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Lecture 6

COMM 222 Lecture Notes - Lecture 6: Telecommuting


Department
Commerce
Course Code
COMM 222
Professor
John Vongas
Lecture
6

Page:
of 4
I. Money as a Motivator
The money that employees receive in exchange for organizational membership is usually a package made up of pay and various
other fringe benefits that have dollar values, such as insurance plans, sick leave, and vacation time. We are mainly concerned with
the motivational characteristics of pay. Employees and managers, however, seriously underestimate the importance of pay as a
motivator.
Motivation theories suggest that money can be a motivator to the extent that it satisfies a variety of needs, is highly valent, and it is
clearly tied to performance. Research has found that financial incentives and pay-for-performance plans increase performance and
lower turnover. In general, the ability to earn money for outstanding performance is a competitive advantage for attracting,
motivating, and retaining employees.
A. Linking Pay to Performance on Production Jobs
The prototype of all schemes to link pay to performance on production jobs is piece-rate. Under a piece-rate system, workers are
paid a certain sum of money for each completed unit of production completed. Various schemes that link pay to performance on
production jobs are called wage incentive plans which often offer a bonus for production over a minimum quota. These wage
incentives have often resulted in increases in productivity.
B. Potential Problems with Wage Incentives
Despite their theoretical and practical attractiveness, wage incentives have some potential problems when they are not managed
with care.
Lowered Quality. It is sometimes argued that wage incentives can increase productivity at the expense of quality. While adequate
systems can usually be put in place to monitor and maintain quality in manufacturing operations, wage incentives that increase
"through-put" in service contexts are more difficult to control.
Differential Opportunity . A threat to the establishment of wage incentives exists when workers have differential opportunities to
produce at a high level. Sometimes access to raw materials or the quality of production equipment can give some workers an unfair
advantage over others in their opportunity to earn incentives.
Reduced Cooperation. Wage incentives that reward individual productivity might decrease cooperation among workers who might
hoard materials intended for common use or neglect common tasks like house-keeping that do not contribute directly to production
quotas.
Incompatible Job Design. In some cases, the way jobs are designed can make it very difficult to install wage incentives. It is very
difficult to identify individual productivity in such contexts as assembly line work or where teams are large. As the size of the team
increases, the relationship between any individual’s productivity and his or her pay decreases
Restriction of Productivity. A chief psychological impediment to the use of wage incentives is the tendency for workers to restrict
productivity. Restriction of productivity refers to the artificial limitation of work output that can occur under wage incentive
plans. Workers come to an informal agreement about what constitutes a fair day's work and artificially limit their work output.
C. Linking Pay to Performance on White-Collar Jobs
Compared with production jobs, evaluating white-collar performance is more difficult because there are fewer objective performance
criteria to which pay can be tied. Attempts to link pay to performance on white-collar jobs are often called merit pay plans. Just
as straight piece-rate is the prototype for most wage incentive plans, there is also a prototype for most merit pay plans: Periodically
(usually yearly), managers are required to evaluate the performance of employees on some form of rating scale or by means of a
written description of performance. Using these evaluations, the managers then recommend that some amount of merit pay be
awarded to individuals over and above their basic salaries. This pay is usually incorporated into the subsequent year’s salary. Most
companies employ these plans, although their implementation is often ineffective since many individuals do not perceive a link
between their job performance and their pay.
D. Potential Problems with Merit Pay Plans
As with wage incentive plans, merit pay plans have several potential problems if employers do not manage them carefully.
Low Discrimination. A major flaw with merit pay plans is that managers might be unable or unwilling to discriminate between good
performers and poor performers.
Small Increases. Merit increases are often simply too small to act as effective motivators, especially if they are spread out over an
entire year and combined with other things like cost of living allowances. To overcome this problem, some companies pay a lump
sum bonus which is merit pay that is awarded in a single payment and not built into base pay.
Pay Secrecy. Since most companies consider salary information confidential, employees that receive merit pay have no ability to
assess the relative value of what they receive which reduces its motivation potential. Further, research has shown that, in the
absence of accurate information, managers tend to overestimate the salaries of peers and subordinates, while underestimating the
salaries of superiors.
E. Using Pay to Motivate Teamwork
Given the highly individual orientation of wage incentives and merit pay, some organizations have either replaced or supplemented
individual incentive pay with plans designed to foster more cooperation and teamwork.
Profit Sharing. Profit sharing is one of the most commonly used group-oriented incentive systems. In years in which the firm
makes a profit, some of this is returned to employees in the form of a cash bonus or a retirement supplement. However, it is unlikely
that these plans are highly motivational. Too many factors beyond the control of individual employees can intervene in the
determination of a company’s profit. It is also difficult to see the impact of one's efforts on overall outcomes. They work best in
smaller firms that regularly turn a profit.
Employee Stock Ownership Plans (ESOPs). Employee stock ownership plans (ESOPs) are incentive plans that allow
employees to own a set amount of a company’s shares and provide employees with a stake in the company’s future earnings and
success. Employees are sometimes allowed to purchase shares at a fixed price and in some cases the organization will match
employee contributions. However, like profit sharing, these programs work best in small firms that regularly turn a profit. Besides
being difficult to see the connection between one’s own efforts and company profits, ESOPs lose their motivational potential in a
weak economy when a company’s share price goes down.
Gainsharing Plans. Gainsharing plans are group incentive plans based on improved productivity or performance over which the
workforce has some control. This often includes reductions in the cost of labour, material, or supplies. When measured costs
decrease, the company pays a monthly bonus according to a predetermined formula that shares this “gain” between employees and
the firm. The most common of these plans is the Scanlon Plan.
Skill-Based Pay. Also called "pay for knowledge", skill-based pay is a system in which people are paid according to the number
of job skills they have acquired. The idea is to motivate employees to learn a wide variety of work tasks irrespective of the job that
they might be doing at any given time. Skill based pay can provide incentives for a more flexible work force, but training costs are
high.
II. Job Design as a Motivator
The use of job design as a motivator represents an attempt to capitalize on intrinsic motivation. The goal of job design is to identify
the characteristics that make some tasks more motivating than others and to capture these characteristics in the design of jobs.
A. Traditional Views of Job Design
From the advent of the Industrial Revolution until the 1960s, the prevailing philosophy regarding the design of most non-managerial
jobs was job simplification. The zenith of job simplification occurred in the early 1900s when industrial engineer Frederick Winslow
Taylor developed his principles of Scientific Management. Taylor advocated extreme division of labour and specialization, and careful
standardization and regulation of work activities and rest pauses.
While responsible for initial gains in both workplace productivity and employee standard of living, in recent years, behavioural
scientists have begun to question the impact of job simplification on performance, customer satisfaction, and the quality of working
life.
B. Job Scope and Motivation
Job scope can be defined as the breadth and depth of a job. Breadth refers to the number of different activities on the job, while
depth refers to the degree of discretion or control the worker has over how the job is performed. The classic example of a low-scope
job is the traditional assembly line job. High scope jobs that are both broad and deep provide more intrinsic motivation and are the
most satisfying to workers.
One way to increase the scope of a job is to assign employees stretch assignments that offer employees challenging opportunities to
broaden their skills by working on a variety of tasks with new responsibilities.
C. The Job Characteristics Model
The Job Characteristics Model proposes that there are several “core” job characteristics that have a certain psychological impact on
workers. In turn, the psychological states induced by the nature of the job lead to certain outcomes that are relevant to the worker
and the organization. Several other factors known as moderators influence the extent to which these relationships hold true.
Core Job Characteristics. There are five core job characteristics that affect worker motivation. Higher levels of these characteristics
should lead to more favourable outcomes. Skill variety is the degree to which a job provides the opportunity to do a variety of
different activities using various skills and talents. Autonomy is the degree to which the job provides freedom to schedule one’s
own work activities and decide work procedures. Task significance is the extent to which the job has a substantial impact on
other people. Task identity is the extent to which a job involves doing a complete piece of work, from beginning to end.
Feedback is information about the effectiveness of one’s work performance.
A questionnaire called the Job Diagnostic Survey (JDS) is used to measure the core characteristics of jobs and is used to determine
the motivating potential of a job. The motivating potential of a job measures how well a given job scores in motivating workers. The
overall motivating potential of a job can be calculated by the following formula:
Motivating Potential Score =
Skill Task Task
variety + identity + significance x Autonomy x Job feedback
3
Critical Psychological States. The Job Characteristics Model argues that work will be intrinsically motivating when it is perceived as
meaningful, when the worker feels responsible for the outcomes of the work, and when the worker has knowledge about his or her
work progress. Skill variety, task identity, and task significance affect the meaningfulness of the job; autonomy affects responsibility;
and feedback affects knowledge of results.
Outcomes. The presence of the critical psychological states leads to a number of outcomes that are relevant to both the individual
and the organization including high intrinsic work motivation, high "growth" satisfaction, high general job satisfaction, and high work
effectiveness.
Moderators. Jobs that are high in motivating potential do not always lead to favourable outcomes. Certain moderator or contingency
variables intervene between job characteristics and outcomes. One of these is the job-relevant knowledge and skill of the worker
which must be high if workers are to respond favourably to jobs that are high in motivating potential. Growth need strength
refers to the extent to which people desire to achieve higher-order need satisfaction by performing their jobs. Generally, workers with
high growth needs will be most responsive to challenging work. Finally, workers who are dissatisfied with the context factors
surrounding the job (such as pay, supervision, and company policy) will be less responsive to challenging work than more satisfied
workers.
Research Evidence. Tests of the Job Characteristics Model have been very supportive of the basic prediction of the model in that
workers tend to respond more favourably to jobs that are high in motivating potential. Where the model seems to falter is in its
predictions about growth needs and context satisfaction. Evidence that these factors influence reactions to job design is weak or
contradictory.
D. Job Enrichment
Job enrichment is the design of jobs to enhance intrinsic motivation, quality of working life, and job involvement. Job
involvement is a cognitive state of psychological identification with one’s job and the importance of work to one’s total self-image.
Employees who have enriched jobs tend to have higher levels of job involvement, and job involvement is positively related to job
satisfaction and organizational commitment. Employees who are more involved in their job are less likely to quit.
In general, enrichment involves increasing the motivating potential of jobs via the arrangement of their core characteristics. Many job
enrichment schemes combine tasks, establish client relationships, reduce supervision, form teams, or make feedback more direct.
Combining tasks. This involves assigning tasks that might be performed by different workers to a single individual.
Establishing external client relationships. This involves putting employees in touch with people outside the organization who depend
on products or services.
Establishing internal client relationships. This involves putting employees in touch with people who depend on their products or
services within the organization.
Reducing supervision or reliance on others. The goal here is to increase autonomy and control over one’s own work.
Forming work teams. Management can use this format as an alternative to a sequence of “small” jobs that individual workers
perform when a product or service is too large or complex for one person to complete alone.
Making feedback more direct. This technique is usually used in conjunction with other job design aspects that permit workers to be
identified with their “own” product or service.
E. Potential Problems with Job Enrichment
Despite the theoretical attractiveness of job enrichment as a motivational strategy, enrichment can encounter a number of
challenging problems.
Poor Diagnosis. A lack of careful diagnosis can bring about errors like increasing job breadth without changing any other critical job
characteristics, a practice known as job enlargement. The result is simply more tasks at the same level without any changes in
the other core characteristics. Also, jobs may be enriched that are already seen as too rich by those working in them (some refer to
this a job engorgement).
Lack of Desire or Skill. Some workers do not desire the added responsibility that an enriched job often entails. Alternatively, they
may lack the skills and competence necessary to perform enriched jobs effectively.
Demand for Rewards. The development of new skills and greater responsibility that accompany job enrichment often encourage
workers to seek additional extrinsic rewards like extra pay.
Union Resistance. Traditionally, North American unions have not been enthusiastic about job enrichment. Unions have tended to
equate narrow job specialization with the preservation of jobs and resist the combination of tasks and team approaches.
Supervisory Resistance. Often the autonomy that workers obtain through job enrichment is seen by their supervisors as
"disenriching" their own jobs. Some organizations have responded to this problem by effectively doing away with direct supervision
of workers performing enriched jobs. Others use the supervisor as a trainer and developer of individuals on enriched jobs.
III. Management by Objectives