager face-to-face, via direct line, e-mail, or mobile,” explains Sarah Smith, manager of Handelsbanken’s branch in Scunthorpe, UK.
Branch-level empowerment seems to work well. Handelsbanken is the fastest-growing bank in the UK, has the highest customer satisfaction ratings among banks in Sweden and the UK, has one of the highest credit ratings among banks worldwide, and was one of the few European banks to weather the great financial crisis unscathed. 77
© Audun Bakke Andersen/Getty Images
SUPPORTING EMPOWERMENT
You may have heard leaders say they are “empowering” the workforce. Yet empowerment is a state of mind, so what these executives really mean is that they are changing the work environment to support the feeling of empowerment. 78 Numerous individual, job design, and organizational or work-context factors support empowerment. 79 At the individual level, employees must possess the necessary competencies to be able to perform the work, as well as handle the additional decision-making requirements.
Job characteristics clearly influence the degree to which people feel empowered. 80 Employees are much more likely to experience self-determination when working in jobs with a high degree of autonomy and minimal bureaucratic control. They experience more meaningfulness when working in jobs with high levels of task identity and task significance. They experience more self-confidence when working in jobs that allow them to receive feedback about their performance and accomplishments.
Several organizational and work-context factors also influence empowerment. Employees experience more empowerment in organizations in which information and other resources are easily accessible. Empowerment is also higher in organizations that demonstrate a commitment to employee learning by providing formal training programs and nurturing a learning orientation culture (which encourages informal learning and discovery). Furthermore, empowerment requires corporate leaders to trust employees and be willing to take the risks that empowerment creates. 81
With the right individuals, job characteristics, and organizational environment, empowerment can substantially improve motivation and performance. For instance, two recent studies reported that restaurant servers with higher empowerment provide better customer service and engage in more organizational citizenship behaviors (specifically, helping other busy servers with their workload). 82 However, organizational and cultural conditions can limit the extent to which the conditions for empowerment produce feelings of empowerment. A few studies have observed, for example, that increased autonomy and discretionPage 172 does not result in higher feelings of empowerment in high power distance cultures because this self-determination conflicts with the norms of high power distance (deferring to the boss’s power). Trust in leadership is another important contingency regarding whether employees feel empowered when structural conditions for empowerment are present. 83
Self-Leadership Practices
6-6
What is the most important characteristic that companies look for in their employees? Leadership potential, ability to work in a team, and good communication skills are important, but they don’t top the list in a survey of 800 British employers. Instead, the most important employee characteristic is self-motivation. Frode Gronvold can identify with these survey results. The chair of Linstow Management Center, which develops and manages major shopping centers in Latvia and Estonia, seeks out people who demonstrate self-leadership. “I really appreciate when I have colleagues who take initiative,” says Gronvold. “I like people with a creative state of mind, who at the same time are autonomous, self-driven, self-motivated, with the ability to cooperate and get the best out of each other. These are the main skills that I am looking for in my employees.” 84
Frode Gronvold looks for people who engage in self-leadership . Self-leadership refers to specific cognitive and behavioral strategies to achieve personal goals and standards. These activities support the individual’s self-motivation and self-direction without direct assistance from managers or others. 85 Some self-leadership strategies are derived from social cognitive theory and goal setting (see Chapter 5). Other activities, such as constructive thought processes, have been extensively studied in sports psychology.
SELF-LEADERSHIP STRATEGIES
Self-leadership consists of several processes, and the five main activities are identified in Exhibit 6.4 . These elements generally follow each other in a sequence: personal goal setting, constructive thought strategies, designing natural rewards, self-monitoring, and self-reinforcement.
EXHIBIT 6.4 Elements of Self-Leadership
Personal Goal Setting Self-leadership refers to leading oneself toward objectives, so the process necessarily begins by setting goals. These goals are self-determined, rather than assigned by or jointly decided with a supervisor. Research suggests that employees are more motivated and perform better when they set their own goals, particularly in combination with other self-leadership practices. 86 Personal goal setting also requires a high degree of self-awareness, because people need to understand their current behavior and performance before establishing meaningful goals for personal development.
Constructive Thought Strategies Before beginning a task and while performing it, employees engage in two constructive (positive) thought strategies about that work and its accomplishment: positive self-talk and mental imagery. 87
Telecommuting is one of the fastest-growing workplace practices and is particularly popular among Millennial employees. Yet only some people have developed their self-leadership skills sufficiently to perform well outside the traditional workplace. “Remote workers need to be self-directed and self-motivated to be successful,” observes Anthony Curlo, the CEO of IT recruiting and staff augmentation firm DaVinciTek. “Employers expect the same productivity, if not more, when employees work remotely,” he adds. “While some employees are self-motivated to succeed, others need to be in a workplace environment to stay motivated.”88© Goodluz/iStock/Getty Images RF
Positive Self-Talk Do you ever talk to yourself? Most of us do, according to a major study of college students.89 Self-talk refers to any situation in which we talk to ourselves about our own thoughts or actions. The problem is that most self-talk is negative; we criticize much more than encourage or congratulate ourselves. Negative self-talk undermines our confidence and potential to perform a particular task. In contrast, positive self-talk creates a “can-do” belief and thereby increases motivation by raising our self-efficacy and reducing anxiety about challenging tasks.90 We often hear that professional athletes “psyche” themselves up before an important event. They tell themselves that they can achieve their goal and that they have practiced enough to reach that goal. They are motivating themselves through positive self-talk.
Mental Imagery You’ve probably heard the phrase “I’ll cross that bridge when I come to it!” Self-leadership takes the opposite view. It suggests that we need to mentally practice a task and imagine successfully performing it beforehand. This process, known as mental imagery, has two parts. One part involves mentally practicing the task, anticipating obstacles to goal accomplishment, and working out solutions to those obstacles before they occur. By mentally walking through the activities required to accomplish the task, we begin to see problems that may occur. We can then imagine what responses would be best for each contingency.91
While one part of mental imagery helps us anticipate things that could go wrong, the other part involves visualizing successful completion of the task. You might imagine the experience of completing the task and the positive results that follow, such as being promoted, receiving a prestigious award, or taking time off work. This visualization increases goal commitment and motivates people to complete the task effectively. This is the strategy that Tony Wang applies to motivate himself. “Since I am in sales, I think about the reward I get for closing new business—the commission check—and the things it will allow me to do that I really enjoy,” explains the sales employee in Washington, DC. “Or I think about the feeling I get when I am successful at something and how it makes me feel good, and use that to get me going.”92
Designing Natural Rewards Self-leadership recognizes that employees actively craft their jobs. To varying degrees, they can alter tasks and work relationships to make the work more motivating.93 One way to build natural rewards into the job is to alter the way a task is accomplished. People often have enough discretion in their jobs to make slight changes to suit their needs and preferences.
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Self-Monitoring Self-monitoring is the process of keeping track at regular intervals of one’s progress toward a goal by using naturally occurring feedback. Self-monitoring significantly improves employee performance.94 However, some self-monitoring arrangements may be better than others. Some people can receive feedback from the job itself, such as members of a lawn maintenance crew who can see how they are improving the appearance of their client’s property. But many of us are unable to observe our work output so quickly or easily. Instead, feedback mechanisms need to be designed. Salespeople might arrange to receive monthly reports on sales levels in their territory. Production staff might have gauges or computer feedback systems installed so they can see how many errors are made on the production line. Research suggests that people who have control over the timing of performance feedback perform their tasks better than do those with feedback assigned by others.95
Self-Reinforcement Self-leadership includes engaging in self-reinforcement, which is part of social cognitive theory described in Chapter 5. Self-reinforcement occurs whenever an employee has control over a reinforcer but doesn’t “take” the reinforcer until completing a self-set goal. A common example is taking a break after reaching a predetermined stage of your work. The work break is a self-induced form of positive reinforcement. Self-reinforcement also occurs when you decide to do a more enjoyable task after completing work that you dislike. For example, after slogging through a difficult report, you might decide to spend time doing a more pleasant task, such as catching up on industry news by scanning websites. One of the challenges with self-reinforcement is the temptation to take the reward before you should. Recent writing has explored situational and emotional strategies to manage these temptations so self-reinforcement remains true to one’s original intentions.96
SELF-ASSESSMENT 6.3: How Well Do You Practice Self-Leadership?
Self-leadership refers to specific cognitive and behavioral strategies that people apply to themselves to support the self-direction and self-motivation needed to perform a task. It recognizes that successful employees mostly regulate their own actions rather than rely on others to motivate them. You can discover how well you practice various self-leadership activities by locating this self-assessment in Connect if it is assigned by your instructor.
EFFECTIVENESS OF SELF-LEADERSHIP
A respectable body of research shows consistent support for most elements of self-leadership.97 Austrian army soldiers who completed a self-leadership training course performed better on physical tests (such as time completing an obstacle course) and educational tests on subjects they were studying at the time, compared to soldiers who didn’t take the course. Self-set goals and self-monitoring increased the frequency of wearing safety equipment among employees in a mining operation. Through mental imagery, supervisors and process engineers in a pulp-and-paper mill more effectively transferred what they learned in an interpersonal communication skills class back to the job. Studies also indicate that constructive thought processes improve individual performance in various sports activities. Indeed, studies show that almost all Olympic athletes rely on mental rehearsal and positive self-talk to achieve their performance goals.98 Studies have also found that self-leadership strategies are relevant across cultures.99
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PERSONAL AND SITUATIONAL PREDICTORS OF SELF-LEADERSHIP
Some research suggests that self-leadership behaviors are more frequently found in people with higher levels of conscientiousness and extroversion. People with a positive self-concept evaluation (i.e., self-esteem, self-efficacy, and internal locus of control) are also more likely to apply self-leadership strategies.100
The work environment influences the extent to which employees engage in self-leadership. Specifically, employees require some degree of autonomy to engage in most aspects of self-leadership. They also feel more confident with self-leadership when their boss is empowering rather than controlling and if there is a high degree of trust between them. Employees are also more likely to engage in self-monitoring in companies that emphasize continuous measurement of performance.101 Overall, self-leadership promises to be an important concept and practice for improving employee motivation and performance.
SELF-ASSESSMENT 6.4: Do You Have a Proactive Personality?
People differ in how much they try to influence the environments in which they live. Those with a proactive personality take action to change things while less proactive people adapt to the existing situation. Proactive personality is a stable personality characteristic, and is associated with self-leadership. You can discover the extent to which you have a proactive personality by locating this self-assessment in Connect if it is assigned by your instructor.
chapter summary
6-1 Discuss the meaning of money and identify several individual-, team-, and organizational-level performance-based rewards.
Money (and other financial rewards) is a fundamental part of the employment relationship, but it also relates to our needs, our emotions, and our self-concept. It is viewed as a symbol of status and prestige, as a source of security, as a source of evil, or as a source of anxiety or feelings of inadequacy.
Organizations reward employees for their membership and seniority, job status, competencies, and performance. Membership-based rewards may attract job applicants and seniority-based rewards reduce turnover, but these reward objectives tend to discourage turnover among those with the lowest performance. Rewards based on job status try to maintain internal equity and motivate employees to compete for promotions. However, they tend to encourage a bureaucratic hierarchy, support status differences, and motivate employees to compete and hoard resources. Competency-based rewards are becoming increasingly popular because they encourage skill development. However, they tend to be subjectively measured and can result in higher costs as employees spend more time learning new skills.
Awards and bonuses, commissions, and other individual performance-based rewards have existed for centuries and are widely used. Many companies are shifting to team-based rewards such as gainsharing plans and to organizational rewards such as employee stock ownership plans (ESOPs), stock options, and profit sharing. Although ESOPs and stock options create an ownership culture, employees often perceive a weak connection between individual performance and the organizational reward.
6-2 Describe five ways to improve reward effectiveness.
Financial rewards have a number of limitations, but reward effectiveness can be improved in several ways. Organizational leaders should ensure that rewards are linked to work performance, rewards are aligned with performance within the employee’s control, team rewards are used where jobs are interdependent, rewards are valued by employees, and rewards have no unintended consequences.
6-3 List the advantages and disadvantages of job specialization.
Job design is the process of assigning tasks to a job, including the interdependency of those tasks with other jobs. Job specialization subdivides work into separate jobs for different people. This increases work efficiency because employees master the tasks quickly, spend less time changing tasks, require less training, and can be matched more closely with the jobs best suited to their skills. However, job specialization may reduce work motivation, create mental health problems, lower product or service quality, and increase costs through discontentment, absenteeism, and turnover.
6-4 Diagram the job characteristics model and describe three ways to improve employee motivation through job design.
The job characteristics model is a template for job redesign that specifies core job dimensions, psychological states, and individual differences. The five core job dimensions are skill variety, task identity, task significance, autonomy, and job feedback. Jobs also vary in their required social interaction (task interdependence), predictability of work activities (task variability), and procedural clarity (task analyzability). Contemporary job design strategies try to motivate employees through job rotation, job enlargement, and job enrichment. Organizations introduce job rotation to reduce job boredom, develop a more flexible workforce, and reduce the incidence of repetitive strain injuries. Job enlargement involves increasing the number of tasks within the job. Two ways to enrich jobs are clustering tasks into natural groups and establishing client relationships.
6-5 Define empowerment and identify strategies that support empowerment.
Empowerment is a psychological concept represented by four dimensions: self-determination, meaning, competence, and impact, related to the individual’s role in the organization. Individual characteristics seem to have a minor influence on empowerment. Job design is a major influence, particularly autonomy, task identity, task significance, and job feedback. Empowerment is also supported at the organizational level through a learning orientation culture, sufficient information and resources, and corporate leaders who trust employees.
6-6 Describe the five elements of self-leadership and identify specific personal and work environment influences on self-leadership.
Self-leadership refers to specific cognitive and behavioral strategies to achieve personal goals and standards through self-direction and self-motivation. These strategies include personal goal setting, constructive thought patterns, designing natural rewards, self-monitoring, and self-reinforcement. Constructive thought patterns include self-talk and mental imagery. Self-talk occurs in any situation in which a person talks to himself or herself about his or her own thoughts or actions. Mental imagery involves mentally practicing a task and imagining successfully performing it beforehand. People with higher levels of conscientiousness, extroversion, and a positive self-concept engage in more self-leadership. Self-leadership also occurs more readily in workplaces that support empowerment and have high trust between employees and management.
key terms
employee stock ownership plans (ESOPs), p. 158
job characteristics model, p. 165
motivator-hygiene theory, p. 165
critical thinking questions
1. As a consultant, you have been asked to recommend either a gainsharing plan or a profit-sharing plan for employees who work in the four regional distribution and warehousing facilities of a large retail organization. Which reward system would you recommend? Explain your answer.
2. Which of the performance reward practices—individual, team, or organizational—would work better in improving organizational goals? Please comment with reference to an organization of your choice.
3. Waco Tire Corporation redesigned its production facilities around a team-based system. However, the company president believes that employees will not be motivated unless they receive incentives based on their individual performance. Give three reasons why Waco Tire should introduce team-based rather than individual rewards in this setting.
4. What can organizations do to increase the effectiveness of financial rewards?
5. Most of us have watched pizzas being made while waiting in a pizzeria. What level of job specialization do you usually notice in these operations? Why does this high or low level of specialization exist? If some pizzerias have different levels of specialization than others, identify the contingencies that might explain these differences.
6. Can a manager or supervisor “empower” an employee? Discuss fully.
7. Describe a time when you practiced self-leadership to perform a task successfully. With reference to each step in the self-leadership process, describe what you did to achieve this success.
8. Can self-leadership replace formal leadership in an organizational setting?
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CASE STUDY: YAKKATECH, INC.
By Steven L. McShane, Curtin University (Australia) and University of Victoria (Canada)
YakkaTech, Inc. is an information technology services firm employing 1,500 people throughout Washington and Oregon. YakkaTech has a consulting division, which mainly installs and upgrades enterprise software systems and related hardware on the client’s site. YakkaTech also has a customer service division that consists of four customer contact centers serving clients within each region.
Each customer service center consists of a half-dozen departments representing functional specializations (computer systems, intranet infrastructure, storage systems, enterprise software systems, customer billing, etc.). These centers typically have more than two dozen employees in each department. When a client submits a problem to the center using the online form, the message or call is directed to the department where the issue best applies. The query is given a “ticket” number and assigned to the next available employee in that department. Individual employees are solely responsible for the tickets assigned to them. The employee investigates and corrects the issue, and the ticket is “closed” when the client agrees that the problem has been resolved.
If the client experiences the same problem again, even a few days later, a new ticket is issued and sent to whichever employee is available to receive the ticket. A client’s problems are almost always handled by different employees each time, even when the issue is sent to the same department. Furthermore, when a customer center department is heavily backlogged, clients are redirected to the same department at another regional center, where the problem can be addressed more quickly.
At one time, YakkaTech operated more than a dozen small customer contact centers throughout the region, because client problems had to be diagnosed and resolved on-site. Today, employees can investigate most software and hardware system faults from the center through remote monitoring systems, rather than personally visit the client. Consequently, eight years ago, YakkaTech amalgamated its customer service operations into four large regional centers. Customer service staff work entirely within the center. When a client visit is required, the ticket is transferred to an individual or team in the consulting business, who then visits the client.
YakkaTech’s customer service business has nearly doubled over the past five years, but with this growth has come increasing customer complaints regarding poor quality service. Many say that employees seem indifferent to the client’s problems. Others have commented on the slow response to their problems where the issue requires the involvement of more than one department. Several clients have also complained that they are continually educating YakkaTech’s customer service employees about the details of their unique IT systems infrastructure.
Another concern is that about 18 months ago, YakkaTech’s voluntary employee quit rates in the contact centers had risen above the industry average. This shift increased labor costs due to the cost of recruiting new technical staff and the lower productivity of new employees. According to results of an employee survey two years ago (as well as informal comments since then), many employees felt that their work is monotonous. Some also said that they felt disconnected from the consequences of their work. A few also complained about ongoing conflicts with people in other departments and the stress of serving dissatisfied clients.
In response, YakkaTech’s executive team decided to raise pay rates for its customer service staff to become among the highest in the industry around the Pacific Northwest. The assumption was that the high pay rates would improve morale and reduce turnover, thereby reducing hiring costs and improving productivity. In addition, YakkaTech introduced a vested profit-sharing plan, in which employees received the profit-sharing bonus only if they remained with the company for two years after the bonus was awarded. Employees who quit or were fired for just cause before the vesting period forfeited the bonus.
Employee turnover rates dropped dramatically, leading the executive team to conclude that customer service quality and productivity would improve. Instead, customer complaints and productivity remain below expectations and, in some cases, have worsened. Experienced employees continue to complain about the work. There have been a few disturbing incidents in which employees have been careless in solving client problems or did not bother to forward tickets that should have been assigned to another department. Employee referrals (where staff recommend friends to join the company) have become rare events, whereas at one time they represented a significant source of qualified job applicants. Furthermore, a few executives have recently overheard employees say that they would like to work elsewhere but can’t afford to leave YakkaTech.
Discussion Questions
1. What symptom(s) in this case suggest(s) that something has gone wrong?
2. What are the main causes of the symptom(s)?
3. What actions should YakkaTech executives take to correct the problem(s)?
© 2009 Steven L. McShanePage 178
TEAM EXERCISE: IS STUDENT WORK ENRICHED?
Purpose This exercise is designed to help you learn how to measure the motivational potential of jobs and evaluate the extent that jobs should be further enriched.
INSTRUCTIONS (SMALL CLASS) Being a student is like a job in several ways. You have tasks to perform, and someone (such as your instructor) oversees your work. Although few people want to be students most of their lives (the pay rate is too low!), it may be interesting to determine how enriched your job is as a student.
1. Students are placed into teams (preferably four or five people).
2. Working alone, each student completes both sets of measures in this exercise. Then, using the following guidelines, they individually calculate the score for the five core job characteristics as well as the overall motivating-potential score for the job.
3. Members of each team compare their individual results. The group should identify differences of opinion for each core job characteristic. They should also note which core job characteristics have the lowest scores and recommend how these scores could be increased.
4. The entire class will then meet to discuss the results of the exercise. The instructor may ask some teams to present their comparisons and recommendations for a particular core job characteristic.
INSTRUCTIONS (LARGE CLASS)
1. Working alone, each student completes both sets of measures in this exercise. Then, using the guidelines below, each student individually calculates the score for the five core job characteristics, as well as the overall motivating-potential score for the job.
2. Using a show of hands or classroom technology, students indicate their results for each core job characteristic. For example, the instructor will ask those whose result is within a range of scores, so several students raise their hands within each band of scores. Alternatively, students can complete this activity prior to class and submit their results through online classroom technology. Later, the instructor will provide feedback to the class showing the collective results (i.e., distribution of results across the range of scores).
3. Where possible, the instructor might ask students with very high or very low results to discuss their views with the class.
4. Job Diagnostic Survey
5. Source: Adapted from the Job Diagnostic Survey, developed by J.R. Hackman and G.R. Oldham. The authors have released any copyright ownership of this scale [see J.R. Hackman and G. Oldham, Work Redesign (Reading, MA: Addison-Wesley, 1980), p. 275].
6. Calculating the Motivating-Potential Score
7. Scoring Core Job Characteristics: Use the following set of calculations to estimate the motivating-potential score for the job of being a student. Use your answers from the Job Diagnostic Survey that you completed earlier.
8.
9. Calculating Motivating-Potential Score (MPS): Use the following formula and the earlier results to calculate the motivating-potential score. Notice that skill variety, task identity, and task significance are averaged before being multiplied by the score for autonomy and job feedback.
10.