RSM100Y1 Study Guide - Midterm Guide: Safelite, Balanced Scorecard, Belron
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RSM465 Midterm Review
WEEK 1: INTRODUCTION
What motivates people? Pay with performance link, recognition, advancement, training
Positive Psychology: 3 types of happiness
1. Pleasant life – Money and material goods; eventually dies out
2. Good life – doing things, being engaged
3. Meaningful life – achieve things, religion
Rewarding A, while Hoping for B (S. Kerr)
Politics – operative/specific goals are wanted, but vague/crowd-pleasing goals are rewarded (with
Medicine – labelling a sick person well or a well person sick…they are more prone to overemphasize the
symptoms of a well person (which is not compatible with morality)
Professors – promotions based on research, not teaching
Sports – coaches like to talk about teamwork, but individual stats are used for rewards and pay
Business – often seek long term growth, but reward quarterly earnings
We overemphasize objective, highly visible, and easily quantifiable behaviours in rewards. There is
hypocrisy because defense attorneys fund US judge’s campaigns, not prosecutors, which make
them less tough on crime. We also emphasize morality or equality rather than efficiency.
3 Types of Motivation
Basic motivation for survival
Motivation based on rewards and punishments, such as carrot and stick approaches (work for
Intrinsic motivation, which allows you to do things for the satisfaction of simply doing them,
conducive to creativity, generates the most long term happiness
According to Daniel Pink, motivation comes from Autonomy, Mastery, and Purpose. Autonomy is our
desire to be self-directed. Mastery is the urge to get better at stuff – look for challenges. Purpose –
have a goal. If-then rewards are incentives that only work for mechanical tasks, but not cognitive
ones. For cognitive ones, offer praise and feedback, as well as autonomy.
Agency Theory – resolving principal and agent problems: The two problems that agency theory
addresses are: 1.) the problems that arise when the desires or goals of the principal and
agent are in conflict, and the principal is unable to verify (because it difficult and/or
expensive to do so) what the agent is actually doing; and 2.) the problems that arise
when the principal and agent have different attitudes towards risk.
Process Theories - deal with the “process” of motivation and is concerned with “how” motivation occurs
(expectancy, goal setting)
Content Theories - why human needs change over time, and explains what DRIVES behaviour (X and Y
Theory, ERG theory (Existence, Relationship, and Growth).
Lecture 2: Incentive and Motivation at Work
Productivity – the ratio of output per unit of input
How to Improve It:
1. Scientific Management – standardization of steps, time-motion studies, piece rate and
2. Financial Control (incentives)
3. Human Relations (work environment)
The Hawthorne effect — an increase in worker productivity produced by the psychological stimulus of
being singled out and made to feel important.
The aptitudes of individuals are imperfect predictors of job performance. Although they give some
indication of the physical and mental potential of the individual, the amount produced is strongly
influenced by social factors.
Informal organization affects productivity. The Hawthorne researchers discovered a group life among
the workers. The studies also showed that the relations that supervisors develop with workers tend
to influence the manner in which the workers carry out directives.
Work-group norms affect productivity. The Hawthorne researchers were not the first to recognize that
work groups tend to arrive at norms of what is a fair day's work; however, they provided the best
systematic description and interpretation of this phenomenon.
The workplace is a social system. The Hawthorne researchers came to view the workplace as a social
system made up of interdependent parts.
Does Money Motivate Employees?
Amount of money and relative size matters.
In marketing, the decoy effect (or asymmetric dominance effect) is the phenomenon whereby
consumers will tend to have a specific change in preference between two options when also
presented with a third option that is asymmetrically dominated. An option is asymmetrically
dominated when it is inferior in all respects to one option; but, in comparison to the other option, it
is inferior in some respects and superior in others.
Non-Monetary Rewards/Social Norms
Market Norm & Social Norm
◦ Employee incentives
Purpose of Gift
◦ Employee Benefits
Social Norms takes longer time to establish
◦ Israel daycare experiment
Freakonomics: Why Gangs Live with their Mothers
A crack gang works pretty much like the standard capitalist enterprise: You have to be near the top of
the pyramid to make a big wage. But selling crack is a lot more dangerous than most menial labor.
Anyone who was a member of J. T.'s gang for the four years covered in the notebooks stood a 1-in-4
chance of being killed. That's more than five times as deadly as being a timber cutter, which the Bureau
of Labor Statistics calls the most dangerous job in the United States.
Why Incentive Plans Cannot Work (Alfie Kohn)
Incentives do not alter the attitudes that underlie behaviours, and only work temporarily. In a study
done, quality of performance were not affected by incentive plans. At a manufacturing firm, when
incentive plans were taken away, productivity dropped at first, but came back to original levels. The
true costs of incentives are:
1. Pay is not a motivator – doubling pay does not increase performance, especially if the task is
cognitive in nature
2. Rewards punish – by making bonuses contingent on certain actions, workers feel controlled. Not
receiving a reward that you expected is punitive
3. Reward rupture relationships – people care too much about individual gain, less collaboration
and more competition. Workers attempt to hide problems
4. Rewards ignore reasons –
5. Rewards discourage risk taking – instead of exploring possibilities, they do exactly what they are
required to do and not more
6. Rewards undermine interest – rewards cannot replace true interest in a job. Using money
undermines intrinsic interest.
Getting More Bang for Buck (Mickel and Barron)
Monetary rewards require symbolic meaning to increase the perceived value of rewards and increase
Symbolism for money: : (a) achievement and recognition, (b) status and respect, (c) freedom and
control, and (d) power.
The distribution process can induce value: WHO distributes the reward (if it’s the CEO, then the value
increases). Why the reward is given (for big accomplishments = intrinsic). HOW they’re distributed (
ceremonial awards where the public can see is more meaningful).
Whom is receiving it (the number of ranks of people).
Perception of fairness doesn’t affect symbolic meaning, but organizational outcomes.
Positive psychology: 3 types of happiness: pleasant life money and material goods; eventually dies out, good life doing things, being engaged, meaningful life achieve things, religion. Rewarding a, while hoping for b (s. kerr) Politics operative/specific goals are wanted, but vague/crowd-pleasing goals are rewarded (with winning office) Medicine labelling a sick person well or a well person sick they are more prone to overemphasize the symptoms of a well person (which is not compatible with morality) Professors promotions based on research, not teaching. Sports coaches like to talk about teamwork, but individual stats are used for rewards and pay. Business often seek long term growth, but reward quarterly earnings. We overemphasize objective, highly visible, and easily quantifiable behaviours in rewards. There is hypocrisy because defense attorneys fund us judge"s campaigns, not prosecutors, which make them less tough on crime. We also emphasize morality or equality rather than efficiency.