PART 2

Individual Behaviors
and Processes in
Organizations

CHAPTER 6

Motivating
Behavior with
Work and
Rewards
Chapter Learning Objectives
After studying this chapter you should be able to:

1. Identify and describe different approaches to job design

and relate each to motivation.
2. Discuss employee participation, empowerment, and
flexible work arrangements and identify how they can
impact motivation.
3. Describe the goal setting theory of motivation and discuss
broader perspectives on goal setting.
4. Discuss performance management and its role in
motivation.
5. Describe how organizations use various kinds of rewards
to motivate employees.
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 Motivation and Employee Performance

• Using Theories of Motivation

– No single theory explains motivation—each theory
covers only some factors that motivate behavior
– More than one theory or method can be used to
enhance performance in an organization
– Each theory or method must be translated into
operational terms

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 Work Design in Organizations

• Job Design
– How organizations define and structure jobs
• Job Specialization (Fredrick Taylor)
– Jobs should be scientifically studied, broken down into
small component tasks, and then standardized across
all workers doing those jobs
– Follows Adam Smith’s concept of the division of labor
– Jobs designed for efficiency can become boring and
monotonous, resulting in job dissatisfaction

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 Early Alternatives to Job Specialization
Job Rotation Systematically moving workers from
one job to another in an attempt to
minimize monotony and boredom
Job Enlargement Giving workers more tasks to perform
(Horizontal Job Loading)
Job Enrichment Giving workers more tasks to perform
(Vertical Job Loading) and more control over how to perform
them

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 Work Design in Organizations

• The Job Characteristics Theory

– Critical psychological states of workers
1. Experienced meaningfulness of the work
2. Experienced responsibility for work outcomes
3. Knowledge of results
– Motivational properties of tasks
1. Skill variety
2. Task identity
3. Task significance
4. Autonomy
5. Feedback

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 Job Characteristics Theory:
Research Findings
• Research generally supports the theory,
however:
– Performance seldom found to correlate with job
characteristics
– Measures used to test theory are not always valid and
reliable
– Role of individual differences is not supported
– Theory is lacking in specific guidelines for
implementation

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 Employee Involvement and Motivation

• Extending job design to include:

– Participation
• Giving employees a voice in making decisions about
their own work
– Empowerment
• Enabling workers to set their own work goals, make
decisions, and solve problems within their sphere of
responsibility and authority

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 Employee Involvement and Motivation

• Areas of Employee Involvement

– Personal job-related decisions
– Administrative matters (e.g., work schedules)
– Product quality decisions
• Techniques and Issues in Employee
Involvement
– Empowerment through work teams (quality circles)
– Decentralization of decision-making and increased
delegation

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 Requirements for Effective Empowerment

• An organization must be:

– Sincere in its efforts to spread power and
autonomy to lower levels of the organization
– Committed to maintaining participation and
empowerment
– Systematic and patient in its efforts to empower
workers
– Prepared to increase its commitment to training

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 Flexible Work Arrangements

• Variable Work Schedules

– Compressed work schedule
• Employees work a 40-hour week in fewer than 5 days
– Extended work schedule
• Employees work for relatively long periods of work followed
by relatively long periods of paid time off
– Flexible work schedule (flextime)
• Employees gain more control over hours worked daily
– Job Sharing
• Two or more part-time employees share full-time job
– Telecommuting
• Employees spend all or part of their time working off-site

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 Flexible Work Arrangements (cont’d)

• Telecommuting’s Benefits to Organizations

– Reduced absenteeism and turnover
– Reduction in indirect expenses for facilities
• Telecommuting’s Downside Considerations
– Employees miss the workplace social interaction
– Employees lack self-control/discipline
– Difficulties arise in coordinating in-face meetings

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 Goal Setting and Motivation

• Purposes of Setting Goals in Organizations

– To provide a useful framework for managing
motivation to enhance employee performance
– To serve management as a control device for
monitoring how well the organization is performing
• Goal
– A desirable objective

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 Goal Setting and Motivation (cont’d)

• Goal Setting Theory (Locke)

– Assumes that behavior is a result of conscious goals
and intentions, therefore goals influence behavior
(performance)
• Goal Characteristics
– Goal difficulty
• The extent to which a goal is challenging and requires effort
– Goal specificity
• The clarity and precision of a goal

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 Expanded Goal Setting Theory
(Lock and Latham)
• The Goal-Setting Process
– Goal-directed effort is a function of goal attributes:
• Goal difficulty
• Goal specificity
• Goal acceptance: the extent to which a person
accepts a goal as his/her own
• Goal commitment: the extent to which a person is
personally interested in reaching a goal

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 Broader Perspectives on Goal Setting
• Management by Objectives (MBO)
– A collaborative goal-setting process through which
organizational goals cascade down throughout the
organization
– Requires customizing to each organization

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 Broader Perspectives on Goal Setting
• Steps of the General MBO Model
– Top managers establish overall goals for the firm
– Managers and employees collaborate to set subsidiary
goals
– Managers and employees ensure that the employees
have the resources needed to reach the goals
– Process flows downward as each subordinate
manager repeats the steps with her own subordinates
– Manager periodically meets with subordinates to check
progress and make adjustments as needed

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 Goal Setting: Evaluation and Implications

• Research has shown that:

– Goal difficulty and specificity are closely associated
with performance
– Goal-setting theory may focus too much on short-run
considerations
– MBO has the potential to motivate because it helps
implement goal-setting theory on a systematic basis
throughout the organization
– MBO has a tendency to overemphasize quantitative
goals to enhance verifiability

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 Performance Management
in Organizations
• The Nature of Performance Management
– Performance appraisal process:
1. Evaluate an employee’s work behaviors by measurement
and comparison with previously established standards
2. Document the results
3. Communicate the results to the employee
– Purposes of performance appraisal:
• Provide feedback
• Decide and justify reward allocations
• Judgment and development

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 Performance Management Basics

Elements
Elementsof
ofPerformance
Performance
Measurement
Measurement

How
Howoften
oftenare
are How
Howis
is
Who
Whoisisto
todo
do the
theappraisals
appraisals performance
performanceto
to
the
theappraisals?
appraisals? to
tobe
bedone?
done? be
bemeasured?
measured?

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 Performance Management: The Process

• The Appraiser: Alternatives

– The direct supervisor
– Multiple-rater systems (including self-evaluation)
– 360-degree feedback
• A system in which people receive performance feedback from
those on all sides of them in the organization (boss,
colleagues, peers, subordinates)
• Frequency of Appraisals
– Determined by convenience for administrative
purposes, cultural appropriateness, and relevance

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 Performance Management… (cont’d)

• Measuring Performance
– Considerations
• Desired decisions to be made based on outcome
• Instruments must be valid, reliable, and free of bias
– Choices of measurement methods
• Graphic rating scales, checklists, essays/diaries, behaviorally
anchored rating scales, forced-choice systems
• Comparative methods such as ranking, forced distribution,
paired comparisons, multiple raters

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 Individual Rewards in Organizations

• Reward System
– Consists of all organizational components involved in
allocating compensation and benefits to employees in
exchange for their contribution to the organization:
• People
• Processes
• Rules
• Procedures
• Decision-making activities

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 Rewards’ Purposes, Roles, and Meanings

• Purposes
– To attract, retain, and motivate qualified employees
• Roles of compensation structures
– To be equitable and consistent
– To be a fair reward for the individual’s contribution
– To be competitive in the external labor market
• Meanings of rewards
– Surface value: objective meaning or worth of reward
– Symbolic value: subjective and personal meaning or
worth of reward

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 Types of Individual Rewards

• Compensation Package
– The total array of money (wages, salary, commission),
incentives, benefits, perquisites, and awards provided
by the organization
• Base Pay
– Symbolizes an employee’s worth
– Can improve motivation and performance if part of an
effectively planned and managed pay system
– Is a major cost of doing business
– Can reduce turnover and increase morale when well-
designed

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 Types of Individual Rewards (cont’d)
• Incentive Pay Systems 1. Piecework programs
– Plans in which employees 2. Gain-sharing
can earn additional programs
compensation in return 3. Bonus systems
for certain types of 4. Long-term
performance compensation
5. Merit pay plans
6. Profit-sharing plans
7. Employee stock
option plans

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 Individual Rewards (cont’d)

• Indirect Compensation (Employee Benefits)

1. Payment for time not worked
2. Social Security contributions
3. Unemployment compensation
4. Disability and workers’ compensation benefits
5. Life and health insurance programs
6. Pensions or retirement plans

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 Individual Rewards (cont’d)

• Perquisites
– Special privileges awarded to selected members of an
organization, usually top managers
– Add to the status of their recipients and thus may
increase job satisfaction and reduce turnover
• Other Awards
– Rewards for seniority, perfect attendance, zero defects
(quality work), cost reduction suggestions

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 Managing Reward Systems

• Linking Performance and Rewards

– Employee perception of link between pay and
performance results in symbolic value of pay
• Flexible Reward Systems
– Allows employees to choose the combination of
benefits that best suits their needs
– Increases both employee satisfaction with benefits
and administrative costs for the employer
• Participative Pay Systems
– Employees are involved in the design and/or
administration of their compensation system

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Table 6.1 Issues to Consider in Developing Reward Systems
ISSUE IMPORTANT EXAMPLES

PAY SECRECY • Open, closed, partial

• Link with performance appraisal
• Equity perceptions

EMPLOYEE PARTICIPATION • By human resource department

• By joint employee/management committee

FLEXIBLE SYSTEM • Cafeteria-style benefits

• Annual lump sum or monthly bonus
• Salary versus benefits

ABILITY TO PAY • Organization’s financial performance

• Expected future earnings

ECONOMIC AND LABOR • Inflation rate

MARKET FACTORS • Industry pay standards

• Unemployment rate

IMPACT ON ORGANIZATIONAL • Increase in costs

PERFORMANCE • Impact on performance

EXPATRIATE COMPENSATION • Cost-of-living differentials

• Managing related equity issue

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 Managing Reward Systems (cont’d)

• Pay Secrecy
– Employer makes no information available to
employees regarding other employees’ salaries,
percentage raises, salary ranges and requires
employees to not reveal their compensation
• Expatriate Compensation
– Compensation packages of employees on overseas
assignments must be adjusted to account for
differences in costs of living and working conditions in
working aboard versus their home base

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 Organizational Behavior in Action
• After reading the chapter:
– Isn’t job enlargement just another way that management
can get more work out of employees?
– Which flexible work arrangement appeals the most to
you?
– On a scale of 1 (weak) to 10 (strongly), how strongly
linked are course grades to the actual performance
capabilities of most students?

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