Chapter 6: Applied Performance Practices

 Arienza, Janylle Korrine

 Marciano, Ma. Elieze Angela
 Ona, Jan Patricia Mae
 Rocido, Alexandra Michelle
 Salazar, Patrick Mark 
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After reading this chapter, you should be able to:

 Discuss the meaning of money and identify several individual-, team-, and
organizational-level performance-based rewards.
 Describe five ways to improve reward effectiveness.
 List the advantages and disadvantages of job specialization.
 Diagram the job characteristics model and describe three ways to improve employee
motivation through job design.
 Define empowerment and identify strategies that support empowerment.
 Describe the five elements of self-leadership and identify specific personal and work
environment influences on self-leadership.
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The Meaning of Money in the Workplace

 The meaning and effects of money differ between men and women.
 The meaning of money also seems to vary across cultures.
 The motivational effect of money is much greater than was previously believed, and this
effect is due more to its symbolic value than to what it can buy.

“The love of money is not only one of the strongest moving forces of human life, but
money is, in many cases, desired in and for itself.” - Philosopher John Stuart Mill

Financial Reward Practices

Financial rewards come in many forms, which can be organized into the four specific
objectives: membership and seniority, job status, competencies, and performance.

MEMBERSHIP- AND SENIORITY-BASED REWARDS

 Membership-based and seniority-based rewards (sometimes called “pay for pulse”)
represent the largest part of most paychecks.

REWARD OBJECTIVES, ADVANTAGES, AND DISADVANTAGES

JOB STATUS–BASED REWARDS
 Job status–based rewards try to improve feelings of fairness by distributing more
pay to people in higher-valued jobs. These rewards also motivate employees to compete for promotions.
 It can also potentially do the opposite by encouraging a bureaucratic hierarchy.
These rewards also reinforce a status mentality
 Status-based pay potentially motivates employees to compete for promotions

COMPETENCY-BASED REWARDS
 Competency-based rewards motivate employees to learn new skills.
 Competency-based pay plans have not always worked out as well as promised by
their advocates.
 Skill-based pay plans are a more specific variation of competency-based
rewards in which people receive higher pay determined by their mastery of
measurable skills.

PERFORMANCE-BASED REWARDS
(can’t decide kung isasama ba or hindi hehe) Performance-based rewards have existed since
Babylonian days 4,000 years ago, but their popularity has increased dramatically over the past few decades.
Here is an overview of some of the most popular individual, team, and organizational performance-based
rewards.
i. Individual Rewards - Many employees receive individual bonuses or other rewards
for accomplishing a specific task or exceeding annual performance goals.
ii. Team Rewards
 Gain Sharing Plan - calculates bonuses from the work unit’s cost
savings and productivity improvement.
- tends to improve team dynamics, knowledge sharing, and pay
satisfaction.
- creates a reasonably strong link between effort and
performance, because much of the cost reduction and labor efficiency
is within the team’s control.

iii. Organizational Rewards

 Employee Stock Ownership Plans (ESOPs) – a reward system that
encourages employees to buy company stock, usually at a discounted
price.
- most ESOPs are designed as retirement plans
 Stock Options - a reward system that gives employees the right to
purchase company stock at a future date at a predetermined price
- its intention is to motivate employees to make the company more
profitable.
  Profit- Sharing Plan - a reward system that pays bonuses to employees
on the basis of the previous year’s level of corporate profits

Evaluating Organizational-Level Rewards - research indicates that ESOPs and

stock options tend to create an ownership culture in which employees feel aligned
with the organization’s success. Both increase firm performance under some
circumstances, but the effects are fairly weak.
- Profit sharing tends to create less ownership culture, yet it had stronger
influence on productivity than did ESOPs or stock options. It also has the
advantage of automatically adjusting employee compensation with the firm’s
prosperity, thereby reducing the need for layoffs or negotiated pay reductions
during recessions.
- One reason why organizational rewards don’t improve motivation or
performance very much is that employees perceive a weak connection between
their individual effort and the determinants of those rewards. However, a few
studies have found that ESOPs and other organizational rewards have a more
robust influence on motivation and firm performance when employees are also
involved in organizational decisions.

Improving Reward Effectiveness

 One study found that very large rewards (relative to the usual income) can result in
lower, rather than higher, performance.
 On the contrary, top-performing companies are more likely to have performance-based
(or competency-based) rewards, which is consistent with evidence that these rewards
are one of the high-performance work practices.
 Reward systems do motivate most employees, but only under the right
conditions. Here are some of the more important strategies for improving reward
effectiveness.
(bullets of each sub-topic can be not included (in the ppt if you suggest). These are mere suggestion on what to report po hehe summary lang as for my
understanding)
LINK REWARDS TO PERFORMANCE
 Organizational behavior modification theory and expectancy theory both recommend
that employees with better performance should be rewarded more than those with
poorer performance.
 Unfortunately, this simple principle seems to be unusually difficult to apply.
 Companies also need to apply rewards soon after the performance occurs, and in a
large-enough dose (such as a bonus rather than a pay increase), so employees
experience positive emotions when they receive the reward.

ENSURE THAT REWARDS ARE RELEVANT

 Align rewards with performance within the employee’s control
 The more employees see a “line of sight” between their daily actions and the
reward, the more they are motivated to improve performance.
 Reward systems need to correct for situational factors.
 Sales bonuses need to be adjusted for such economic factors.

USE TEAM REWARDS FOR INTERDEPENDENT JOBS

 Team rewards are better than individual rewards when employees work in highly
interdependent jobs.
 Team rewards encourage cooperation, which is more important when work is
highly interdependent.
 Team rewards tend to support employee preferences for team-based work.
 ENSURE THAT REWARDS ARE VALUED
 Rewards work best when they are valued.
 Ask employees what they value.
WATCH OUT FOR UNINTENDED CONSEQUENCES
 Performance-based reward systems sometimes have unexpected—and undesirable
—effects on employee motivation and behavior.
 Avoiding unintended consequences of rewards isn’t easy, but they can often be
averted by carefully thinking through what the rewards actually motivate people to
do.

Financial rewards come in many forms and, as was mentioned at the outset of this section,
influence employees in complex ways. But money isn’t the only thing that motivates people. Employees
are usually much more engaged in their work through intrinsic rather than extrinsic sources of motivation.
Companies motivate employees mainly by designing interesting and challenging jobs, which is the topic
we discuss next.

Job Design Practices

 The ideal, at least from the organization’s perspective, is to find the right combination so
that work is performed efficiently but employees are engaged and satisfied.
 This objective requires careful job design.
(bullets of each sub-topic can be not included (in the ppt if you suggest). These are mere suggestion on what to report po hehe summary lang as for my
understanding)
JOB DESIGN AND WORK EFFICIENCY
 Job Specialization - the result of a division of labor, in which work is subdivided into
separate jobs assigned to different people.
- Each job includes a narrow subset of tasks, usually completed in a short cycle
time.
- Job specialization potentially improves work efficiency.
Reasons for increased work efficiency:
1. Employees have less variety of tasks to juggle, so there is less time
lost changing over to a different type of activity.
2. Employees can become proficient more quickly in specialized jobs.
There are fewer physical and mental skills to learn, therefore less
time to train and develop people for high performance.
3. Shorter work cycles give employees more frequent practice with the
task, so jobs are mastered more quickly.
4. Specialization tends to increase work efficiency by allowing
employees with specific aptitudes or skills to be matched more
precisely to the jobs for which they are best suited

SCIENTIFIC MANAGEMENT
 The practice of systematically partitioning work into its smallest elements and
standardizing tasks to achieve maximum efficiency.
 Its principles were introduced by Frederick Winslow Taylor.
 It is mainly associated with high levels of job specialization and standardization of
tasks to achieve maximum efficiency.

PROBLEMS WITH JOB SPECIALIZATION

 Extreme job specialization adversely affects employee attitudes and motivation.
 Some jobs can be so specialized that it becomes tedious, trivial, and socially
isolating.
  Employee turnover and absenteeism tend to be higher in specialized jobs with very
short cycle times.
 Companies sometimes have to pay higher wages to attract job applicants to this
dissatisfying, narrowly defined work.
 The positive effect of higher proficiency is easily offset by the negative effect
of lower attentiveness and motivation caused by the tedious work patterns.
 Job specialization also undermines work quality by disassociating job incumbents
from the overall product or service.
Job Design and Work Motivation
 Motivation-hygiene Theory – it is Frederick Herzberg’s theory stating that employees
are primarily motivated by growth and esteem needs, not by lower-level needs.
- It proposes that employees experience job satisfaction when they fulfill growth and
esteem needs and they experience dissatisfaction when they have poor working
conditions, low job security, and other factors categorized as lower-order needs.
 Job Characteristics Model – it identifies five core job dimensions that produce three
psychological states.
- Employees who experience these psychological states tend to have higher levels of
internal work motivation, job satisfaction and work effectiveness.

JOB CHARACTERISTICS MODEL

CORE JOB CHARACTERISTICS

1. Skill Variety – refers to the use of different skills and talents to complete a variety of
work activities; to perform tasks within their jobs
2. Task Identity – the degree to which a job requires completion of a whole or an
identifiable piece of work.
3. Task Significance – the degree to which a job has a substantial impact on the
organization and/or larger society.
- It is an observable characteristic of the job as well as a perceptual awareness.
4. Autonomy – the degree to which a job gives employees the freedom, independence
and discretion to schedule their work and determine the procedures used in completing
it.
 - Core motivational element of job design
5. Job Feedback – the degree to which employees can tell how well they are doing from
direct sensory information from the job itself.

CRITICAL PSYCHOLOGICAL STATES

 The five core job characteristics affect employee motivation and satisfaction through
three critical psychological states, skill variety, task identity, and task significance
directly contribute to the job’s experienced meaningfulness.
 Autonomy directly contributes to feelings of experienced responsibility.
 The third critical psychological state is knowledge of results.

INDIVIDUAL DIFFERENCES
 Job design doesn’t increase work motivation for everyone in every situation.
 Employees will be motivated by the five core job characteristics only when they are
satisfied with their work and have a high growth need strength.

SOCIAL AND INFORMATION PROCESSING JOB CHARACTERISTICS

 The job characteristics model overlooks two clusters of job features: social
characteristics and information processing demands.

Social Characteristics Information Processing Demands

a. One social characteristic is the
extent to which the job requires
a. One information processing
employees to interact with other
demands of the job is called task
people.
variability.
This requires social interaction is
associated with emotional labor as
b. The second information processing
well as with task interdependence.
demand, called task analysability.

b. A second social characteristic of the

** Task variability and task analyzability
job is feedback from others.
are important job characteristics to
Jobs that enable this social feedback
consider when designing organizational
may be just as motivating as jobs
structures.
that provide feedback from the task
itself.

Job Design Practices

Three main strategies can increase the motivational potential of jobs: job rotation, job
enlargement, and job enrichment.

JOB ROTATION - There are three potential benefits of job rotation.

1. It increases skill variety throughout the workday.
2. It minimizes health risks from repetitive strain and heavy lifting.
3. It supports multiskilling.

JOB ENLARGEMENT
 It is the practice of adding more tasks to an existing job.
 It significantly improves work efficiency and flexibility.
 Employees are motivated when they perform a variety of tasks and have the
freedom and knowledge to structure their work to achieve the highest satisfaction
and performance.
 JOB ENRICHMENT
 It is the practice of giving employees more responsibility for scheduling,
coordinating,
 and planning their own work
 People who perform enriched jobs potentially have higher job satisfaction and work
motivation, along with lower absenteeism and turnover.
 Job enrichment increases the jobholder’s felt responsibility and sense of ownership
over the product or service.
Two Ways to Increase Job Enrichment
Natural Grouping Establishing Client Relationships
 Increases job enrichment by
combining highly interdependent
 It involves putting employees in
tasks into one job.
direct contact with their clients
rather than using another job group
 By forming natural work units, or the supervisor as the liaison
jobholders have stronger feelings of between the employee and the
responsibility for an identifiable body customer.
of work.
 It increases task significance.
 Forming natural work units increases
task identity and task significance.

** Forming natural task groups and establishing client relationships are common ways to
enrich jobs, but the heart of the job enrichment philosophy is to give employees more autonomy
over their work. This basic idea is at the core of one of the most widely mentioned—and often
misunderstood—practices known as empowerment.

Empowerment Practices
Empowerment – a psychological concept in which people experience more self-
determination, meaning, competence, and impact regarding their role in the organization.
 Self-determination. Empowered employees feel that they have freedom,
independence, and discretion over their work activities.
 Meaning. Employees who feel empowered care about their work and believe that what
they do is important.
 Competence. Empowered people are confident about their ability to perform the work
well and have a capacity to grow with new challenges.
  Impact. Empowered employees view themselves as active participants in the
organization; that is, their decisions and actions have an influence on the company’s
success.

SUPPORTING EMPOWERMENT
 Empowerment is a state of mind.
 Job characteristics influence the degree to which people feel empowered.
Employees experience self-determination, more meaningfulness and more self-
determination.
 Several organizational and work-context factors also influence empowerment.
Employees experience more empowerment in organizations in which information
and other resources are easily accessible; and in organizations that demonstrate a
commitment to employee learning.
 Empowerment requires corporate leaders to trust employees and be willing to take
the risks that empowerment creates.
 (do not include in ppt??; this is in page 171/200) With the right individuals, job
characteristics, and organizational environment, empowerment can substantially
improve motivation and performance. However, organizational and cultural
conditions can limit the extent to which the conditions for empowerment produce
feelings of empowerment.

Self-Leadership Practices
 Self-Leadership – refers to specific cognitive and behavioural strategies to achieve
personal goals and standards through self-direction and self-motivation.
 Self- leadership strategies are derived from social cognitive theory and goal setting.

SELF-LEADERSHIP STRATEGIES

1. Personal Goal Setting - Self-leadership refers to leading oneself toward objectives,

so the process necessarily begins by setting goals.
- These goals are self-determined, rather than assigned by or jointly decided with
a supervisor.
- Personal goal setting also requires a high degree of self-awareness.
2. Cognitive Thought Strategies - Before beginning a task and while performing it,
employees engage in two constructive (positive) thought strategies about that work
and its accomplishment: positive self-talk and mental imagery.

Positive Self-Talk Mental Imagery

Self-Talk – refers to the process

of talking to ourselves about our  It refers to the process of mentally practicing
own thoughts or actions. The a task and visualizing its successful
problem is most self-talk is completion. Thus, has two (2) parts.
negative.  One part involves mentally practicing the
task, anticipating obstacles to goal
Negative Self-Talk – accomplishment, and working out solutions to
 undermines our confidence and
potential to perform a particular
task.
Positive Self-Talk – creates a
“can-do” belief and thereby
increases motivation.
those obstacles before they occur. We see
problems that may occur and imagine what
responses would be best for each
contingency.
 The other part involves visualizing successful
completion of the task. You might imagine the
experience of completing the task and the
positive results that follow.

3. Designing Natural Rewards - Self-leadership recognizes that employees

actively craft their jobs.
- They can alter tasks and work relationships to make the work more
motivating.
4. Self-Monitoring - Self-monitoring is the process of keeping track at regular
intervals of one’s progress toward a goal by using naturally occurring
feedback.
- Self-monitoring significantly improves employee performance.
5. Self-Reinforcement - Self-reinforcement occurs whenever an employee has
control over a reinforcer but doesn’t “take” the reinforcer until completing a
self-set goal.
- Self-reinforcement also occurs when you decide to do a more enjoyable
task after completing work that you dislike.
- One of the challenges with self-reinforcement is the temptation to take
the reward before you should.
- Self-reinforcement must remain true to one’s original intentions.

EFFECTIVENESS OF SELF-LEADERSHIP
 The ability to avoid self-defeating beliefs, leverage their points of power, and
collaborate with others–resulting in goal achievement, independence, and the
ability to lead others more effectively.
 A respectable body of research shows consistent support for most elements of self-
leadership. (hellooooo wala akong mailagay dito na definition galing sa book {p. 174 / 203}
puro examples siya so ayun ikaw na po bahala goodluck!!! hahaha)

EFFECTIVENESS OF SELF-LEADERSHIP
 People with a positive self-concept are more likely to apply self-leadership
strategies.
 The work environment influences the extent to which employees engage in self-
leadership.
 Self-leadership promises to be an important concept and practice for improving
employee motivation and performance.
Lagay ko lang ‘to dito hehehe baka need