Chapter 6 - Applied Performance
Thursday, March 7, 2013
THE MEANING OF MONEY IN THE WORKPLACE
• Rewarding people with money is one of the oldest and certainly the most
widespread applied performance practice
• Money relates to our needs, our emotions, and our self-concept. It is a
symbol of achievement and status, a reinforcer and motivator, and a source of
enhanced or reduced anxiety.
• Studies report that money is viewed as a symbol of status and prestige, as a
source of security, as a source of evil, or as a source of anxiety or feelings of
• These attitudes toward money influence an individual's ethical conduct,
organizational citizenship, and many other behaviours and attitudes.
FINANCIAL REWARD PRACTICES
• Financial rewards come in many forms, which can be organized into the four
specific objectives : membership and seniority, job status, competencies, and
• Membership-based and seniority-based rewards (sometimes called “pay for
pulse”) represent the largest part of most paycheques.
o These membership and seniority-based rewards potentially attract job
applicants (particularly those who desire predictable income) and reduce
• The higher worth assigned to a job, the higher the minimum and maximum
pay for people in that job.
• status-based pay potentially motivates employees to compete with each
other for higher-status jobs and to raise the value of their own jobs by
exaggerating job duties and hoarding resources.
• The most common competency-based practices identify specific
competencies within a broad group of jobs as well as core competencies that
are relevant across all job groups.
• The second form of competency-based rewards are skill-based pay plans that
reward employees based on their mastery of specific skill blocks.
• Competency-based rewards motivate employees to learn new skills.
• Individual Rewards :Canadians today continue to receive various forms of
individual-level rewards. Some earn bonuses for accomplishing a specific task
or exceeding annual performance goals.
• Team Rewards : Employees earn bonuses that can exceed half their total
pay based on how much steel is produced by the team. This team-based bonus
system also includes penalties. If employees catch a bad batch of steel before
it leaves the mini-mill, they lose their bonus for that shipment. But if a bad
batch makes its way to the customer, the team loses three times its usual
o Gainsharing plans tend to improve team dynamics, knowledge sharing,
and pay satisfaction. They also create a reasonably strong link between effort and performance because much of the cost reduction and labour
efficiency is within the team's control
• Organizational Rewards the whole organization gets rewarded for
reaching certain performance goals.
• Employee share ownership plans (ESOPs) encourage employees to buy
company shares, usually at a discounted price or through a no-interest loan.
• While ESOPs involve purchasing company shares, share options give
employees the right to purchase company shares at a future date at a
• Profit-sharing plans represent another type of organizational-level reward in
which employees receive bonuses on the basis of the previous year's level of
• The main problem with ESOPs, share options, and profit sharing is that
employees often perceive a weak connection between individual effort and
corporate profits or the value of company shares.
• top-performing companies are more likely to have performance-based
rewards, which is consistent with evidence that these rewards are one of the
high-performance work practices
• Reward systems do motivate most employees, but only under the right
conditions. Here are some of the more important strategies for improving
• Link Rewards to Performance
o Companies also need to apply rewards soon after the performance
occurs, and in a large-enough dose (such as a bonus rather than a pay
increase), so that employees experience positive emotions when they
receive the reward
• Ensure that Rewards are Relevant
o The more employees see a “line of sight” between their daily actions
and the reward, the more they are motivated to improve performance
• Use Team Rewards for Interdependent Jobs
o it is difficult to measure individual performance when employees are
working in teams.
o Team rewards also encourage cooperation, which is more important
when work is highly interdependent
o A third benefit of team rewards is that they tend to support employee
preferences for team-based work.
• Ensure that Rewards are Valued
o It seems obvious that rewards work best when they are valued.
o Executives thought the employees would ask for more money in a
special team reward program. Instead, distribution staff said the most
valued reward was a leather jacket with the Campbell Soup logo on the
back. The leather jackets cost much less yet were worth much more than
the financial bonus the company had intended to distribute
• Watch Out for Unintended Consequences
o Performance-based reward systems sometimes have an unexpected—
and undesirable—effect on employee behaviours.
EXAMPLE: Consider the pizza company that decided to reward its
drivers for on-time delivery. The plan got more hot pizzas to customers on
time, but it also increased the accident rates of the company's drivers
because the incentive motivated them to drive recklessly. JOB DESIGN PRACTICES
• A job is a set of tasks performed by one person.
• Job specialization occurs when the work required to make a toy—or any other
product or service—is subdivided into separate jobs assigned to different
• . Cycle time is the time required to complete the task before starting over
with a new work unit.
• One reason for this higher efficiency is that employees spend less time
changing activities because they have fewer tasks to juggle.
• A second reason for increased work efficiency is that specialized jobs require
fewer physical and mental skills to accomplish the assigned work, so less time
and fewer resources are needed for training.
• A third reason is that shorter work cycles give employees more frequent
practise with the task, so jobs are mastered more quickly.
• A fourth reason why specialization tends to increase work efficiency is that
employees with specific aptitudes or skills can be matched more precisely to
the jobs for which they are best suited.
• scientific management is mainly associated with high levels of job
specialization and standardization of tasks to achieve maximum efficiency.
• According to Taylor, the most effective companies have detailed procedures
and work practices developed by engineers, enforced by supervisors, and
executed by employees.
• Employee turnover and absenteeism tend to be higher in specialized jobs
with very short time cycles. Companies sometimes have to pay higher wages
to attract job applicants to this dissatisfying, narrowly defined work
• Job specialization often r