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Week 10 mgt

the amount of energy that a worker displays on the job
the quantity of energy that is directed towards meeting goals
the manner in which workers channel there energy
the forces within a individual that account for the level, direction and persistence of effort expended at work.
extrinsic rewards
rewards externally administered by another person in the organisation. Examples include; pay bonuses, verbal praise
intrinsic rewards
self-administered and derived from feelings of competency, personal development and self control. Believed to be more powerful in motivating than extrinsic rewards
Maslows heirachy of needs
Maslows heirachy of needs
suggests a progression from lower to higher needs. Low needs when neglected negatively impact attitudes and behaviours. These include social needs (pleasant supervisor), safety needs (safe working conditions), and physiological needs (reasonable work hours). these lower needs are extrinsic and need to be satisfied before higher needs may be.

higher needs recognise desires for physiological development and growth. Comprises of self actualisation needs (creative and challenging work) and esteem needs (praise and recognition from boss)

Alderfers ERG theory
Alderfers ERG theory
Builds on maslows theory. Identifies existence, relatedness and growth needs. The ERG theory offers an additional means for understanding human needs and their influence on people at work and also collapses maslows five needs categories into three:
– existence needs (desires for satisfying physiological and material wellbeing)
– relatedness needs (desires for satisfying interpersonal relationships)
– growth needs (desires for continued psychological growth and development)
conversely to maslows heirachy ERG theory does not assume lower level needs must be satisfied in order for higher needs to be. Includes frustration regression principle – an already satisfied lower need can become reactivated and influence behavior when a high level need cannot be satisfied.
Two factor theory
Herzberg’s advice to managers is to always correct poor context to eliminate actual or potential sources of job dissatisfaction, and be sure to build satisfier factors into job content to maximize opportunities for job satisfaction. Additionally, Herzberg provides a useful reminder that there are 2 important aspects of jobs – job content and job context. Herzberg refers to satisfier factors being related to job content (achievement, recognition, responsibility, work itself, advancement and personal growth) and hygiene factors being related to job context (working conditions, co-worker relations, policies/rules, supervisor quality and base wages/salaries). Effectively, satisfier factors are sources of job satisfaction and improving these factors respectively increase job satisfaction; an example of this may be making improvements in what people are asked to do in their jobs. On the other hand, hygiene factors are sources of job-dissatisfaction, and choosing to improve these factors may decrease job dissatisfaction, adding piped music or implementing a no-smoking policy can exemplify this.
process theories of motivation
There are 3 main process theories of motivation
– J. Stacy Adams’ equity theory
– Victor Vroom’s expectancy theory
– Edwin Locke’s goal-setting
These theories offer insight on how people actually make choices to work hard or not, based on their individual preferences, the available rewards and possible outcome = self-efficacy
equity theory
This theory specifically is based on the perception of rewards based on input and skill used. People believing they are in an inequity state (putting in more effort for less rewards) will be demotivated, uncomfortable, and must make an effort to eliminate such discomfort and restore equity in the situation. For example: people who feel underpaid may experience a sense of anger and resultantly may quit.

The key issue here is perception, the recipient’s perception of the reward in its social context determine motivational outcomes. Rewards perceived as equitable should have a positive result on satisfaction and performance and contrastingly rewards perceived as inequitable may create dissatisfaction and cause performance problems. Managers are responsible to ensure that any negative consequences of the equity comparisons are avoided or at least minimized when rewards are allocated. Instead of letting equity concerns get out of hand they need to carefully communicate the intended value of rewards given.

Gender equity
On average, males earn more than females

Comparable worth
The concept that people doing jobs of similar value based on required education, training and skills should receive similar pay

expectancy theory
Expectancy states that a persons motivation is dependent of 3 expectancy factors
1. Expectancy
A person’s belief that working hard will result in a desired level of task performance being achieved. This is integral to make the person feel competent and capable of achieving a desired performance level.
To achieve this a manger must:
– select works with the required level of ability
– train workers to use their ability
– support work efforts
– clarify performance goals
2. Instrumentality
A persons belief that successful performance will be followed by rewards and other potential outcomes (performance- outcome expectancy)
Is maximized by making a person confident in understanding which rewards and outcomes will follow performance accomplishments

– clarify psychological contracts
– communicate performance-outcome possibilities
– demonstrate what rewards are contingent on performance

3. Valence
The value a person assigns to the possible rewards and other work-related outcomes
Is maximized by making the person understand the value of various possible rewards and work outcomes
– identify individual needs
– adjust rewards to match these needs

The theory states motivation equals expectancy, instrumentality and valence in a multiplicative fashion M = ExIxV
This suggests managers must maximize all 3 conditions for motivation to be high.

goal-setting theory
The theory focuses on the motivation properties of task goals.
– task goals can be highly motivating if they are properly set and if they are well managed.
– Locke believes that goal setting can enchance individual work performance and job satisfaction.
o Goal setting gives direction to people in their work and clarifies performance expectations
o Goal setting establishes a frame of reference for task feedback
o Goals provide a foundation for behavioural self-management
In order to gain the benefits of goal setting theory, managers and team leaders must work with others to set the right goals in the right way.
– set specific goals
o they lead to higher performance than generally stated ones
– set challenging goals
o when viewed as realistic and attainable, more difficult goals lead to higher performance than easier goals do
– building goal acceptance and commitment
o people work harder for goals they accept and believe in; they resist goals forced upon them
– clarify goal priorities
o make sure that expectations are clear as to which goals should be accomplished first and why
– provide feedback on goal accomplishment
o make sure that people know how wel they are doing in respect to goal accomplishment
– reward goal accomplishment
o don’t let positive accomplishment pass unnoticed; reward people for doing what they set out to do
self-efficacy theory
In essence is whether people believe in themselves to be capable.
– There are clear links between this theory and those of others:
o Vroom’s expectancy theory: A person with higher self-efficacy will have higher expectancy that he or she can achieve a high level of task performance; this increases motivation
o Locke’s goal-setting theory: Self-efficacy links with a person’s willingness to set challenging performance goals
There are 4 major ways in which self-efficacy can be enhanced:
1. enactive mastery
– a person will gain confidence through positive experience
– the more one works at a task, the experience they build and in turn, the more confident they become at doing it
2. vicarious modeling
– learning by observing other
– when someone else is good at a task and we are able to observe how they do it, we gain confidence in being able to do it ourselves
3. verbal persuasions
– when someone tells use or encourages us that we can perform a task
– hearing others praise our efforts and link those efforts with performance successes is often very motivational
4. emotional arousal
– when we are highly stimulated or energized to perform well in a situation
job rotation
moving from one job to another
– minimizes repetitive strain injury
– multi-skills the workforce
– potentially reduces job boredom
Job enlargement
– adding tasks to an existing job
job enrichment
– giving employees more responsibility for scheduling, coordinating and planning their own work
ex. Granting people authority to make decisions about their work
reinforcement theory
reinforcement theory
– Focuses on the consequences of behaviour
– Views human behaviour as determined by its environmental consequences
– Instead of looking within the individual to explain motivation and behaviour, it focuses on the external environment and the consequences it holds for individuals
– Basic premises are based on what E.L Thorndike called the Law of effect

four strategies used:
– positive reinforcement
– negative reinforcement
– punishment
– extinction

positive reinforcement
Strengthens or increases the frequency of desirable behavior by making a pleasant consequence upon its occurrence.
e.g. a manager nods to express approval to someone who makes a useful comment during a staff meeting

There are 2 important laws of positive reinforcement
1. law of contingent reinforcement
for a reward to have maximum reinforcing value, it must be delivered only if the desired behavior is exhibited.
2. law of immediate reinforcement
the more immediate the delivery of a reward after the occurrence of a desirable behaviour, the greater the reinforcing value of the reward

guidelines for positive reinforcement and punishment:
– clearly identify desired work behvaiours
– maintain a diverse inventory of rewards
– inform everyone of what must be done to get rewards
– recognize individual differences when allocating rewards
– follow the laws of immediate and contingent reinforcement

the power of positive reinforcement can be mobilized through a process known as shaping

is the positive reinforcement of successive approximations to desired behaviour.
positive reinforcement timing
The timing of positive reinforcement can also make a difference in its impact
– Continuous reinforcement schedule: Administers a reward each time a desired behaviour occurs
o Will elicit a desired behaviour the quickest
– Intermittent reinforcement schedule: Rewards behaviour only periodically
o Will be more permanent than behaviour acquired under a continuous schedule
– Oneway to succeed with a shaping strategy, for example, is a to give reinforcement on a continuous basis until the desired behaviour is achieved.Then an intermittent schedule can be used to maintain the behaviour at the new level
negative reinforcement
Increases the frequency of, or strengthens desirable behavior by not giving undesirable consequences when the desired behavior is performed.
– E.g. A manager who has been nagging a worker every day about tardiness does not nag when the worker comes to work on time one day
– Focused on stopping complaints.
Discourages a type or behavior by making a unpleasant consequence contingent on its occurrence.
E.g. A manager issues a written reprimand to an employee who reports late for work one day

Guidelines for punishment
– Tell the person what is being done wrong
– Tell the person what is being done right
– Provide an acceptable alternative to the punished behavior
– Punish immediately
– Make sure the punishment matches the behaviour
– Administer the punishment in private
– Do not punish inadvertently desirable behaviour
– Follows the laws of immediate and contingent reinforcement

Discourages a type of behaviour via withholding praise and rewards
E.g. A manager observes that a disruptive employee is receiving social approval from co-workers; the manager counsels co-workers to stop giving this approval
pay for performance
‘pay for performance’ is consistent with equity, expectancy, and reinforcement theories

merit pay
– a remuneration system that awards pay increases in proportion to individual performance contributions

types of performance based rewards
Organizational rewards
– profit sharing
– share ownership
– stock options
– balanced scorecard

team rewards
– bonsues
– gainsharing

individual rewards
– bonuses
– commissions
– piece rate (commision)

types of non-cash recognition
Six basic forms:
1. social reginforces: praise, involvement, learning and development opportunities
2. merchandise: gifts, vouchers, debit cards, on-line catalogue points
3. symbolic awards: plaques, certificates, letters, flowers, ‘thank you’ notes, intranet publicity, pins, gold watches, pens hampers, t-shirts, embossed mugs, company umbrellas, caps
4. leisure and entertainment: restaurant meals, theatre tickets, tickets to supporting events, corporate ‘boxes’
5. earned time off
improving reward effectiveness
– link rewards to performance
– ensure rewards are relevant
– ensure rewards are valued
– don’t underestimate the importance of non-financial rewards
– watch out for unintended consequences
– articulate desired outcomes & measurements in actionable terms
– provide rewards on a timely basis
– a syndrome that results from prolonged exposure to stress
– consists of emotional exhaustion, depersonalization, low personal accomplishment
– the person
o encounters chronic exhaustion
o bored and cynical about work
o feels, irritable, impatient, and unwilling to talk to other
o encounters depression
prevention/intervention strategies
Is aimed at modifying the organizational stressors that may eventually lead to distress
Aims at changing individual stress responses to necessary demands
Minimize the amount of individual and organizational distress that results when organizational stressors and resulting stress responses have not been adequately controlled
pay for knowledge
Concept of ‘skill based pay’
Pays workers according to the number of job relevant skills they master
EG: gov departments – ACT government has developed framework incorporating over 200 individual competency units, 21 qualifications and an overall assessment regime which seeks to link rewards to the skills, competencies and qualifications of employees.
Common in self managing teams.
bonus pay
• Provides one off/lump sum payments to employees based on the accomplishment of specific performance targets or some other extraordinary contribution, such as an idea for work improvement.
• Typically doesn’t increase base wages/salaries.
• Common at the executive level, but now used more extensively.
• Not always inevitable, and are raised/cut in line with company performance.
profit sharing
• Distribute to some or all employees a proportion of profits earned by the organization during a stated performance period.
• Exact amount varies according to the level of profits and each person’s base remuneration and/or length of service.
• Common in professions such as accounting and law and are becoming common elsewhere too.
gain sharing
• Extends the profit sharing concept by allowing groups of employees to share in any savings or ‘gains’ realized through their efforts to reduce costs and increase productivity.
• Specific formulas are used to calculate both the performance contributions and gain sharing awards.
• EG: Scanlon plan of gain sharing –
75% of gains distributed to workers, 25% kept by the company.
• Recognising that each work situation is different, there is a general move away from predefined formulas to custom-designed approaches that reinforce the link between pay and performance for specific groups.
employee share ownership
• Involves employees in ownership through the purchase of shares in the companies that employee them.
• Where traditionally used as financing schemes to save jobs and prevent business closures, share ownership by employees is an important performance incentive.
• Share options gives the option holder the right to buy shares at a future date at a fixed price, links ownership directly with a performance incentive, since employees holding share options are motivated to work hard to raise the price of company shares, then exercise their option and buy shares at a discount, which gives a financial gain.
• Most common in senior executive remuneration, but can also include lower levels.
• EG:
– more than 50% of employees bought shares in company when they initially offered in 1995.
– By mid 2009, share price was still trading above $9, a significant increase from its listing price of 75c.
• IF RISK IS HIGH, company may perform poorly, the options would then be worth less, or none at all, and the motivation value would be hugely limited, or be counter-productive all together.
technological companies experience downturn in stock market.
Employees disappointed that incentive pay was tied to share options.
Employees then leave to pursue more promising options.

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