Organizational

Behaviour: Concepts,
Controversies,
Applications

Eighth Canadian Edition

Chapter 5
Motivation in Action

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■ Copyright © 2019 Pearson Canada Inc.
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
importantCopyright
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 Copyright © 2019 Pearson Canada Inc. 4-4
Variable-Pay Programs

Individual-Based Incentives
Group-Based Incentives
■ Piece-rate pay plans
□ Pay a fixed sum for each■ Gainsharing
unit of production □ Focus on productivity
completed. gains
□ Improvements in
■ Merit-based group productivity
□ Pay is based on determine the rewards
performance appraisal to be shared.
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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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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Examples of High and Low Job
Characteristics

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The Job Characteristics Model

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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 Copyright
and correct
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Pearsonown
Canada Inc. 4 - 12
performance
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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