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Managing People

The effective management of people in an organization requires an understanding of motivation, job design, reward systems, and group influence.

Behavior Modification

Operant conditioning is the learning that takes place when the learner recognizes theconnection between a behavior and its consequences.

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Positive reinforcement vs. punishment: rewarding desired behavior vs. punishingundesired behavior.

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Negative reinforcement: removing negative consequences from workers whoperform the desired behavior.

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Extinction: removing whatever is currently reinforcing the undesirable behavior.

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Reinforcement schedules: variable, erratic reinforcement schemes are moreeffective than steady reinforcement schedules.

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Classical conditioning: if one gets sick after eating tacos, from that point forwardone may get sick from the smell of tacos. People are genetically hard-wired tomake certain associations. For example, sickness is associated with food.

Expectancy Theory

Theexpectancy theoryof motivation models motivational force as the product of threefactors perceived by the individual. There is research evidence to support the theory,and it has become relatively widely accepted.

Principal-Agent Problem

In a company, stockholders are principals and managers are agents. The goal of acompensation system is to align principals' and agents' interests.Executives who are compensated based on financial performance may favor diversifying the company since it evens out their incomes. But shareholders candiversify their portfolios on their own if they want.

Promotion Tournaments

The purpose of high executive salaries is to motivate those at lower levels by givingthem a goal or prize for which to strive. If eight people are competing for a position, onlyone of them has to be paid the big prize, but they all are motivated.

Job Design

Scientific management took all authority away from the workers – no thinking wasneeded. Skill variety, task identity, task significance, autonomy, and feedback all weremissing.Giving people choices provides more job satisfaction. One way of doing this is topropose an alternative or two that is inferior, and ask for the employee's opinion. Anexaggerated example that illustrates this point: in selecting the foundation of a building,the manager, knowing concrete is better, can propose wood. The employee proposesconcrete and gains satisfaction from "convincing" the manager of the right decision.

Equity Theory

People care about fairness and are willing to give up money to avoid unfair treatment.An example of this idea is a game in which one person is handed 100 dollars, and thisperson must propose to give part of the money to a second person. The first personmust propose the amount that he or she will give to the second person, and the secondperson can accept or reject the offer. If the second person accepts the offer, then itstands as proposed. If the second person rejects the offer, neither of the two people getto keep any of the money. Assuming that the two people never will deal with each other again, the rational decision of the second person is to accept any amount that the firstperson offers. However, if the first person offers only one dollar, the second person mayrefuse this low offer simply to punish the first person who is not offering a "fair" split.

Reward Systems

Employees like performance rating distributions in which almost everyone is at the top,but in which a few really get punished. Employees hate systems in which only a few gettop ratings.

When people are given higher rewards than what they deserve, at first their performance improves, but then they start reasoning that they really are worthy andbegin to slack off.

Efficiency Wages

For lower-level workers, performance increases with increased wages. Efficiency wagesare wages set at a higher-than-market clearing wage, set by employers to:

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discourage shirking by raising the cost of being fired

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encourage worker loyalty

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raise group output norms

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improve the applicant pool

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raise morale

Rationalizing Behavior

Cognitive dissonance is the state of conflict that one faces when one's attitudes arecontradicted by the situation that one is experiencing. In this situation, people oftenrationalize anything that is inconsistent in their minds. For example, one may come tolove the things for which he or she is poorly compensated in order to resolve theinconsistency of doing something that one does not want to do for below average pay.

Characteristics of Jobs and Work that Substitute for Formal Leadership

In flat organizations, there are fewer opportunities to formally manage the work of others. In this situation, people may become de-motivated because they feel that theyare not advancing. However, some environments have characteristics that cansubstitute for more formal leadership opportunities. These characteristics are:

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Professional orientation

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Performance feedback provided by work itself

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Cohesive, interdependent work groups and advisory panel

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Written goals and rigid procedures

Groupthink

Concurrence-seeking may become so dominant in a group that it overrides objectiveappraisal. In a cohesive group, individuals truly may believe that a bad proposal is agood one without scrutinizing it.

Managing Individual and Group Performance