Managing People and Performance

BM036-3-3

Motivation and Reward

 LEARNING OUTCOME

• To describe motivation and the correlation

with reward strategies.

• To explain the concept of rewards

management and the need to reward
employees.

• To describe psychological contract

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 1.0 IMPORTANCE OF
MOTIVATION
• The Importance of Motivation in the
Workplace:
– Determinants of individual performance
• Motivation—the desire to do the job.
• Ability—the capability to do the job.
• Work environment —the resources
needed to do the job.

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 Posters Work

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 2.0 Motivation
The force within us that activates our behavior.
It is a function of three distinct components,
Intensity, Direction, and Persistence.

Motivation

Intensity Direction Persistence

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 2.1 Motivation - Intensity

Intensity refers to the amount of mental and

physical effort put forth by an employee,
example: a salesperson.

Motivation

Intensity Direction Persistence

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 2.2 Motivation - Direction

The extent to which an individual determines and

chooses efforts focused on a particular goal.

Motivation

Intensity Direction Persistence

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 2.3 Motivation - Persistence

The extent to which the goal-directed effort is

put forth over time (continuously).

Motivation

Intensity Direction Persistence

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 3.0 MOTIVATION AND
REWARD
• Motivation theory is concerned with what
– influences people to behave
– their effort
– commitment
– contribution
– voluntary behavior

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 3.0 MOTIVATION AND
REWARD
• It is necessary to understand factors that motivate
people and how reward processes and practices
can develop in light of these factors (influences
people to behave, their effort, commitment,
contribution and voluntary behavior).

• Motivation theories provide

essential guidance on practical
steps required to develop effective
reward systems

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 3.1 POPULAR THEORIES OF
MOTIVATION
• Content Perspectives of Motivation
– Maslow’s Hierarchy of Needs
– Herzberg’s Two-Factor Theory
– McClelland’s Achievement, Power and
Affiliation Needs
• Process Perspectives on Motivation
– Expectancy Theory
– Equity Theory
– Goal-Setting Theory
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 3.2 WHAT THE THEORIES
HAVE TAUGHT US
• A lesson of individual differences.
– Reward system must recognise different needs
– One size do not fit all!
• A lesson of striking a balance.
– A combination of financial and non-financial.
• A lesson of creating connection
– A clear link between performance and reward and what needs to be
done to achieve it.
– Employees will be highly motivated if they can control the means of
attaining their goals.
• A lesson of equity.
– Distribution of rewards must be perceived to be equitable.
– Rewards should compare favorably with other organisations.

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 4.0 REWARD MANAGEMENT

• Reward management deals with

strategies, policies and processes required
to ensure that the contribution of people
with the organisation is recognized by both
financial and non financial means.

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 4.1 INTRINSIC REWARDS

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 4.2 EXTRINSIC REWARDS

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 4.3 THE AIMS OF REWARD
MANAGEMENT
• Reward people according to the value they create

• Align reward practices with business goals and with employee

values and needs

• Reward the right things to convey the right message about what
is important in terms of behaviours and outcomes

• Help the organisation to attract and retain the high-quality people

• Motivate people and obtain their engagement and commitment

• Develop a high-performance culture

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 • Imagine that you are now
working. In your company
everyone receives the same
level of rewards, regardless of
their performances.
How will this affect your level
of motivation?

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 4.4 THE ABSENCE OF GOOD REWARD
MANAGEMENT AFFECTS

• The employee (motivation)

• The employer (performance standards not

met)

• The organisation as a whole

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 5.0 Definition of Psychological
Contract
“The perceptions of both parties to the employment
relationship, organisation and individual, of the
reciprocal promises and obligations implied in that
relationship”

•The state of the psychological contract is

concerned with whether the promises and
obligations have been met, whether they are fair
and their implications for trust.
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 5.0 THE PSYCHOLOGICAL
CONTRACT
• Generally accepted as an individual’s subjective beliefs,
shaped by the organisation, regarding the terms of an
exchange relationship between the individual employee
and the organisation (Rousseau,1995).

• The set of reciprocal expectations between an individual

employee and organisation (Stiles, Graton & Truss,
1997).

• Contains a combination of beliefs held by individuals and

their employers about what they expect of one another.
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 5.1 Concept explained

• It is concerned with assumptions, expectations,

promises and mutual obligation
• It is implicit
• It develops over time as experience
accumulates, employment conditions change
and employees re-evaluate their expectations.

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 5.1 What is the psychological
contract?

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 EXAMPLE OF
PSYCHOLOGICAL CONTRACT
• For the past five years, employees of
Design Fabrications have been allowed to
leave work early every Wednesday
afternoon, either to attend the local football
match or to avoid the ensuing traffic jams.
This arrangement has always been
‘understood’ and never written down, so
that it’s become an unwritten custom.

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 5.2 THE BENEFITS OF A POSITIVE
PSYCHOLOGICAL CONTRACT
• Strongly linked to higher commitment to
the organisation
• Higher employee satisfaction
• Better employment relations
• Good HRM practices
• Produces a high-
involvement climate

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 5.3 The Psychological Contract
Framework

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 5.4 The Deal

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 5.5 IMPACT OF
PSYCHOLOGICAL CONTRACT
• Can cause mutual misunderstanding and lead to
reduced motivation or poor performance when
expectations are not met by either party.

• These disappointments can, however be

alleviated if management
– play a role of managing expectations, which means
clarifying what employees should achieve,
– the competencies they should possess and
– the values they should uphold.
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 5.6 Framework for applying psychological
contract to the employment relationship

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 5.7 The State of the Psychological
Contract
Overall, to what extent has the organisation kept its promises
and commitment to you?
%
fully 45
partly 49
not at all 6

Do you feel fairly paid for the work you do?

%
Yes, definitely 30
Yes, probably 30
No, probably not 19
No, definitely not 21

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 5.7 The State of the Psychological
Contract

To what extent do you trust your senior

management to look after your best interests?
%
A lot 25
Somewhat 34
Only a little 23
Not at all 18

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 5.8 Exploring the Links

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 5.8 Exploring the Links (cont’d)

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 5.9 THE ROLE OF REWARDS MANAGEMENT IN
DEVELOPING A POSITIVE PSYCHOLOGICAL
CONTRACT

• Provides a basis for joint agreement and definition

of roles

• Communicating expectations in the form of targets

and standards of performance

• Obtaining a consensus on the contribution both

parties have to make to obtain the expected
results

• Defines the level of support by managers

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5.9 THE ROLE OF REWARDS MANAGEMENT IN
DEVELOPING A POSITIVE PSYCHOLOGICAL
CONTRACT

• Provides financial rewards through schemes that

indicates what the organisation believes to be
important

• Provides non financial rewards that reinforces

expectations

• Giving employees opportunities at performance

reviews discussion to clarify and discuss

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 Discussion

1. Discuss the impacts of positive psychological

contract to an organisation

2. Understanding motivation theories able to

build a competitive reward and performance
management system. Justify your answer with
the relevant examples.

3. Discuss the role of rewards management in

developing a Positive Psychological Contract.

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