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Chapter 6

COMM 151 Chapter Notes - Chapter 6: Job Satisfaction, Employee Retention, Microsoft Powerpoint

Course Code
COMM 151
Christopher Miners

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COMM 151 Chapter 6 Notes Motivation in Practice
Money as a Motivator
Pay is motivational for people who have strong lower-level needs
Expectancy Theory states that pay satisfies a variety of needs therefore it should be a good
motivator to the extent that it is clearly tied to performance
Pay for performance plans have increased performance and lower turnover
Piece Rate: A pay system in which individual workers are paid a certain sum of money for each
unit of production completed incentive = make more units, get more money
Wage incentive plans: Various systems that link pay to performance on production jobs
Usually leads to a big increase in productivity
Problems with Wage Incentive
a) Lowered Quality
Increase productivity at the expense of quality, want to make more units
b) Differential Opportunity
Workers will differ in the expectancy that they can produce at a level
If the supply of raw materials or equipment varies in different workplaces, some
workers will be at a disadvantage under an incentive system
c) Reduced Cooperation
Decrease cooperation among workers and team work due to the pressure to
produce as much as possible to earn a higher pay
d) Incompatible Job Design
The way jobs are designed can make it difficult to implement wage incentives
On an assembly it is difficult to reward individual contribution to productivity
When working in teams, as the size of the team increases the relationship
between an individual’s productivity his/her pay decreases
e) Restriction of Productivity: The artificial limitation of work output that can occur under
wage incentive plans
Workers feel that increased productivity due to the incentive will lead to
reduction in the workforce so they limit their production performance
Merit pay plans: Systems that attempt to link pay to performance on white-collar jobs
CEO’s are paid bonus when firm is profitable
Managers evaluate employees via rating scale or written description to award bonuses
Individuals that see a strong link between rewards & performance tend to perform better
Merit pay used to attract and retain employees as alternatives to wage increases
This method is ineffective: Employees don’t see correlation between pay & performance
Problems with Merit Pay Plans
Low Discrimination
Managers unable to differentiate between good and poor performers
Managers feel that they have to rate their employees as equals performers
in order to be fair some employees are over or under rewarded
Small Increases too small to be effective motivators
Merit is abandoned when inflation occurs or when they encounter
economic difficulties when motivation is needed, they don’t give it
Organization fails to communicate how much it has raised merit
Lump sum bonus: Merit pay that is awarded in a single payment and not
built into base pay

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COMM 151 Chapter 6 Notes Motivation in Practice
Pay Secrecy
No means of comparing the merit pay to other employees even if
distributed equally
Employees “invent” salaries therefore reduce satisfaction and motivation
as peers underestimate the pay of their superiors while managers
Using Pay to Motivate Teamwork Refer to pg. 191
Firms replaced or supplemented individual incentive pay with plans designed to foster more
cooperation and teamwork orgs choose pay plans that supplement their strategic needs
Profit Sharing: The return of some company profit to employees in the form of cash or bonus a
retirement supplement based on years of service, base pay, and performance
Unlikely that this is highly motivational
Too many factors can affect profits example the economic conditions
Works best for smaller firms where it is easier to see one’s actual impact on profit
Employee Stock Ownership Plans (ESOPs): Allow employees to own a set of a company’s
shares and provide employees with a stake in the company’s future earnings and success
They attract and retain talent, motivate employee performance, focus their attention, etc.
Creates a culture of ownership and improves employee retention & profitability
Align employees goal w. the interest of the organization because they want org to do well
Best for smaller firms
Gain sharing: A group pay incentive plan based on productivity or performance improvements
over which the workforce has some control
Include reductions in labour, materials or supplies
When costs decrease company pays a monthly bonus so the employees receive a gain
Builds trust and commitment to the formulas to calculate the gains
Includes the entire workforce
Aligns company goals
Skill-Based Pay: People are paid according to the number of job skills they have acquired
Encouraging people to learn a variety of tasks More skills = more pay
Encourage employee flexibility in tasks on self-managed teams this gives them a
broader picture of work process
High training costs since people are learning so many new things
Keeps employees on task
Job Design as Motivator
Using job design as a motivator represents an attempt to capitalize on intrinsic motivation
The goal of job design is to identify the characteristics that make some tasks more motivating
than others and capture these characteristics in the design of other jobs
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