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Ch 5 - Motivation in Action.docx

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University of British Columbia
COMM 292
Leah Sheppard

Motivation in Action Chapter 5 From Theory to Practice: The Role of Money  Most commonly used reward – most emotionally meaningful object in contemporary life  Extrinsic motivator  Men value money more than women  Relationships in the workplace > Money Creating Effective Reward Systems  Pay is not a primary factors for job satisfaction  BUT, it is important when you’re trying to keep top talent (CEO’s, managers)  Options: lead, match or lag the market in pay Four Major Strategic Decisions that Need to be Made: What to Pay: Establishing a Pay Structure  Balancing internal equity and external equity o Internal equity – the worth of the job to the org. – established through job evaluation o External equity – competitiveness of org.’s pay to other orgs. in the industry  Cost of paying below market standards: higher turnover rate  Pay  highest single operating cost o Paying too much  products/services of the org. become more expensive How to Pay: Rewarding Individuals through Variable-Pay Programs  Move away from paying based on credentials/tenure  toward variable-pay programs  Bases a portion of an employee’s pay on some individual, group or organizational measure of performance  Common with salespeople and executives; non-unionized companies  Turns orgs.’ fixed cost into a variable cost Individual Based Incentives  Piece-rate wages – paid a fixed sum for each unit of production completed o Pure piece-rate – no base salary o Commission for salespeople  Merit-based pay – based on performance appraisal ratings o Advantage: allow employers to differentiate pay based on performance o Increases to the base salary of those who have a positive performance report o Limitations: based on annual performance appraisal; fluctuates based on economic conditions – affects pay raise pool; resisted by unions  Bonuses – rewards employees for recent performance rather than historical performance o One time rewards for defined work o Disadvantage: can cause workplace politics  negative behavior  Skill-based pay – sets pay levels on the basis of how many skills employees have or how many jobs they can do o Aka competency-based; knowledge-based o Increase flexibility of workforce  interchangeable employees o Facilitates communication across the org. o Downside: “top out” – learn everything they could possibly learn  hit a cap  no more challenging tasks; doesn’t address level of performance Group Based incentives  Gainsharing – improvements in group productivity determine the total amount of money to be shared o Productivity savings can be divided up between the company and employees o Focuses on productivity gains rather than profits  Rewards behaviors that are less influenced by external factors  Can still receive rewards even if the business is not too profitable Organizational Based Incentives  Profit-sharing plans – employer shares profits with employees based on a predetermined formula o Can distribute direct cash or stock options o Focus is on financial results o Ignore factors: customer service, employee development o Expectancy theory perspective: employees will be less motivated during economic downturns because likelihood of significant bonus is low o Most effective in situations with high involvement, more teamwork, encouraged participation  Stock options and Employee stock ownership plans o ESOP – company-established benefit plan in which employees acquire stock as part of their benefits o Employees adopt the perspective of top management by making them “owners” o Stock options – right to buy stocks in the company for a guaranteed price o Canada’s tax environment is not very flexible to this strategy o Research Findings:  Increased employee satisfaction and work motivation  It works because employees psychologically experience ownership over the firm  Financial stake + opportunity to exercise influence over the business Challenges to Pay for Performance Programs o Teamwork – emphasis needs to be on team-based rewards, not individual o Unions – paid on basis of seniority and job categories; few opportunities for pay-for-performance  Hurts cooperation; leads to competition between workers; may create stressful work environment o Public Sector employees – hard to measure productivity because it’s mostly based on a service provided  Best strategy: Goal Setting Theory: goal difficulty & goal specificity = higher motivation o Ethical Considerations – employees manipulating performance results to increase their bonuses  financial crisis 2008 Flexible Benefits: Developing a Benefits Package  Flexible benefits – benefits plan that allows each employee to put together a benefits package individually tailored to his or her own needs and situation  Related to Expectancy Theory: organizational rewards should be linked with employee’s personal goals  Choose compensation package that satisfies their current needs most  Tailored based on: age, marital status, spouse’s benefits package, number and age of dependents, etc  Modular Plans – predesigned packages of benefits with each module put together to meet the needs of a specific group (single, single parent, etc.) of employees  Core Plus Plans – core of essential benefits + a selection of variable others o Benefit credits – allows employee to “purchase” more benefits  Flexible Spending Accounts – set aside a $ amount offered in the plan to pay for particular services (eye care, dental premiums) o Don’t have to pay taxes on the $ they spend out of these accounts  Increases employees take-home pay Intrinsic Rewards: Employee Recognition Programs  Expectancy Theory: key component of motivation is link between performance and rewards  having your behavior recognized  Linking Employee Recognition Programs and Reinforcement Theory o Most powerful motivator in the workplace = recognition (Reinforcement Theory) o Recognition immediately after desired behavior = encourages repetition o Celebrate team successes = enhance team cohesiveness and motivation  Employee Recognition in Practice o Recognizing employees’ performances cost little or no money o Sending thank you notes, putting employees in prestigious committees, offer more training and advancement opportunities, o Reduces turnover Caveat Emptor: Apply Motivation Theories Wisely Motivation Theories are Culture-Bound  Motivation theories do not work the same way throughout the world and in different cultures  China’s reward structure is undergoing a fundamental shift: equal pay  pay for performance  Mexico: immediate feedback  daily incentives system  High cultural value on uncertainly avoidance  pay based on objective measures (skill or seniority)  High cultural value on individualism  individual performance: pay for performance, individual incentives, stock options  High cultural value on humane orientation  work-family balance: social benefits & programs (child care, maternal leave, sabbaticals) Evaluating Motivation Theories Cross-Culturally o Current motivation theories were developed in the US so they don’t apply seamlessly in other countries o Canada and US  rely heavily on extrinsic motivation o Japanese  emphasis on group processes providing motivation o Adjustments to Maslow’s Hierarchy  High uncertainty avoidance  security would be on top  High humane orientation  social needs on top o Collectivist cultures (Central and Eastern E
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