Textbook Notes (363,019)
Canada (158,147)
BUS 272 (246)
Chapter 5

OB Chapter 5 - Motivation in Action.docx

7 Pages
Unlock Document

Simon Fraser University
Business Administration
BUS 272
Christopher Zatzick

Chp 5: Motivation in Action Creating Effective Reward Systems Four major strategic rewards decisions: 1. What to pay employees - establishing a pay structure  Balancing internal equity and external equity o Internal Equity - The worth of the job to the organization established through technical process called job evaluation o External Equity - The external competitiveness of an organization's pay relative to pay elsewhere in its industry established through pay surveys 2. How to pay individual employees - variable-pay plans and skill-based pay plans  Variable-Pay Program - A reward program in which a portion of an employee's pay is based on some individual and/or organizational measure of performance o Allows companies to fluctuate pay quicker in response to the economy, changing fixed labour costs to more variable costs Individual-Based Incentives  Piece-Rate Pay Plan - An individual-based incentive plan in which employees are paid a fixed sum for each unit of production completed o Often modified where employees earn a base hourly wage plus a piece-rate differential  Merit-Based Pay Plan - An individual-based incentive plan based on performance appraisal ratings o Effective because individuals perceive strong relationship between performance and rewards o Based on performance appraisals can make it valid or invalid o Sometimes pay raise pool fluctuates based on economic conditions, not performance o Unions typically resist merit-based pay plans  Bonus - An individual-based incentive plan that rewards employees for recent performance rather than historical performance o Incentive effects higher because it rewards recent performance  Skill-Based Pay - An individual-based incentive plan that sets pay levels on the basis of how many skills employees have or how many jobs they can do o Increase flexibility in workforce, employee skills are interchangeable o Employees get frustrated when they learn all the skills o Don't address level of performance o Skills acquired may not be needed immediately o Is not agreed to be equitable Group-Based Incentives  Gainsharing - A group-based incentive plan in which improvements in group productivity determine the total amount of money to be shared o Focus on productivity allows employees to receive incentive even when organization isn't profitable Organizational-Based Incentives  Profit-Sharing Plan - An organization-wide incentive plan in which the employer shares profits with employees based on a predetermined formula o Focus on past financials, ways to cut cost today without considering longer-term needs o Tend to ignore factors such as customer service, not directly linked to profits  Employee Stock Ownership Plan (ESOP) - A company-established benefit plan in which employees acquire stock as part of their benefits 3. What benefits to offer - flexible benefits Flexible Benefits - A benefits plan that allows each employee to put together a benefits package individually tailored to his or her own needs and situation Three most popular types of benefit plans  Modular Plans - Predesigned packages of benefits, with each module put together to meet the needs of a specific group of employees  Core-Plus Plans - Consist of a core of essential benefits and a menu-like selection of other benefit options from which employees can select and add to the core  Flexible Spending Accounts - Allow employees to set aside up to the dollar amount offered in the plan to pay for particular services 4. How to construct employee recognition programs o Recognition can take many forms, informal or formal o Rewarding a behaviour with recognition immediately following that behaviour is likely to encourage is repetition o Recognizing an employee's superior performance often costs little or no money Caveat Emptor: Apply Motivation Theories Wisely October-10-11 2:08 PM Motivation Theories Are Culture-Bound  US workers rather have Rolex watches or expensive dinners, while Japanese workers wanted a night out sale team bowling  Productivity in Moscow didn't increase for Saturday shift because rewards have little impact GLOBE/Hofstede Cultural Reward Preference Examples Dimension High uncertainty avoidance Certainty in compensation systems: Greece  Seniority-based pay Portugal  Skill-based pay Japan Individualism Compensation based on individual Australia performance UK  Pay for performance US  Individual incentives  Stock options Humane orientation Social benefits and programs: Sweden (masculinity vs. Femininity dimension) Flexible benefits Norway  Workplace child-care programs Netherlands  Career-break schemes  Maternity leave programs Provide Performance Feedback Managers are often reluctant to give performance feedback. 1. They are often uncomfortable in discussing performance weaknesses directly with employees 2. Employees tend to become defensive when their weaknesses are pointed out 3. Employees tend to have an inflated assessment of their own performance Beware Signals Sent by Rewards 1. Individuals are unable to break out of old ways of thinking about rewards o Management emphasizes quantifiable behaviours and is reluctant to change the existing system o Employees feel entitled 2. Organizations often don't look at the big picture of performance system 3. Both management and shareholders focus on short-term results Can We Eliminate Rewards? Creating a Motivating Work Environment Alfie Kohn proposes actions organizations can take to create motivating work environment  Abolish Incentive Pay: Pay employees generous
More Less

Related notes for BUS 272

Log In


Don't have an account?

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.