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Organizational Behaviour: Concepts, Controversies, Applications

Eighth Canadian Edition

Chapter 5

Motivation in Action

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Chapter Outline (1 of 3)

From Theory to Practice: The Role of Money

Creating Effective Reward Systems

What to Pay: Establishing a Pay Structure

How to Pay: Rewarding Individuals through Variable-Pay Programs

Flexible Benefits: Developing a Benefits Package

Intrinsic Rewards: Employee Recognition Programs

Beware the Signals That Are Sent by Rewards

Can We Eliminate Rewards?

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Material pertinent to this discussion is found under “SnapShot Summary” at the end of the chapter.

Chapter Outline (2 of 3)

Motivating by Job Redesign

The Job Characteristics Model

Job Redesign in the Canadian Context: The Role of Unions

How Can Jobs Be Redesigned?

Relational Job Design

Alternative Work Arrangements

Flextime

The Social and Physical Context of Work

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Material pertinent to this discussion is found under “SnapShot Summary” at the end of the chapter.

Chapter Outline (3 of 3)

Employee Involvement

Examples of Employee Involvement Programs

Linking Employee Involvement Programs and Motivation Theories

Motivation: Putting It All Together

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Material pertinent to this discussion is found under “SnapShot Summary” at the end of the chapter.

Learning Outcomes (1 of 2)

Demonstrate how the different types of variable-pay programs can increase employee motivation.

Show how flexible benefits can be used to motivate.

Identify the motivational benefits of intrinsic rewards.

Describe the job characteristics model and why it motivates.

Compare the main ways jobs can be redesigned.

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Material pertinent to this discussion is found at the beginning of the chapter.

Learning Outcomes (2 of 2)

Explain how specific alternative work arrangements can motivate employees.

Describe how employee involvement programs can motivate employees.

Describe how knowledge of what motivates people can be used to make organizations more motivating.

5 - ‹#›

Material pertinent to this discussion is found at the beginning of the chapter.

From Theory to Practice: The Role of Money

Money is the most commonly used reward in organizations.

Money certainly helps needs get met.

A 2010 survey of Canadian employees found that 46% believed they were underpaid.

But, money is not the top priority for many employees.

Many emphasize relationships in the workplace.

Developing rewards programs is a complex process.

Consider the value individuals place on specific rewards.

5 - ‹#›

LO1; Material pertinent to this discussion is found under “From Theory to Practice: The Role of Money.”

Creating Effective Reward Systems

Although pay is not the primary factor driving job satisfaction, it does motivate people

As pay is important, organizations must consider:

Whether they will lead, match, or lag the market

How individual contributions will be recognized

5 - ‹#›

LO1; Material pertinent to this discussion is found under “Creating Effective Reward Systems.”

What to Pay: Establishing a Pay Structure

Setting pay levels requires a balance between external and internal equity

Internal equity – the worth of the job to the organization (job evaluation)

External equity – the competitiveness of an organization’s pay relative to industry standards

Setting pay levels (above, at, or below market rates) is a key strategic decision with important trade-offs

5 - ‹#›

LO1; Material pertinent to this discussion is found under “Creating Effective Reward Systems.”

How to Pay: Rewarding Individuals Through Variable-Pay Programs

Many firms are moving towards variable-pay programs

A portion of an employee’s pay is based on some individual and/or organizational measure of performance.

Individual-based

Piece-rate wages

Merit-based pay

Bonuses

Skill-based pay

Group-based

Gainsharing

Organizational-based

Profit sharing

Employee stock ownership plans (ESOPs) and stock options

5 - ‹#›

LO1; Material pertinent to this discussion is found under “Creating Effective Reward Systems.”

Note: This is the introductory slide to further details in future slides on these concepts.

Variable-Pay Programs

Individual-Based Incentives

Piece-rate pay plans

Pay a fixed sum for each unit of production completed.

Merit-based

Pay is based on performance appraisal ratings

Bonuses

One-time rewards for defined work rather than ongoing entitlements

Skill-based pay

Pay based on how many skills employees have or how many jobs they can do (see next slide)

Group-Based Incentives

Gainsharing

Focus on productivity gains

Improvements in group productivity determine the rewards to be shared.

5 - ‹#›

LO1; Material pertinent to this discussion is found under “Creating Effective Reward Systems.”

Skill-Based Pay: An Alternative to Job-Based Pay

Pay levels are set based on how many skills employees have or how many jobs they can do

Also known as competency-based or knowledge-based pay

Skill-based pay helps to increase workforce flexibility

Filling staffing needs is easier when employee skills are interchangeable

Communication can also be improved

On the other hand, skill-based pay can lead to problems

Does not address the level of performance

Employees may acquire skills for which there is no immediate need

5 - ‹#›

LO1; Material pertinent to this discussion is found under “Creating Effective Reward Systems.”

Variable Pay Programs: Organizational-Based Incentives

Profit-Sharing Plans

Organization-wide programs that distribute compensation based on some established formula designed around a company’s profitability

Employee Stock Ownership Plans (ESOPs) and Stock Options

Company-established benefit plans in which employees acquire stock as part of their benefits

Stock options give employees the right to buy stocks in the company at a later date for a guaranteed price

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LO1; Material pertinent to this discussion is found under “Creating Effective Reward Systems.”

Flexible Benefits: Developing a Benefits Package

A Flexible Benefits plan permits each employee to create a compensation package to suit their individual needs

Replaces the “one-benefit-plan-fits-all” approach

Selections based on marital status, age, spouses’ benefits status, number of dependents, etc.

Three most popular benefit plans:

Modular plans

Core-plus plans

Flexible spending accounts

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LO2; Material pertinent to this discussion is found under “Creating Effective Reward Systems.”

Intrinsic Rewards: Employee Recognition Programs

Employee recognition programs

from private “thank you” to high profile recognition

According to expectancy theory, the key component of motivation is the link between performance and reward

Using reinforcement theory, providing recognition immediately following positive behaviour leads to repetition.

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LO3; Material pertinent to this discussion is found under “Creating Effective Reward Systems.”

Beware the Signals That Are Sent by Rewards

Reward systems often do not reflect organizational goals:

Individuals are unable to break out of old ways of thinking about rewards and recognition practices

Stick to rewarding things that can be easily measured.

Organizations don’t look at the big picture of their performance system

Subunits compete with each other.

Management and shareholders focus on short-term results.

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LO3; Material pertinent to this discussion is found under “Creating Effective Reward Systems.”

Management Reward Follies

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LO3; Material pertinent to this discussion is found under “Creating Effective Reward Systems.”

Perhaps more often than we would like, organizations engage in what has been called “the folly of rewarding A, while hoping for B.”

A recent survey suggests that three themes seem to account for some of the biggest obstacles in dealing with the folly. First, individuals are unable to break out of old ways of thinking about reward and recognition practices. This is demonstrated in such things as an emphasis on quantifiable behaviours, to the exclusion of non-quantifiable behaviours; employees having an entitlement mentality (i.e., they don’t support changing the reward system because they are comfortable with the current behaviours that are rewarded), and management being reluctant to change the existing performance system. A second factor is that organizations often don’t look at the big picture of their performance system. Consequently, rewards are allocated at subunit levels, with the result that units often compete against each other. Finally, both management and shareholders often focus on short-term results, rather than rewarding employees for planning for longer ranges.

Can We Eliminate Rewards?

Alfie Kohn suggests that organizations should focus less on rewards, more on creating motivating environments:

Abolish incentive pay

Re-evaluate evaluation

Create conditions for authentic motivation

Encourage collaboration

Enhance content

Provide choice

5 - ‹#›

LO3; Material pertinent to this discussion is found under “Creating Effective Reward Systems.”

Abolish incentives: Pay people generously and fairly, make sure people don’t feel exploited, and then make sure that pay is not on their minds.

Re-evaluate evaluation: Rather than making performance appraisals look and feel like a punitive effort—who gets raises, who gets promoted, who is told they’re performing poorly—the performance evaluation system might be structured more like a two-way conversation to trade ideas and questions, done continuously, not as a competition.

Create the conditions for authentic motivation: A noted economist recently summarized the evidence about pay for productivity as follows: “Changing the way workers are treated may boost productivity more than changing the way they are paid.”

Collaboration: People are more likely to perform better in well-functioning groups where they can get feedback and learn from each other.

Content: People are generally the most motivated when their jobs give them an opportunity to learn new skills, provide variety in the tasks that are performed, and enable them to demonstrate competence.

Choice: “We are most likely to become enthusiastic about what we are doing—and all else being equal, to do it well—when we are free to make decisions about the way we carry out a task.”

Motivating by Job Redesign

Job Design

The way the elements in a job are organized can act to increase or decrease effort

Also suggests what those elements in the job are

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LO4; Material pertinent to this discussion is found under “Motivating by Job Redesign.”

Managers have several options at their disposal if they want to redesign or change the makeup of employee jobs.

The Job Characteristic Model

The Job Characteristic Model (JCM) can describe any job in terms of five core job dimensions

Skill variety

Task identity

Task significance

Autonomy

Feedback

5 - ‹#›

LO4; Material pertinent to this discussion is found under “Motivating by Job Redesign.”

Examples of High and Low Job Characteristics

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LO4; Material pertinent to this discussion is found under “Motivating by Job Redesign.”

The Job Characteristics Model

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LO4; Material pertinent to this discussion is found under “Motivating by Job Redesign.”

Motivating Potential Score

Can combine the core dimensions into a single predictive index, called the motivating potential score (MPS), which is calculated as follows:

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LO4; Material pertinent to this discussion is found under “Motivating by Job Redesign.”

How Can Jobs Be Redesigned?

Job Rotation

Periodic shifting of workers from one task to another with similar skill requirements at the same organizational level

Reduces boredom, increases motivation, and helps employees understand how their work contributes to the organization

Job Enrichment

The vertical expansion of jobs

Employee does a complete activity

Expands the employee’s freedom and independence

Increases responsibility, and provides feedback so individuals can assess and correct their own performance

5 - ‹#›

LO5; Material pertinent to this discussion is found under “Motivating by Job Redesign.”

Relational Job Design

How to make jobs more pro-socially motivating

How can managers design work so employees are motivated to promote the well-being of the organization’s beneficiaries?

Beneficiaries include customers, clients, patients

View of job design shifts focus from employee to those whose lives are affected by the job

How can this be done?

Better connect employees with the beneficiaries of their work

5 - ‹#›

LO5; Material pertinent to this discussion is found under “Motivating by Job Redesign.”

Alternative Work Arrangements

Flextime

Employees work a set amount of hours but have some flexibility

Core period for all + flexible set of hours determined by workers

Job Sharing

Two or more people splitting a 40-hours-a-week job

Telecommuting

Employees work from home at least two days a week

Employees have access to smartphones, tablets, and other mobile computing devices.

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LO6; Material pertinent to this discussion is found under “Motivating by Job Redesign.”

Examples of Flextime Schedules

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LO6; Material pertinent to this discussion is found under “Motivating by Job Redesign.”

The Social and Physical Context of Work

Policies such as job rotation, employee empowerment, and employee participation have positive effects on productivity, at least partially because they encourage more communication and a positive social environment.

Social characteristics include interdependence, social support, and interactions with other people

5 - ‹#›

LO6; Material pertinent to this discussion is found under “Motivating by Job Redesign.”

Employee Involvement

Participative process that uses employees’ input to increase their commitment to the organization’s success

Examples of employee involvement programs

Participative management

Representative participation

5 - ‹#›

LO6; Material pertinent to this discussion is found under “Employee Involvement.”

Motivation: Putting It All Together

What motivates people?

How can we use this information to make sure that organizational processes motivate our employees?

Four basic emotional drives (needs) guide people:

Drive to Acquire

Met through organizational rewards

Drive to Bond

Promoted through commitment to teamwork, friendship & openness

Drive to Comprehend

Based on effective job design

Drive to Defend

Based on performance management & resource allocation process

5 - ‹#›

LO8; Material pertinent to this discussion is found under “Motivation: Putting It All Together.”

How To Fulfill the Drives That Motivate Employees

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LO8; Material pertinent to this discussion is found under “Motivation: Putting It All Together.”

Summary

Money is not a motivator for all individuals.

Effective reward systems link pay to performance.

Jobs characterized by variety, autonomy, and feedback are more motivating.

5 - ‹#›

Material pertinent to this discussion is found at the end of the chapter.

OB at Work: For Review (1 of 2)

What is variable pay? What variable-pay programs are used to motivate employees? What are their advantages and disadvantages?

How can flexible benefits motivate employees?

What are the motivational benefits of intrinsic rewards?

What is the job characteristics model? How does it motivate employees?

5 - ‹#›

Material pertinent to this discussion is found at the end of the chapter.

OB at Work: For Review (2 of 2)

What are the main ways that jobs can be redesigned? In your view, in what situations would one of the methods be favoured over the others?

What are the three alternative work arrangements of flextime, job sharing, and telecommuting? What are the advantages and disadvantages of each?

What are employee involvement programs? How might they increase employee motivation?

How can motivation theories be used to create more motivating work environments?

5 - ‹#›

Material pertinent to this discussion is found at the end of the chapter.

OB at Work: For Managers (1 of 2)

Recognize individual differences: Spend the time necessary to understand what is important to each employee. Design jobs to align with individual needs and maximize their motivation potential.

Give employees firm, specific goals, and provide them with feedback on how well they are doing in pursuit of those goals.

Allow employees to participate in decisions that affect them. Employees can contribute to setting work goals, choosing their own benefits packages, and solving productivity and quality problems.

5 - ‹#›

Material pertinent to this discussion is found at the end of the chapter.

OB at Work: For Managers (2 of 2)

Link rewards to performance and ensure that employees perceive the link between the two.

Check the system for equity. Employees should perceive that experience, skills, abilities, effort, and other obvious inputs explain differences in performance and hence in pay, job assignments, and other obvious rewards.

5 - ‹#›

Material pertinent to this discussion is found at the end of the chapter.

Breakout Group Exercises

Form small groups to discuss the following:

How might the job of student be redesigned to make it more motivating?

What is your ideal job? To what extent does it match up with the elements of the job characteristics model (JCM)?

Would you prefer working from home or working at the office? Why?

5 - ‹#›

Material pertinent to this discussion is found at the end of the chapter.

From Concepts to Skills: Designing Enriched Jobs

Combine tasks

Increases skill variety and task identity

Create natural work units

Increases employee “ownership” of the work and improves the likelihood that employees will view their work as meaningful and important

Establish client relationships

Increases skill variety, autonomy, and feedback for the employee

Expand jobs vertically

Seeks to partially close the gap between the “doing” and the “controlling” aspects of the job

Open feedback channels

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Material pertinent to this discussion is found at the end of the chapter.

This slide can be used to debrief the exercise, showing what can be done to enrich the job.

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Skill varietyTask identityTask significa

nce

AutonomyFeedback

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MotivatingPotentialScoreMPS