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M H R 300 Study Guide - Midterm Guide: Motivation, Risk Aversion, Nordstrom

Management and Human Resources
Course Code
M H R 300
Min Li
Study Guide

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Topic 4-Part II
What are the problems associated with pay for performance? Mention some of them and
explain one f these problems
If you have pay for performance and one task has more of an impact on your
performance, you will put majority of your attention on this task
You stop putting your attention on other aspects of the position
Detrimental in terms of creativity
Destroy a natural level of intrinsic motivation
What are the basic predictions of the agency model of pay for performance?
Increase in autonomy increases pay for performance
i.e. Nordstrom
Increase in risk aversion decreases pay for performance
Increase in risk decreases pay for performance
Do not use pay for performance in a risky environment
More risk leads to more autonomy which increase pay for performance
Increase in effort aversion decreases pay for performance
Use pay for performance for people who work more hours
What are the relationships among challenges, skills and intrinsic motivation according to M Cs
Vertical axis: challenges
Horizontal axis: skills
Low skill high challenge: anxiety
High skill low challenge: bored
Flow channel: high level of intrinsic motivation
Pay enough or don’t pay at all? Explain
1 control, 3 treatments
Must answer questions from standardized test
Must think hard
Cognitive exercise
Control group
Fixed salary just to participate
1 cent per correct answer
Drop in productivity
1 dollar per correct answer
3 dollars per correct answer
As you keep increasing the incentive
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