MOTIVATION AND

REWARD SYSTEM

Presented by Group 2:
Yusairah D. Darapa
Sittie Normallah S. Datu Ali
Hasmin U. Manunggal
 Motivation and Reward System
A. Motivation B. Appraising and
1. A Model of Motivation Rewarding
2. Motivational Drives Performance
3. Human Needs 1. A complete Program
4. Behavior Modification 2. Money as a Means of
Rewarding employees
5. Goal Setting
3. Organizational
6. The Expectancy Model Behavior and
7. The Equity Model performance Appraisal
8. Interpreting 4. Economic Incentive
Motivational Models System
 MOTIVATION
Presented by:
YUSAIRAH D. DARAPA
 A Model of Motivation

- Refers to a record of the goals,

strategies, and influencers that led
to their decisions
 A Model of Motivation
Components:
1.Need
2.Motivation
3.Behavior
4.Rewards
5.Feedback
 A Model of Motivation

https://www.chegg.com/
Motivational Drives and Human Needs

1. Maslow’s Hierarchy of Needs

2. McClelland’s Acquired Needs
Theory
3. Herzberg’s Two Factor Theory
 Behavior Modification

- Refers to the process of changing

patterns of human behavior using
various motivational techniques,
including negative and positive
reinforcement
 Behavior Modification Techniques

1. Positive Reinforcement –
pairing positive stimulus to
behavior
2. Negative Reinforcement –
pairing of behavior to the
removal of a negative stimulus
 Behavior Modification Techniques

3. Punishment - designed to
weaken behaviors by pairing an
unpleasant stimulus to behavior
 MOTIVATION
(Continuation)

Presented by:
SITTIE NORMALLAH S. DATU ALI
 GOAL SETTING THEORY
• Developed by Edwin Locke in 1960
• It is an employee-engagement tactic that involves setting specific
and measurable goals to improve productivity
• Locke emphasized the fact that employees work well when they are
faced with challenging goals.
Principles of Goal- Setting Theory
▪ CLARITY
- Goals must be clear and specific
▪ CHALLENGE
- Goals should be sufficiently challenging.
▪ COMMITMENT
- Employees should have a great understanding and support the
goal they are being
assigned from the beginning.
▪ FEEDBACK
- Important component of the goal-setting theory.
▪ TASK COMPLEXITY
- Goals should be broken down into smaller goals.
 STEPS IN USING GOAL SETTING
THEORY
A. IDENTIFY THE PURPOSE OF THE GOAL
▪ Figuring out what you want to achieve, why you want to achieve it,
and when you want to achieve it
•B. MEET WITH THE EMPLOYEES
▪ Provide a clear understanding of the purpose of the goal, the
measurement for determining success, and how they can receive
feedback.
▪ Answering questions they may have is critical for encouraging
their commitment.
▪ You can outline the responsibilities required, specific tasks, and
available resources.
STEPS IN USING GOAL SETTING
THEORY
•C. DEVELOP PLAN USING SMART MODEL
➢ Specific
- create an explicit goal with particular guidelines and criteria.
➢ Measureable
- can determine progress using a quantifier
➢ Attainable
- Ideal goals are achievable in addition to being challenging
- It's vital that a goal encourages people to gain new skills, increase
their knowledge, and expand their capabilities.
STEPS IN USING GOAL SETTING
THEORY
➢ Realistic
- within reach of the individual's skill set, knowledge, or characteristics
➢ Time Bounded
- Has a clear deadline for completion
STEPS IN USING GOAL SETTING
THEORY
•D. ENSURE SUPPORT AND RESOURCES ARE AVAILABLE
▪ Having the right tools, information, contacts, and any other
resources they require to achieve their goal
E. SET UP FEEDBACK SESSIONS
▪Feedback helps to keep the goal on track and make sure that the
tasks ahead are properly organized and planned for.
▪Feedback sessions can also improve your rapport with your
employees and help you to delegate tasks in the future.
 EXPECTANCY THEORY
▪ Proposed by Victor Vroom of Yale School of Management in 1964.
▪ It states that the intensity of a tendency to perform in a particular
manner is dependent on the intensity of an expectation that the
performance will be followed by a definite outcome and on the appeal
of the outcome to the individual.

•
 3 KEY ELEMENTS OF
EXPECTANCY THEORY
•A. EXPECTANCY
▪ EFFORT PERFORMANCE
▪ Expectancy is the belief that if you work hard (effort) you will be able
to hit the targets (performance) that have been set for you by your
manager.
▪ Factors associated with your level of expectancy include:
✓ Your past experience.
✓Your confidence in your ability.
✓How difficult you perceive the target is to achieve, and whether or
not the target is under your control.
 3 KEY ELEMENTS OF
EXPECTANCY THEORY
•B. INSTRUMENTALITY
▪ PERFORMANCE OUTCOME
▪ Instrumentality is the faith that if you perform well, then a valid
outcome will be there.
▪ You’re assessing how likely you are to receive a reward if you
hit the targets that have been set for you.
▪ You make this judgment based on a number of factors,
including:
✓Is the relationship clear between performance and reward
✓How much you trust the person who decides on the reward.
✓How transparent is the decision-making process around who
gets what reward?
 3 KEY ELEMENTS OF
EXPECTANCY THEORY
•C. VALENCE
▪ OUTCOME REWARD
▪ It is the importance you place on the expected outcome of your
performance
▪ This often depends on your individual needs, goals, values and
sources of motivation.
 EQUITY THEORY
▪ Developed by John Stacey Adams in 1963
▪ Based on the idea that individuals are motivated by fairness
▪ If an individual identifies an inequity between themselves and a peer,
they will adjust the work they do to make the situation fair in their eyes
▪ When you offer fair compensation for your team’s contributions, they
may maintain higher levels of motivation.
 COMPONENTS OF EQUITY
THEORY
A. INPUT
▪ It is a contribution one makes to receive a reward.
▪ This includes:
✓The number of hours worked (effort).
✓The commitment shown.
✓The enthusiasm shown.
✓The experience brought to the role.
✓Any personal sacrifices made.
✓The responsibilities and duties of the individual in the role.
✓The loyalty the individual has demonstrated to superiors or the
organization.
 COMPONENTS OF EQUITY
THEORY
•B. OUTPUT
▪ The result an individual receives as a result of their inputs to the
organization
▪ Outcomes can include hard factors such as:
✓ Salary and pay raises
✓ Job security
✓ Benefits like healthcare or vacation time
▪ There are also less tangible outcomes:
✓ Praise from co-workers
✓ Improved reputation
✓ Pride in one’s work
FACTORS THAT AFFECT EQUITY
THEORY
•A. REFERENT GROUPS
▪ These are comparisons that an employee can make from their evaluation
about an outcome they receive.
▪ The four primary comparisons are:
✓Self- inside
• - The experience an employee had when they were in a different position
in their current organization
✓Self- outside
• - The employee’s experience in other position outside of the company
✓Other- inside
• - Involves a comparison to another employee’s inputs and outcomes in
the same company
✓Other-outside
• - Consists of a comparison to other employees in a same position
outside the company
 FACTORS THAT AFFECT
EQUITY THEORY
▪ An employee may use one of these four referents to determine how
fairly their employer treats them.

B. MODERATING VARIABLES
▪ Refers to someone’s education and experience level can also have a
direct effect on their perception of fairness.
 Appraising and
Rewarding Performance

Presented by:
Hasmin U. Manunggal
" The typical persons rate his or her performance at
about the 80th percentile. so, people tend to believe
they’re doing better than most of the people around
them."
-Edward E. Lawler

"Managers should give constructive feedback to

employees, so that they can improve their
performance."
-Sherry E. Moss and Juan I. Sanchez
 Objectives
TO UNDERSTAND:
• Total Reward System
• Money as means of rewarding employee.
• Organizational behavior and performance appraisal.
• Economic incentive system
 Reward System
-consist of all organizational components
involved in allocating compensation and
benefits to employees in exchange for their
contribution to the organization including:
- people
- processes
- procedures
- decision-making activities
 Complete Program
Three incentive foundation of a complete pay
program:
1. Base Pay (according to level of responsibility
and market pressure)
2. Performance Rewards (based on contribution
of the employee)
3. Profit Sharing (rates the organization in terms
of its general economic performance)
 The three systems are complimentary because
each reflects a different set of factors in total
situation. Base pay and skill-based pay motivate
employees to progress to jobs of higher skills and
responsibility. Performance pay is an incentive to
improve performance on the job. Profit sharing
motivates workers toward teamwork to improve an
organization's performance.
Money as Means of Rewarding Employees
✓ Money is an economic value as a medium of
exchange.
✓ Money is also a social medium of exchange.
✓ Differences in meaning of money by gender and
culture.
✓ Money is an important motivator.
 Application of the Motivational Models

Money Satisfies many Drives and Needs

• Drives Achievement-oriented employees
maintain a symbolic scorecard in their minds by
monitoring their total pay and comparing it with that
of others. Their pay is a measure of their
accomplishments.
• Needs Pay is viewed primarily as a hygiene
factor, although it may have at least short-term
motivational value as well.
 Expectancy
Expectancy Theory states that
Valence X Expectancy X Instrumentality = Motivation
This means that if money is to act as a strong motivator, an
employee must want more of it (valence), must believe that
effort will be successful in producing desired performance
(expectancy), and must trust that the monetary reward will
follow better performance (instrumentality).

Money often has high valence. This dual role means that most
employees do respond to money as a reward.
 Extrincsic and Intrincsic Rewards

Money is essentially an extrincsic reward rather than an

intrincsic one, so it is easily administered in behavior
modification programs.

Extrinsic – are external reward that occur apart from

the nature of work, providing no direct satisfaction at
the time the work is performed.

Intrinsic – are internal rewards that a person feels when

performing a job that has direct and immediate
connection between work and reward.
 Organizational Behavior and
Performance Appraisal
Management by Objectives (MBO) is a strategic
management model that aims to improve the
performance of an organization by clearly defining
objectives that are agreed to by both management and
employees.
According to the theory, having a say in goal
setting and action plans encourages participation and
commitment among employees, as well as aligning
objectives across the organization:
 4 steps of MBO:
1. Objective setting
-joint determination by manager and employee of
appropriate levels of future performance for the
employee, within the context of overall unit goals and
resources.

2. Action planning
-participated or even independent planning by the
employee as to how to reach those objective.
3. Periodic reviews
-joint assessment of progress toward objectives
by manager and employee, perform informally
sometimes spontanously

4. Annual evaluation
-more formal assessment of success in ahieving
the employee's annual objectives, coupled with a
renewal of the planning cycle.
 Performance Appraisal
-is a process of evaluating the performance of employees,
sharing that information with them, and searching for ways to
improve their performance.
Appraisal is necessary in order to do the following;
1. Allocate scarce resources in a dynamic environment.
2. Motivate and reward employees.
3. Give employees feedback about their work.
4. Maintain fair relationships within groups.
5. Coach and develop employees.
6. Comply with Regulations
 The Performance Appraisal System
-part of appraisal system which requires supervisor to
assess employees on various aspects.
• Productivity
• Behavior
• Personal traits
• Quality of work
• Quantity of output
• Attendance
• Historical performance
• Potential for growth and advancement
 Appraisal Interview
-a session in which the supervisor provides:

✓ Feedback
✓ Discusses any problem
✓ Invites a response
✓ Opportunity to motivate
 Appraisal Approaches
Self-Appraisal
This is an opportunity for the employee to be
introspective and to offer a personal assessment of his
or her accomplishments.

Performance Feedback
Feedback enhances an employee's self-image and
feeling of competence. It leads to both improved
performance and improved attitudes if handled
properly by the manager.
360 Degree Feedback
This is the process of systematically gathering data on
a person's skills, abilities, and behaviors from a
variety of sources -- the managers, peers,
subordinates, and even customers or clients.
This system works best if individuals match the data
gathered with their own self-assessments.
 Economic Incentive System
-a system that induce a high level of
individual, group, or organizational
performance by making an employees pay
contingent connected with their
performance.
 Wage Incentives
More Pay for More Production
Basically, wage incentives, which are a
form of merit pay, provide more pay for
more output or results, often referred to as
pay for performance.
 Profit Sharing

Is a system that distributes to

employees some portion of the profits of
business, either immediately (in form of
cash bonuses) or deferred until a later
date.
 Gain Sharing

A gain-shairing plan establishes a

historical base period of organizational
performance, measures improvements,
and shares the gains with employees on
some formula basis.
Behavioral Basis Gain sharing plans use several
fundamental ideas from organizational behavior and are
much more than pay systems. Encourage employees
performance and provide an incentive for coordination
and teamwork.

Contingency Factors The success of gain sharing is

contingent upon a number of key factors, such as the
moderately small size of the unit, a sufficient operating
history to allow the creation of standards, the existence
of controllable cost areas, and the relative stability of the
business.
 Skill-Based Pay

In contrast to salaries (which pay someone to hold a

job) a wage incentives (which pay for the level of
performance) this type of pay (also called knowledge
based pay or multi skill pay ) rewards individuals for what
they know how to do.

Advantages Although skill based pay systems are

quite new they provide strong motivation for employees
to develop their work related skills they reinforce an
employees sense of self esteem.
 References

https://www.academia.edu/7970531/Appraising_and_Rewarding_Pe
rformance