PART 2

Individual Behaviors
and Processes in
Organizations

CHAPTER 6

Motivating
Behavior with
Work and
Rewards
Chapter Learning Objectives
After studying this chapter you should be able to:

1. Identify and describe different approaches to job design

and relate each to motivation.
2. Discuss employee participation, empowerment, and
flexible work arrangements and identify how they can
impact motivation.
3. Describe the goal setting theory of motivation and discuss
broader perspectives on goal setting.
4. Discuss performance management and its role in
motivation.
5. Describe how organizations use various kinds of rewards
to motivate employees.
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 Job design
1. Job specialization
2. Basic job design
3. Job characteristics
Theory

Performance Management
1. Process
2. Elements
Employee involvement
3. The balanced scorecard
4. Type of rewards
5. Rewards issues Motivating
Behavior
with work
and rewards

Flexible work
arrangements
1. Compressed work
Goal Setting schedule
1. Goal setting theory 2. Extended work schedule
2. MBO 3. Flexitime
4. Job sharing
5. Telecommuting
 Work Design in Organizations
• Job Design
– How organizations define and structure jobs

• Job Specialization (Fredrick Taylor)

– Jobs should be scientifically studied, broken down into small component
tasks, and then standardized across all workers doing those jobs

• Early alternative to Job Specialization

Job Rotation Systematically moving workers from one job to another
in an attempt to minimize monotony and boredom

Job Enlargement Giving workers more tasks to perform

(Horizontal Job Loading)

Job Enrichment Giving workers more tasks to perform and more

(Vertical Job Loading) control over how to perform them

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permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
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 Employee Involvement and Motivation
• Extending job design to include:
– Participation
• Giving employees a voice in making decisions about their own
work
– Empowerment
• Enabling workers to set their own work goals, make decisions,
and solve problems within their sphere of responsibility and
authority
• Areas of Employee Involvement
– Personal job-related decisions
– Administrative matters (e.g., work schedules)
– Product quality decisions
• Techniques and Issues in Employee Involvement
– Empowerment through work teams (quality circles)
– Decentralization of decision-making and increased delegation

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permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
 Flexible Work Arrangements

• Variable Work Schedules

– Compressed work schedule
• Employees work a 40-hour week in fewer than 5 days
– Extended work schedule
• Employees work for relatively long periods of work followed by
relatively long periods of paid time off
– Flexible work schedule (flextime)
• Employees gain more control over hours worked daily
– Job Sharing
• Two or more part-time employees share full-time job
– Telecommuting
• Employees spend all or part of their time working off-site

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permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
© 2017 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
 Goal Setting and Motivation
• Purposes of Setting Goals in Organizations
– To provide a useful framework for managing motivation to
enhance employee performance
– To serve management as a control device for monitoring how
well the organization is performing
• Goal
– A desirable objective
• Goal Setting Theory (Locke)
– Assumes that behavior is a result of conscious goals and
intentions, therefore goals influence behavior (performance)

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permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
© 2017 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
 Broader Perspectives on Goal Setting
• Management by Objectives (MBO)
– A collaborative goal-setting process through which
organizational goals cascade down throughout the
organization
– Requires customizing to each organization

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 Performance Management
in Organizations
• The Nature of Performance Management
– Performance appraisal process:
1. Evaluate an employee’s work behaviors by measurement
and comparison with previously established standards
2. Document the results
3. Communicate the results to the employee
– Purposes of performance appraisal:
• Provide feedback
• Decide and justify reward allocations
• Judgment and development

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permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
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permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
 Performance Management Basics

Elements
Elementsof
ofPerformance
Performance
Measurement
Measurement

How
Howoften
oftenare
are How
Howis
is
Who
Whoisisto
todo
do the
theappraisals
appraisals performance
performanceto
to
the
theappraisals?
appraisals? to
tobe
bedone?
done? be
bemeasured?
measured?

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permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
 Performance Management… (cont’d)

• Measuring Performance
– Considerations
• Desired decisions to be made based on outcome
• Instruments must be valid, reliable, and free of bias
– Choices of measurement methods
• Graphic rating scales, checklists, essays/diaries, behaviorally
anchored rating scales, forced-choice systems
• Comparative methods such as ranking, forced distribution,
paired comparisons, multiple raters

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permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
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 Individual Rewards in Organizations

• Reward System
– Consists of all organizational components involved in
allocating compensation and benefits to employees in
exchange for their contribution to the organization:
• People
• Processes
• Rules
• Procedures
• Decision-making activities

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 Rewards’ Purposes, Roles, and Meanings

• Purposes
– To attract, retain, and motivate qualified employees
• Roles of compensation structures
– To be equitable and consistent
– To be a fair reward for the individual’s contribution
– To be competitive in the external labor market
• Meanings of rewards
– Surface value: objective meaning or worth of reward
– Symbolic value: subjective and personal meaning or
worth of reward

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 Types of Individual Rewards

• Compensation Package
– The total array of money (wages, salary, commission),
incentives, benefits, perquisites, and awards provided
by the organization
• Base Pay
– Symbolizes an employee’s worth
– Can improve motivation and performance if part of an
effectively planned and managed pay system
– Is a major cost of doing business
– Can reduce turnover and increase morale when well-
designed

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 Types of Individual Rewards (cont’d)
• Incentive Pay Systems 1. Piecework programs
– Plans in which employees 2. Gain-sharing
can earn additional programs
compensation in return 3. Bonus systems
for certain types of 4. Long-term
performance compensation
5. Merit pay plans
6. Profit-sharing plans
7. Employee stock
option plans

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permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
 Individual Rewards (cont’d)

• Indirect Compensation (Employee Benefits)

1. Payment for time not worked
2. Social Security contributions
3. Unemployment compensation
4. Disability and workers’ compensation benefits
5. Life and health insurance programs
6. Pensions or retirement plans

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 Individual Rewards (cont’d)

• Perquisites
– Special privileges awarded to selected members of an
organization, usually top managers
– Add to the status of their recipients and thus may
increase job satisfaction and reduce turnover
• Other Awards
– Rewards for seniority, perfect attendance, zero defects
(quality work), cost reduction suggestions

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 Managing Reward Systems
• Linking Performance and Rewards
– Employee perception of link between pay and
performance results in symbolic value of pay
• Flexible Reward Systems
– Allows employees to choose the combination of
benefits that best suits their needs
– Increases both employee satisfaction with benefits
and administrative costs for the employer
• Participative Pay Systems
– Employees are involved in the design and/or
administration of their compensation system

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Table 6.1 Issues to Consider in Developing Reward Systems

ISSUE IMPORTANT EXAMPLES

• Open, closed, partial

Pay Secrecy • Link with performance appraisal
• Equity perceptions

• By human resource department

Employee Participation
• By joint employee/management committee

• Cafeteria-style benefits
Flexible System • Annual lump sum or monthly bonus
• Salary versus benefits

• Organization’s financial performance

Ability to Pay
• Expected future earnings

Economic and Labor • Inflation rate

• Industry pay standards

Market Factors
• Unemployment rate

Impact on Organizational • Increase in costs

Performance • Impact on performance

• Cost-of-living differentials
Expatriate Compensation
• Managing related equity issue

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permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.