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Lecture 5

MGCR 222 Lecture 5: Job Design
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4 Pages
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Fall 2015
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Department
Management Core
Course Code
MGCR 222
Professor
Jean- Nicolas Reyt
Lecture
5

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MGCR222Lecture5JobDesign
1. Incentives and Job Design
Managers can think that their employees are either motivated by:
a. Extrinsic factors
Ex. Payment, awards, avoiding punishment
Mcgregor's 'theory X'
Incentive systems
b. Intrinsic factors
Ex. Challenge, desire to learn, task enjoyment
Mcgregor's 'theory Y'
Job characteristics model
2. Incentive Systems
Incentive systems refer to how (tangible) extrinsic rewards are distributed within an
organization
Ex. What behaviours rewarded, what rewards given
A way to communicate what the organization values
a. Common Types
Salary, raises, promotions
Generally determined by seniority and merit
The relative weight of these factors, and how they are measures, are
key considerations
Pay for performance
Individual employees are rewarded in proportion to their
performance/contributions
Ex. Commission on sales, piece-rates
Can also be implemented at the team-level
Pay for performance plans:
Compensation= s + b*x
Fixed: s = salary
Variable: b = rate of reward contingent on performance
Ex. Piece rate, bonus, profit-sharing, stock options
Performance measure: x = f (effort)
Often imperfect measure of effort and performance
Ex. Sales, stock price, managers evaluation
Considerations: how much of a compensation package should be
contingent on performance?
Depends on a fundamental trade-off:
Motivation:
How important are explicit external incentives
Ex. What other sources of motivation exist for
the job
Risk:

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Description
MGCR222 Lecture 5 Job Design 1.Incentives and Job Design Managers can think that their employees are either motivated by: a.Extrinsic factors Ex. Payment, awards, avoiding punishment Mcgregors theory X Incentive systems b. Intrinsic factors Ex. Challenge, desire to learn, task enjoyment Mcgregors theory Y Job characteristics model 2. Incentive Systems Incentive systems refer to how (tangible) extrinsic rewards are distributed within an organization Ex. What behaviours rewarded, what rewards given A way to communicate what the organization values a.Common Types Salary, raises, promotions Generally determined by seniority and merit The relative weight of these factors, and how they are measures, are key considerations Pay for performance Individual employees are rewarded in proportion to their performancecontributions Ex. Commission on sales, piecerates Can also be implemented at the teamlevel Pay for performance plans: Compensation= s + b*x Fixed: s = salary Variable: b = rate of reward contingent on performance Ex. Piece rate, bonus, profitsharing, stock options Performance measure: x = f (effort) Often imperfect measure of effort and performance Ex. Sales, stock price, managers evaluation Considerations: how much of a compensation package should be contingent on performance? Depends on a fundamental tradeoff: Motivation: How important are explicit external incentives Ex. What other sources of motivation exist for the job Risk:
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