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Chapter 6

Chapter 6 - Motivation in Practice.docx

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Wilfrid Laurier University
Marc Hurwitz

WEEK 5CHAPTER 61CHAPTER 6 MOTIVATION IN PRACTICEMONEY AS A MOTIVATOR 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 valuesAccording to Maslow and Alderfer pay should prove especially motivational to people who have strong lowerlevel needsAccording 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 performance 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 Wages Incentives Lowered Quality It is sometimes argued that wages incentives can increase productivity at the expense of quality Differential Opportunity A threat to the establishment of wage incentives exists when workers have different opportunities to produce at a higherlevel Reduced Cooperation Wage incentives that reward individual productivity might decrease cooperation among workersIncompatible Job Design In some cases they way jobs are designed can make it very difficult to implement wage incentivesRestriction of Productivity A chief psychological impediment to the use of wage incentives is the tendency for workers to restrict productivity Linking Pay to Performance on WhiteCollar Jobs Merit Pay Plans Systems that attempt to link pay to performance on whitecollar jobsThere is some evidence that pay is not related to performance under some merit plans Potential Problems with Merit Pay Plans Low Discrimination On reason that many merit pay plans fail to achieve their intended effect is that managers may be unable or unwilling to discriminate between good performers and poor performers Small Increases As second threat to the effectiveness of merit pay plan exists when merit increases are simply too small to be effective motivationoLump sum bonus Merit pay that is awarded in a single payment and not built into base payPay Secrecy A final threat to the effectiveness of merit pay plan is the extreme secrecy that surrounds salaries in most organizations Cannot compare salaries so it damages the motivational impactUsing Pay to Motivate TeamworkProfit Sharing The return of some company profit to employees in the form of a cash bonus or a retirement supplement Employee Stock Ownership Plan ESOPs Incentive plans that allow employees to won a set amount of a companys shares and provide employees with a stake in companys future earnings and success
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