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MGHB02H3 (269)
Chapter 6

Chapter 6 Notes

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Department
Management (MGH)
Course
MGHB02H3
Professor
Julie Mc Carthy
Semester
Summer

Description
Chapter 6 Motivation in Practice Notes Money as a Motivator N the money that employees receive in exchange for organizational membership is in reality a package made up of pay and various fringe benefits that have dollar values, such as insurance plans, sick leave, and vacation time N employees and managers seriously underestimate the importance of pay as a motivator; yet, the motivation theories suggest that pay is, in fact, a very important motivator and everyone considers it to a deep extent N according to Maslow and Alderfer, pay should prove especially motivational to people who have strong lower-level needs N for these people, pay can be exchanged for food, shelter, and other necessities of life N using need hierarchy terminology, pay can also function to satisfy social, self-esteem, and self-actualization needs N according to expectancy theory, if pay can satisfy a variety of needs, it should be highly valent, and it should be a good motivator to the extent that it is clearly tied to performancethis is how pays potential can be realized Linking Pay to Performance on Production Jobs N piece-rate a pay system in which individual workers are paid a certain sum of money for each unit of production completed N more common than pure piece-rate is a system where workers are paid basic hourly wage and paid a piece-rate differential on top N in some cases, it is very difficult to measure the productivity of an individual worker because of the nature of production process N under these circumstances, group incentives are sometimes employed N wage incentive plans various systems that link pay to performance on production jobs N compared with straight hourly pay, the introduction of wage incentives usually leads to substantial increases in productivity Potential Problems with Wage Incentives N despite their theoretical and practical attractiveness, wage incentives have some problems when they are not managed with care N it is sometimes argued that wage incentives can increase productivity at the expense of quality N while this may be true in some cases, it does not require particular ingenuity to devise a system to monitor and maintain quality in manufacturing; however, the quality issue can be a problem when employers use incentives to motivate faster people processing, such as conducting consumer interviews on the street or in stores, where quality control is more difficult N a threat to the establishment of wage incentives exists when workers have different opportunities to produce at a high level N in expectancy theory terminology, workers will differ in the expectancy that they can produce at a high level N wage incentives that reward individual productivity might decrease cooperation among workers N in some cases, the way jobs are designed can make it very difficult to implement wage incentives N some wage incentive systems can be designed to reward team productivity in some circumstances; however, as the size of the team increases, the relationship between any individuals productivity and hisher pay decreases N a chief psychological impediment to the use of wage incentives is the tendency for workers to restrict productivity N under normal circumstances, without wage incentives, productivity can be expected to be distributed in bell-shaped mannera few workers are especially low producers, a few are especially high producers, and most produce in the middle range N when wage incentives are introduced, workers sometimes come to informal agreement about what constitutes a fair days work and artificially limit their output accordingly, which can decrease the expected benefits of the incentive system N restriction of productivity the artificial limitation of work output that can occur under wage incentive plans N sometimes it happens because workers feel that increased productivity due to the incentive will lead to reductions in workforce N more often, employees fear that if they produce at especially high level, employer will reduce rate of payment to cut labour costs Linking Pay to Performance on White-Collar Jobs N compared to production jobs, white-collar jobs offer fewer objective performance criteria to which pay can be tied N performance in many such jobs is evaluated by the subjective judgment of the performers manager N merit pay plans systems that attempt to link pay to performance on white-collar jobs N the prototype for most merit pay plans: periodically (usually yearly), managers are required to evaluate the performance of employees on some form of rating scale or by means of a written description of performance N using these evaluations, the managers then recommend that some amount of merit pay be awarded to individuals over and above their basic salaries, which is usually incorporated into the subsequent years salary cheques N since indicators of good performance on some white-collar jobs (especially managerial jobs) can be unclear or highly subjective, merit pay can provide an especially tangible signal that the organization considers an employees performance on track N individuals who see a strong link between rewards and performance tend to perform better; in addition, white-collar workers (especially managers) particularly support the notion that performance should be an important determinant of pay Potential Problems with Merit Pay Plans N one reason that many merit pay plans fail to achieve their intended effect is that managers might be unable or unwilling to discriminate between good performers and poor performers, which means that effective rating systems are rarely employed N if the performance evaluation system does not assist the manager in giving feedback about his or her decisions to employees, the equalization strategy might be employed to prevent conflicts with them or among them N if there are performance variations in workers, equalization over-rewards poorer performers and under-rewards better performers N a second threat to the effectiveness of merit pay plans exists when merit increases are simply too small to be effective motivators N in this case, even if rewards are carefully tied to performance and managers do a good job of discriminating between more and less effective performers, the indented motivational effect of pay increases may not be realized N to overcome this visibility problem, some firms have replaced conventional merit pay with a lump sum bonus www.notesolution.com
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