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Copyright © 2005 Prentice Hall, Inc. All rights reserved. PowerPoint Presentation by Charlie Cook The University of West Alabama Motivating and Rewarding Employees Chapter 10 Chapter 10 10 PART IV: Leading

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  • Copyright 2005 Prentice Hall, Inc.All rights reserved.

    PowerPoint Presentation by Charlie CookThe University of West Alabama

    Motivating and Rewarding Employees

    Chapter 10Chapter 1010

    PART IV: Leading

  • Copyright 2005 Prentice Hall, Inc. All rights reserved. 102

    Learning OutcomesAfter reading this chapter, I will be able to:1. Describe the motivation process.

    2. Define needs.

    3. Explain the hierarchy of needs theory.

    4. Differentiate Theory X from Theory Y.

    5. Explain the motivational implications of the motivation hygiene theory.

    6. Describe the motivational implications of equity theory.

  • Copyright 2005 Prentice Hall, Inc. All rights reserved. 103

    Learning Outcomes (contd)After reading this chapter, I will be able to:6. Explain the key relationships in expectancy theory.

    7. Describe how managers can design individual jobs to maximize employee performance.

    8. Explain the effect of workforce diversity on motivational practices.

    9. Describe how entrepreneurs motivate their employees.

  • Copyright 2005 Prentice Hall, Inc. All rights reserved. 104

    Chapter Opening

    How does an organization get maximum effort from employees

    if the organization is in bankruptcy or closing down? America West Airlines gave employees a reason to stay.

    America West, similar to many other companies at the turn of the 21st century,

    declared bankruptcy and significantly cut costs, cut salaries, and improved efficiencies. Their management believed it could survive. They needed pilots, flight crews, mechanics, reservation personnelBut at such a crucial time facing pending doom,

    how does management motivate those employees to stay?

  • Copyright 2005 Prentice Hall, Inc. All rights reserved. 105

    America Wests solution was to offer retention bonuses to its employees.

    Moving forward pay, employees who stayed and rode out the storm were rewarded. America West managers also indicated that they would not be receiving any bonuses themselves. Company leaders were very open about the bonuses,

    stating the bonus would not make up for what they had lost, but it was the companys way of saying thank you.

  • Copyright 2005 Prentice Hall, Inc. All rights reserved. 106

    Upwards of 40% of all organizations are offering some type of retention bonus, and are realizing that keeping good performers takes some additional incentive.

    Even though worker loyalty to organizations has decreased in the past two decades,

    retention bonuses appear to be effective in increasing employee loyalty.

  • Copyright 2005 Prentice Hall, Inc. All rights reserved. 107

    In the end, America West recovered and employees received their retention bonuses.

    Most importantly, employees recognized how important they were to the airline and how much they were appreciated.

  • Copyright 2005 Prentice Hall, Inc. All rights reserved. 108

    Discussion Questions To identify the motivational aspects of being an

    employee at America West. How do these motivational aspects relate to Maslows

    hierarchy of needs theory? Do you think Herzbergs motivation-hygiene theory

    applies to the employees at America West? Why or why not?

    Do you think that motivation theories and practices that motivate individuals at a U.S. based company like America West Airlines would be effective in explaining and generating motivation in other countries? If so, which countries? If not, why?

  • Copyright 2005 Prentice Hall, Inc. All rights reserved. 109

    Motivation And Individual Needs

    MotivationThe willingness to exert high levels of effort to reach organizational goals, conditioned by the efforts ability to satisfy some individual need

    NeedAn internal state that makes certain outcomes appear attractive

  • Copyright 2005 Prentice Hall, Inc. All rights reserved. 1010

    Componentsof Motivation

    OrganizationalOrganizationalGoalsGoals

    NeedsNeeds

    EffortEffort

    MotivationMotivation

  • Copyright 2005 Prentice Hall, Inc. All rights reserved. 1011

    The Motivation Process

    Exhibit 10.1

  • Copyright 2005 Prentice Hall, Inc. All rights reserved. 1012

    Early Theories Of Motivation

    Hierarchy of needs theory (Maslow) There is a hierarchy of five human needs; as each need becomes satisfied, the next need becomes dominant.

    Physiological: food, drink, shelter, sexSafety: physical safetySocial: affiliation with others, affection, friendshipEsteem: Internal (self-respect, autonomy, and achievement); external (status, recognition, and attention) Self-actualization: personal growth and fulfillment

  • Copyright 2005 Prentice Hall, Inc. All rights reserved. 1013

    Maslows Hierarchy of Needs

    Exhibit 10.2Source: Motivation and Personality, 2nd ed., by A. H. Maslow, 1970. Reprinted by permission of Prentice Hall, Inc., Upper Saddle River, New Jersey.

  • Copyright 2005 Prentice Hall, Inc. All rights reserved. 1014

    Early Theories Of Motivation (contd)

    Theory X (McGregor)The assumption that employees dislike work, are lazy, seek to avoid responsibility, and must be coerced to perform

    Theory YThe assumption that employees are creative, seek responsibility, and can exercise self-direction

  • Copyright 2005 Prentice Hall, Inc. All rights reserved. 1015

    Theory X Premises

    A manager who views employees from a Theory X (negative) perspective believes:

    Employees inherently dislike work and, whenever possible, will attempt to avoid it.

    Because employees dislike work, they must be coerced, controlled, or threatened with punishment to achieve desired goals.

    Employees will shirk responsibilities and seek formal direction whenever possible.

    Most workers place security above all other factors associated with work and will display little ambition.

    Exhibit 10.3

  • Copyright 2005 Prentice Hall, Inc. All rights reserved. 1016

    Theory Y Premises

    A manager who views employees from a Theory Y (positive) perspective believes:

    Employees can view work as being as natural as rest or play.

    Men and women will exercise self-direction and self-control if they are committed to the objectives.

    The average person can learn to accept, even seek, responsibility.

    The ability to make good decisions is widely dispersed throughout the population and is not necessarily the sole province of managers.

    Exhibit 10.3 (contd)

  • Copyright 2005 Prentice Hall, Inc. All rights reserved. 1017

    Early Theories Of Motivation (contd)

    Motivation-Hygiene theory (Herzberg)Intrinsic factors are related to job satisfaction and extrinsic factors are related to job dissatisfaction

    Hygiene factors Factors, such as working conditions and salary, that, when

    adequate, may eliminate job dissatisfaction but do not necessarily increase job satisfaction.

    Motivators Factors, such as recognition and growth, that can increase

    job satisfaction.

  • Copyright 2005 Prentice Hall, Inc. All rights reserved. 1018

    Herzbergs Motivation-Hygiene Theory

    Exhibit 10.4

  • Copyright 2005 Prentice Hall, Inc. All rights reserved. 1019

    Contrasting Views of Satisfaction-Dissatisfaction

    Exhibit 10.5

  • Copyright 2005 Prentice Hall, Inc. All rights reserved. 1020

    Contemporary Theories Of Motivation

    Three-needs theory (McClelland) The needs for achievement, power, and affiliation are major motives in work

    Need for achievement (nAch): the drive to excel, to achieve in relation to a set of standards, to strive to succeed.Need for power (nPow): The need to make others behave in a way that they would not have behaved otherwise.Need for affiliation (nAff): The desire for friendly and close interpersonal relationships.

  • Copyright 2005 Prentice Hall, Inc. All rights reserved. 1021

    Management Classic--David McClelland and the Three-Needs Theory David McClellands work related to motivation focused

    on aspects of personality characteristics. The questions then are: (1) How do you find out if someone is a high achiever?(2) What effect can that persons need for achievement have on

    an organization?

    McClelland would give individuals a projective test in which subjects responded to a set of pictures.

    The responses were then classified as focusing on a need for achievement, power, or affiliation. Those who had a high need for achievement, however, shared some similar attributes.

  • Copyright 2005 Prentice Hall, Inc. All rights reserved. 1022

    High achievers perform best when they perceive their probability of success as 50-50.

    They dislike gambling, they dislike high probability of success, and they like to set goals that require stretching.

    Some reasonably predictions can be made between the relationship of the achievement need and job performance. There are consistent findings for power and affiliation needs also.

  • Copyright 2005 Prentice Hall, Inc. All rights reserved. 1023

    When job situations have personal responsibility, feedback, and an intermediate degree of risk,

    high achievers are strongly motivated; they are successful in entrepreneurial activities, such as running their own businesses or managing self-contained units within a large organization.

    A high need to achieve does not necessarily indicate that someone is a good manager for large organizations

    The needs for affiliation and power are closely related to managerial success.

    The best managers are high in the need for power and low in the need for affiliation.

    Last, employees can be trained successfully to stimulate their achievement need.

  • Copyright 2005 Prentice Hall, Inc. All rights reserved. 1024

    Contemporary Theories Of Motivation (contd)

    Equity theory (Adams)Employees perceive what they get from a job situation (outcomes) in relation to what they put into it (inputs) and then compare their input-outcomeratio with the input-outcome ratios of relevant others.

  • Copyright 2005 Prentice Hall, Inc. All rights reserved. 1025

    Contemporary Theories Of Motivation: Equity Theory (contd)

    ReferentIn equity theory, the other persons, the systems, or the personal experiences against which individuals compare themselves to assess equity.The choice of a particular set of referents is related to the information available about referents as well as to the perceived relevance.

  • Copyright 2005 Prentice Hall, Inc. All rights reserved. 1026

    Equity Theory Relationships

    EmployeesAssessment

    *Person A is the employee, and Person B is a relevant other or referent.

    Perceived Ratio Comparison

    Exhibit 10.6

  • Copyright 2005 Prentice Hall, Inc. All rights reserved. 1027

    Equity Theory

    When employees perceive an inequity they may:Distort either their own or others inputs or outcomes.Behave so as to induce others to change their inputs or outcomes.Behave so as to change their own inputs or outcomes.Choose a different comparison referent.Quit their job.

  • Copyright 2005 Prentice Hall, Inc. All rights reserved. 1028

    Equity Theory Prepositions

    If paid according to time, overrewarded employees will produce more than equitably paid employees.

    If paid according to quantity of production, overrewarded employees will produce fewer but higher-quality units than equitably paid employees.

    If paid according to time, underrewarded employees will produce less or poorer-quality output.

    If paid according to quantity of production, under-rewarded employees will produce a large number of low-quality units in comparison with equitably paid employees.

    Exhibit 10.7

  • Copyright 2005 Prentice Hall, Inc. All rights reserved. 1029

    Job Design And Motivation

    Job characteristics model (JCM)Hackman and Oldhams job description model:

    The five core job dimensions are skill variety, task identity, task significance, autonomy, and feedback.

    Internal rewards are obtained when:An employee learns (knowledge of results) through (feedback) that he or she personally (experienced responsibility through autonomy of work) has performed well on a task that he or she cares about (experienced meaningfulness through skill variety, task identity, and/or task significance).

  • Copyright 2005 Prentice Hall, Inc. All rights reserved. 1030

    Core Job Dimensions

    Skill varietyThe degree to which the job requires a variety of activities so the worker can use a number of different skills and talents

    Task identityThe degree to which the job requires completion of a whole and identifiable piece of work

    Task significanceThe degree to which the job affects the lives or work of other people

  • Copyright 2005 Prentice Hall, Inc. All rights reserved. 1031

    Core Job Dimensions (contd)

    AutonomyThe degree to which the job provides freedom, independence, and discretion to the individual in scheduling the work and in determining the procedures to be used in carrying it out

    FeedbackThe degree to which carrying out the work activities required by the job results in the individuals obtaining direct and clear information about the effectiveness of his or her performance

  • Copyright 2005 Prentice Hall, Inc. All rights reserved. 1032

    The Job Characteristics Model

    Source: J. R. Hackman, Work Design, in J. R. Hackman and J. L. Suttle, eds.,Improving Life at Work (Glenview, IL: Scott, Foresman, 1977), p. 129.

    Exhibit 10.8

  • Copyright 2005 Prentice Hall, Inc. All rights reserved. 1033

    Guidelines for Job Redesign

    Exhibit 10.9Source: J. R. Hackman and J. L. Suttle eds., Improving Life at Work (Glenview. IL: Scott, Foresman, 1977). With permission of the authors.

  • Copyright 2005 Prentice Hall, Inc. All rights reserved. 1034

    Expectancy Theory (Vroom)

    A comprehensive theory of motivation that an individual tends to act in a certain way, in the expectation that the act will be followed by given outcome, and according to the attractiveness of that outcome to the individual.

    The extent to which individuals are motivated to perform to get a reward of value to them is based on their belief that their performance will result in the reward they want.

  • Copyright 2005 Prentice Hall, Inc. All rights reserved. 1035

    Expectancy Theory (contd)

    Emphasizes self interest in the alignment of rewards with employee wants.

    Addresses why employees view certain outcomes (rewards) as attractive or unattractive.

    Emphasizes the connections among expected behaviors, rewards, and organizational goals.

    Is concerned with individual perceptions and the provision of feedback.

  • Copyright 2005 Prentice Hall, Inc. All rights reserved. 1036

    Expectancy Relationships (Linkages)

    EffortperformanceThe perceived probability that exerting a given amount of effort will lead to performance

    PerformancerewardThe belief that performing at a particular level will lead to the attainment of a desired outcome

    Attractiveness The importance placed on the potential outcome or reward that can be achieved on the job.

  • Copyright 2005 Prentice Hall, Inc. All rights reserved. 1037

    Simplified Expectancy Theory

    Training and development

    Performance appraisal system

    Human resources management

    Exhibit 10.10

  • Copyright 2005 Prentice Hall, Inc. All rights reserved. 1038

    Integrating Theories of Motivation

    Exhibit 10.11

  • Copyright 2005 Prentice Hall, Inc. All rights reserved. 1039

    Dilemma in Management--Rewarding Appropriate Behavior You have just been hired as a supervisor at the

    Quality Travel Agency in Charlotte, North Carolina. In this job, customers call you to arrange travel plans. Many car rental agencies and hotels frequently run contests for the sales representatives. The incentives are attractive enough for you to steer customers toward those companies even though it might not be the best or the cheapest for them. The programs are viewed as a bonus for your hard work.

  • Copyright 2005 Prentice Hall, Inc. All rights reserved. 1040

    Questions

    Is there anything wrong with your doing business with these car rental and hotel firms that offer kickbacks to you?

    What ethical issue do you see in this case for (1) you and (2) your customers?

    How could your organization design a performance reward system that would encourage you to high levels of bookings, while at the same time not compromising ethical practices and good customer service?

  • Copyright 2005 Prentice Hall, Inc. All rights reserved. 1041

    Flexibility: The Key To Motivating A Diverse Workforce

    Recognizing the different personal needs and goals of individuals

    Providing a diversity of rewards to match the varied needs of employees

    Being flexible in accommodating the cultural differences within a diverse workforce when attempting to motivate workers.

  • Copyright 2005 Prentice Hall, Inc. All rights reserved. 1042

    Motivation and Compensation

    Pay-for-performance programsCompensation plans such as piece-rate plans, profit sharing, and the like that pay employees on the basis of performance measures not directly related to time spent on the job.

  • Copyright 2005 Prentice Hall, Inc. All rights reserved. 1043

    Compensation Alternatives

    Competency-based compensation ()A program that pays and rewards employees on the basis of skills, knowledge, or behaviors they possess

    Broad-banding ()Pre-set pay level, based on the degree to which competencies exist and allow an employee to contribute to the organization.

    Stock optionsA program that allows employees to purchase company stock at a fixed price and profit when company performance increases its stock value.

  • Copyright 2005 Prentice Hall, Inc. All rights reserved. 1044

    Work-Life Balance: Alternative Work Schedules Flextime

    A scheduling option that allows employees select what their work hours will be within some specified parameters.

    Job sharingA type part-time work that allows two or more workers to split a traditional 40-hour-a-week job

    TelecommutingA system of working at home on a computer that is linked to the office

  • Copyright 2005 Prentice Hall, Inc. All rights reserved. 1045

    Employee Empowerment: How Entrepreneurs Motivate Employees Giving employees power by:

    Allowing them to complete the whole job.Having employees work together across departments and functions in the organization.Using participative decision making in which employees provide input into decisions.Delegating decisions and duties, turning over the responsibility for carrying them out to employees.Redesigning their jobs so they have discretion over the way they do their work.