OB Final Materials
Chapter 5: Motivation in action
The role of money
1. Is the most commonly used reward in organization
2. Money help needs get met, but it is not on the top priority to make a job satisfied, relationship with others is more
important to job satisfaction
Effective reward system
Balancing internal equity: worth of job (use job evaluation) and external equity (the external competiveness of an
organization’s pay relative to pay elsewhere in the industry (pay survey))
Organization pay people based on the length of service but not using the variable-pay program
A. Variable pay program: reward system in which a portion of an employee’s pay is based on some individual and
organization measure of performance.
- Individual based Incentive
1. Piece-rate pay plan: paid a fixed sum for each unit of production completed
2. Merit-based pay: individual based incentive plan based on performance appraisal rating (provide increases to
3. Skill-based pay: set pay levels on basis of how many skills employees have. Problem: based on skill rather than
- Group-based Incentives
Gain sharing: incentive plan where improvement in group productivity determines total amount of money that is
Focus on productivity gains, not profits
Employees receive reward even organization is not profitable
- Organization-based Incentives
1. Profit-sharing plan: organization wide incentive plan in which the employer shares profits with employees
based on a predetermined formula
2. Stock options and employee stock ownership plan (ESOP)
Stock option: give employees the right to buy stocks in the company
Employee stock ownership plan: A company established benefit plan in which in which employees
acquire stock as part of their benefits
This increases employees’ JOB SATISFACTION and WORK MOTIVATION
It is the most incentive plan to increase productivity
B. Flexible benefits: developing a benefits package. It is a benefit plan that allows each employee to put together a benefit
package individually tailored to his or her own need and situation. This can depend on AGE, MARITAL STATUS, NUMBER
The benefit plan that use before is: ONE BENEFIT PLAN FIT ALL
C. Intrinsic rewards: recognition program. Broad activity, from a spontaneous and private Thank You to widely publicized
formal program in which specific type of behavior are encouraged and procedures recognized
1. Linking Employee recognition Programs and Reinforcement Theory: rewarding a behavior with recognition
immediately following that behavior is likely to encourage its repetition.
2. Employee recognition in practice: recognition of an employee is often cost little or no money and employee
recognition may reduce turnover in organization.
Expectancy theory: individuals will generally perform in ways that raise the probability of receiving the rewards offered.
Management reward follies
We hope for… but we reward
1. Teamwork and collaboration the best team members
2. Innovative thinking and risk-taking proven methods and not making mistakes
3. Development of people skills technical achievement and accomplishment
4. Employee involvement and empowerment Tight control over operations and resources
5. High achievement another year’s effort
6. Long-term growth; environmental responsibility quarterly earning
7. Commitment to total quality shipping on schedule, even with defect
8. Candour; surfacing bad new early report good news, whether it is true or not; agreeing with the manager,
whether or not he is right
Three obstacles to ending these follies
1. Individual are unable to break out of old ways of thinking about reward and recognition practices.
2. Organization often do not look at the big picture of their performance system
3. Both managers and shareholders often focus on short-term results.
Can we eliminate rewards? Alfie Hohn he wrote a book called “ PUNISHED BY REWARDS”. It suggests that organization should focus less on
rewards, more on creating motivating environment.
1. Abolish incentive pay: pay generously and fairly, take pay off their mind, so that they will focus on goal of
2. Re-evaluation evaluation: structure the performance evaluation system more like a two-way conversation to
trade ideas and question. The discussion of performance should not ties to compensation
3. Create condition for authentic motivation: not put employee under surveillance, listen to employees’ point of view
and provide feedback
4. Encourage collaboration: provide support to create well functioning-team
5. Enhance content: match people to job, increase meaningfulness of job. People are more motivated when they can
learn new skills in job.
6. Provide choice: involve employee in decision-making. Participative management.
Definition: the way the elements in a job are organized.
Research in a job design suggests that the way the elements in a job are organized can act to increase or decease effort.
Job characteristic model: the model that proposes that any job can be described in terms of 5 core job dimensions: skill
variety, task identity, task significance, autonomy, feedback.
1. Skill variety: the degree to which the job requires a variety of different activities so the employee can use a
number of different skills and talents
2. Task identity: The degree to which the job requires completion of a whole and identifiable piece of work.
3. Autonomy: The degree to which the job provides substantial freedom, independence, and discretion to the
individual in scheduling the work and determining the procedures to be used in carrying it out.
4. Feedback: The degree to which carrying out the work activities required by the job results in the individual
obtaining direct and clear info about the effectiveness of his performance.
Every dimension can be rated as high or low.
1. The fist three dimensions help to experience meaningfulness of the work: If task is meaningful, employee will view the
job as important, valuable and worthwhile
2. The fourth dimension refers to the responsibility for the outcome: employee feels sense of personal responsibility fro
result when the job give them greaten autonomy
3. The last dimension is the actual result of the work activities: Feedback helps employees know whether they are
Motivating potential score: a predictive index suggesting the motivation potential in a job
MPS = ( (skill variety + task identity + task significance)/ 3) * autonomy * feedback
How can jobs be redesigned?
1. Job rotation: shifting worker from 1 task to another, prevent boredom and increase motivation through
2. Job enrichment: the vertical expansion of jobs, increase degree to which employees control planning, execution,
evaluation of their work. Expand freedom, independence, increase responsibility. Reduces absenteeism, turnover,
increase satisfaction (contingency)
Alternative work arrangement:
1. Flextime: An arrangement where employees work during a common core period each day but can form their total
workday from a flexible set of hours outside the core.
2. Job sharing: having 2 or more people split 40hrs week. The problem is that it is hard to find compatible pairs
3. Telework: An arrangement where employees do their work outside the office anywhere they have access to
smartphones, tablets, and other mobile computing devices. The problem is that this will cause isolation; employee
feels that they are missing out.
Definition: a participative process that use the input of employees and is intended to increase employee commitment to an
2 major forms of employee employment
1. Participative management: a process in which subordinates share a significant degree of decision-making power
with their immediate superiors
2. Representative participation: A system in which employees participate in organizational decision making through
a small group of representative employees
Motivation: Putting it all together
4 basic emotional drive (needs) guide individuals
1. Drive to acquire: meet through organization reward
2. Drive to bond: meet through creating culture that promotes teamwork, collaboration, openness, friendship 3. Drive to comprehend: meet through job design and creating job that are meaningful, interesting, challenging
4. Drive to defend: meet through organization’s performance, management and resource allocation process (fairness)
Reward preference in different countries
Globe/Hofstede Reward preference Examples
High uncertainty avoidance Certainty in compensation system: Greece, Portugal, Japan