Class Notes (836,562)
Canada (509,854)
MGHB02H3 (88)
Anna Nagy (7)

Organizational Behaviour Ch 6.doc

13 Pages
Unlock Document

Management (MGH)
Anna Nagy

Organizational Behaviour - Chapter 6 Motivation in Practice M ONEY AS AM OTIVATOR Employers and managers underestimate the importance of pay as a motivator Maslow and Alderfer: pay should prove especially motivational to people with strong lower level needs Pay can also function to satisfy social, self-esteem and self-actualization needs o If you get a pay raise: gives you prestige, signals your competence as a worker and boss cares about you Expectancy Theory says: If pay can satisfy a variety of needs, it should be highly valent and it should be a good motivator to the extent that it is clearly tied to performance financial in incentives have been found to increase performance and lower turnover Research: money is the most important and effective motivator = competitive advantage Piece-Rate: pay system which individual workers are paid a certain sum of money for each unit of production completed o More common is a system where workers are paid a basic hourly wage + a piece-rate differential on top o In some cases, very difficult to measure the productivity of an individual because of the nature of the production process under these circumstance, group incentives are sometimes employed Wage incentive plans: various systems that link pay to performance on production jobs Report: a median productivity improvement of 30% following the installation of piece-rate pay Potential Problems with Wage Incentives Lowered Quality: o Argued that wage incentives increase productivity at the expense of quality o The quality issue can be a problem when employers use incentives to motivate faster 'people processing' such as conducting consumer interviewers on the street Differential Opportunity : o Another threat is when workers have different opportunities to produce at a high level o Access of raw materials supply or equipment varies from place to place, some workers will be at an unfair disadvantage under this system o Workers will differ in the expectancy they can produce at a high level Reduced Cooperation: o May decrease cooperation among workers o To maintain a high wage rate, machinists might hoard raw materials or refuse to carry out maintenance Incompatible Job Design: o The way jobs are designed can make it very difficult to implement wage incentives o On an assembly line, almost impossible to reward individual contributions to productivity o As the size of a team increases, the relationship between any individual's productivity and their pay decreases the impact of your productivity is higher in a team of two Restriction of Productivity: o Under normal circumstances with W/I, we can expect productivity to be distributed in a 'bell-shaped' manner a few low producers, especially high producers and those in the middle range o When they are introduced, workers sometimes come to an informal agreement about what constitutes a fair day's work and can decease the expected benefits of the incentive system o Restriction of productivity: artificial limitation of work output that can occur under wage incentive plans o This can occur b/c workers feel increased productivity will lead to workforce reduction or it will reduce the rate of payment to cut labour costs often occurred before unions o Stories of rate-cutting shortcuts are often passed down from one generation to another in support of restricting output under incentive systems Linking Pay to Performance on White-Collar Jobs White-collar jobs (clerical, professional and managerial) frequently offer fewer objective performance criteria which can be tied o Trustworthy objective indicators of individual performance often difficult to find subjective judgement Merit Pay Plans: systems that attempt to link pay to performance on white- collar jobs o Periodically (yearly), managers are required to evaluable the performance of employees on some form of rating scale = recommends an amount of merit pay awarded to individuals above their basic salaries Since performance indicators on some W-C jobs unclear or highly subjective, merit pay provides a tangible signal the company considers the employee's performance 'on track' M/P plans = one of the most common forms of motivation in Canadian organizations Survey: 83% of organizations with a pay-for-performance system said it was somewhat successful now being ineffective and research suggests it is not related to performance under some M/P plans Potential Problems with Merit Pay Plans Low Discrimination: o Managers might be unable or unwilling to discriminate between good performers and poor performers - Good rating systems rarely employed o Subjective evaluations of performance difficult to make and often distorted by perceptual errors managers might feel only fair response is to rate most employees are equal performers o Equalization strategy of mangers used to prevent conflicts between employees (over-rewards poor and under-rewards good performers) Small Increases: o Threat exists when merit increases are simply too small to be effective motivators o Sometimes when high motivation is needed, the motivational impact of merit pay is removed o Motivational impact is reduced because organization fails to communicate how much of a raise is for merit, and how much is for cost of living Some firms have replaced conventional merit pay with a lump sum bonus Lump Sum Bonus: merit pay awarded in a single payment and not built into base pay Managers must ensure that merit pay ties to performance criteria that truly benefit the organization at that year (not long term goals) Pay Secrecy: o Final threat is the extreme secrecy that surrounds salaries in most organizations o HR Management principle that salaries are confidential information o Even if merit pay is administered fairly, is contingent on performance and is generous, employees might remain ignorant of these facts o No way of comparing their own merit treatment with that of others this secrecy may severely damage the motivation impact of a well-design merit plan (don't inform workers about avg pay for doing same work) o In the absence of better information, employees inclined to 'invent' salaries for others o In general: reduces satisfaction with pay, damage perceptions of the link between performance & rewards and reduce the valence of promotion to a higher level of mgt o Experiment: after pay disclosure for salespeople was implemented, the staff in the experimental group revealed significant increases in Per. & Sat. With pay However, supervisors may have felt pressured to give better ratings under the open pay system (actions open to scrutiny) o If Perform. Eval. Systems are poorly implemented, a more open pay policy = exposure this and managers will evaluate performance in a manner that reduces conflict Using Pay to Motivate Teamwork People sometimes end up pursuing their own agendas at the expense of the goals of their group o Some firms have replaced this w/ plans designed to foster more cooperation/teamwork Profit Sharing: the return of some company profit to employees in the form of a cash bonus / retirement supplement o Unlikely P/S is highly motivational o Greatest problem is that too many factors beyond the control of the workforce (general economy) can affect profits no matter how well ppl perform o Also, hard to see the impact of one`s own actions on profits Employee stock ownership plans (ESOPs): incentive plans that allow employees to own a set amount of a companys shares and provide employees with a stake in the companys future earnings and success Also serve to attract and retain talent, motivate performance, create a culture of ownership, educate employees about the business, conserve cash but substituting options for cash
More Less

Related notes for MGHB02H3

Log In


Join OneClass

Access over 10 million pages of study
documents for 1.3 million courses.

Sign up

Join to view


By registering, I agree to the Terms and Privacy Policies
Already have an account?
Just a few more details

So we can recommend you notes for your school.

Reset Password

Please enter below the email address you registered with and we will send you a link to reset your password.

Add your courses

Get notes from the top students in your class.