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Chapter 11 - Motivating and Rewarding Employees 11-232 Copyright 2015 Pearson Education, Inc. CHAPTER 11 MOTIVATING AND REWARDING EMPLOYEES LEARNING OUTCOMES After reading this chapter, students should be able to: 1.Define and explain motivation. 2.Compare and contrast early theories of motivation. 3.Compare and contrast contemporary theories of motivation. 4.Discuss current issues in motivating employees. Management Myth Myth: Motivation is all about “show me the money.” Truth: There are many options available to managers, aside from money, for improving employee motivation. The secret to being effective is understanding individuals unique needs. Teaching Tips: When students hear that companies like Google give such great benefits, they immediately think, Id like to work there! To get students thinking about how motivation works, ask the following questions: 1.Ask students to identify what motivates them. Is it money? Is it time off? 2.Do you think that motivation theories and practices that motivate individuals at a U.S. based company would be effective in explaining and generating motivation in other countries? If so, which countries? If not, why? (Most motivation theories are US based and are culture bound) I.WHAT IS MOTIVATION A.Definition 1. Many incorrectly view motivation as a personal trait. Chapter 11 - Motivating and Rewarding Employees 11-233 Copyright 2015 Pearson Education, Inc. 2. Motivation is the result of the interaction between the individual and the situation. a) Individuals differ in motivational drive. b) An individuals motivation varies from situation to situation. 3. Motivation refers to the process by which a persons efforts are energized, directed, and sustained toward attaining a goal. 4. Function of three key elements: energy, direction and persistence. a) The energy element is a measure of intensity. (1) When someone is motivated, he or she puts forth effort and tries hard. (2) Quality and intensity must be measured. b) The effort must be channeled in a direction that benefits the organization. (1) Effort directed toward, and consistent with, the organizations goals. c) Persistence is the 3rd key element. (1) We want employees to persist in putting forth effort to achieve those goals. 5. A recent Gallup poll found that a large majority of U.S. employeessome 73 percentare not excited about their work. IIFOUR EARLY THEORIES OF MOTIVATION (1950s 4. Need for affiliation (nAff)the desire to be liked and accepted by others. 5. The best managers tend to be high in nPow and low in nAff. Chapter 11 - Motivating and Rewarding Employees 11-236 Copyright 2015 Pearson Education, Inc. III HOW DO CONTEMPORARY THEORIES EXPLAIN MOTIVATION A.What is Goal-Setting Theory? (Exhibit 11-4) 1. Goal-setting theory - says that specific goals increase performance and that difficult goals, when accepted, result in higher performance than do easy goals. 2. Working toward a goal is a major source of job motivation. 3. Specific and challenging goals are superior motivating forces. 4. The specificity of the goal itself acts as an internal stimulus. 5. Participatively set goals elicit superior performance; in other cases, individuals performed best when their manager assigned goals. Participation is probably preferable to assigning goals when employees might resist accepting difficult challenges. 6. People will do better if they get feedback on how well theyre progressing toward their goals because feedback helps identify discrepancies between what theyve done and what they want to do. 7. Self-generated feedbackwhere an employee monitors his or her own progress has been shown to be a more powerful motivator than feedback coming from someone else. 8. Three other contingencies influence the goal-performance relationship: a) Goal commitment - is most likely when goals are made public, when the individual has an internal locus of control, and when the goals are self-set rather than assigned. b) Self-efficacy refers to an individuals belief that he or she is capable of performing a task. The higher your self-efficacy, the more confidence you have in your ability to succeed in a task. c) National culture - well adapted to North American countries because its main ideas align reasonably well with those cultures. It assumes that subordinates will be reasonably independent (not a high score on power distance), that people will seek challenging goals (low in uncertainty avoidance), and that performance is considered important by both managers and subordinates (high in assertiveness). Chapter 11 - Motivating and Rewarding Employees 11-237 Copyright 2015 Pearson Education, Inc. B.How Does Job Design Influence Motivation? 1. Job design refers to the way tasks are combined to form complete jobs. 2. Managers can design motivating jobs by using the job characteristics model (JCM), developed by J. Richard Hackman and Greg R. Oldham. This model helps managers describe any job in terms of five core job dimensions. a) Skill variety. b) Task identity. c) Task significance. d) Autonomy. e) Feedback. 3. Exhibit 11-5 presents the model. a) The first three dimensionsskill variety, task identity, and task significance combine to create meaningful work. b) Jobs that possess autonomy give the job incumbent a feeling of personal responsibility for the results. From the Past to the Present Managers have always been concerned about how tasks should be performed. Early management experts like Fredrick Taylor, were interested in the one best way to arrange work and jobs. Later, researchers created the now famous Hawthorne Studies to unravel the patterns of human behavior in the workplace. From his work in the 1950s, Herzberg wanted to know the importance of attitudes toward work and the employees experiences, both good and bad, that workers reported. The fact that job dissatisfaction and job satisfaction were the results of different aspects of the work environment was an important finding. What Herzberg discovered changed the way we view job design. The Job Characteristics model, built upon Herzbergs findings in identifying the five core job dimensions, especially autonomy. As managers and organizations continue to search for work designs that will energize and engage employees. Discuss This: Why do you think jobs need to be “designed”? How can job design contribute to employee motivation? Teaching Tip: Its always good to have a couple of students in class who have experienced the role of a manager. These students can be encouraged to give examples of things theyve done that have worked well to motivate employees (and things that have worked not so well). For students who have never experienced management responsibilities, they should think about jobs that they have had and address the following questions: Were there times when they were motivated to perform their best? Were there times when work just seemed to drag on and on? How could these jobs been improved? Chapter 11 - Motivating and Rewarding Employees 11-238 Copyright 2015 Pearson Education, Inc. c) If a job provides feedback, the employee will know how effectively he or she is performing. 4. Research on the JCM has found that the first three dimensionsskill variety, task identity, and task significancecombine to create meaningful work. a) If these three characteristics exist in a job, we can predict that the person will view his or her job as being important, valuable, and worthwhile. 5. Jobs that possess autonomy give the job incumbent a feeling of personal responsibility. 6. Jobs that provide feedback let the employee know how effectively he or she is performing. 7. JCM suggests that internal rewards are obtained when an employee learns (knowledge of results through feedback) that one personally (experienced responsibility through autonomy of work) has performed well on a task that one cares about (experienced meaningfulness through skill variety, task identity, and/or task significance). a) The links between the job dimensions and the outcomes are moderated or adjusted by the strength of the individuals growth need (the persons desire for self-esteem and self-actualization). 8. Individuals with a high growth need are more likely to experience the psychological states when their jobs are enriched than are their counterparts with a low growth need. 9. Job enrichment (vertical expansion of a job by adding planning and evaluation responsibilities): Individuals with low growth need dont tend to achieve high performance or satisfaction by having their jobs enriched. 10. Exhibit 11-6 depicts guidelines for job redesign based on the JCM. C.What is Equity Theory? 1. Employees make comparisons. 2. There is considerable evidence that employees compare themselves to others and that inequities influence the degree of effort that employees exert. 3. Developed by J. Stacey Adams, equity theory says that employees perceive what they get from a job situation (outcomes) in relation to what they put into it (inputs) and then compare their input-outcome ratio with the input-outcome ratio of relevant others. (See Exhibit 11-7.) a) If they perceive their ratio to be equal to those of the relevant others with whom they compare themselves, a state of equity exists. b) If the ratios are unequal, inequity exists; that is, workers view themselves as under-rewarded or over-rewarded. 4. The referent is an important variable in equity theory. 5. There are three referent categories: “persons,” “system,” and “self.” Chapter 11 - Motivating and Rewarding Employees 11-239 Copyright 2015 Pearson Education, Inc. a) Persons includes other individuals with similar jobs in the same organization and also includes friends, neighbors, or professional associates. b) The system considers organizational pay policies and procedures and the administration of that system. c) Self refers to input-outcome ratios that are unique to the individual. It reflects past personal experiences and contacts. 6. The choice of a particular set of referents is related to the information available about referents as well as the perceived relevance. 7. When employees perceive an inequity, they might: a) distort either their own or others inputs or outcomes, b) behave so as to induce others to change their inputs or outcomes, c) behave so as to change their own inputs or outcomes, d) choose a different comparison referent, e) or quit their job. 8. Individuals are concerned with both absolute rewards and the relationship of those rewards to what others receive. 9. On the basis of ones inputs, such as effort, experience, education, and competence, one compares outcomes such as salary levels, raises, recognition, and other factors. 10. A perceived imbalance in input-outcome ratios relative to others creates tension. 11. The theory establishes four propositions relating to inequitable pay. (See Exhibit 10-7.) 12. Whenever employees perceive inequity, they will act to correct the situation. 13. Distributive justice - is the perceived fairness of the amount and allocation of rewards among individuals. 14. More recent research has focused on looking at issues of procedural justice, which is the perceived fairness of the process used to determine the distribution of rewards. 15. This research shows that distributive justice has a greater influence on employee satisfaction than procedural justice, while procedural justice tends to affect an employees organizational commitment, trust in his or her boss, and intention to quit. 16. Equity theory has an impressive amount of research support and offers important insights into employee motivation. Right or Wrong? Kodak, once the premier maker of photographic film, has struggled to make it in a world of Chapter 11 - Motivating and Rewarding Employees 11-240 Copyright 2015 Pearson Education, Inc. digital photography and camera phones.34 It filed for bankruptcy in early 2012. In July 2012, the companys CEO went back to bankruptcy court asking permission to pay 15 top executives and managers (including himself) up to $8.82 million in cash and deferred stock if they successfully restructured the company and brought it back out of bankruptcy. Although incentive plans in bankruptcy have been controversial, Kodak said a committee of the companys unsecured creditors supported the pay plan. What do you think? Discuss This: What ethical issues do you see in this situation? What stakeholders might be impacted by this bonus plan? How might they be impacted? Teaching Tips: Students should be familiar with the Occupy Wall Street movement and how American citizens protested the high salaries paid to executives during difficult economic times. Students should be encouraged to explore the arguments for and against these protests. Here are a couple of questions to get the ball rolling: Is executive compensation out of control? Should the Federal Government step in a put limits on what employees can be paid? D.How Does Expectancy Theory Explain Motivation? 1. The most comprehensive explanation of motivation is Victor Vrooms expectancy theory. 2. It states that an individual tends to act on the basis of the expectation that the act will be followed by a given outcome and the attractiveness of that outcome to the individual. 3. It includes three variables or relationships (Exhibit 11-8). a) Expectancy - effort-performance linkagethe probability perceived by the individual that exerting a given amount of effort will lead to performance. b) Instrumentality - performance-reward linkagethe degree to which the individual believes that performing at a particular level will lead to the attainment of a desired outcome. c) Valence - attractivenessthe importance that the individual places on the potential outcome or reward that can be achieved on the job. 4. It can be summed up in the following questions: a) How hard do I have to work to achieve a certain level of performance, and can I actually achieve that level? b) What reward will performing at that level get me? c) How attractive is this reward to me, and does it help achieve my goals? 5. How does expectancy theory work? a) Exhibit 11-8 shows a very simple version of expectancy theory. Chapter 11 - Motivating and Rewarding Employees 11-241 Copyright 2015 Pearson Education, Inc. b) The strength of a persons motivation to perform (expectancy/effort) depends on how strongly that individual believes that he or she can achieve what is being attempted. c) If this goal is achieved (instrumentality/performance), will he or she be adequately rewarded by the organization? d) If so, will the reward satisfy his or her individual goals? (valence/attractiveness) E.How Can We Integrate Current Motivation Theories? 1. There is a tendency to view the motivation theories independently even though many of the ideas underlying the theories are complementary. 2. Exhibit 11-9 presents a model that integrates much of what we know about motivation. a) Its basic foundation is the simplified expectancy model. 3. The individual effort box has an arrow leading into it that flows out of the individuals goals. 4. The goals-effort loop is meant to remind us that goals direct behavior. a) Expectancy theory predicts that an employee will exert a high level of effort if he or she perceives a strong relationship between effort and performance, performance and rewards, and rewards and satisfaction of personal goals. b) Need theories tell us that motivation would be high to the degree that the rewards an individual received for his or her high performance satisfied the dominant needs consistent with his or her individual goals. 5. The model considers the need for achievement, equity, and the job characteristics model. 6. Finally, we can see the JCM in this integrative exhibit. Task characteristics (job design) influence job motivation at two places. a) First, jobs that score high in motivating potential are likely to lead to higher actual job performance since the employees motivation is stimulated by the job itself. b) Second, jobs that score high in motivating potential also increase an employees control over key elements in his or her work. c) Jobs that offer autonomy, feedback, and similar task characteristics help to satisfy the individual goals of employees who desire greater control over their work. Chapter 11 - Motivating and Rewarding Employees 11-242 Copyright 2015 Pearson Education, Inc. IV WHAT CURRENT ISSUES DO MANAGERS FACE? Learning Catalytics Question: Instructor Directions and Follow-Up Question Type QuestionAnswer/ResponseFor the Instructor RegionWhy did you choose to become a college student? There is no correct answer. Use this question after explaining Maslows hierarchy. Many students may be completely unaware of why they decided to become a college student. RegionWhat need is satisfied by good grades? The correct answer is esteem. Start the discussion of Maslows hierarchy with this question to help students understand how it works. A.How Can Managers Motivate Employees When the Economy Stinks? 1. Tough economic times leave companies with tight budgets, minimal or no pay raises, benefit cuts, no bonuses, long hours doing the work of those who had been laid off. As conditions worsen, employee confidence, optimism, and job engagement plummeted as well. 2. During these times managers are have to be creative in keeping their employees efforts energized, directed, and sustained toward achieving goals. 3. Suggestions that involve little (or no money) include: a) Holding meetings with employees to keep the lines of communication open and to get their input on issues. b) Establishing a common goal, such as maintaining excellent customer service, to keep everyone focused. c) Creating a community feel so employees could see that managers cared about them and their work. d) Giving employees opportunities to continue to learn and grow. e) Encouraging words B.How Does Country Culture Affect Mot

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