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Chapter 5

COMM 292: Chapter 5

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Department
Commerce
Course
COMM 292
Professor
Angela Kelleher
Semester
Winter

Description
COMM 292: Observational Behaviour Chapter 5 From Theory to Practice: The Role of Money  There are personality traits and demographic factors that correlate with and individuals attitude toward money  People who value money highly score higher on competitiveness, materialism and control o Score higher on self-esteem, need for achievement and Type A personality measures  Organizations need to understand individuals' needs when rewarding Creating Effective Reward Systems What to Pay: Establishing a Pay Structure  The worth of the job in the organization and relative to the market determines job pay structure  Paying more may attract better qualified and more motivated employees  Firms that pay below market level may have high turnover or not be able to afford higher salaries How to Pay: Rewarding Individuals through Variable-Pay Programs  Variable-pay programs: a portion of an employee's pay is based on some individual and/or organizational measure of performance  Costs for organizations decline as productivity declines as pay is variable Individual-Based Incentives:  Piece-rate pay: employees are paid a fixed sum for each unit of production completed o Many firms modify this plan and add a base salary to the variable pay plan  Merit-based pay: based on performance appraisal ratings o Individuals perceive a strong relationship between performance and rewards o Separation between the most productive and blow average producers (lower pay increases)  Bonuses: rewards employees for recent performance rather than historical performance o Focus on the recent past, and rewards employees for high productivity or better work ethic o Rewarding individuals based on bonuses can cause problems (financial crisis 2008)  Skill-based pay: sets pay based on how many skills employees have/how many jobs they can do o Employees may top out and not be able to have any more pay increases o Employees may be paid for skills they may not need immediately or ever o Pay is not based on the level of performance which may vary Group-Based Incentives:  Gainsharing: improvements in group productivity determine the total amount of money to be shared o Focuses on productivity gains rather than profits o Rewards specific behaviours that are less influenced by external factors COMM 292: Observational Behaviour Organizational-Based Incentives:  Profit-sharing: employer shares profits with employees based on a predetermined formula o Employees may ignore customer service and employee development o Companies in cyclical industries would see varied results, thus varied profit-sharing o Best in organizations with more teamwork, and managerial philosophy encouraging participation  Stock options and employee stock ownership plans (ESOP): company-established benefit plan in which employees acquire stock as part of their benefits o Employees will think more about their actions if they have ownership in the organization  Teamwork: incentive pay to individuals can lead to problems in group productivity and cohesiveness o Organizations focused of teamwork must focus incentives on the team not individuals  Unions: employees are usually paid based on seniority and job categories, with little movement o Against variable pay as it may lead to competition and increased work stress  Public Sector Employees: difficult to link productivity as most of these jobs are service based o The goal setting theory is better applied to these types of employees Research Findings: ESOPs  Have the potential to increase job satisfaction and work motivation  Takes ownership and participative style to achieve improvements in the firm's performance Research Findings: Variable-Pay Programs  Variable-pay programs increase motivation and productivity o Does not mean this is true for all organizations or employees  Teamwork, unions, public sectors, and ethics are problems to the pay-for-performance program Flexible Benefits: Developing a Benefits Package  Different employees have different needs and ideas about their benefits  Flexible benefits: employees put together a benefits package individually tailored to their own needs  Modular plans: predesigned packages of benefits that fit a specific group of employees  Core-plus plans: consist of a core benefits package with other added options available  Flexible spending accounts: given money to purchase of package of benefits Intrinsic Rewards: Employee Recognition Programs  Recognition given to employees may not be enough in some jobs, organizations Linked Employee Recognition Programs and Reinforcement Theory:  Recognition is the best motivator in the workplace according to employees  Team celebrations can enhance group cohesiveness and motivation Employee Recognition in Practice: COMM 292: Observational Behaviour  Recognition programs are attractive to organizations as they are cost effective  Recognition may reduce turnover, particularly in good employees Caveat Emptor: Apply Motivation Theories Wisely Motivation Theories are Culture-Bound:  Being a member of a successful team with shared goals and values, rather than financial rewards, drives Japanese sales representatives to succeed  Countries with high uncertainty prefer pay based objective, because it is guaranteed  Countries with high value on individualism place emphasis on individual responsibility to perform  Countries with high humane orientation offer social benefits and programs to employees and families Evaluating Motivation Theories Cross-Culturally:  Other cultures focus on motivating a group of employees rather than individuals  Different cultures/countries place different benefits and needs above others  Employees expect that outputs will be greater than their inputs  It is important to determine the internal norms of a country when developing an incentive plan Provide Performance Feedback:  Employees need to be given performance feedback to determine if rewards are equitable  Managers are often uncomfortable discussing weakness with employees  Many employees become defensive when their weaknesses are pointed out  Organizations must train managers to provide and give employee feedback Beware the Signals that are sent by Rewards:  Individuals are unable to break out of old ways of thinking about reward and recognition practices  Organizations often don't look at the big picture of their performance system o Units often end up competing against each other, instead of working together  Both management and shareholders often focus on short-term results o They don't reward employees for longer-range planning  This all happens when organizations hope for one thing but then reward for something else Can We Just Eliminate Rewards?  Employee commitment benefits organizations as they work harder, and have more devotion, rather than waiting to be rewarded for each action or success Creating a Motivating Work Environment:  Must determine if employees have the adequate tools, equipment, materials, and supplies o Working conditions, helpful co-workers, supportive work rul
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