Chapter 6

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University of Toronto Scarborough
Management (MGH)
Joanna Heathcote

Chapter 6- Motivation in Practice MONEY AS A MOTIVATOR Pay is important as it can fulfill lower-level needs as well as higher level needs such as social and self-esteem LINKING PAY TO PERFORMANCE ON PRODUCTION JOBS Piece-rate A pay system in which individual workers are paid a certain sum of money for each unit of production completed Wage Incentive Plans Various systems that link pay to performance on production jobs ***POTENTIAL PROBLEMS WITH WAGE INCENTIVES LOWERED QUALITY For example a toy factory, more toys would be made so that employees can earn more yet they no longer have quality as their top priority DIFFERENTIAL OPPORTUNITY for example, if the worker had two type of stations for the toys (one with the newest models of equipment and one with the older ones) they will feel disadvantaged when they must work with the one REDUCED COOPERATION May reduce the cooperation between workers when the pay systems reward individuals INCOMPATIBLE JOB DESIGN Where wage incentives may be better suited to reward group productivity rather than individual performance o However as the team increases then the pay would decrease even though there would be an increase of productivity RESTRICTION OF PRODUCTIVITY The artificial limitation of work output that can occur under wage incentive plans o IE people are afraid to be very productive because they fear that their employers will think that labour costs will be too high and will choose to cut labour hours or the workforce LINKING PAY TO PERFORMANCE ON WHITE-COLLAR JOBS MERIT PAY PLANS Systems that attempt to link pay to performance on white collar jobs POTENTIAL PROBLEMS WITH MERIT PAY PLANS LOW DISCRIMINATION Managers are unwilling or unable to discriminate between good performers and poor performers SMALL INCREASES too small to motivate o Some companies have used the lump sum bonus which is paid out at one time and not built into base pay PAY SECRECY because other people do not know about others pay then the effectiveness of the merit pay plans is nullified by the secrecy USING PAY TO MOTIVATE TEAMWORK PROFIT SHARING The return os some company profit to employees in the form
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