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MGHB02H3 (269)
Anna Nagy (23)
Chapter 6

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Management (MGH)
Anna Nagy

MGTB27 Chapter 6: Motivation in Practice Money as a Motivator  Pay prove motivational to people who have strong lower level needs  Pay can satisfy social, self esteem, and self-actualization needs  Consistent with the predictions of need theory and expectancy theory  Increase performance and lower turnover Linking Pay to Performance on Production Jobs  Piece rate: a pay system in which individuals workers are paid a certain sum of money for each unit of production completed  Wage incentive plan: various system that link pay to performance on production jobs  Wage incentives leads to substantial increases in productivity Potential Problems with Wage Incentives  Lowered Quality  Differential Opportunity  Reduced Cooperation  Incompatible Job Design  Restriction of Productivity o The artificial limitation of work output that can occur under wage incentive plans Linking Pay to Performance on White-Collar Jobs  White collar jobs offer fewer objective performance criteria to which pay can be tied  Evaluated by the subjective judgement of the performer’s manager  Merit pay plans: systems that attempt to link pay to performance on white collar jobs  Used to attract and retain employees and as an alternative to wage increases  Seniority, the number of employees, and job level account for more variation in pay than performance Potential Problems with Merit Pay Plan  Low Discrimination o Managers have subjective evaluations of performance  Small increases o Merit increase are too small to be effective motivations (too late, withdraw during economic difficulties, spread out time interval) o Lump sum bonus: merit pay that is awarded in a single payment and not built into base pay  Pay secrecy o Employees who receive merit increases not to discuss with co-worker o Without comparisons with co-workers  destroy the motivational impact of merit plan o Over estimate pay of peers and underestimate pay of superiors o Reduce satisfaction with pay, damage perceptions of the linkage between performance and rewards, reduce the valence of promotions to a higher level of management Using Pay to Motivate Teamwork  Profit Sharing o The return of some company profit to employees in the form of a cash bonus or a retirement supplement  Employee Stock Ownership Plans o Incentive plans that allow employees to own a set amount of a company’s shares and provide employees with a stake in the company’s future earnings and success MGTB27 o Attracting and retaining talent, motivating employee performance, focusing employee attention on organizational performance creating a culture of ownership; educating employees about the business, conserving cash by substituting options for cash o Increase employee loyalty and motivation  align goals and interests of the organization and create a sense of legal and psychological ownership o Work best in small organizations  Gain-sharing o A group pay incentive plan based on productivity or performance improvements over which the workforce has some control o Reduction in cost of labour, materials, supplies o Extensive workforce participation  build trust and commitment o Lower production cost  Skill-based pay o The more skills that are acquired, the higher the person’s pay o Flexible manufacturing o Training cost is high o Work best in large manufacturing organizations  increase productivity, lower labour costs per parts reduction in scrap Job Design as a Motivator  Beginning of industrial revolution  Job design to match the new developed machinery system to meet demand  Specialization to efficient productivity  Job Scope: the breadth and depth of a job  Breadth: the number of different activities performed on a job  Depth: the degree of discretion or control a worker has over how work tasks are performed  High scope jobs – professor  Low scope jobs – traditional assembly line job  High scope jobs (both broad and deep) should provide more intrinsic motivation than low scope jobs  Increase the scope of a job is to assign employees stretch assignments  offer challenging opportunities to broaden their skills by working on a variety of tasks with new responsibilities  Job rotation: rotating employees to different tasks and jobs in an organization The Job Characteristic Model Core Job Characteristics 1. Skills variety - The opportunity to do a variety of job activities 2. Task identity - A job involves doing a complete piece of work, from beginning to end 3. Task significance - The impact that a job has on other people 4. Autonomy - The freedom to schedule own work activities and decide work procedures 5. Job Feedback - Information about the effectiveness of work performance Job Diagnostic Survey – measure the core characteristics of jobs Motivating Potential Score = (Skill Variety +Task Identity +Task Significance)/3 x Autonomy x Feedback Critical Psychological States  Experienced meaningfulness of the work  Experienced responsibility for outcomes of the work  Knowledge of the actual results of the work activities MGTB27 Outcomes Moderators 
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