Lec 8 Application of Motivation

7/31/2019 Lec 8 Application of Motivation

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Motivation Management by objectives(MBO) Employee Recognition programs Employee Involvement programmes

Performance Appraisal Environmental Change Economic Considerations

Variable pay programs Piece rate pay plan Wage incentives Profit sharing Gain sharing Skill-based pay Flexible benefits


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Management by objectives A program that encompasses specific goals,

participatively set, for an explicit time period, with

feedback on goal progress. Four ingredients:

Goal specificity

Participative decision making

Explicit time period

Performance feedback


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Linking MBO with goal-setting

Consistent with goal setting:

MBO would be most effective when the goals are

difficult enough to require the person to do somestretching.

Disagreement between MBO and goal setting:

MBO strongly advocates participation. Goal settingtheory demonstrates that assigning goals tosubordinates works well.


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When does MBO fail:

Unrealistic expectations regarding results

Lack of commitment by top management

Inability or unwillingness by management toallocate rewards based on goal accomplishment.

Cultural incompatibilities


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Employee recognition programs Consist of personal attention, expressing interest, approval

and appreciation for a job well done.

Linking with reinforcement theory:

Agreement: rewarding a behaviour with recognition

immediately following that behaviour is likely to encourage

its repetition.

In practice:

Suggestion systems


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Employee Involvement programs

Participative management

Representative participation

Quality circles

Employee Stock Ownership Plans


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Participative management

Requires employees to take joint decisions (involves

teams, committees group meetings, understand managers

work and responsibility for decisions).

Evaluation: modest influence on productivity, motivation

and job satisfaction


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Representative Participation

Workers participate in organizational decision making

through a small group of representative employees.

Forms: work councils, Board representatives

Evaluation: improves motivation of people working in

councils and board but it does not motivate others.


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Quality circles

A work group of employees who meet regularly to

discuss their quality problems, investigate causes,

recommend solutions, and take corrective actions. Evaluation: QCs have shown positive influence on

productivity but no influence on employee satisfaction

because very little time is spent on meetings and the

outcome is not accepted by managements in most

cases.


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Employee Stock Ownership Plans

Company established benefit plans in which employees

acquire stock as part of their benefits.

Evaluation: ESOPs increase employee satisfaction but ithas less impact on performance.


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Linking Employee Involvement Programs

and Motivation Theories:

Theory Y Participative Management

Two factor theory Intrinsic motivation

(enriched work)

ERG theory Recognition, responsibility,

growth and enhanced self-esteem

Equity theory

Reinforcement theory


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Performance Appraisal Purpose of Performance Appraisal

Judgment Techniques

Job BehaviorAssessment Centres


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Variable pay programs A portion of an employees pay is based on some individual

and/or organizational measure of performance.

Forms:

Piece rate wages: Workers are paid a fixed sum for each unit ofproduction completed.

Bonus: Annual bonus

Profit sharing plans: Organization-wide programs that distribute

compensation based on some established formula designedaround a companys profitability.

Gain sharing: An incentive plan in which improvements in groupproductivity determine the total amount of money that isallocated.


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n ng ar a e-pay programs anExpectancy Theory:

Individuals should perceive a strong relationship between

their performance and the rewards they receive if

motivation is to be maximized.

In practice:

Variable pay is rapidly replacing the annual increment.


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Skill-based pay plans

Pay levels are based on how many skills employees have or

how many jobs they can do.

A survey of Fortune 1000 firms say that skill based pay hasbeen successful in increasing organizational performance.

Demerits:

People may leave an organization after learning all the skills.

Skills can become obsolete.

People may acquire skills not needed by their current job.

Skill based plans dont address the level of performance.

t


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n ng - ase pay p ans toMotivation Theories:

ERG Theory : Learninga higher order

need.

McClellends Theory : learning new skills will

help high achievers findtheir jobs morechallenging

Reinforcement Theory : skill based pay is a

reinforcer.

Equity Theory : skill based pay increases

the perception of equity


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In practice

Skill based pay is adopted in organizations facing

aggressive foreign competition.

Skill based pay is moving from the shop floor to the

white-collar workforce.


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ex e ene s

Employees tailor their benefit program to meet their

personal needs by picking and choosing from a menu

of benefit options. Ex: Medical benefits, cafeteria expenses, etc.

Linking Flexible Benefits and Expectancy Theory:

Flexible benefits individualise rewards by allowing each

employee to choose the compensation package that best

satisfies his or her current needs


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Environmental ChangeJob Enrichment

-Combining tasks, creating natural work units,establishing relationship, expanding job vertically, openingfeedback channels

Job Enlargement

Job Rotation

Job Reengineering-Policies, Technology, Competition,Information system, cost benefits, future challenges

Lec 8 Application of Motivation

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