Motivation and its relationship to Compensation Maritza Soto, Ph.D. Professor University of Puerto Rico- Rio Piedras
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Motivation and its relationshipto Compensation
Maritza Soto, Ph.D.
Professor
University of Puerto Rico- Rio Piedras
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Why do people work?
What motivates people at work?
What rewards to organizations
offer?
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Motivation and Individual Needs
Motivation
The willingness to exert high levels of effort to
reach organizational goals, conditioned by the
effort’s ability to satisfy some individual need
Need
An internal state that makes certain outcomes
appear attractive
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Components of Motivation
Motivation
OrganizationalGoals
Needs
Effort
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Consider the different perspectives ofemployee groups
Executive
Managerial
Supervisory
Engineering
R & D
Sales
Professional
Financial
Legal
Information
Systems/Technology
Administrative
Production
ClericalMaintenance
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Do they seek similar or differentrewards?
Are they motivated in differentways by different things?
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Early Theories of Motivation:Maslow’s Hierarchy of Needs
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Consider Herzberg’s Job Factors
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Consider Herzberg’s Job Factors
Motivators
Achievement
Recognition
Work itself
Responsibility
Advancement
Growth
Herzberg, F. 2003. One more time: How do you motivateemployees? Harvard Business Review (January): 87-96.(This paper was originally published in the HBR in 1968).
•Hygiene Factors
•Company policy and administration
•Supervision
•Relationship with supervisor
•Work conditions
•Salary
•Relationship with peers
•Personal life
•Relationship with subordinates
•Status
•Security
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Consider Douglas McGregor’s theory
Theory X In this theory, management assumes employees are inherently lazy and will avoid work if they
can. Because of this, workers need to be closely supervised and comprehensive systems ofcontrols developed. A hierarchical structure is needed with narrow span of control at each level.According to this theory, employees will show little ambition without an enticing incentive programand will avoid responsibility whenever they can. A term originating in military organization theory,but now used more commonly in business management, particularly human resourcemanagement, span of control describes the number of subordinates that report to each manager(or to each military officer). ...
The Theory X manager tends to believe that everything must end in blaming someone. He or shethinks all prospective employees are only out for themselves. Usually these managers feel thesole purpose of the employees interest in the job is money. They will blame the person first inmost situations, without questioning whether it may be the system, policy, or lack of training thatdeserves the blame. Employment is a contract between two parties, one being the employer andthe other being the employee. ...
Furthermore, Theory X supervisors cannot trust any employee, and they reveal this to theirsupport staff via their communications constantly. A Theory X manager can be said to be animpediment to employee morale and productivity.
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Consider Douglas McGregor’s theory
In this theory management assumes employees may be ambitious, self-motivated, anxious to accept greater responsibility, and exercise self-control, self-direction, autonomy and empowerment. It is believed thatemployees enjoy their mental and physical work duties. It is also believedthat if given the chance employees have the desire to be creative andforward thinking in the workplace. There is a chance for greater productivityby giving employees the freedom to perform at the best of their abilitieswithout being bogged down by rules.
A Theory Y manager believes that, given the right conditions, most peoplewill want to do well at work and that there is a pool of unused creativity inthe workforce. They believe that the satisfaction of doing a good job is astrong motivation in and of itself. A Theory Y manager will try to remove thebarriers that prevent workers from fully actualizing themselves .
Many people interpret Theory Y as a positive set of assumptions aboutworkers. A close reading of The Human Side of Enterprise reveals thatMcGregor simply argues for managers to be open to a more positive view ofworkers and the possibilities that this creates.
The Human Side of Enterprise, Douglas McGregor
1960
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Contemporary Theories of Motivation:Three-needs theory (McClelland)
The needs for achievement, power andaffiliation are major motives in workNeed for Achievement 9nAch): the drive to
excel, to achieve in relation to a set ofstandards, to strive to succeed
Need for power (nPow): the need to makeothers behave in a way that they would not
have behaved otherwiseNeed for affiliation (nAff): the desire for friendly
and close personal relationships
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Equity Theory- (Adams)
Employees perceive what they get from a job situation (outcomes) in relation to whatthey put into it (inputs) and then compare
their input-outcome ratio with the input-outcome rations of relevant others
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Equity Theory- (Adams)
Referent
In equity theory, the other persons, the
systems, or the personal experiences against
which individuals compare themselves toassess quality
The choice of particular set of referents isrelated to the information available aboutreferents as well as to the perceived relevance
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Equity Theory- (Adams)
When employees perceive an inequitythey may:
Distort either their own or others’ inputs or
outcomes
Behave so as to induce others to change theirinputs or outcomes
Choose a different comparison referentQuit their job
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Equity Theory
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Job design and Motivation
Job characteristics Model (JCM)- Hackman andOldham
The five core job dimensions are skill variety, task
identity, task significance, autonomy and feedbackInternal rewards are obtained when:
An employee learns (knowledge of results) through(feedback) that he or she personally (experiencedresponsibility through autonomy of work) has performed
well on a task that he or she cares about (experiencedmeaningfulness through skill variety, task identity, and/ortask significance)
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Job design and Motivation
Core Job dimensions
Skill variety- the degree to which the job
requires a variety of activities so the worker can
use a number of different skills and talentsTask identity- the degree to which the job
requires completion of a whole and identifiablepiece of work
Task significance- the degree to which the jobaffects the lives or work of other people
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Job design and Motivation
Core Job dimensionsAutonomy- the degree to which the job provides
freedom. Independence, and discretion to the
individual in scheduling the work and indetermining the procedures to be used incarrying it out
Feedback- the degree to which carrying out thework activities required by the job results in theindividual’s obtaining direct and clear information about the effectiveness of his or herperformance
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Expectancy Theory (Vroom)
A comprehensive theory of motivation thatan individual tends to act in a certain way,in the expectation that the act will be
followed by given outcome, and accordingto the attractiveness of that outcome to theindividualThe extent to which individuals are motivated to
perform to get a reward of value to them isbased on their belief that their performance willresult in the reward they want
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Expectancy Theory (Vroom)
Emphasizes self interest in the alignment ofrewards with employee wants
Addresses why employees view certain
outcomes (rewards) as attractive or unattractive Emphasizes the connection among expected
behaviors, rewards, and organizational goals
Is concerned with individual perceptions andprovision of feedback
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Expectancy Theory
Work motivation is a sequential function ofemployee perception of three things:Perceived probability that additional effort will
lead to improved performance (i.e. Expectancy)Perceived probability that improved
performance will be instrumental to obtainmentof rewards (i.e. Instrumentality)
Perceived subjective value (i.e. Valence) ofrewards and other outcomes of performanceachievement
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Expectancy Theory
Expectancy Theory (also known as the Valence-Instrumentality- Expectancy Theory) (1964) Victor Vroom
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Expectancy Relationships (Linkages)
Effort-performanceThe perceived probability that exerting a given
amount of effort will lead to performance
Performance-rewardThe belief that performing at a particular level
will lead to the attainment of a desired outcome
AttractivenessThe importance placed on the potential
outcome of reward that can be achieved on the job
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Expectancy Theory Applied
Requirements for success
Identify what behaviors and results we want to
pay for
Link meaningful rewards directly to desiredbehaviors and results
Generate accurate and timely performance datausing a cost-effective system
Employee involvement, understanding andacceptance
Expectancy Theory (also known as the Valence-Instrumentality- Expectancy Theory) (1964) Victor Vroom
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Simplified Expectancy Theory
Individualeffort
Individualperformance
Organizational
Rewards
Individual goals
Performanceappraisal
Training and
Development
Human Resources
Management
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What rewards do
organizations offer?
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Reward is
..something given in return for good or sometimes evil orfor service or merit…
…compensation; profit; return…
Pay is
…to give due compensation; make payment
…the simple, direct word meaning to give money, etc. due
for services rendered, goods received, etc. …compensate
implies a return, whether monetary or not, thought of asequivalent to the service given, the effort expended…
Webster’s New World Dictionary, Second College Edition Inc. 1974
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Overall Employee Relations Goals ofCompensation Management
The Ultimate Objective
To attract, retain and motivate employees of thecaliber necessary to achieve the organization’s
objetive.
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Compensation Program Objectives
The Bottom Line
Positive impact on employee relations if:
Pay is for performance
Pay is competitive
Pay is fair/equitable
For both the employee and the organization
The compensation challenge is to reconcile three equities:
Individual
External
Internal
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Perception
How does perception enter into the worldof compensation?
Who has perceptions?
Are these perceptions positive? Negative?
How can we fight perceptions?
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Performance Appraisals
Traditional performance appraisals don’t
work’:
Subjectivity
Non-valid criteria
Absence of standards and measures
Poor communication
Lack of trainingInfrequency
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Conditions supporting Pay-for-Performance
The organization supportsperformance-based pay
Managers are trained toappraise performance
Differences in performance are
measurable and significant Management believes that
people can be motivated bymoney
Management knows how to
relate pay increases toperformance/behavior
There is trust betweensupervisors and subordinates
The level of intestinal fortitudeamong the organization’smanagers is high
Pay ranges are wide enough Criteria are fully communicated
to workers