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Chapter 6

Chapter 6.docx

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Department
Rotman Commerce
Course Code
RSM260H1
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all

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Chapter 6 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 o usually leads to substantial increases in productivity Problems With Wage Incentives - lowered quality: quality issue can decline when motivating people to work faster in jobs that require “people processing: e.g. customer interviews - differential opportunity: some workers will be at a disadvantage if supply of raw materials or quality of equipment varies in workplaces which limits their opportunities to produce at a high level - reduced cooperation: wage incentives that reward individual productivity might decrease cooperation among workers - incompatible job design: the way some jobs are designed can make it hard to implement wage incentives e.g. assembly line - restriction of productivity: the artificial limitation of work output that can occur under wage incentive plans o no wage incentive: productivity is distributed in a “bell-shaped manner” o wage incentive: productivity is skewed to the left Linking Pay to Performance on White Collar Jobs - white collar jobs (clerical, profession, managerial) offer fewer objective performance criteria to which pay can be tied - merit pay plans: systems that attempt to link pay to performance on white collar jobs o merit pay is rewarded based on managers’ evaluation of their employees’ performance o have become one of the most common forms of motivation - problems: o low discrimination: managers may be unable/unwilling to discriminate b/w good and poor performers o small increases: merit increases may be too small to be effective motivators  lump sum bonuses: merit pay awarded in a single payment and not built into base pay o pay secrecy: even if merit pay is administered fairly, those who receive merit increases don’t discuss it w/their co-workers b/c they don’t have a way to compare their own merit treatment w/others Using Pay to Motivate Teamwork Pay Plan Description Advantages Disadvantages Profit Employees - employees have a - many factors beyond control of Sharing receive a cash sense of ownership employees can affect profits bonus based on - aligns employee - difficult for employees to see the organization goals w/organization impact of their actions on profits goals organizational profits Employee Employees can - creates sense of legal - many factors can influence value of stock own a set + psychological organization’s shares ownerships amount of the ownership for - difficult for employees to see organization’s employees connection b/w their efforts + value shares - aligns employees’ of organization’s stock goals and interests - they lose their motivational w/those of the potential in a weak economy when organization the value of the organization’s stocks decline Gainsharing When measured - aligns organization + - bonuses might be paid even when costs decrease, employee goals the organization doesn’t make a employees - encourages profit receive a bonus teamwork + - employees might neglect objectives based on a cooperative behaviour that aren’t included in the formula predetermined formula Skill-based Employees are - encourages - increases training cost pay paid according employees to learn - labour costs can increase as to the # of job new skills employees acquire more skills skills they - greater flexibility in acquire task assignments - provides employees w/a broader picture of the work process Job Design as A Motivator Job Scope and Motivation - job scope: the breadth and depth of a job - breadth: the number of different activities performed on the job - depth: the degree of discretion/control the worker has over how these tasks are performed o broad jobs: requires workers to do a number of different tasks o deep jobs: emphasizes freedom in planning how to do the work Quality Control High Scope Equipment Monitoring Manager Professor Low Scope Traditional Assembly Line Assembly Line Job Utility Worker How to increase the scope of a job: - assign employees stretch assignments: way to broaden their skills by working on a variety of tasks w/new responsibilities - job rotation: rotating employees to diff. tasks + jobs in an organization The Job Characteristics Model 1. Skill Variety - the opportunity to do a variety of job activities using various skills + talents o high: owner of a garage who does electrical repair, does body work, etc. o low: body shop worker who sprays paint eight hrs/day 2. Task Identity - the extent to which a job involves doing a complete piece of work from beginning to end o high: cabinet maker who designs, builds and finishes a piece of furniture o low: worker in furniture factory who only makes table legs 3. Task Significance - the impact a job has on other people o high: nursing the sick in a hospital intensive care unit o low: sweeping hospital floors 4. Autonomy - the freedom to schedule one’s own work activities
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