Will you be able to complete the full course?

5 Motivation in the Workplace Ddmitr/iStock/Thinkstock Learning Objectives After reading this chapter and studying the materials, you should be able to:• Describe the natur e of moti vation in the w orkplace, gi ven the int ersection of personal motiv ation and or ganizational moti vation.

• Use the job char acteristics model t o impr ove emplo yee moti vation and perf ormance.

• Apply the job perf ormance model moti vational s ystem.

• Employ goal-setting theory and emplo yee in volvement pr ograms t o moti vate w orkers.

• Implement pa y and r eward s ystems that moti vate emplo yees.

2017 Bridgepoint Education, Inc. All rights reserved. Not for resale or redistribution. The Nature of Motivation in the Workplace Section 5.1 5.1 The Nature of Motivation in the Workplace What do y ou w ant fr om y our job? This seeming ly simple question ma y r equire a somew hat complicat ed ans wer. Ear ly in a car eer the ans wer mig ht be, “ A pa ycheck.” Ov er time, personal moti ves gr ow as lif e cir cumstances e volve. A y oung, sing le emplo yee mig ht r emain pr otective of time a way fr om w ork t o enjo y other acti vities. A new mother or f ather ma y be dri ven b y the desir e f or health insur ance and the fle xibility r equired t o pr o- vide car e f or a child. Lat er in lif e, a challenging job with gr eater r espon- sibility and the opportunity t o men - tor others mig ht become a po wer- ful moti vational f orce, as can being v ested in a compan y’s pension plan without w orrying that it will disap - pear or be reduced.

Chapter 4 of this book de scribed a series of moti vational theories fr om the cont ent, oper ant pr ocess, and cogniti ve pr ocess perspecti ves. Moti vation occurs as a r esult of indi vidual needs, the r ein- forcements emplo yees encount er, per ceptions of equity , or the dri ve t o achie ve and r eceive intrinsic and e xtrinsic v alences. The r esulting beha viors mentioned w ere those that ar e ad vantageous t o the compan y, such as eff ort and pr oductivity on the one hand and st opping undesir able habits (smoking, goofing off ) on the other . Much of the time, these out comes also benefit the emplo yee; ho wever, the w orker can be equall y dri ven b y moti ves outside of the compan y’s int erests or influence, and this sometimes r esults in conflicts betw een personal and organizational motives. Consequentl y, ther e ma y be cir cumstances in w hich a contr ast can be dr awn betw een per- sonal moti ves and or ganizational moti ves. A t times these ar e one and the same. A t others, the y ma y be in opposition. As an e xample, y our moti ve ma y be t o be pr omoted t o a hig her r ank. The or ganization’s moti ve will be t o find the person best suit ed t o the job, w hich ma y or ma y not be y ou. A personal moti ve w ould be t o obtain the hig hest possible le vel of compensa - tion.

The organization, seeking to remain competitive, may need to hold down payroll costs.

The w ork–life balance dilemma off ers another e xample of a conflict betw een personal and or ganizational moti ves. On the one hand, emplo yees w ant a r easonable w ork schedule, one that allo ws them t o start each da y fr esh and ener gized, f eeling as thoug h the y ha ve had enoug h time with f amily. On the other , competiti ve f orces and deadlines ma y dri ve the manager t o demand o vertime and tr avel of subor dinates. A successful management pr ogram seek s t o r econcile these competing goals in a w ay that w ould moti vate emplo yees. The f ollowing OB in A ction feature box regarding Zehnder Communications provides an example.

When seeking t o de velop a pr ogram of moti vation in the w orkplace, it ma y be helpful t o consider Figur e 5.1. This simplified model suggests that managers can de velop successful AndreyPopov/iStock/Thinkstock Personal motives can be impacted by circumstances at and outside of work, many having to do with one’s stage in life. What motivates you?

\251 2017 Bridgepoint Education, Inc. All rights reserved. Not for resale or redistribution. The Nature of Motivation in the Workplace Section 5.1 motivational s ystems b y using a mor e compr ehensive appr oach, incorpor ating the cont extual elements that ar e f eatured in this chapt er: (1) the natur e of the job, and (2) other or ganiza- tional pr ocesses including goal setting pr ograms and pa y s ystems. In other w ords, althoug h the theories described in Chapt er 4 identify some elements of the or ganizational cont ext, additional factors should be considered when seeking to enhance workplace motivation. Figure 5.1: Personal and organizational goals While companies and individuals have separate goals that motivate them to accomplish certain tasks, sometimes these goals can overlap.

Management’s task should be t o optimize the o verlap betw een personal and or ganizational moti ves. In the r emainder of this chapt er, v arious pr ograms designed t o achie ve that out come ar e described. OB in Action: Zehnder Communications The w orld of ad vertising and mar keting communication is a d ynamic, challenging, and con - tinually e volving en vironment. F or y ears, ad vertising w as a r elatively str aightforward pr ocess. T raditional media outlets (t elevision, r adio, new spapers, mag azines, and billboar ds) w ere select ed, and indi viduals cr eated messages designed t o r esonate with pot ential cust omers that use those media.

Today, such an appr oach w ould be out dated and w ould lik ely f ail. The w orld of social media and instant communication has shift ed the task s t o be perf ormed and the methods r equired t o complet e them. As advertising expert Dave Woods noted, (c ontinued) \251 2017 Bridgepoint Education, Inc. All rights reserved. Not for resale or redistribution. Job Design and the Job Characteristics Model Section 5.2 5.2 Job Design and the Job Characteristics Model This section f ocuses on the w ays job design and the job char acteristics model can be used t o enhance emplo yee perf ormance. Ensuring emplo yees ar e satisfied with and inspir ed b y the job cont ext can become a k ey aspect of moti vation in the w orkplace. Job design refers t o the pr actice of pr eparing and/or changing a job description t o meet or ganizational r equirements. The job char acteristics model off ers insig hts int o the int eractions betw een a person and a job. Job Design For y ears, the pr ocess of job design lar gely t ook place in the human r esources department , w here personnel specialists w orked with managemen t t o assign task s t o indi vidual jobs. T able 5.1 displays three standard steps of job design. OB in Action: Zehnder Communications (continued) Mobile marketing is exploding. You can’t really separate mobile marketing from ‘traditional’ e-commerce . . . because 80% of folks are using mobile devices when they are away from home and work and more standard e-commerce sites in their offices for their jobs and at home when they shop online. (personal communication, November 1, 2015) He points out that a sing le mes sage mig ht need t o be adapt ed t o fit mor e than a dozen diff erent scr een sizes and types.

Such a situatio n cr eates signif icant t ension and pr essure t o perf orm f or ad vertising agency emplo yees, w ho f ace continuing demands t o cr eate ad vertising and pr omotional messages that lead t o measur able r esults. An y ad vertising pr ogram must meet the needs of a di verse set of venues in which communications will be sent.

Zehnder Communication has been able t o successfull y o vercome man y of these challenges. The compan y has been not ed as a t op 10 place t o w ork b y local media outlets (in New Or leans and Bat on R ouge) f or mor e than a decade ( New Orleans CityBusiness, 2016). Jeff ery Zehnder , f ounder and CEO, believes part of the key to success is emplo yee freedom and empowerment. One app lication of his manage rial philosoph y is the V AN pr ogram. V acation-as-needed pr o- gram al lowed emplo yees t o tak e time off w hen the y need it , if doing so did not int erfere with or slow down the activities of others in the company.

The combinatio n of an e xciting w ork en vironment with a caring and supporti ve management t eam has cr eated success f or the or ganization. As Zehnder stat es, “ As e xperts, it’s not enoug h that w e r emain w ell v ersed in new media tr ends. W e o we it t o our clients t o r emain at the f orefront of inno vation, dedicat ed t o de veloping new w ays t o r each the consumer” (personal communication, May 4, 2013).

Reflection and Application Questions 1. What motives do you believe are most important to advertising agency employees?

2. Do you think that freedom and empowerment, which play key roles in Jeffrey Zehnder’s leadership style, would succeed in every type of organization?

3. What is your reaction to the VAN program? Would it work in every type of company?

\251 2017 Bridgepoint Education, Inc. All rights reserved. Not for resale or redistribution. Job Design and the Job Characteristics Model Section 5.2 Table 5.1: Standard steps of job design StepDescription Job analysis Assigning specific tasks to specific jobs Job description A formal list of tasks and duties placed in the company manual, handbook, or website Job specification A listing of eligibility requirements or job qualifications, used in recruiting and selection pr ocesses Over time, it has become app arent that job descriptions and job specifications pr oduce e xpec- tations r egarding the types of task s t o be perf ormed and the skills needed t o complet e those task s, both in applicants and in those w ho ar e hir ed. When such e xpectations ar e met , the emplo yee will lik ely r eport hig her le vels of satisf action with the job and commitment t o the or ganization (Irving & Mont es, 2010). Con versely, unmet e xpectations (“This isn ’t w hat I e xpected w hen I t ook this job ”) r esult in dissatisf action, decr eased moti vation, and at times a job search or the intention to quit (Bridges, Johnston, & Sager, 2007). The Job Characteristics Model The job char acteristics mod el off ers insig hts int o the int eractions betw een a person and a job (Hackman & Oldham, 1980). The appr oach suggests that the natur e of a job influences se veral person al and or ganizational out comes. A pr ogression tak es place in w hich cor e job char acteristics aff ect critical ps ychological stat es, w hich in turn lead t o v arious or ganizational out comes (see the t op portion of Figur e 5.2; the bott om portion includes other v ariables that will be discussed later in this section).

Figure 5.2: Job characteristics model The job characteristics model describes the interaction between a person and a job. Core job dimensions lead to critical psychological states, which in turn lead to personal and work outcomes. V ariables such as employee growth and need strength, combined with employee knowledge and skill, influence both perceptions of the core job dimensions as well as personal and work outcomes.

Source: Adapted from Hackman, J. R., & Oldham, G. R. (1980). Work redesign, pp. 78–80. Upper Saddle River, NJ: Pearson.

\251 2017 Bridgepoint Education, Inc. All rights reserved. Not for resale or redistribution. Job Design and the Job Characteristics Model Section 5.2 Core Job Characteristics The firs t element in the job char acteristics model sho wn in Figur e 5.2 contains fi ve cor e job dimensions that can be modified t o impr ove personal and w ork out comes. Each char acteris- tic can be examined to see whether it is present or absent in any form of employment.

Skill variety r efers t o the number of skills needed t o be able t o successfull y perf orm a gi ven job.

Some jobs in volve r elatively f ew skills, w hereas others r equire a comple x set . F or e xam- ple, pr essing shirts in a dry cleaning oper ation r equires f ar f ewer skills than perf orming sur- gery or working as an auto mechanic.

Task identity r efers t o the e xtent t o w hich a job inclu des the completion of an identifiable piece of w ork. A musician composing a song possesses a str ong le vel of task identity . In con - trast, a lathe oper ator w ho mak es legs f or tables, along side thr ee other lathe oper ators, has little or no task identity.

Task significance, or human interaction, r eflects the degr ee t o w hich a job has a beneficial impact on other people, or in other w ords, is the w ork helpful and meaningful t o others? Someone w ho w orks as a nurse or ps ychologist perf orms a job with hig h task significance. Someone tabulating information to be entered into a computer database may not.

Autonomy is the amount of fr eedom an emplo yee has t o perf orm a job in a manner in w hich the indi vidual sees fit . A mechanic w ho decides w hich car t o r epair first , chooses the parts needed t o mak e the r epair, and complet es the job without asking a supervisor’s opinion or permission ho lds a hig h le vel of aut onomy. The holder of an out bound t elemarketing job in w hich phone numbers ar e dialed b y a comput er and the emplo yee f ollows a pr ompted script t o make presentations while being carefully supervised does not have autonomy.

Feedback is the degr ee t o w hich the emplo yee r eceives inf ormation about ho w w ell a job has been perf ormed. Such inf ormation oft en r esults fr om the job itself. The indi vidual can see the r esult of his or her eff orts w hen the output is complet e and identifiable. F or instance, making a sale or successfull y installing a comput er pr ogram and seeing that it w orks cr eates job- gener ated f eedback. Man y r etail sales positions off er hig h degr ees of f eed- back, as the sale is either made or not made. Indi viduals that pr ovide sup - port services, such as clerical emplo y- ees, oft en r eceive little f eedback on a r outine basis, other than comments b y supervisors. Critical Psychological States The e xtent t o w hich a particular job fulfills each of the cor e job char acter- istics contribut es t o an emplo yee’s per ceptions of the job itself. These per ceptions, or the critical ps ycholog- ical stat es disp layed in Figur e 5.2, ar e associat ed with emplo yee moti vation, Wavebreakmedia Ltd/Wavebreak Media/Thinkstock An important condition for psychological satisfaction at work is that the tasks one performs are meaningful.

\251 2017 Bridgepoint Education, Inc. All rights reserved. Not for resale or redistribution. Job Design and the Job Characteristics Model Section 5.2 performance, and job satisf action as positi ve out comes and withdr awal beha viors such as absent eeism and intentions to turnover as negative outcomes (Hackman & Oldham, 1976).

A job with a hig h le vel of skill v ariety, task identity , and task significance pr ovides the emplo yee with the f eeling that the w ork he or she perf orms is meaningful. A meaningful job mak es the w orkplace mor e palatable, as the emplo yee uses his or her skills in completing task s. Mean- ingfulness also emerges from helping others.

A job with a hig h le vel of aut onomy cr eates f eelings of gr eater r esponsibility r egarding the out - comes of the w ork. This critical ps ychological stat e in volves r eceiving cr edit w hen task s ar e accomplished and being held accountable w hen the y ar e not . A braham Maslo w w as among the first t o not e the cr aving f or est eem as a moti ve, w hich w as r einforced b y Da vid McClelland in the need theory of motivation, as discussed in Chapter 4.

Finally, a job that pr ovides a hig h le vel of f eedback gi ves the emplo yee kno wledge of the actual r esults of w ork acti vities. Intrinsic moti ves ar e associat ed with both e xperienced r esponsibil- ity and kno wledge of r esults. An emplo yee w ho succee ds g ains additional v alence fr om the actual achievement, in terms of self-efficacy and positive self-regard.

Personal and Work Outcomes Higher le vels of cor e job char acteristics lead t o impr oved ps ychological stat es and ther efore impr oved out comes, or the lo wer portion of the model sho wn in Figur e 5.2. Lo wer degr ees of cor e job char acteristics neg atively influence ps ychological stat es and r esult in r eductions in these v alued out comes. The job char acteristics model suggests that the f our ideal personal and work outcomes are • hig h internal work motivation, • high-quality work performance, • high satisfaction with the work, • and low absenteeism and turnover. Hig h int ernal w ork moti vation, the first out come, r epresents the indi vidual’s desir e t o per- f orm at a hig h le vel. This moti vation occurs without the pr esence of e xtrinsic r ewards such as pa y and benefits. The same holds true f or the other thr ee out comes. Hig h-quality w ork perf ormance, the second out come, r efers t o the w orker’s ability t o pr oduce a gr eater quan - tity as w ell as bett er quality, of goods or services. Hig h satisf action with the w ork means that emplo yees will be less lik ely t o damage or ganizational pr operty or file grie vances ag ainst supervisors and ma y be mor e lik ely t o mak e positi ve stat ements about the compan y. Lo w absent eeism and turnover are indicators of satisfaction with work.

These out comes cr eate v alue f or the person and the compan y. A moti vated indi vidual w ho pr oduces hig h quality w ork and e xpresses satisf action with that w ork will lik ely sho w up t o w ork each da y and will be less inclined t o look f or another job. F rom the or ganization’s perspecti ve, companies off ering jobs with hig h v alues in the cor e dimensions r eceive the ben - efits of moti vated emplo yee eff orts, including impr oved perf ormance in t erms of quantity and quality , and spend less time filling positions f or w orkers w ho do not arri ve and those w ho quit (Griffin, 1991).

\251 2017 Bridgepoint Education, Inc. All rights reserved. Not for resale or redistribution. Job Design and the Job Characteristics Model Section 5.2 Table 5.2 summarizes the elements in volved in each of the job char acteristics model’s k ey v ariables.

Table 5.2: Summary of key variables in the job characteristics model Core job characteristics →Critical psychological states →Personal and work outcomes Skill variety Task identity Task significance Experienced meaningfulness of the workHigh internal work moti vation High-quality work perf ormance High satisfaction with the w ork Low absenteeism and turno ver Autonomy Experienced responsibility f or the outcomes of the work Feedback Knowledge of the actual r esults Moderating Variables There is one complication t o the principles stat ed in the job char acteristics model. In or gani- zational r esearch t erminology, emplo yee gr owth need str ength and emplo yee kno wledge and skill ar e moder ating v ariables. Moder ating v ariables specify conditions under w hich r elation- ships depict ed in Figur e 5.2 ar e pr esent. In the job char acteristics model, the v ariables either str engthen or w eaken the pr edicted r elationships. Consequentl y, an y anal ysis of w orkplace moti vation would be influenced by the moderating variables (Johns, Xie, & Fang, 1992).

Employee gr owth need strength r efers t o an indi vidual’s degr ee of self-est eem and desi re f or self-actualization.

The job char acteristics model posits that the fi ve cor e job dimensions will be mor e important t o and v alued b y indi viduals w ho ha ve the hig h gr owth need str ength personality char acteristic. This means that emplo yees with hig her le vels of gr owth needs ar e those w ho wil l be most moti vated b y the cor e job char acteristics and subsequent critical ps y- chological stat es. Hig h gr owth need str ength is an e xpression of a str ong degr ee of int ernal moti vation. It is connect ed t o the desir e t o pr ovide hig h-quality w ork, le vels of satisf action with a job, and, w hen pair ed with hig her le vels of the cor e job char acteristics, r esults in lo wer le vels of absent eeism and turno ver. The r elationships betw een the cor e job char acteristics and personal/job out comes will be w eaker or none xistent f or emplo yees with lo w le vels of gr owth need strength.

The same patt ern tak es place f or emplo yees with hig her (and lo wer) le vels of kno wledge and skill.

The job char acteristics model will be mor e pr edictive of positi ve emplo yee and compan y out comes w hen emplo yees ar e skilled and ha ve hig h kno wledge le vels. Companies emplo y- ing indi viduals with lo w le vels of kno wledge and skill ar e less lik ely t o r eceive the benefits of off ering challenging and exciting jobs posited by the model.

Motivating Potential Score (MPS) The r elationship among the v ariables sho wn in T able 5.2 r esults in a pr edictive inde x, w hich allo ws f or cal culation of the str ength of the cor e job char acteristics as moti vating f actors (Nadler , Hackman, & La wler, 1979). The moti vating pot ential scor e (MPS) f ormula is calcu- lat ed as follows:

\251 2017 Bridgepoint Education, Inc. All rights reserved. Not for resale or redistribution. Job Design and the Job Characteristics Model Section 5.2 skill variety + task identity + task significance MPS= ––––––––––––––––––––––––––––––––––––––––––––––– × autonomy × feedback 3 The scor e can be calculat ed b y an outside observ er (e.g., someone in the HR office), a r esearcher in vestigating the usefulness of this approach, by a supervisor, or by the individual employee.

In an y case, t o achie ve a hig h moti vating pot ential scor e, a job must be hig h on at least one of the firs t thr ee f actors that lead t o e xperienced meaningfulness at w ork. Then both aut onomy and f eedback must be pr esent. A hig h moti vating pot ential scor e indicat es that the personal and w ork out comes displa yed in T able 5.2 will r esult. A substantial amount of r esearch indi- cat es support f or the job char acteristics model using the moti vating pot ential scor e and other measur es (Fried & Ferris, 2006). Not e that an MPS scor e b y itself has little meaning. Onl y w hen one job is compar ed with another will the r esultant scor es allo w f or int erpretation. F or e xample, the job of administr a- tive assistant could be compar ed t o that of an out bound t elemarketer. T o calculat e the MPS scor e, a v alue w ould be assigned t o each v ariable, such as 1=lo w and 5=hig h f or skill v ariety, task identity , task significan ce, aut onomy, and f eedback. F or the administr ative assistant , one could reasonably assume the following values:

4 (skill variety) + 3 (task identity) + 5 (task significance) MPS= ––––––––––––––––––––––––––––––––––––––––––––––––––––––––– × 3 (autonomy) × 4 (feedback) 3 The resulting score would be: 12 MPS= –– × 3 × 4 = 64 3 For the telemarketer, the values might be: 1 (skill variety) + 1 (task identity) + 1 (task significance) MPS= ––––––––––––––––––––––––––––––––––––––––––––––––––––––––– × 1 (autonomy) × 3 (feedback) 3 In that instance, the score would be: 3 MPS= –– × 1 × 3 = 9 1 The anal ysis w ould impl y that the motiv ating potential of the job of administr ative assistant w ould be slig htly mor e than sev en times hig her than that of an inbound t elemarketer, r egard- less of all other f actors, including pa y, benefits, and other compan y conditions. The adminis- tr ative assistant should be much more motivated, simply by the job he or she performs daily.

Criticisms of the Job Characteristics Model Two cr iticisms of the job char acteristics model e xist. The first is that the e valuation of each v ariable is subj ective, not obj ective. F or instance, w hen considering the MPS f ormula f or the \251 2017 Bridgepoint Education, Inc. All rights reserved. Not for resale or redistribution. The Job Performance Model of Motivation Section 5.3 administrative assistant , do y ou belie ve each of those v alues is corr ect? One person ma y belie ve skill v ariety deserv es a scor e hig her than the “4” indicat ed; another ma y think 4 is t oo hig h. Th e same holds true f or e very other it em. Assessm ents of all the f actors in the model ar e personal rather than a hard-and-fast number or degree.

Second, it ma y not be the case that e very person v alues each of the v ariables. F or instance, a person with a lo w locus of contr ol, w ho belie ves des tiny is det ermined b y outside f orces including chance, luck, f ate, or mor e po werful people, ma y not v alue aut onomy and in f act pr efer dir ection and hands -on management . Another indi vidual ma y not enjo y int eracting with other people, w hich w ould mean hig her task significance (human int eraction) ma y not be a good thing. The model assumes all w orkers ar e the same and ha ve the same moti ves— which ma y or ma y not be the case. The inclusion of the moder ating v ariables sho wn in Figur e 5.2 is partly designed to address this issue.

In summary , despit e the criticisms, the job char acteristics model off ers insig hts int o the int er- actions betw een a person and a job. A pr ogression tak es places in w hich cor e job char acteris- tics contribut e t o the critical ps ychological stat es necessary t o impr ove personal and w ork out comes, noting that gr owth need strength and indi vidual kno wledge and skill could accen - tuate or reduce those effects.

5.3 The Job Performance Model of Motivation The job perf ormance model de veloped b y Mit chell and Daniels (2003) pr ovides an e xample of an int egrated appr oach t o conceptualizing moti vational pr ocesses in the w orkplace (see Figur e 5.3). Th e appr oach accounts f or indi vidual char acteristics as w ell as the or ganizational cont ext and opens the door t o discussion of the impact of cont extual v ariables on emplo yee moti vation. Th e job perf ormance model incorpor ates the f ollowing elements: indi vidual char- act eristics, job cont ext, moti vational pr ocesses, moti vated beha viors, and actual perf ormance. Comprehension Exercise 1. Skill variety, task identity, and task significance lead to a. e xperienced meaningfulness of the work.

b. experienced responsibility for the outcomes of the work.

c. knowledge of the actual results of work activities.

d. the moderating variable growth need strength.

2. The need for self-esteem and the desire for self-actualization reflect a. critical psychological states.

b. the need for autonomy. c. growth need strength.

d. task significance. Answers: 1) a 2) c \251 2017 Bridgepoint Education, Inc. All rights reserved. Not for resale or redistribution. The Job Performance Model of Motivation Section 5.3 Figure 5.3: Job performance model The job performance model suggests that job context contributes to motivational processes and moti vated behaviors through enhancement or limit, whereas individual characteristics contribute to these moti vations b y skill le vel. All of these f actors w ork t ogether t o contribut e t o actual performance.

Source: Adapted from Mitchell, T. R., & Daniels, D. (2003). Motivation. In Borman, W. C., Ilgen, D. R., & Klimoski, R. J., Handbook of ps ychology (Vol. 12, p. 226). New York, NY: John Wiley & Sons.

Individual Characteristics Every person possesses a unique set of skills, abilities, and mental functions. Moti vated beha viors become mor e lik ely w hen the emplo yee’s skill set and mental disposition mat ch the r equirements of the job. Both elements ar e crucial t o perf ormance. An indi vidual w ho does not ha ve the r equired job kno wledge ma y find the w ork e xciting and challenging but cannot perf orm at hig h le vels because a k ey ingr edient is missing. A t the same time, an indi- vidual ma y be able t o perf orm r equired job task s, but emotions, moods, belief s, or v alues ma y r educe the willingness t o appl y those skills. Someone w ho is depr essed, belie ves the compan y acts unethicall y or discrimi nates, or is mad about an unr elated issue ma y be less willing t o appl y his or her w ork skills. The r esult will be f ewer moti vated beha viors and a lo wer le vel of perf ormance.

The Job Context Just as each person brings a distinct set of attribut es t o the w orkplace, e very w ork en viron- ment will be diff erent fr om all others. E ven in or ganizations that pr oduce the same pr oducts and services and use basicall y the same building design—such as f ast-food r estaurant chains, big-bo x r etailers, financial service pr oviders such as E dward Jones, or car maint enance com - panies such as Jiffy Lube or Good year Tir e—differences still appear . Althoug h the ph ysical en vironment ma y be the same and the jobs ar e equi valent, supervisory sty les and in-house social norms may differ.

\251 2017 Bridgepoint Education, Inc. All rights reserved. Not for resale or redistribution. The Job Performance Model of Motivation Section 5.3 A pleasant and positi ve job cont ext, as not ed r egarding the Zehnder Communications com - pany ear lier in this chapt er, contribut es t o indi vidual and compan y success b y enabling emplo yees t o do their best w ork. Thr ough pr ocesses such as ment oring and r ewarding, w hich help t o build self-efficacy and self-est eem in indi vidual w orkers, moti vated beha viors can be incr eased. A compan y with an unpleasant ph ysical en vironment, poor r eward s ys- tem, unqualified or inept supervisors, or count erproductive cultur al norms limits moti vated beha viors (Kamdar & Van Dyne, 2007). Motivational Processes Mitchell and Daniels consider moti vational pr ocesses t o include ar ousal, att ention, dir ec- tion, int ensity, and persist ence. These f actors constitut e cogniti ve pr ocesses, or moti vational f orces, in the t erms of e xpectancy theory . A rousal points the indi vidual t o the task at hand. A ttention r emoves distr actions that w ould pr event the emplo yee fr om gi ving full eff ort t o a task. Dir ection means that the emplo yee f ocuses on the cor rect com - pletion of the assignment . Int ensity r epresents the r equired le vel of eff ort needed t o achie ve a desir ed out come. P ersistence indicat es the emplo yee’s willingness t o k eep trying or w orking until the job is done. Motivated Behaviors Motivated beha viors ar e the tangible out comes that r esult fr om thr ee f ac- tors:

indi vidual inputs, the job con - text, and moti vational pr ocesses, w hich ar e sho wn in Figur e 5.3. These combine t o pr oduce observ able emplo yee eff ort.

In the Mit chell and Daniels model, these beha viors ar e observ ed thr ough f ocus, int ensity, quality , and dur ation.

Moti vated beha viors, then, include sta ying on task, trying har d, pr oducing quality outputs, and continuing t o pr oduce o ver longer periods of time. Actual Performance The final out come, perf ormance, is indicat ed b y or ganizational measur es and goals. P erfor- mance in pr oduction will be signaled b y the number of units corr ectly pr oduced. Hig her sales r eflect impr oved perf ormance b y a salesperson. A ccountants that pr epare financial docu - ments on time with complet e accur acy perf orm at hig h le vels. In the job perf ormance model of moti vation, impr oved perf ormance occurs w hen all the other v ariables ar e combined corr ectly.

The job perf ormance model pr ovides an int egrated appr oach t o conceptualizing moti vational pr ocesses in the w orkplace. The model off ers a back ground that incorpor ates mor e than the v ariables e xplained in cont ent, oper ant pr ocess, and cogniti ve pr ocess theories of moti vation. Monkeybusinessimages/iStock/Thinkstock Motivation is directly connected to the job context, which encompasses everything from the physical work environment to the style of management.

\251 2017 Bridgepoint Education, Inc. All rights reserved. Not for resale or redistribution. Goal-Setting and Employee Involvement Programs Section 5.4 Among the k ey f actors t o be included ar e the natur e of the job, goals and goal-setting pr o- cesses, social factors at work, and the organization’s pay system and reward structure. 5.4 Goal-Setting and Employee Involvement Programs At the person al le vel, moti vation ma y be deri ved fr om unmet needs, r einforcements, the desir e f or equity , or intrinsic and e xtrinsic r ewards. Another important element of moti vation in the w orkplace is indi vidual goals, including the goal-setting pr ocess itself and in volving the emplo yee in that pr ocess. Goal setting and emplo yee in volvement oft en go hand in hand w hen it comes to motivation. Goal-Setting Theory Goal-setting theory off ers the t ools t o design perf ormance tar gets that moti vate emplo yees t o achie ve personal and or ganizational objecti ves. The theory , as originall y de veloped b y E dwin Lock e (1968), suggests that indi viduals with w ell-established goals ar e lik ely t o perf orm at hig her le vels than those without such goals. Lock e suggests that goals begin in v alues and v alue judgments, w hich in turn det ermine emotions and int entions. Emotions and int entions pla y major r oles in det ermining beha vior—in this case, the eff orts or acti vities t oward achie v- ing goals—which leads to subsequent results (see Figure 5.4). These stages r epresent the pr ogression not ed in Chapt er 3 r egarding per ceptions. When a person v alues an out come associat ed with a goal, f or personal or car eer-based r easons, the indi vidual’s le vel of emotional commitment rises. F or instance, kno wing that incr easing one’s personal productivity (more sales, more units of production, finishing an R&D r esearch proj- ect) will incr ease the odds of r eceiving a positi ve perf ormance appr aisal, pa y r aise, or pr o- motion, the person has a str onger emotional attachment t o achie ving the goal. This attach- ment tu rns int o int entions (“I’m going t o come t o w ork a little ear ly, sta y a little lat e, and try har der”) which then become actual behaviors. Comprehension Exercise 1. Which is not an organizational motive?

a. impr oved productivity b. fewer defects c. receiving a promotion d. reduced tardiness 2. In the job performance model, arousal, attention, direction, intensity, and persistence ar e part of a. individual characteristics.

b. the job context.

c. motivational processes.

d. motivated behaviors. Answers: 1) c 2) c \251 2017 Bridgepoint Education, Inc. All rights reserved. Not for resale or redistribution. Goal-Setting and Employee Involvement Programs Section 5.4 Figure 5.4: Goal setting and motivation Goal-setting theory posits that values determine emotions and intentions, which in turn influence goal-orient ed behavior; these factors work together to achieve end results.

Adapted from: A. D. Szilagyi and M. J. Wallace, Jr. (1980). Organizational Behavior and Performance: 2nd edition, Santa Monica, CA, page 135.

Goal-Setting Components The goal-setting appr oach further establishes the conditions under which goals ar e link ed t o perf ormance. T o optimize the benefits of goal setting, eff ective goals should ha ve the char ac- teristics shown in Table 5.3.

Table 5.3: Characteristics of effective goals Characteristic Description Difficult but attainable Should not overwhelm the employee but be challenging to achieve; goals that are too difficult result in the employee “giving up” and goals that are t oo easy may lead to the employee hitting the target and then relaxing or failing to continue to try hard Measurable Should be clearly stated so that the employee and manager both know if the goal was achieved Flexible Should be adjusted when conditions change, such as an external shift (economic downturn; terrorist attack) or an internal problem (company crisis due to a natural disaster or unethical company activities) Goals should be difficult enoug h that emplo yees must try har d t o r each them. Consist ent r esearch indic ates the r elationship betw een goal difficu lty and perf ormance (W right, 1990). Unattainable goals oft en cause w orkers t o simpl y gi ve up, because the y lead t o frustr ation and subsequent lo wer le vels of eff ort. This means that a quality goal is achie vable. Easil y met goals do not challenge the employee to continue higher levels of effort.

Clearly stat ed, measur able goals r eflect goal specificity, w hich con veys w hether a goal has been de fined using quantifiable out comes. Hig her le vels of goal specificity ha ve been link ed t o perf ormance incr eases (Ment o, St eele, & Karr en, 19 87). F or e xample, goal specificity in a sales job w ould be f ound in the stat ement, “I will mak e 10 calls on entir ely new pot ential cli - ents each month in the coming y ear with the goal of cr eating 2 successful sales. ” Goal specific- ity in an IT department mig ht be t o “cr eate one new usable and mar ketable app in the coming y ear.” Goal specificity f or an accountant mig ht be “I will finalize all r eports and stat ements on time or one day early throughout the year.” In addi tion t o goal specifici ty, a link age has been established betw een goal accomplishment and self-efficacy (V ancouver, 2001). The r esearch r einforces the idea that a clear ly defined and \251 2017 Bridgepoint Education, Inc. All rights reserved. Not for resale or redistribution. Goal-Setting and Employee Involvement Programs Section 5.4 achievable goal pr ovides the gr eatest opportunity f or the person t o perf orm eff ectively. Suc - cess at r eaching the goal in turn builds self-efficacy . Incr eased self-efficacy is another positi ve out come associated with goals and goal setting programs, when they are carefully created.

With r egard t o goal fle xibility, man y times or ganizational cir cumstances change dr amatically, w hich in turn aff ects the goals set b y and f or emplo yees. The sudden r esignation of a CEO , a fir e or flood in a major manu facturing f acility, or some other int ernal e vent could mak e pr evi- ously se t goals unr ealistic. The same holds true w hen e xternal en vironmental f orces change. A dr amatic economic do wnturn mig ht mak e pr evious pr oduction and sales goals unachie vable. It only makes sense to revise them to more realistic performance targets as events unfold.

Two additional f actors contribut e t o the success of an y goal-setting pr ogram: f eedback and goal commitment . Emplo yees w ho r eceive f eedback on their pr ogress t oward their goals ha ve a bett er idea of w hen the y ar e on course and w hen corr ections need t o be made. Str ong r ela- tionships e xist betw een f eedback, difficult goals, and subsequent perf ormance (Langeland, Johnson, & Mawhinney, 1998).

Goal commitment e xpresses the degr ee t o w hich an emplo yee f eels personall y in volved in achie ving a goal, either because the person helped set the goal or because the person str ongly agr ees with the goal’s int ent. R esearch suggests goal commitment constitut es a moder ating v ariable. That is, difficult goals ar e r elated t o perf ormance onl y w hen hig her degr ees of goal commitment are present (Donovan & Radosevich, 1998).

Organizational pr ograms including Six Sigma ha ve achie ved gr eater le vels of success w hen quality goals ar e institut ed (Linderman, Schr oeder, Zahe er, & Choo, 2003). Eff ective or ganiza- tional operations become mor e lik ely w hen the goals meet the conditions stat ed in T able 5.3.

Goal Setting and Motivational Mechanisms Locke’s goal-setting pr ogram incorpor ates f our moti vational mechanisms. First , goals dir ect att ention t oward k ey acti vities and a way fr om less important acti vities. Clear ly stat ed goals pr ovide a sense of dir ection. Second, goals r egulate eff ort. An emplo yee w ho kno ws w hat he or she should accomplish in a gi ven time period can dedicat e sufficient eff ort t o the task. Thir d, goals incr ease persis tence, or the willingness t o k eep w orking on a task o ver time. F ourth, goal se tting is r elated t o conceptual and str ategic thinking. In other w ords, goals spur str ategy de velopment. P ondering o ver ho w t o r each a goal enables the indi vidual t o succeed (Lock e & Latham, 2002).

Management by Objectives Management b y objecti ves (MBO) is a participati ve goal-setting pr ogram that tak es ad van- tage of the benefits and principles pr esent in goal-set ting theory (Druck er, 1954). Se veral v ersions of the pr ogram ha ve been used in or ganizational settings (Car oll & T osi, 1973). The essential ingr edients of the pr ograms ar e (1) the actua l st eps in volved and (2) meeting the MBO pr erequisites (such as commitment fr om t op management and an en vironment w here emplo yees feel supported). \251 2017 Bridgepoint Education, Inc. All rights reserved. Not for resale or redistribution. Goal-Setting and Employee Involvement Programs Section 5.4 Steps The st eps in volved in MBO ar e job anal ysis, emplo yee goal pr eparation, manager goal pr epa- ration, the meeting, and the follow-up.

The job anal ysis phase constitut es a k ey element in the MBO pr ocess. Bef ore an y goals ar e writt en, the k ey functions of the job should be enumer ated. Job anal ysis ans wers this ques - tion:

“Wh y w as I hir ed?” The ans wer t o that question points t o ar eas in w hich goals should be set.

The ne xt phase in volves emplo yee goal pr eparation. In most MBO pr ograms, emplo yees pr e- pare goal lists on an annual basis. In some or ganizations the y ar e writt en in lat e December or ear ly January . Other companies pr efer t o set goals in the off-season or at the end of the fiscal y ear, during slower times.

In the manage r goal pr eparation phase, the manager writ es tw o separ ate goal lists. The first is a perso nal list of the manager’s objecti ves f or the coming y ear. The second is the list that the manager pr epares f or each t eam member . A t the completion of this st ep, the emplo yee has a self-pr epared list and the manager’s prepared goal list for that employee.

In the meeting phase, the manager and emplo yee con vene t o discuss the tw o goal lists, w hich ar e then blended int o a sing le document . Managers and their emplo yees negotiat e the final set of objectives. The meeting strengthens the element of participation in the process.

The f ollow-up stage identifies specific times f or goals t o be assessed in t erms of actual perf ormance. F ollow-ups can be annual, semiannual, or quart erly, depending on compan y pr eference.

Prerequisites Many companies ha ve adopt ed MBO pr ograms, with r esults r anging fr om pr ograms that w ere successful t o some that did not f are as w ell (Batt en, 200 3; F ord, 1979). Ear ly indications w ere that as f ew as one thir d of F ortune 500 compan y leaders and emplo yees belie ved the pr ogram w as of v alue (Dinesh & P almer, 1998; Schust er & Kimball, 1974). The lesson s learned fr om these applications include the conclusion that MBO is not f or e very compan y. Instances ha ve occurr ed in w hich an MBO pr ogram cr eated mor e pr oblems than it sol ved. Conse- quentl y, the best appr oach seems t o be t o se ek out conditions in w hich the s ystem can succeed (McConkie, 1979; Thompson, Luthans, & T erpening, 1981). Successful MBO pr ograms meet seven prerequisite conditions. Rawpixel/iStock/Thinkstock MBO programs work best when top management clearly demonstrate their investment to employees at all levels.

\251 2017 Bridgepoint Education, Inc. All rights reserved. Not for resale or redistribution. Goal-Setting and Employee Involvement Programs Section 5.4 First, t op management must be committ ed and in volved. Emplo yees ar e “signal r eaders,” meaning the y observ e managers t o see w hich issues ar e tr eated as important . If t op manage- ment just pa ys lip service t o a pr ogram, w orkers quickl y cat ch on. When compan y leaders tr eat an issue with car e and sincerity , emplo yees f ollow. F or an MBO pr ogram t o w ork, managers at all le vels should set goals and participat e in meetings with those of hig her and lo wer r anks (R ogers, Hunter, & Rogers, 1993). When they do not, employee confidence quickly wanes.

Second, the pr oper en vironment, in w hich emplo yees f eel empo wered and support ed b y managers, should be in place. An or ganization’s climat e and cultur e det ermine w hether man - agers will f eel thr eatened or in vigorated b y w orker participation and in volvement. A uthori- tarian en vironments ar e poor candidat es f or MBO pr ograms. When emplo yees conclude that the s ystem is mer ely another f orm of perf ormance appr aisal r ather than something designed t o help them achie ve at hig her le vels, it gener ally leads t o cont empt. The pr ogram cannot be one that appears t o be mor e puniti ve than positi ve. The opposit e should be the case. Bill P ackard, one of the tw o f ounders of Hew lett-Packard, said of MBO , “No oper ating policy has contribut ed mor e t o Hew lett-Packard’s success (than) . . . MBO . . . (it) is the antithesis of man - agement b y contr ol. Management b y objecti ves . . . refers t o a s ystem in w hich o verall objec - tives ar e clear ly stat ed and agr eed upon, and w hich gi ves people the fle xibility t o w ork t oward those goals in w ays the y det ermine best f or their o wn ar eas of r esponsibility” ( The Economist, 2009).

Thir d, the compan y should ha ve sufficient r esources and the willingness t o tie r ewards t o perf ormance. The link age of r ewards t o perf ormance will be crucial t o the long-r ange suc - cess of the pr ogram. Companies in financial crisis will lik ely e xperience pr oblems if it is not possible to provide tangible rewards for improved performance.

Fourth, an MB O pr ogram w orks best using a s ystematic appr oach. Goal-setting time fr ames and the f ollow-up stage sho uld be built int o some f orm of annual calendar , w hether it com - mences in January or at some other point during the y ear (a fiscal calendar beginning in Jul y, f or e xample). When the pr ocess f eels r andom or disor ganized, emplo yees ma y ha ve less con - fidence in the program.

Fifth, successful MBO pr ograms r ely on quality objecti ves. F rom the goal-setting lit erature, w e kno w that eff ective objecti ves ar e difficult but attainable, clear ly stat ed, measur able, and fle xible. Sixth, emplo yees should be able t o pr epare tw o kinds of objecti ves. One set , w hich ma y be labeled “f or the compan y,” includes important or ganizational out comes, such as incr easing sales, r educing def ects, turning paperw ork in on time, and so f orth. The second set w ould be labeled “f or y ourself.” As part of the pr ocess, an emplo yee can aspir e t o lose w eight, cut do wn on caff eine, learn a f oreign language, adapt t o updat ed softw are or t echnology, or eng age in some other f orm of self-impr ovement. Ideall y, the best s ystems tie “f or the compan y” goals with “f or y ourself ” goals. In other w ords, success in one ar ea leads t o success in the other . An indi vidual w ho r aises sales f or the compan y should enjo y the r ewards. An emplo yee w ho learns Spanish for herself has become more valuable to the company.

Finally, MBO pr ograms r equire patience. Installing the s ystem tak es time. The pr ocess ma y need to be fine-tuned for several years before it operates without any glitches.

\251 2017 Bridgepoint Education, Inc. All rights reserved. Not for resale or redistribution. Goal-Setting and Employee Involvement Programs Section 5.4 Implications The management b y objecti ves appr oach w as designed t o tak e ad vantage of tw o or ganiza- tional pr ocesses: goal setting and participation. The second pr ocess, participation, helps build lines of communication and trust betw een emplo yers and emplo yees as w ell as leads t o other valuable outcomes such as organizational commitment.

Management b y objecti ves pr ograms can cr eate v alue in one other k ey w ay. A w ell-designed pr ogram link s goals t ogether at all le vels (see Figur e 5.5). These goals, in turn, help the or ga- nization achie ve its ultimat e mission or purpose. A quality MBO pr ogram k eeps managers and the o verall compan y on tr ack, w orking on the same lar ger objecti ves, and cr eates a situation in w hich indi vidual goals support departmental goals, departmental goals support or gani- zational goals, and those goals ar e based on the or ganization’s mission. The pr ogram can ther efore pr ovide indi vidual w orkers with a str ong se nse of dir ection and purpose as the y carry out their jobs.

Figure 5.5: Goals by level By linking goals together at all levels, an organization can effectively achieve its ultimate mission or purpose.

Employee Involvement Although it is specificall y a goal-setting pr ogram, management b y objecti ves illustr ates the importance of emplo yee in volvement at the indi vidual le vel. Emplo yee in volvement as a br oader moti vational f orce at the or ganizational le vel is also k ey. In gener al, emplo yee involvement describes an y or ganizational pr ocess that seek s t o utilize the full capacities of emplo yees w hile encour aging incr eased commitment t o the or ganization’s success (Cott on, \251 2017 Bridgepoint Education, Inc. All rights reserved. Not for resale or redistribution. Goal-Setting and Employee Involvement Programs Section 5.4 1993). The tw o primary aspects of emplo yee in volvement ar e participati ve management and r epresentative management , but other emplo yee in volvement pr ograms, such as quality cir- cles and employee stock ownership plans, have also been effective.

Participative Management Participative management includes methods designe d t o shar e decision making and other aspects of or ganizational di rection with emplo yees at lo wer le vels. The participation aspect of MBO is an e xample of w hat this kind of emplo yee in volvement mig ht look lik e. The ad van- tages of participati ve management include the ability t o solicit ideas and cr eative appr oaches fr om all or ganizational members. Also, participati ve management in decision making oft en leads t o incr eased commitment t o the decision aft er it has been made. Companies eng aged in participati ve management tend to offer jobs that are more interesting and meaningful.

Participation ma y or ma y not be link ed t o incr eased pr oductivity. This suggests that partici - pation pr ograms gener ate the gr eatest v alue w hen emplo yees ha ve the skills and kno wledge r equired t o mak e meaningful contributions (Heller , Pusic, Str auss, & Wilpert , 1998). Under that condition, trust and confidence can be built between managers and employees.

Representative Management In a r epresentative management appr oach, emplo yees do not eng age dir ectly in or ganiza- tional decision making but inst ead choose a small gr oup w ho will participat e and r epresent them.

This s ystem t ends t o r edistribute po wer within companies b y placing labor on a mor e equal standing with manage ment and st ockholders. T wo of the mor e common f orms of r epre- sentative management are work councils and board representatives (Keller, 2002).

A w ork council is a gr oup cr eated t o link emplo yees with management . The council consults with management w hen dec isions ar e made r egarding personnel issues and concerns. Mem - bers are elected to serve on the council.

Board representatives ar e emplo yees w ho ar e part of the compan y’s boar d of dir ectors. The y r epresent emplo yee int erests. Boar d r epresentative arr angements ar e common in E urope and are even required by law in some European Union nations.

Representative management applies mor e t o lar ger or ganizational issues than t o da y-to-day oper ations. It ma y be f or this r eason that the impact on emplo yee perf ormance and moti va- tion appears to be minimal (Cotton, 1993).

Other Employee Involvement Techniques In addi tion t o the mor e gener al participati ve managem ent and r epresentative management s ystems, tw o other pr ograms encour age emplo yee in volvement: quality cir cles and emplo yee st ock o wnership plans. A qualit y circle is a gr oup of 7 t o 10 emplo yees that meets r egularly t o discuss compan y quality pr oblems. The gr oup holds r esponsibility f or in vestigating the causes of the pr oblem, mak ing r ecommendations on ho w t o sol ve it , and, in some instances, leading the implementation of solutions. Eff ective qualit y cir cles gener ate f eedback r egarding the successes of v arious actions tak en, with management maintaining final contr ol (Cott on, 1993).

The use of this t echnique has lar gely w aned in the Unit ed Stat es due t o a lack of both \251 2017 Bridgepoint Education, Inc. All rights reserved. Not for resale or redistribution. Goal-Setting and Employee Involvement Programs Section 5.4 strategic o versight and full int egration int o the or ganization’s oper ations (Hammersle y & Pin - nington, 1999 ), althoug h the pr ogram has enjo yed success in other countries, most notabl y Japan.

Emplo yee stock ownership programs ha ve met with success in man y or ganizations (Pier ce & F uro, 1990; McDonald, 2000). The actual pr ograms tak e man y f orms, fr om emplo yees bu ying st ock in the compan y w here the y w ork t o indi viduals in a compan y pur chasing and oper at- ing the or ganization. Opportunities t o pur chase shar es of st ock in an emplo yer compan y ar e part of man y compan y benefit pack ages. Normall y, a trust will be established f or o wnership of emplo yee shar es. Companies either bu y st ock or allocat e st ock t o the trust , and emplo yees can only take physical possession when leaving the organization.

The str ongest benefit of emplo yee st ock plans t ends t o be impr oved w orker satisf action (Buchk o, 1993 ). E vidence that st ock plans lead t o heig htened le vels of moti vation is less com - pelling, with some companies e xperiencing gr owth in shar e v alues but others not achie ving the same r esults (Da vidson & W orrell, 1994). T o achie ve positi ve r esults, compan y leaders ar e ad vised t o pr ovide consist ent f eedback about or ganizational perf ormance and emplo yees should be able t o v oice opinions about the dir ection of the compan y (Stamps, 1996). Com- pan y leaders ma y also ha ve t o r espond t o cir cumstances in w hich st ock v alues decline, as w as the case during the 2009 r ecession. In those instances, firms that t ook a long-t erm perspec- ti ve, encour aging emplo yees t o sta y the course, hold their shar es, and w atch as those shar es r egained v alue o ver time, w ere the most lik ely t o a void the neg ative impact of the economic do wnturn on employee morale.

In summary , goal-setting theory suggests that indi viduals with w ell-established goals ar e lik ely t o perf orm at hig her le vels. Emplo yee in volvement is an y or ganizational pr ocess that seek s t o utilize the entir e capacities of emplo yees w hile encour aging incr eased commitment t o the organization’s success. Comprehension Exercise 1. Which is not a prerequisite for successful MBO programs?

a. a simple system b. company and personal objectives c. employee autonomy d. patience 2. Which type of employee involvement program uses groups to represent workers in or ganizational decision-making processes?

a. participative management b. quality management c. representative management d. employee stock ownership management Answers: 1) c 2) c \251 2017 Bridgepoint Education, Inc. All rights reserved. Not for resale or redistribution. Pay Structures and Reward Systems Section 5.5 5.5 Pay Structures and Reward Systems Whenever mone y is in volved, people t end t o pa y particular att ention. This stat ement is true r egarding prices of pr oducts as w ell as pa y schedules f or emplo yees. P ay is not the onl y type of r eward that can be used t o moti vate emplo yees, ho wever, and this section details the v ari- ous pr ograms—in addition t o pa y—that can be used t o attr act talent and encour age perf or- mance.

Mone y r emains a po werful incenti ve, ho wever, and the OB in A ction st ory r egarding the EpiPen controversy serves as an example of what can go wrong. OB in Action: The EpiPen Episode One ongoing phr ase hear d r egarding the w orld of commer ce is, unf ortunately, corpor ate gr eed. Such became the case in a dr amatic turn of e vents r egarding the pr oduct called EpiP en. F or those suf - fering fr om se vere aller gies (especiall y childr en), the EpiP en can be a lit eral lif esaver. Someone aller- gic t o a bee sting, or t o peanuts can quickl y inject the med icine in the EpiP en (epinephrine) t o r eceive immediat e relief from an allergic attack.

The New York Times w as among the first t o r eport a series of e vents aft er the pharmaceutical compan y My lan pur chased the rig hts t o EpiP en in 2007. A t the time, the w holesale price w as less than $100 f or a tw o-pen set . B y 2009, the price w ent up t o $103.50 f or a se t and r ose t o $264.50 b y Jul y 2013. Then the w holesale price incr eased t o near ly $461 in May 2015 and to $608.61 by May 2016.

The drug itself is r elatively ine xpensive t o pr oduce. Mar c Le avey, an int ernist at Baltimor e’s Mer cy Medical Cent er not ed, “In capable hands, a vial of epinephrine and a s yringe, t ogether costing onl y a f ew dollars, can administ er the medication almost as quickl y as the EpiP en, cer- tainl y within a minute” (Miller, 2016, para. 11).

The American A cademy of P ediatrics (AAP) said it “is gr avely concerned some f amilies will be left without access t o this important medication ” (F rieden, 2016, par a. 15). AAP pr esident Benar d Dr eyer called f or “all int erested stak eholders—families, doct ors, manuf acturers, dis- tribut ors, pa yers and go vernment agencies lik e the F ood and Drug A dministration—to act quickl y to alleviate the financial hardships faced by families” (Frieden, 2016, para. 15).

To mak e the matt er w orse, Mylan CEO Heather Br esch r eceived a 600 per cent pa y incr ease as the pric e of the EpiP en r ose b y 400% (P opken, 2016). The compan y’s st ock price near ly tri - pled dur ing the same time period. Outr age acr oss the country w as widespr ead, and a congr es- sional in vestigation f ollowed. As of 2016, ho wever, no concr ete action had been tak en ag ainst Br esch or the company.

To try t o quiet the criticisms of the compan y, Br esch first institut ed a discount coupon pr o- gram f or the pr oduct. When that appr oach appear ed t o not g ain tr action, the compan y e ventu- ally released a generic version at a substantially lower price (Kodjak, 2016).(continued) Laures/iStock/Thinkstock The EpiPen controversy is an example of motivation through disincentive.

Mylan’s dramatic price hikes created controversy and negative publicity for the company.

\251 2017 Bridgepoint Education, Inc. All rights reserved. Not for resale or redistribution. Pay Structures and Reward Systems Section 5.5 Pay and Reward Variables Individual companies emplo y one of tw o philosophies r egarding pa y and r ewards. The first , an equity pa y philosophy, r esults fr om the belief that emplo yees should view the pa y s ys- tem as being f air. The philosoph y oft en leads t o mor e unif orm pa y s ystems, including pa y r ate car ds, w hereby emplo yees kno w the le vel of pa y t o e xpect based on or ganizational r ank and y ears of e xperience. A clear e xample of this appr oach ma y be f ound in compensation s ystems in man y primary and secondary education settings. T eachers ar e paid based on personal le v- els of education (undergraduate, master’s, Ph.D., or Ed.D.) and years of experience.

The sec ond method, an e xchange pay philosophy, emphasizes the idea that some indi vidu- als and skills ar e mor e v aluable than others and the compan y is willing t o pa y accor dingly. Those w ho e xhibit hig her le vels of perf ormance and those w ho possess mor e v alued skills ar e r ewarded accor dingly. In the e xchange philosoph y, tw o f actors influence pa y structur es: mar ket forces and skill values.

Market Forces Market f orces dri ve w ages w hen shortages ar e pr esent or w hen hig her competition f or skill sets e xist. F or e xample, mos t colleges and uni versities pa y f aculty members in some ar eas at lo wer le vels than others. F aculty in English, sociology, philosophy, history, education, and the arts t end t o earn less mone y, due t o the lar ge number of indi viduals with a t erminal degr ee (Ph.D ., E d.D.) seeking emplo yment. Other disciplines, including the sciences and business, off er hig her salaries because f ewer applicants hold t erminal degr ees, and those w ho do oft en r eceive competitive offers from two sets of employers—universities and outside industry. Skill Values Skill v alues constitut e the second f orce in the e xchange philosoph y. Skill-based pay, w hich is also kno wn as c ompetency-based or knowledge-based pay, establishes pa y le vels based on the number of skills an emplo yee holds or ho w man y jobs that person can perf orm (Ledf ord, 1995).

The appr oach is particular ly useful f or or ganizations that seek t o hir e “gener alists” w ho can complet e gr eater numbers of task s, such as r etail salespersons w ho can also st ock shel ves, count in ventory, and sell a v ariety of pr oducts. In an er a of do wnsizing and la yoffs, gener alists ha ve become mor e v aluable. Some e vidence suggests that the skill-based appr oach OB in Action: The EpiPen Episode (continued) Reflection and Application Questions1. What motives do you believe are in place for top management at Mylan and similar companies?

2. What do you believe will be the impact of this story, in terms of motivation, on r ank-and-file employees at companies such as Mylan?

3. Describe the connections between company pricing strategies, executive compensation, and employee motivation through the reward system on a more general level.

\251 2017 Bridgepoint Education, Inc. All rights reserved. Not for resale or redistribution. Pay Structures and Reward Systems Section 5.5 improves communication betw een w orkers w ho w ork cooper atively acr oss job assignments, w hich leads to fewer “turf wars” over job assignments (Lawler, Ledford, & Chang, 1993).

Skill-based pa y has link ages t o moti vational concepts. When emplo yees can e xpand skill sets thr ough cr oss-training or outside learning pr ograms, the need f or achie vement can be satis - fied and intrinsic moti vation ma y rise. Mor e important , skill-based pa y off ers the pot ential t o int egrate equity and e xchange concepts. Indi viduals with a gr eater numbers of job skills r eceive hig her compensation (e xchange), but the pa y diff erential ma y be per ceived as being f air (equity) w hen other emplo yees can observ e the diff erences in skill sets and jobs per- f ormed (Lee, Law, & Bobko, 1999).

A f ew pot ential pr oblem ar eas ar e associat ed with skill- based pa y. First , skills that once w ere v aluable t o an or ganization may become obsolete, forcing management t o value them in new w ays. Second, emplo yees ma y r each the point at w hich no new skills ma y be accumulat ed, w hich w ould le vel out an y new pa y incr eases and pot entially aff ect moti vational le vels. Thir d, emplo yees ma y g ain skills that the or ganization does not v alue. Despit e these issues, com - pany leaders may conclude that skill-based pay is useful.

Pay-for-Performance Systems The pa y philosophies used b y or ganizations normall y appl y t o pa y s ystems based on periods of time, such as hour ly w ages or an annual salary . In contr ast, pa y-for-performance s ystems ar e designed t o enhance emplo yee eff ort using incenti ves. As a gr oup, perf ormance-based r eward and pa y s ystems ar e sometimes r eferred t o as v ariable-pay programs. T able 5.4 out - lines se veral types of v ariable pa y plans, or pr ograms, w hich ar e tied t o either indi vidual or compan y performance levels.

Table 5.4: Types of variable-pay plans Individual• Piece-rate pay • Task-and-bonus plan • Modified piece-rate pay • Commissions • Bonuses Organizational • Profit-sharing plan • Gainsharing plan Individual Variable-Pay Plans Individual pa y incenti ves dat e back t o the Industrial R evolution. The ear liest v ersion, piec e- rate pay, assigned a fix ed amount t o each unit pr oduced (T aylor, 1903) in manuf acturing oper- ations. A t the time, distrust betw een companies and emplo yees oft en disrupt ed the s ystem, \251 2017 Bridgepoint Education, Inc. All rights reserved. Not for resale or redistribution. Pay Structures and Reward Systems Section 5.5 as w orkers w ould f ear that pr oducing t oo man y units w ould r esult in the piece r ate being cut t o a lo wer le vel. T o help o vercome the pr oblem, t ask-and-bonus pay s ystems established set numbers of units f or w hich the r egular piece r ate w ould be paid (Gantt , 1919/1973). An y emplo yee w ho e xceeded the quota w ould earn an additional amount per unit . Consequentl y, pur e piece-rate plans have become rare in the United States.

Some companies emplo y modified piec e-rate pa y s ystems that pa y per time period plus an incenti ve. In those s ystems, a standar d dail y or hour ly r ate f or pa y is established, meaning the w orker kno ws the lo west amount he or she will earn f or an hour or da y. Then, a piece- r ate diff erential will be established f or those that e xceed a specified quota or simpl y b y the unit . F or e xample, a medical tr anscriber ma y be paid $9.00 per hour plus 25 cents per page complet ed. The modified piece-r ate appr oach att empts t o combine a sense of security with financial incentives to perform at higher levels.

In sales positions, a str aight c ommission appr oach r esembles a piece r ate per sale. Salesper - sons can be paid b y the unit or as a per centage of sales o ver a time period, normall y one month.

The str aight commission method can moti vate the salesperson—or cause him or her t o push t oo har d t o finalize deals. An alt ernative method, salary plus commission, r esembles the task -and-bonus s ystem. The salesperson g ains a sense of security fr om a base pa y amount and can be moti vated thr ough commission incenti ves. A dditional incenti ves can be added f or t ending t o other aspects of the job, such as f ollowing up on or ders and maintaining accounts in other ways.

Bonuses can be paid t o indi vidual emplo yees, oft en on an annual basis f or achie ving v ari- ous goals or outcomes. Most bonus plans ar e gear ed t o sales positions. The primary problem associat ed with annual bonuses is that w hen the y become r outine, emplo yees begin t o e xpect them.

Failure to pay a bonus in a given year often leads to morale problems.

Organizational Variable-Pay Plans To cr eate moti ves f or sets of emplo yees, tw o or ganizational v ariable-pay plans ha ve been established:

pr ofit sharing and g ainsharing. Pr ofit-sharing plans distribut e funds based on an established f ormula r elated t o compan y pr ofitability. The funds ma y be paid as shar es of st ock or as bonus pa yments. When these incenti ves ar e clear ly made kno wn, compan y emplo yees can be encour aged t o w ork t ogether t o incr ease pr ofits thr ough bett er efficiency and impr oved pr oductivity. Pr ofit-sharing plans ha ve r esulted in impr oved pr ofitability in or ganizations, when compared to companies without such plans (Magnan & St. Onge, 1998).

Gainsharing plans ar e compan y incenti ve funds that ar e di vided betw een emplo yees and managers, oft en as a 50-50 split . The diff erence betw een g ainsharing and pr ofit sharing is that g ainsharing will be based on pr oductivity r ather than pr ofits. Pr ofits ar e oft en aff ected b y f actors be yond the contr ol of emplo yees, such as shifting int erest r ates or losses in oper ations in other countries. The futur e of pr ofit-sharing and g ainsharing pr ograms ma y be influenced b y economic cir- cumstances. Because man y companies f aced declining r evenues during the 2008 r ecession, their ability t o pa y such bonuses lessened. Companies f acing int ernational competition mig ht be less able to earn the level of income that would make such programs viable.

\251 2017 Bridgepoint Education, Inc. All rights reserved. Not for resale or redistribution. Pay Structures and Reward Systems Section 5.5 Benefits Benefit pack ages r epresent an e xpensive component of a compensation pr ogram. Pr oviding health insur ance, paid v acation da ys, holida y pa y, pur chase discounts, in-house child car e, plus go vernment-required disability insur ance and unemplo yment insur ance f ees tak es time and oft en mak es it mor e difficult f or a U .S. compan y t o compet e with f oreign firms. The ques - tion becomes, “Do benefit pr ograms moti vate w orkers?” In some w ays, the ans wer w ould be “y es”; ho wever, not in t erms of perf ormance. Inst ead, benefits ha ve been link ed t o r ecruiting and retention.

In t erms of r ecruiting, applicants being str ongly consider ed f or positions at some point will be ask ed about compensation. The basic pa y pack age will be one primary f actor in their decision t o ta ke a job. Most applicant s then inquir e about benefits. When the base pa y is the same but one compan y pa ys health insur ance pr emiums w hile another does not , the compan y that off ers benefits has a r ecruiting ad vantage. Applicants also compar e v acation da ys as part of this process.

In the ar ea of r etention, companies that pr ovide health insur ance pr e- mium pa yments oft en ho ld on t o emplo yees longer . Someone mig ht sa y that he or she w ould lik e t o change jobs, but cannot aff ord hig her health insur ance pr emiums. Once ag ain, w hether this r epresents a pos - itive moti vational f orce is debatable. Emplo yees ma y also decid e t o sta y with a compan y because of the pen - sion plan. When someone becomes v ested in a pension s ystem but mig ht lose benefits f or lea ving, the plan becomes the “golden f etters” that r etain senior workers.

As the w orkforce becomes incr easingly di verse, emplo yee needs in t erms of benefits e xpand. Gr eater numbers of emplo yees r emain unmarried and an incr easing component of the w ork- force consists of tw o-income f amilies with no childr en. Fle xible benefit pr ograms allo w emplo yees to choose the benefits that best suit their needs (Barringer & Milkovich, 1998).

Three primary v ersions of fle xible benefit plans ar e f ound in the Unit ed Stat es. A modular plan establishes sets of benefit pack ages fr om w hich emplo yees can choose. Y oung emplo y- ees mig ht pick one pack age emphasizing health car e benefits f or childr en with little or no contribution t o a pension plan, w hile older workers might select another that f eatures larger contributions t o a pension plan plus an insur ance plan t o co ver the costs of nursing home car e in the futur e. A c ore-plus plan off ers a standar d set of benefits, as w ell as a series of additional options that emplo yees can select . F or instance, an older w orker ma y use an y funds pr ovided t o augment a pension pack age, w hereas a y ounger w orker mig ht use the funds t o pur chase additional term life insurance. JDiamante/iStock/Thinkstock Competitive benefits make a difference in recruitment and retention, but may not impact performance in the same manner.

\251 2017 Bridgepoint Education, Inc. All rights reserved. Not for resale or redistribution. Pay Structures and Reward Systems Section 5.5 Flexible spending plans, the thir d option, ha ve become popular in man y U .S. companies. Emplo yees set aside funds t o pa y f or specific it ems, and the funds ar e withdr awn on a pr etax basis, essentiall y turning them int o a tax deduction. The most pr evalent plans ar e monies held f or health care, dental services, and child care expenses.

Flexible benefit plans ma y tak e ad vantage of the concept f ound in e xpectancy theory that or ganizational r ewards shou ld be tied t o indi vidual goal s. Fle xible benefit pack ages also assist in the same areas, recruiting and retention, as standard benefit programs.

Employee Recognition Programs Compliments ar e fr ee. In a t ough econom y in w hich companies seek t o lo wer costs in as man y w ays as possible, off ering financial inducements t o impr ove perf ormance ar e oft en not f ea- sible.

Some w ould ar gue that emplo yee r ecognition pr ograms ar e a cynical att empt t o entice w orkers t o try har der f or the same amount of pa y (Dunham, 2002). Others w ould count er that r ecognition, w hen mana ged pr operly, serv es as a method t o help emplo yees attain intrin - sic r ewards f or doing good w ork as a v ariable-ratio f orm of positi ve r einforcement (Glasscock & Gram, 1999).

Both f ormal and inf ormal elements of emplo yee r ecognition e xist. Inf ormally, compliments and e xpressions of gr atitude f or perf ormance can be deli vered b y managers at all r anks. Sa vvy CEOs ar e a ware of the impact of a personal “thank y ou” fr om t op managers. F ormal emplo yee r ecognition pr ograms ma y in volve se veral methods. Emplo yee of the Month a wards ar e com - mon, as ar e speciall y design ated par king spaces f or winners. Man y companies post emplo yee accomplishments on ph ysical and digital bulletin boar ds that ar e str ategically placed f or e veryone to see.

What w ould seem appar ent is that emplo yee r ecognition cannot pr ovide an all-encompassing solution t o moti vational pr oblems. Ho wever, it can off er a viable method t o supplement other eff orts to motivate employees and create job satisfaction at the same time.

Ethics and Motivation Criticisms of managerial tac tics abound and ha ve e xisted f or centuries. A t the crux of man y debat es o ver management actions is the basic assumption that emplo yee–management r ela- tionships ar e essentiall y ad versarial. In man y w ays, U .S. la ws r egarding union–management arr angements subscribe t o that point of view . F rom that v antage point , an y att empt t o inspir e hig her levels of performance could be construed to simply be a form of manipulation.

Ethical debat es o ver moti vational pr ograms should account f or mor e than a mer e mone y-for- output f ormulation. Ex amples abound w here pr ofessional athlet es ha ve been willing t o settle f or lo wer r emuneration in e xchange f or a bett er chance t o win a championship. The car eer of LeBr on James serv es as an e xample. James made a contr oversial decision t o sign a contr act with the Miam i Heat in the NB A, ther eby enhancing his chances of winning a championship, e ven thoug h his pa y w ould be lo wer. F ollowing his time in that city , he mo ved back t o Cle ve- land, near his home t own, t o be a champion f or that part of the stat e of Ohio. While e xtreme, his mo ves indicat e that an emplo yee mig ht w ork f or mor e than a pa ycheck and that ps ychic income can ent er the pictur e. R ecognition, accomplishments, w orking with friends, and a \251 2017 Bridgepoint Education, Inc. All rights reserved. Not for resale or redistribution. Pay Structures and Reward Systems Section 5.5 variety of additional non-pa y elements ar e all str ong moti vators. With that ca veat in mind, ethical challenges r emain. Emplo yees ar e oft en acut ely a ware of distributi ve and pr ocedural justice issues in the w orkplace. A moti vational s ystem can be per ceived as being f air, unf air, unethical, or illegal.

Pay discrimination based on gender and r ace continues. E ven with new la ws designed t o le vel pa y structur es, the pr oblem has not gone a way. In the 2008 r ecession, African American w orkers suff ered dispr oportionate job losses compar ed t o Caucasians (Ca wthorne, 2009). These injustices represent ethical, legal, and workplace morale issues.

Also, man y emplo yees and unions ar gue that jobs ar e lost in the Unit ed Stat es t o companies in other countries in w hich pa y s ystems do not pr ovide a quality standar d of li ving. F urther, man y of these or ganizations do not pr ovide pr otections f or w orkers and oper ate in unsaf e w ork f acilities that pollut e w ater and land. The count erargument w ould be that , fr om the perspecti ve of emplo yees in those f oreign countries, the w ages constitut e the best the y can achie ve, and these w orkers ar e hig hly moti vated as a r esult, e ven in poor w orking conditions.

As not ed in the My lan st ory in this chapt er, e xecutive pa y r emains a cont entious ethical pr ob- lem.

CEO salaries as compar ed t o emplo yee w ages ha ve r eached e xtremely dispr oportion- ate le vels. Is it ethical f or t op managers, e ven in strugg ling companies, t o r eceive these lar ge pa yments? The Dodd–F rank W all Str eet R eform and Consumer Pr otection A ct, signed int o la w in 2010, soug ht t o mak e the CEO pa y pr ocess mor e tr ansparent—although e xecutive pa y r emains a contr oversial t opic, as t op managers still r eceive hig h salaries with appar ently little r egard for public perceptions.

In the futur e, debat es r egarding f air pa yment and tr eatment of emplo yees undoubt edly will persist as ethical and mor al questions. Also, as the job perf ormance model suggests, the or ga- nizational cont ext adds a series of v ariables int o a compan y’s moti vational en vironment. W orkplace issues in that cont ext, such as discrimination in pr omotion decisions, constitut e both motivational and ethical areas of concern. Comprehension Exercise 1. Profit-sharing and gainsharing are examples of a. the equity pay philosophy.

b. the exchange pay philosophy.

c. individual variable pay.

d. organizational variable pay.

2. An Employee of the Month award is an example of a. pay for performance.

b. organizational variable recognition.

c. formal employee recognition.

d. informal employee recognition. Answers: 1) d 2) c \251 2017 Bridgepoint Education, Inc. All rights reserved. Not for resale or redistribution. Summary and Resources Summary and Resources Chapter Summary Personal motives and organizational motives are connected at some times and disparate at others.

One managerial goal should be to optimize the overlap between personal and orga- nizational motives. The job characteristics model includes skill variety, task identity, task significance (or human interaction), autonomy, and feedback. These connect to the critical psychological stat es that are associated with employee motivation, including experienced meaningful- ness of the work, experienced responsibility for outcomes, and knowledge of actual results. These critical psychological states, as a group, collectively influence personal and work out comes.

The relationships between the variables in the job characteristics model can be used to cr eate a predictive index, which allows for calculation of the motivating potential score of the job. Growth need strength and employee knowledge and skill can moderate or alter the calculation of the motivating potential score.

The job performance model integrates various motivational processes in the workplace. It combines individual characteristics with job context, motivational processes, motivated beha viors, and levels of performance.

The keys to effective goal-setting programs include setting difficult but attainable perfor- mance targets that are both measurable and flexible when needed. Goal specificity conveys w hether a goal can be stated using quantifiable outcomes. Goal commitment expresses the degr ee to which an employee feels personally engaged in achieving a goal. Locke’s goal- setting program incorporates four motivational mechanisms into the workplace, including dir ect attention to key activities, regulating effort, increasing persistence, and inspiring conceptual and strategic thinking.

Management by objectives (MBO) is a participative goal-setting program. The steps of MBO include job analysis, employee goal preparation, manager goal preparation, a meeting, and f ollow-up. The prerequisites of effective MBO programs include top management commit- ment and involvement, the proper environment, sufficient resources, the willingness to tie r ewards to performance, a simple system, quality objectives for the company and for one- self, and patience. Management by objectives takes advantage of two organizational pro- cesses:

goal setting and participation. They create value by instilling a sense of direction for w orkers.

Employee involvement describes any process that utilizes the full capacities of employees w hile encouraging increased commitment to the organization’s success. The two primary aspects of employee involvement are participative management and representative man- agement.

Involvement programs include quality circles and employee stock ownership pr ograms.

Pay philosophies guide many reward system decisions. An equity pay philosophy represents the belief that employees should view the pay system as being fair. The exchange pay phi- losophy is founded on the premise that some individuals and some skills are more valuable \251 2017 Bridgepoint Education, Inc. All rights reserved. Not for resale or redistribution. Summary and Resources than others and the company pays accordingly. Skill-based pay, which is also known as compet ency-based or knowledge-based pay, establishes pay levels based on the number of skills an employee holds or how many jobs that person can perform.

Performance-based reward and pay systems are referred to as variable-pay programs. Indi vidual variable pay plans include piece-rate pay, task-and-bonus plans, modified piece r ate, commissions, and bonuses. Organizational variable plans comprise profit-sharing and g ainsharing programs.

Benefit plans are only tangentially related to employee motivation. They exhibit the great- est influence in the areas of employee recruiting and retention. Flexible benefit plans allow w orkers greater choice in the benefits they will receive.

Employee recognition programs may have some impact on motivation. Informal plans include compliments and expressions of gratitude. Formal systems use a variety of formats t o note employee accomplishments. While they do not offer all-encompassing motivation solutions, they can supplement other company efforts.

Ethical challenges in motivation include concerns regarding pay discrimination based on gender and race. U.S. companies often lose jobs to countries where companies offer subsis- tence pay and poor working conditions, which affect motivational levels in both countries. Ex orbitant executive pay remains a contentious problem in today’s workplace environment. CASE STUDY: Say what?

Molly Wistr om e xperienced a dilemma she could not ha ve e xpected. Her position as a cus - tomer service coor dinator f or a major shipping compan y had been a sour ce of pride f or se veral y ears. Aft er w orking f or the inbound cust omer and client call desk f or thr ee y ears, she w as pr omoted t o a new position, w here she serv ed as the primary liaison betw een the compan y and se veral clients. Her primary r esponsibilities included ensuring clear communications betw een companies shipping pack ages and those r eceiving the pack ages that w ere handled b y her compan y, and tr oubleshooting w hen that did not occur . She thoug ht of herself and her compan y as a “linking pin” between vendors and customers.

For y ears, Moll y’s immediat e supervisor w as St ephanie R ouse. St ephanie t ook pride in her department and the function that it serv ed. Fi ve y ears ear lier, she had been ask ed t o help implement a management b y objecti ves pr ogram in the compan y. St ephanie view ed the pr o- gram as an opportunity t o cr eate e ven bett er lines of communication betw een all r anks in the compan y. She car efully f ollowed all pr otocols as the pr ogram w as put int o place and w orked diligentl y t o mak e sur e manage ment b y objecti ves w as per ceived as a f air path way t o incr ease access to rewards.

Molly had car efully mar ked her calendar f or June. Each y ear, she w as ask ed t o set thr ee y ear- long compan y goals and one personal objecti ve. The compan y pr eferred June, because it is a much slo wer shipping season than December and January . Moll y w ould then meet with St eph- anie and the y w ould finalize the goal list f or the ne xt y ear. Her perf ormance r eview f or the pr evious year would take place each July. (continued) \251 2017 Bridgepoint Education, Inc. All rights reserved. Not for resale or redistribution. Summary and Resources Review Questions Name and define the five core job characteristics of the job characteristics model.

Core job characteristics include five factors. Skill variety refers to the number of skills needed to be able to successfully perform a given job. Task identity indicates whether the job includes a complete, identifiable piece of work. Task significance, or human interaction, reflects the degree to which a job has an impact on other people or whether the work is helpful and meaningful to others. Autonomy implies working without supervision and being free to perform a job in the ways the employee sees fit. Feedback is the degree to which the employee receives immediate information about how well a job has been performed.

Identify the sources of the three critical psychological states identified by the job characteris- tics model.

Critical psychological states are associated with employee motivation. Skill variety, task identity, and task significance lead to experienced meaningfulness of the work. Autonomy leads to experienced responsibility for the outcomes of the work. Feedback results in knowl- edge of the actual results of work activities.

Name and explain the role of the two moderating variables that are part of the job character- istics model.

In organizational research terminology, employee growth need strength and employee knowledge and skill are the moderating variables that influence conditions under which relationships hold. Employee growth need strength consists of an individual’s degree of self-esteem and desire for self-actualization. The job characteristics model will be more predictive of positive employee and company outcomes when employees are skilled and have higher knowledge levels.

What are the components of the job performance model of motivation?

The job performance model incorporates the following elements: individual characteristics, the job context, motivational processes, motivated behaviors, and levels of performance.

Define goal specificity and goal commitment.

Goal specificity conveys whether a goal can be stated using quantifiable outcomes. Goal commitment expresses the degree to which an employee feels personally involved in achiev- ing a goal, either because the person helped set the goal or because the person strongly agrees with the goal’s intent.

What five steps are involved in management by objectives programs?

The steps of MBO are job analysis, employee goal preparation, manager goal preparation, the meeting, and follow-up. CASE STUDY: Say what? (continued) Stephanie had announced her r etirement at the compan y Christmas party . T ears w ere shed b y long-time friends and coworkers. A new manager, Craig Johanssen, began duties in January.

In ear ly F ebruary, Cr aig burst int o Moll y’s office. “It’s time t o put t ogether a goal list f or this y ear,” he announced.

“I’m sorry,” Molly replied, “but we have always written those in June.” “I he ard,” Cr aig r eplied, “but that doesn ’t r eally w ork f or our ar ea. And besides, I’m not all that con vinced management cares about this anyway.” Not wishing t o cr eate an immediat e confr ontation, Moll y agr eed t o pr epare her list . Her first goal w as t o complet e a cust omer satisf action surv ey f or pack age r ecipients t o mak e sur e the y w ere happ y with deli very times and pr actices. Her second compan y-based goal w as t o r equest an upgr ade t o the tr acking s ystem, w hich had f allen behind the t echnologies used in other companies.

Her thir d compan y-related goal w as t o mak e a personal contact with each com - pany that shipped it ems t o thank them f or their business. Her personal goal w as t o begin t o learn Spanish.

Again, without notice, Cr aig w alked int o Moll y’s office with the list in hand. “I can go along with y our second and thir d goals, but I think a cust omer satisf action surv ey w ould be a w aste of time,” he said firmly.

Molly r esponded, “The surv ey w as St ephanie’s idea. W e both thoug ht it mig ht help impr ove our service, and I was just waiting until June to make it official.” Craig r eplied, “W ell, think of so mething else. I kno w, do the same thing as y our thir d goal. Just mak e a call t o each compan y that r eceives pack ages and thank them. ” He paused, “ And this Spanish goal has got to go.” “Why?” Moll y ask ed. “W e ha ve mor e Latino companies as clients each y ear. I think it w ould be gr eat to be able to say a few words in their first language.” “I’d r ather the y learn ho w t o speak Eng lish,” Cr aig r etorted. “Think of something else, lik e ma ybe working out a couple of times a week.” “And when do you want this?” she inquired.

“Whenever,” he answered.

“When will I be evaluated on these goals?” Molly asked.

“Who knows? When we get to it I guess.” Still wishing t o a void conflict , Moll y agr eed. She also car efully document ed the entir e con ver- sation, in case it w ould be needed at some futur e point . She included her original goal list in the file.

Case Questions 1. Which of the prerequisites of effective MBO programs had Craig violated?

2. What would you expect in terms of performance from Molly and her peers, given Craig’s appr oach?

3. How should Molly respond to these changes?

4. If you were Craig’s manager and found out what he had done, what would be your r esponse?

\251 2017 Bridgepoint Education, Inc. All rights reserved. Not for resale or redistribution. Summary and Resources Review Questions Name and define the five core job characteristics of the job characteristics model.

Core job characteristics include five factors. Skill variety refers to the number of skills needed to be able to successfully perform a given job. Task identity indicates whether the job includes a complete, identifiable piece of work. Task significance, or human interaction, r eflects the degree to which a job has an impact on other people or whether the work is helpful and meaningful to others. Autonomy implies working without supervision and being fr ee to perform a job in the ways the employee sees fit. Feedback is the degree to which the emplo yee receives immediate information about how well a job has been performed.

Identify the sources of the three critical psychological states identified by the job characteris- tics model.

Critical psychological states are associated with employee motivation. Skill variety, task identity , and task significance lead to experienced meaningfulness of the work. Autonomy leads to experienced responsibility for the outcomes of the work. Feedback results in knowl- edge of the actual results of work activities.

Name and explain the role of the two moderating variables that are part of the job character- istics model.

In organizational research terminology, employee growth need strength and employee kno wledge and skill are the moderating variables that influence conditions under which r elationships hold. Employee growth need strength consists of an individual’s degree of self-esteem and desire f or self-actualization. The job characteristics model will be more predictive of positive emplo yee and company outcomes when employees are skilled and have higher knowledge le vels.

What are the components of the job performance model of motivation?

The job performance model incorporates the following elements: individual characteristics, the job context, motivational processes, motivated behaviors, and levels of performance.

Define goal specificity and goal commitment.

Goal specificity conveys whether a goal can be stated using quantifiable outcomes. Goal commitment expresses the degree to which an employee feels personally involved in achiev- ing a goal, either because the person helped set the goal or because the person strongly agr ees with the goal’s intent.

What five steps are involved in management by objectives programs?

The steps of MBO are job analysis, employee goal preparation, manager goal preparation, the meeting, and follow-up. CASE STUDY: Say what? (continued) Stephanie had announced her retirement at the company Christmas party. Tears were shed by long-time friends and coworkers. A new manager, Craig Johanssen, began duties in January.

In early February, Craig burst into Molly’s office. “It’s time to put together a goal list for this year,” he announced.

“I’m sorry,” Molly replied, “but we have always written those in June.” “I heard,” Craig replied, “but that doesn’t really work for our area. And besides, I’m not all that convinced management cares about this anyway.” Not wishing to create an immediate confrontation, Molly agreed to prepare her list. Her first goal was to complete a cust omer satisfaction survey for package recipients to make sure they were happy with delivery times and practices. Her second company-based goal was to request an upgrade to the tracking system, which had fallen behind the technologies used in other companies. Her third company-related goal was to make a personal contact with each com- pany that shipped items to thank them for their business. Her personal goal was to begin to learn Spanish.

Again, without notice, Craig walked into Molly’s office with the list in hand. “I can go along with your second and third goals, but I think a customer satisfaction survey w ould be a waste of time,” he said firmly.

Molly responded, “The survey was Stephanie’s idea. We both thought it might help improve our service, and I was just waiting until June to make it official.” Craig replied, “Well, think of something else. I know, do the same thing as your third goal. Just make a call to each company that receives packages and thank them.” He paused, “And this Spanish goal has got to go.” “Why?” Molly asked. “We have more Latino companies as clients each year. I think it would be great to be able to say a few words in their first language.” “I’d rather they learn how to speak English,” Craig retorted. “Think of something else, like maybe working out a couple of times a week.” “And when do you want this?” she inquired.

“Whenever,” he answered.

“When will I be evaluated on these goals?” Molly asked.

“Who knows? When we get to it I guess.” Still wishing to avoid conflict, Molly agreed. She also carefully documented the entire conver- sation, in case it would be needed at some future point. She included her original goal list in the file.

Case Questions 1. Which of the prerequisites of effective MBO programs had Craig violated?

2. What would you expect in terms of performance from Molly and her peers, given Craig’s approach?

3. How should Molly respond to these changes?

4. If you were Craig’s manager and found out what he had done, what would be your response?

\251 2017 Bridgepoint Education, Inc. All rights reserved. Not for resale or redistribution. Summary and Resources What are the seven major prerequisites for management by objectives programs?

The prerequisites of effective MBO programs include top management commitment and in volvement, the proper environment, sufficient resources, the willingness to tie rewards t o performance, a simple system, quality objectives for the company and for oneself, and patience.

Explain participativ e management and representative management, and name two employee involvement techniques.

Employee involvement is any organizational process that seeks to utilize the entire capaci- ties of employees while encouraging increased commitment to the organization’s success. The two primary aspects of employee involvement are participative management and r epresentative management. Participative management includes methods designed to share decision making and other aspects of organizational direction with employees at lower levels. Representative manage- ment means that instead of being involved directly, employees are represented by a smaller group.

Explain the difference between the equity and exchange pay and reward philosophies.

Pay philosophies guide many reward system decisions. An equity pay philosophy represents the belief that employees should view the pay system as being fair. The exchange pay phi- losophy is founded on the premise that some individuals and some skills are more valuable than others and the company is willing to pay accordingly.

Briefly describe a skill-based pay program and a pay-for-performance variable-pay program.

Skill-based pay, which is also known as competency-based or knowledge-based pay, estab- lishes pay levels based on the number of skills an employee holds or how many jobs that person can perform. Performance-based reward and pay systems are referred to as variable- pay programs. Individual variable pay plans include piece-rate pay, task-and-bonus plans, modified piece rate, commissions, and bonuses. Organizational variable plans comprise pr ofit-sharing and gainsharing programs.

Analytical Exercises 1. Using Figure 5.1, explain the how personal and organizational motives would inter- act with the elements of Figure 5.2, the job performance model.

2. The motivating potential score for a job is skill variety + task identity + task significance MPS= ——————————————————— × autonomy × feedback 3 Using a scale of 1 (little or none) to 5 (the greatest amount for each variable), calcu- lat e the moti vating potential scores of the f ollowing jobs and e xplain the implications of those scores. • janit or in a high school • assembly-line worker \251 2017 Bridgepoint Education, Inc. All rights reserved. Not for resale or redistribution. Summary and Resources • car salesman • psychologist • CEO of a corporation 3. Some writers have suggested that in today’s workplace environment younger emplo yees view themselves as free agents who will work for the organization that pa ys the most and offers the best opportunities. They are not loyal to any given emplo yer. Assuming this is true, how would this phenomenon affect the following? • per ceptions of personal and organizational motives • the three critical psychological states identified in the job characteristics model • the impact of goal-setting programs • the impact of employee involvement programs • perceptions of equity and exchange pay and reward philosophies 4. Identify five companies or professions that you believe would be best suited to emplo yee involvement programs. Explain your reasoning. Identify five companies or pr ofessions that would be least suited to employee involvement programs. Explain y our reasoning.

5. Explain the impact of CEO pay disparities versus regular employees in terms of • the impact on employee involvement programs.

• perceptions of formal and informal employee recognition programs.

• perceptions of equity. Key Terms autonomy Working without supervision; being free to perform a job in the manner that one sees fit.

board representatives Employees w ho are part of the company’s board of dir ectors.

employee involvement  Any organiza- tional process that seeks to utilize the full capacities of employees while encouraging incr eased commitment to the organization’s success.

equity pa y philosophy The belief that emplo yees should view the pay system as being fair, in terms of both distributive and pr ocedural justice.

exchange pay philosophy The belief that some individuals and some skills are more v aluable than others and should be paid accor dingly. feedback The degree to which the emplo yee receives immediate information about how well a job has been performed.

goal commitment  The degree to which an employee feels personally engaged in achie ving a goal.

goal specificity  The concept that a goal can be stated using quantifiable outcomes.

job design  The practice of preparing and/ or changing a job description to meet orga- nizational requirements.

participative management The prac- tice of sharing decision making and other aspects of organizational direction with emplo yees at lower levels.

representative management  The practice of having employees represented by a small gr oup instead of participating directly in w orkplace decisions.

\251 2017 Bridgepoint Education, Inc. All rights reserved. Not for resale or redistribution. Summary and Resources skill-based pay Establishes pay levels based on the number of skills an employee holds or how many jobs that person can perf orm (also known as c ompetency-based or knowledge-based pay ).

skill variety  The number of skills needed t o be able to successfully perform a gi ven job.

task identity  The extent to which the job includes a complete, identifiable piece of w ork. task significance Also known as human int eraction; the degree to which a job has an impact on other people.

variable-pay programs Performance- based reward and pay systems.

work council A group of employees cr eated to liaise with management.

\251 2017 Bridgepoint Education, Inc. All rights reserved. Not for resale or redistribution.