Study Guide Week 10

MODULE VII: MOTIVATION

I. INTRODUCTION

Motivation is an integral part of employment relationship. From the employees’

point of view, policies having to do with wages, salaries and other earnings have a
major impact on their overall income and thus their standard of living. Both the level
of pay and its seeming fairness compared with others’ pay is important. Pay is also
often considered a sign of status and success. Employees attach great importance
to pay decisions when they evaluate their relationship with the organization.
Therefore, pay decisions must be carefully managed and communicated.

From the employer’s point of view, pay is a powerful tool for furthering the
organization’s strategic goals. It has a major impact on employee attitudes and
behaviours. It influences the kind of employees who are attracted to (and remain
with) the organization and it can be a powerful tool for aligning current employees’
interests with those of the broader organization.

(Noe et al 1996)

II. LEARNING OUTCOMES

At the end of this module, the student will be able to:

 acquire knowledge on how to motivate employees and enhance their

performance and development

III. NUMBER OF MEETINGS

1 week

IV. KEY OUTPUT OF STUDENTS

1 Quiz or a Case Analysis

V. MODULE OUTLINE

a. Motivation
b. Defining the Reward System
c. Selection of Rewards
d. Relating Rewards to Performance
e. Job Satisfaction and Rewards
f. Employee Compensation
g. Role of the Human Resource Manager in the Reward System
 VI. DISCUSSION

a. Motivation (Review the concept of motivation and its theories)

Please read again the lessons on motivation in Mgt 101 (Introduction to
Management) and Mgt 104 (Organizational Behaviour)

b. Defining the Reward System

The organizational reward system consists of the types of rewards to be offered
and their distribution. Organizational rewards include all types of rewards, both intrinsic
and extrinsic that are received as a result of employment by the organization.
Intrinsic rewards are internal to the individual and are normally derived from
involvement in certain activities or tasks. Job satisfaction and feelings of
accomplishment are examples of intrinsic rewards.

Most extrinsic rewards are directly controlled and distributed by the

organization and are more tangible than intrinsic rewards. Pay and hospitalization
benefits are examples of extrinsic rewards.
Though intrinsic and extrinsic rewards differ, they are closely related. An
employee who receives an extrinsic reward in the form of a pay raise may also
experience feelings of accomplishment (an intrinsic reward) by interpreting the pay raise
as a sign of a job well done.

c. Selection of Rewards
Selection of the rewards to be offered is critical if the reward system is to function
effectively. As a first step, management must recognize what employees perceive as
meaningful rewards. Pay is usually the reward most people think about. However,
rewards should be viewed in the larger perspective as anything valued by employees
and may include things such as office location, the allocation of certain pieces of
equipment, the assignment of perceived work tasks and informal recognition.

d. Relating Rewards to Performance

The free enterprise system is based on the premise that rewards should
depend on performance. This performance-reward relationship is
desirable not only at the organizational or corporate level but also at the individual
level. The underlying theory is that employees will be motivated when
they believe such motivation will lead to desired rewards. Unfortunately, many
formal rewards provided by organizations cannot be connected to performance.
Rewards in this category, including paid vacations, insurance plans and
paid holidays are almost always determined by organizational membership
and seniority rather than by performance.

Other rewards, such as promotion can and should be related to performance.

However, opportunities for promotion may occur only rarely. When available, the
higher positions may also be filled on the basis of seniority or by someone
outside the organization.
 e. Job Satisfaction and Rewards
Job satisfaction is an employee’s general attitude towards the job. The
organizational reward system often has a significant impact on the
level of employee job satisfaction. If everyone receives an across-the
board pay increase of 5 percent, it is hard to derive any feeling of
accomplishment from the reward. However, if pay raises are related directly to
performance, an employee who receives a healthy pay increase will more than
likely also experience feelings of accomplishment and satisfaction.

Determinants of Employee Satisfaction and Dissatisfaction

Style and quality of

management
Job design (scope, Commitment to the
depth, interest,  organization
Job satisfaction
perceived value)
Compensation or
(external and 
internal
consistency) Job Turnover,
dissatisfaction  absenteeism,
Social
relationships tardiness, accidents,
Working strikes, grievances,
conditions sabotage
Perceived long-
ranged
opportunities
Perceived
opportunities
elsewhere

(Bryars et al 1997)

Job satisfaction and motivation are not synonymous. Motivation is a drive to

perform, whereas job satisfaction reflects the employee’s attitude toward or happiness
with the job situation.

f. Employee Compensation
Compensation and pay are not synonymous terms. Compensation
refers to all the extrinsic rewards employees receive in exchange for their work. Pay
refers only to the actual amount employees receive in exchange for their work. Usually,
compensation is composed of the base wage or salary, any incentives or bonuses and any
benefits. The base wage or salary is the hourly, weekly or monthly pay employees
receive for their work. Incentives are rewards offered in addition to the base wage or salary
and are usually directly related to performance. Benefits are rewards employees receive
as a result of their employment and position with the organization. Paid vacations, health
insurance and retirement plans are examples of benefits.

g. The Role of the Human Resource Manager in the Reward System

The role of the human resource manager in the overall organizational
reward system is to assist in its design and administer the system. Administering
the system inherently carries the responsibility of ensuring that the system is fair
to all employees. This places the burden of minimizing reward inequities and
employees’ perceptions of reward inequities squarely on the human
resource manager. Many tools and techniques are available to assist human
resource managers in this endeavour.

(Bryars et al 1997)