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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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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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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Learning Outcomes (1 of 2)
1. Demonstrate how the different types of variable-pay
programs can increase employee motivation.
2. Show how flexible benefits can be used to motivate.
3. Identify the motivational benefits of intrinsic rewards.
4. Describe the job characteristics model and why it
motivates.
5. Compare the main ways jobs can be redesigned.

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Learning Outcomes (2 of 2)
6. Explain how specific alternative work arrangements can
motivate employees.
7. Describe how employee involvement programs can
motivate employees.
8. Describe how knowledge of what motivates people can
be used to make organizations more motivating.

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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.

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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

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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

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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

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Variable-Pay Programs
Individual-Based Incentives Group-Based Incentives
• Piece-rate pay plans • Gainsharing
– Pay a fixed sum for each unit of – Focus on productivity
production completed. gains
• Merit-based – Improvements in group
productivity determine the
– Pay is based on performance rewards to be shared.
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)
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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

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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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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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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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Beware the Signals That Are Sent by
Rewards
Reward systems often do not reflect organizational goals:
1. 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.

2. Organizations don’t look at the big picture of their

performance system
– Subunits compete with each other.

3. Management and shareholders focus on short-term

results.

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Management Reward Follies

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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

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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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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

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Examples of High and Low Job
Characteristics

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The Job Characteristics Model

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

Motivating Potential Score ( MPS ) =

Skill variety + Task identity + Task significance
× Autonomy × Feedback
3

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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

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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

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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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Examples of
Flextime
Schedules

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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

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Employee Involvement
• 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

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Motivation: Putting It All Together
1. What motivates people?
2. 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
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How To Fulfill the Drives That Motivate
Employees

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Summary
1. Money is not a motivator for all individuals.

2. Effective reward systems link pay to performance.

3. Jobs characterized by variety, autonomy, and

feedback are more motivating.

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OB at Work: For Review (1 of 2)
1. What is variable pay? What variable-pay programs are
used to motivate employees? What are their advantages
and disadvantages?
2. How can flexible benefits motivate employees?
3. What are the motivational benefits of intrinsic rewards?
4. What is the job characteristics model? How does it
motivate employees?

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OB at Work: For Review (2 of 2)
5. 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?
6. What are the three alternative work arrangements of
flextime, job sharing, and telecommuting? What are the
advantages and disadvantages of each?
7. What are employee involvement programs? How might
they increase employee motivation?
8. How can motivation theories be used to create more
motivating work environments?

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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.

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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.

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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?

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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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