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 Motivational Tools (Incentives,  Job design,  Goal setting (MBO),  Employee Recognition Programs

© 2009 Prentice-Hall Inc. All rights reserved. 

. Employee Involvement Programs,  Variable Pay Programs,  Skill Based Pay Plans,  Flexible Benefit),  Issues in Motivation.


a) Motivational tools 
By job design1. Job characteristic model and Job designing bya) job rotation, b) job enlargement, and c) job enrichment d) Job simplification  Alternative work arrangement a) Flextime. (flexible work hours). b) Job Sharingc) Telecommutingd) The Virtual Office  Employ involvement program 1. Participative Management 2. Representative Participation 1. Works councils 2. Board representative 3. Quality Circle

Variable pay plan a)Piece Rate: b)Merit-Based: c)Bonuses:  Skill-Based Programs a) Profit Sharing a) Gain Sharing b)Employee Stock Ownership Plans (ESOPs)  Flexible benefit
b) Modular Plans c) Core-Plus Plans d) Flexible Spending Plans 

Recogisition program
a) Intrinsic Rewards: Stimulate Intrinsic Motivation b)Benefits of Programs c) Drawbacks of Programs


Motivational tools 
1. 2.  1. 2.

By job designJob characteristic model and Alternative work arrangement Employ involvement program Participative Management Representative Participation
1. Works councils 2. Board representative

3. Quality Circle  Using rewards 
Piece Rate Merit-Based: Bonuses:
© 2009 Prentice-Hall Inc. All rights reserved. 

Profit Sharing Gain Sharing: Employee Stock Ownership Plans (ESOPs)

Motivation by Job Design: The JCM
The Job Characteristics Model (JCM) (Skill variety, Task identity, Task significance, Autonomy, Feedback). How Can Jobs Be Redesigned?  job rotation,  job enlargement, and  job enrichment


Telecommuting The Virtual Office 7-4 .Motivation by Job Design: The JCM     Alternative Work Arrangements Flextime (flexible work hours). Job Sharing.

Motivation by Job Design: The JCM Ability and Opportunity  Success on a job is facilitated or hindered by the existence or absence of support resources.  If either is inadequate.  A popular although arguably simplistic way of thinking about employee performance is as a function of the interaction of ability and motivation. performance = f(A v M). We need to add opportunity to perform to our equation²performance = f(A v M v O). performance will be negatively affected. that is. 7-5 .

Work arrangement(or rearrangement) aimed at reducing or overcoming job dissatisfaction and employee alignment arising from repetitive and mechanistic tasks. organization try to raise productivity levels by offering non-monetary rewards such as greater satisfaction from a sense of personal achievement in meeting the increased challenge and responsibility of one's work. and  job simplification are the various techniques used in a job design. 7-6 .  job rotation.Motivation by Job Design: The JCM How Can Jobs Be Redesigned? Ways to reshape jobs so that they are more challenging. Through job design.  Job enlargement. stimulating. and motivating.  job enrichment.

satisfaction. 7-7 . and performance.Motivation by Job Design: The JCM  Job Characteristics Model (JCM) Hackman and Oldham¶s model proposes that any job can be described through five core job dimensions: Skill variety Task identity Task significance Autonomy Feedback The way elements in a job are organized (job design) impacts motivation.

7-8 . independence. The job¶s impact on others.Motivation by Job Design: The JCM Skill variety ± Degree to which the job requires a variety of different activities. so the worker can use a number of different skills and talent. Completion of a whole piece of work. ‡Feedback ± Amount of direct and clear information on performance. ‡Autonomy ± The degree to which the job provides substantial freedom. and discretion to the individual in scheduling the work and determining the procedures to be used in carrying it out Level of discretion in decision making. Requirements for different tasks in the job. Task identity ± The degree to which the job requires completion of a whole and identifiable piece of work . Task significance ± The degree to which the job has a substantial impact on the lives or work of other people.

Motivation by Job Design: The JCM The links between job dimensions and the outcomes are moderated by the strength of the individual¶s growth need. Motivating potential score (MPS) 7-9 . Individuals with a high growth need are more likely to experience the psychological states when their jobs are enriched.

The Job Characteristics Model Employee growth-need strength moderates the relationships. 7-10 .

called. and productive. the MPS model isn¶t practical and doesn¶t work well.Motivating Potential Score (MPS)  The Five core dimensions can be combined into a single predictive index of motivation.MPS ± People who work on jobs with high core dimensions are generally more motivated.  While the JCM framework is supported by research. satisfied. 7-11 . ± Job dimensions operate through the psychological states in influencing personal and work outcome variables rather than influencing them directly.

People generally seek out jobs that are challenging and stimulating.  Job Rotation ± The periodic shifting of a worker from one task to another  Job Enlargement ± The horizontal expansion of jobs  Job Enrichment ± The vertical expansion of jobs 7-12 .How Can Jobs Be Redesigned? Repetitive jobs provide little variety. autonomy. or motivation.

training time and efficiencies 7-13 . adapting to changes and filling vacancies  Weaknesses include: 1. 3. helps employees better understand their work contributions.  Strengths of job rotation include: 1. reduces boredom. extra time for supervisors addressing questions. the employee is shifted to a different task. 2.  Indirect benefits in that employees with wider range of skills give management more flexibility in scheduling.How Can Jobs Be Redesigned? Job Rotation  Often referred to as cross-training  Periodic shifting of an employee from one task to another  When activity is no longer challenging. and 3. creates disruptions. increases motivation. 2.

Increase efficiency. Avoid monotony (which is the result of specialization and division of work) 2. Advantage 1. Employee may demand increase pay due to increased responsibility 3. satisfaction and motivation Disadvantage 1.  Job enlargement interventions usually have led to less than successful outcomes. Additional training cost 2.How Can Jobs Be Redesigned? Job Enlargement (Horizontal loading)  Increasing the number and variety of tasks / responsibility that an individual performs  Creates more diversity  Difference between enlargement and rotation is that enlargement redesigns jobs where rotation does not. Productivity may fall during redesigning of job 7-14 . Decrease production cost 3.

execution. It adds responsibility and opportunity related to existing task for personal growth. Allows worker to complete an entire activity 3. Increases responsibility and provides feedback 7-15 . Increases the degree to which the worker controls the planning. Overall evidence indicates that job enrichment reduces absenteeism and turnover costs and increases satisfaction. Advantage 1.How Can Jobs Be Redesigned? Job Enrichment Refers to the vertical expansion of jobs It is direct outgrowth of Herzberg¶s 2 factor theory. Increases employee¶s freedom and independence 4. and evaluation of the work 2.

Guidelines for Enriching a Job 7-16 .

increased autonomy and responsibility for employees. Benefits include 1. and 4. reduced hostility toward management. reduced overtime expense. Allows employees some discretion over when they arrive at and leave work. reduced absenteeism. 2. Employees work during a common core time period each day but have discretion in forming their total workday from a flexible set of hours outside the core. 7-17 . increased productivity. Flextime. Major drawback is that it¶s not applicable to all jobs. (flexible work hours).Alternative Work Arrangements 1. 3. and 5.

Another Alternative: Telecommuting  Job Sharing. Allows two or more individuals to split a traditional 40-hour a week job.Employees who do their work at home at least two days a week on a computer that is linked to their office . Typical Telecommuting Jobs ± ± ± Professional and other knowledge-related tasks Routine information-handling tasks Mobile activities  The Virtual Office. Not very popular because finding compatible partner is difficult.The practice of having two or more people split a 40-hour-a-week job. 7-18 .Employees work out of their home on a relatively permanent basis.  Telecommuting.

Reasons for and against Telecommuting Advantages ± Larger labor pool ± Higher productivity ± Less turnover ± Improved morale ± Reduced office-space costs Disadvantages  Employer ± Less direct supervision of employees ± Difficult to coordinate teamwork ± Difficult to evaluate nonquantitative performance  Employee ± May not be as noticed for his or her efforts 7-19 .

Motivation Is Not the Whole Story Ability (A) Motivation (M) Opportunity to Perform (O) Performance (P) P = f(A x M x O) 7-20 .

look to the environment to see if it is supportive. time decision authority etc . performance = f(A v M). information of 7-21 work. Materials an supply 3. We need to add opportunity to perform to our equation²performance = f(A v M v O). Favorable work environment.  If either is inadequate.rules regulations. Tools and equipment 2. peer.  When you attempt to assess why an employee may not be performing to the level that you believe he or she is capable of.Don t Forget Ability and Opportunity  Success on a job is facilitated or hindered by the existence or absence of support resources. senior. that is.  A popular although arguably simplistic way of thinking about employee performance is as a function of the interaction of ability and motivation.  Opportunity in terms of1. performance will be negatively affected.

investigate causes. recommend solutions.Types of Employee Involvement Programs  Participative Management ± Subordinates share a significant degree of decision-making power with their immediate superiors  Representative Participation ± Works councils ‡ Groups of nominated or elected employees who must be consulted for any personnel decisions ± Board representative ‡ An employee sits on a company¶s board of directors and represents the interests of the firm¶s employees  Quality Circle ± A work group of employees who meet regularly to discuss their quality problems. and take corrective actions 7-22 .

communication skills) to participate. .  However. there must be adequate time to participate. it is not appropriate for every organization. 2. Workplace democracy. 3. Participation or participative management.  The issues in which employees get involved must be relevant to their interests. Employee ownership. and 7-23  The organization¶s culture must support employee involvement. Empowerment.  Employees must have the ability (intelligence. technical knowledge. and 4. A catchall term covering a variety of techniques1. commitment and satisfaction.Types of Employee Involvement Programs Participative Management The distinct characteristic common to all participative management programs is that subordinates actually share a significant immediate degree of decisionmaking power with their superiors.  It increases productivity. motivation.  For it to work.

Managers often do not know everything their employees do. Intrinsically rewarding employees makes their jobs more interesting and meaningful 5. Why would management want to share its decision-making power with subordinates? 1.Types of Employee Involvement Programs Participative Management (cont. and job satisfaction. Better decisions 3. Increased commitment to decisions 4.) . motivation. 2. Dozens of studies have been conducted but the findings are mixed. 7-24 . It appears that participation typically has only a modest influence on productivity.

7-25 . They are groups of nominated or elected employees who must be consulted when management makes decisions involving personnel. ‡ Board representatives are employees who sit on a company¶s board of directors and represent the interests of the firm¶s employees.Types of Employee Involvement Programs Representative Participation Representative participation: Almost every country in Western Europe has some type of legislation requiring it. putting labor on a more equal footing with the interests of management and stockholders.  The goal is to redistribute power within an organization.  The two most common forms: ‡ Works councils link employees with management. It is the most widely legislated form of employee involvement around the world.

Types of Employee Involvement Programs Representative Participation (cont. The evidence suggests that works councils are dominated by management and have little impact on employees or the organization. large companies may be legally required to make sure that employee representatives have the same number of board seats as stockholder representatives.  The overall influence seems to be minimal. 7-26 .)  In some countries.  If one were interested in changing employee attitudes or in improving organizational performance. representative participation would be a poor choice.

 Key components are: 1. 2. investigate causes of the problems. 3. They meet regularly on company time to discuss their quality problems. recommend solutions.  A quality circle consists of a work group of eight to ten employees and supervisors who have a shared area of responsibility. Management typically retains control over the final implementation decision. 7-27 . They take over the responsibility for solving quality problems and they generate and evaluate their own feedback.Types of Employee Involvement Programs Quality Circles  Quality circles became popular in North America and Europe during the 1980s. and take corrective actions.

The lack of planning and top-management commitment often contributed to quality circle failures 7-28 .  QCs seem to be a fad that has come and gone. they tend to show little or no effect on employee satisfaction. ‡ First is the little bit of time (usually just an hour per week) that actually deals with employee involvement.)  A review of the evidence indicates that they are likely to positively affect productivity.Types of Employee Involvement Programs Quality Circles (cont. however. the ease of implementing quality circles often worked against them.  Second.

Motivational Theory Links to EI Programs Theory Y Employees want to be involved Managerial viewpoint Two-Factor Theory Intrinsic Motivation Growth Responsibility Involvement ERG Theory Stimulate nAch Growth Recognition Self-esteem 7-29 .

What to pay? (pay structure) 2.Four Major Strategic Reward Decisions 1. What benefits to offer? Do we offer choice of benefits? (flexible benefits) 4. How to build recognition programs? 7-30 . How to pay individuals? (variable pay plans and skill-based pay plans) 3.

What to Pay Establishing a Pay Structure  Internal equity ± The worth of the job to the organization ± Determined by job evaluations  External equity ± The competitiveness of the company¶s pay relative to pay elsewhere in the industry ± Determined through pay surveys  Choose organizational position ± Pay leaders ‡ Greater employee loyalty ‡ Attracts better-quality employees ± Pay laggards ± accept high turnover for low hourly costs 7-31 .1.

pay pool can be small.2. How to Pay.Rewarding Individual Employees Through Variable Pay Programs  Types of Variable Pay Programs A portion of an employee¶s pay is based on some individual and/or organizational measure of performance ±Piece Rate: ‡ Workers are paid a fixed sum for each unit of production completed ‡ Weakness: not feasible for many jobs ±Merit-Based: ‡ Based on performance appraisal ratings ‡ Gap increasing between average and top-performers ‡ Weaknesses: validity of system based on annual appraisals. unions strongly resist ±Bonuses: ‡ Rewards recent performance ‡ Weakness: employees consider this a pay 7-32 .

Productivity is an internal factor where as profit is internal and external factor ±Employee Stock Ownership Plans (ESOPs) ‡ Company-established benefit plans in which employees acquire stock as part of their benefits 7-33 .Skill-Based Pay Programs  Types of Skill-Based Programs: is alternative to job based payAlso known as competency. How to Pay .or knowledge-based pay .2.sets pay based on skills or number of jobs an employee can perform ±Profit Sharing: ‡ Organization-wide programs that distribute compensation based on some established formula designed around a company¶s profitability(in terms of cash or stock option) ±Gain Sharing: ‡ An incentive plan in which improvements in group productivity determine the total amount of money that is allocated (increase in productivity does not always mean profit).

± People will opt for any any training 7-34 . not for performance of the skill.Evaluation of Variable and Skill-based Pay To some extent. variable pay does increase motivation and productivity Benefits of Skill-based Pay Plans ± ± ± ± ± Provide staffing flexibility Facilitate communication across the organization Lessen ³protection of territory´ behaviors Meet the needs of employees for advancement Lead to performance improvements Drawbacks: ± Lack of additional learning opportunities ± Continuing to pay employees for obsolete skills ± Paying for skills of no immediate use to the organization ± Paying for a skill. This plan deals with quality and team work not with level of performance.

Flexible Benefits Employees tailor their benefit program to meet their personal need by picking and choosing from a menu of benefit options. What Benefits to Offer . Modular Plans ± Predesigned benefits packages for specific groups of employees Core-Plus Plans ± A core of essential benefits and a menu-like selection of other benefit options Flexible Spending Plans ± Allow employees to use their tax-free benefit dollars to purchase benefits and pay service premiums 7-35 .3.

4. How to Build Recognition Programs  Intrinsic Rewards: Stimulate Intrinsic Motivation ± Personal attention given to employee ± Approval and appreciation for a job well done ± Growing in popularity and usage  Benefits of Programs ± Fulfill employees¶ desire for recognition ± Inexpensive to implement ± Encourage repetition of desired behaviors  Drawbacks of Programs ± Susceptible to manipulation by management 7-36 .

Special issues in motivation      Motivating professional Motivating contingent worker Motivating diversified work force Motivating low skill service worker Motivating people doing highly repetitive task 7-37 .

training.(skill development opportunity like. They get great deal of intrinsic satisfaction from work they do and have long term commitment with their field of expertise than organisation. allowing them to earn more money and status without assuming managerial responsibility.Special issues in motivation  Motivating professional. Challenging job 4. 7-38 . work shop etc. development. They are more loyal to their profession. They need to update their knowledge regularly. Money and promotion has low priority 2. seminars. Creating alternative career path. Motivation1. Reward with recognition 5. motivates them) 3.they are well paid.

Freedom to work 2.Special issues in motivation  Motivating contingent workerContingent employee do not have job security and stability in the organization that a permanent employee has. Motivation 1. Benefit 7-39 4. Compensation plan 3. day laborer. 3. Opportunity for permanent status. independent contractor. Eg. work hour 2. developing sellable skills  Motivating diversified work force Need to understand and respond to diversity. leases worker etc. Flexibility in 1. on call worker. short term hirer. working from home. part time. temporary employee. Physical work setting .

2. 5. Ample work breaks Employee supervisions 7-40 . 6. 4. who have tolerance for ambiguity. 4.but not high motivation Create pleasant work environment.  1. 3. 2.less turn over.Special issues in motivation  1. Try automation of job (ATM) High pay. Motivating low skill service worker Increase pay/ promotion Flexible work schedule Recruit young or retirees who have low financial need respect Motivating people doing highly repetitive task Careful selection of people. 3.

but some possible hypotheses on relationships  Flexible Benefits ± This concept is becoming more prevalent globally  Employee Benefits ± Practices must be modified to match culture 7-41 .Global Implications  Job Characteristics and Job Enrichment ± Inconsistent results across cultures  Telecommuting ± U. but EU workers are interested in it  Variable Pay ± Not much research available.S. does this more.

± Use goals and feedback ± Allow employees to participate in decisions that affect them ± Link rewards to performance ± Check the reward system for equity 7-42 .Summary and Managerial Implications  To Motivate Employees ± Recognize individual to ability and then give opportunity.