2003 McGraw-Hill Australia Pty Ltd PPTs t/a Organisational Behaviour on the Pacific Rim by McShane and Travaglione 11

Reward and RecognitionReward and Recognition

What do people want from work?

What sort of reward systems can organisations develop?

What is the difference between reward and recognition?

What can we learn from motivational theories about reward?

2003 McGraw-Hill Australia Pty Ltd PPTs t/a Organisational Behaviour on the Pacific Rim by McShane and Travaglione 22

What people want from work is dependent on:What people want from work is dependent on:

Age e.g. ‘older worker’

Circumstances e.g. current needs

Values e.g. to do ‘good’ rather than $

Social needs e.g. acceptance

Cultural influences e.g. ‘golden generation’

2003 McGraw-Hill Australia Pty Ltd PPTs t/a Organisational Behaviour on the Pacific Rim by McShane and Travaglione 33

Extrinsic and intrinsic rewards

$$$$

Membership and seniority

Status

Opportunity to acquire skills

Growth and development

Rewards organisations traditionally Rewards organisations traditionally offeroffer

© Corel Corp

2003 McGraw-Hill Australia Pty Ltd PPTs t/a Organisational Behaviour on the Pacific Rim by McShane and Travaglione 44

Rewards and the skills crisisRewards and the skills crisis

Lowest unemployment rate in the OECD – ‘full employment’

Ageing population Falling birth rate ‘Brain-drain’ Immigration policies (politicians and the

election) Competitors e.g. Australia are doing much

better. Why would skilled immigrants want to come

here? Do we need them?

2003 McGraw-Hill Australia Pty Ltd PPTs t/a Organisational Behaviour on the Pacific Rim by McShane and Travaglione 55

Attracting skilled immigrantsAttracting skilled immigrants

How do we look as a nation? What do we offer? What do they bring (why do we need them

anyway) Do we welcome them? Do we want them? What do we do in terms of immigration

policies to attract skilled immigrants?

2003 McGraw-Hill Australia Pty Ltd PPTs t/a Organisational Behaviour on the Pacific Rim by McShane and Travaglione 66

To refresh your memories: theories To refresh your memories: theories of motivationof motivation

Theories of motivation need to explain:

1. Why an individual decides to join an organisation

2. Why he or she decides to stay or leave

3. Why the individual decides to perform at the level required by the organisation or decides not to put in the effort required.

2003 McGraw-Hill Australia Pty Ltd PPTs t/a Organisational Behaviour on the Pacific Rim by McShane and Travaglione 77

Three Sets of Motivation TheoriesThree Sets of Motivation Theories

Content theories (Maslow, ERG, Herzberg etc)

Process theories (Adams, Vroom, etc)

Behaviour modification (Skinner)

2003 McGraw-Hill Australia Pty Ltd PPTs t/a Organisational Behaviour on the Pacific Rim by McShane and Travaglione 88

Content TheoriesContent Theories

Concerned with the content of the work itself e.g was it challenging?

How work could be ‘enriched’ to provide more satisfaction

Led to attempts to re-design work; job enlargement, rotation and ‘enrichment’

2003 McGraw-Hill Australia Pty Ltd PPTs t/a Organisational Behaviour on the Pacific Rim by McShane and Travaglione 99

Content theories of motivationContent theories of motivation

Motivatorhygienetheory

Motivators

HygienesHygienes

Need forachievement

Need forNeed forpowerpower

Need forNeed foraffiliationaffiliation

McClelland’slearned needs

ERGtheory

Growth

RelatednessRelatedness

ExistenceExistence

Needs hierarchytheory

Self-actualisation

EsteemEsteem

BelongingnessBelongingness

SafetySafety

PhysiologicalPhysiological

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Process theoriesProcess theories

Concerned with individual decision-making, why individuals decide to put in or withhold effort.

Why? Equitable outcomes Commensurate reward

2003 McGraw-Hill Australia Pty Ltd PPTs t/a Organisational Behaviour on the Pacific Rim by McShane and Travaglione 1111

E-to-Pexpectancy

P-to-Oexpectancy

Outcomesand valences

Outcome 1Outcome 1+ or -+ or -

EffortEffort PerformancePerformance

Outcome 3Outcome 3+ or -+ or -

Outcome 2Outcome 2+ or -+ or -

Expectancy theory of motivationExpectancy theory of motivation

2003 McGraw-Hill Australia Pty Ltd PPTs t/a Organisational Behaviour on the Pacific Rim by McShane and Travaglione 1212

Equity theoryEquity theory

Outcome/input ratio inputs what employee contributes (eg skill)outcomes what employees receive (eg pay)

Comparison otherperson/people with whom we compare rationot easily identifiable

Equity evaluation compare outcome/input ratio with the comparison other

2003 McGraw-Hill Australia Pty Ltd PPTs t/a Organisational Behaviour on the Pacific Rim by McShane and Travaglione 1313

Overreward vs underreward inequityOverreward vs underreward inequity

YouComparisonother

OutcomesOutcomes

InputsInputs

OutcomesOutcomes

InputsInputs

Overrewardinequity

OutcomesOutcomes

InputsInputs

OutcomesOutcomes

InputsInputs

Underrewardinequity

2003 McGraw-Hill Australia Pty Ltd PPTs t/a Organisational Behaviour on the Pacific Rim by McShane and Travaglione 1414

Designing effective Reward SystemsDesigning effective Reward Systems

Rewards must be:

Perceived as fair Timely Of a significant magnitude to motivate Individualised Current

2003 McGraw-Hill Australia Pty Ltd PPTs t/a Organisational Behaviour on the Pacific Rim by McShane and Travaglione 1515

Types of reward schemesTypes of reward schemes

Merit schemes Pay for Performance schemes ‘behaviour that appears to lead to positive

consequences will be repeated.’ Does this approach increase motivation? Does it rely on externally mediated rewards

rather than a system in which individuals can be motivated by their jobs?

2003 McGraw-Hill Australia Pty Ltd PPTs t/a Organisational Behaviour on the Pacific Rim by McShane and Travaglione 1616

Why do merit pay systems often fail?Why do merit pay systems often fail?

Is it because the theoretically base is not strong or

the schemes are not well implemented my managers?

2003 McGraw-Hill Australia Pty Ltd PPTs t/a Organisational Behaviour on the Pacific Rim by McShane and Travaglione 1717

(cont)(cont)

1. Pay is not perceived to be related to Job Performance

Lawler: ‘employees do not see the relationship between their hard work and the rated performance.’

Why? The rewards e.g. share options take too long

to come Unrealistic goals Secrecy surrounding annual increase

2003 McGraw-Hill Australia Pty Ltd PPTs t/a Organisational Behaviour on the Pacific Rim by McShane and Travaglione 1818

Performance ratings are seen as Performance ratings are seen as biasedbiased

Can mangers make objective distinctions between good and bad performance?

In theory, based on ‘objective’ measures but…

Somebody – your superior – has to implement the plan

2003 McGraw-Hill Australia Pty Ltd PPTs t/a Organisational Behaviour on the Pacific Rim by McShane and Travaglione 1919

Rewards are not Viewed as RewardsRewards are not Viewed as Rewards

A pay increase might be meant to say ‘you are well regarded’ but might send another message’ you are only average’

Message about inequity in the company Worsened by secrecy Performance reviews too far apart to have

effect Do we need to keep changing the merit plan

to ‘fit’ with changes in the environment e.g. inflation

What about under-performers?

2003 McGraw-Hill Australia Pty Ltd PPTs t/a Organisational Behaviour on the Pacific Rim by McShane and Travaglione 2020

Trust and openness about merit Trust and openness about merit increases is low.increases is low.

‘You need a good PA system’ Good human relations climate Explain the reasons for increases Need an open climate for it to work

2003 McGraw-Hill Australia Pty Ltd PPTs t/a Organisational Behaviour on the Pacific Rim by McShane and Travaglione 2121

Organisation view money as the primary Organisation view money as the primary motivator ignoring the importance of the job itselfmotivator ignoring the importance of the job itself

Detracts from the job itself Motivate intrinsically Merit pay takes external focus Overlooks the value and importance of the

job itself Back to job re-design

2003 McGraw-Hill Australia Pty Ltd PPTs t/a Organisational Behaviour on the Pacific Rim by McShane and Travaglione 2222

Making a merit pay system workMaking a merit pay system work

Openness and trust are the basics Supervisors need to be trained in rating and

feedback techniques Components of annual pay should be clearly

and openly specific – so that merit forms an average for distribution

Need to customise to needs and individuals Don’t overlook other rewards

2003 McGraw-Hill Australia Pty Ltd PPTs t/a Organisational Behaviour on the Pacific Rim by McShane and Travaglione 2323

Making it workMaking it work

Good preformance measures – what do we mean by ‘high performance’?

Better communication about the systems; how it works, what will be delivered

Better delivery systems – make clear the relationship between performance and pay

Managerial behaviour – negative perception of connection between pay and performance

2003 McGraw-Hill Australia Pty Ltd PPTs t/a Organisational Behaviour on the Pacific Rim by McShane and Travaglione 2424

Membership/seniority-based rewardsMembership/seniority-based rewards

Fixed wages, seniority increases Advantages

guaranteed wages may attract job applicants seniority-based rewards reduce turnover

Disadvantagesdon’t motivate job performancediscourage poor performers from leavingmay act as ‘golden handcuff’ Too limited

2003 McGraw-Hill Australia Pty Ltd PPTs t/a Organisational Behaviour on the Pacific Rim by McShane and Travaglione 2525

Skill-based rewardsSkill-based rewards

Pay increases with skill or competencies acquired or demonstrated

Skill-based paypay increases with skill modules learned

Advantages more flexible work force, better quality, consistent with employability

Disadvantagespotentially subjective, higher training costs

2003 McGraw-Hill Australia Pty Ltd PPTs t/a Organisational Behaviour on the Pacific Rim by McShane and Travaglione 2626

Status-based rewardsStatus-based rewards

Include perks e.g. company car

Advantages job evaluation tries to maintain pay equitymotivate competition for promotions

Disadvantagesemployees exaggerate duties, hoard resources create psychological distance across hierarchy inconsistent with flatter organisations

2003 McGraw-Hill Australia Pty Ltd PPTs t/a Organisational Behaviour on the Pacific Rim by McShane and Travaglione 2727

Organisationalrewards

• Share ownership • Share options• Profit sharing

Teamrewards

• Gainsharing• Bonuses

Performance-based rewardsPerformance-based rewards

IndividualIndividualrewardsrewards

• Piece ratePiece rate• CommissionsCommissions• Royalties Royalties • Merit payMerit pay

2003 McGraw-Hill Australia Pty Ltd PPTs t/a Organisational Behaviour on the Pacific Rim by McShane and Travaglione 2828

Do we want individuals to reach Do we want individuals to reach ‘high’ levels of performance?‘high’ levels of performance?

What does performance depend on?

Performance is a function of Motivation x Ability x Opportunity

P = (f) M X A X O

2003 McGraw-Hill Australia Pty Ltd PPTs t/a Organisational Behaviour on the Pacific Rim by McShane and Travaglione 2929

Based on Expectancy-theory; effort, Based on Expectancy-theory; effort, performance and rewardperformance and reward

Makes sense (?) but . . we have to:

1. Agree on what we mean by performance e.g. for a child-minder

2. Agree how we will assess individual performance

3. Agree how we are going to reward individual performance

2003 McGraw-Hill Australia Pty Ltd PPTs t/a Organisational Behaviour on the Pacific Rim by McShane and Travaglione 3030

Improving performance?Improving performance?

Performance is a {f} of Motivation x Ability x Opportunity

What do we mean by the performance of waiter or waitress?

What would we mean by a high performing retail sales assistant?

How can a geriatric nurse improve her or his performance?

Do organisations really want ‘high performance’ or ‘adequate performance’?

Do many jobs have within them the scope to ‘improve ‘ performance?

2003 McGraw-Hill Australia Pty Ltd PPTs t/a Organisational Behaviour on the Pacific Rim by McShane and Travaglione 3131

Performance-reward problemsPerformance-reward problems

Shift attention away from motivation of job itself to extrinsic rewards

Create a psychological distance with reward giver

Discourage risk taking

Used as quick fix

But more importantly . . .

2003 McGraw-Hill Australia Pty Ltd PPTs t/a Organisational Behaviour on the Pacific Rim by McShane and Travaglione 3232

Focus on rewardsFocus on rewards

Effort, performance and reward must be perceived to be linked

Ensure rewards must be relevant to the employee

Rewards must be valued

Rewards must be of sufficient magnitude to motivate

Use team rewards for interdependent jobs

Beware of unintended consequences© Corel Corp

2003 McGraw-Hill Australia Pty Ltd PPTs t/a Organisational Behaviour on the Pacific Rim by McShane and Travaglione 3333

But we reward But we reward individualsindividuals while talking while talking teamsteams

Performance assessment invariably individually-based e.g. PA

On which individuals are rewarded But organisations stress team work!So why not more team-based rewards?Difficult to assess e.g. equityDifficult to administerCost

2003 McGraw-Hill Australia Pty Ltd PPTs t/a Organisational Behaviour on the Pacific Rim by McShane and Travaglione 3434

Team and organisational rewardsTeam and organisational rewards

Gainsharing plans based on cost reductions and increased labour

efficiency

Employee Share Ownership Programme e.g. The Warehouse employees own company shares

Share options e.g. senior management right to purchase company shares at a future

date at a predetermined price

Profit sharing e.g. Mainfreight employees receive share of profits

2003 McGraw-Hill Australia Pty Ltd PPTs t/a Organisational Behaviour on the Pacific Rim by McShane and Travaglione 3535

Job designJob design

Assigning tasks to a job, including the interdependency of those tasks with other jobs

Technology has a great influence on the design of jobs (technological determinism)

Taylorist/Fordist design

Employability affects job design

2003 McGraw-Hill Australia Pty Ltd PPTs t/a Organisational Behaviour on the Pacific Rim by McShane and Travaglione 3636

AdvantagesAdvantages DisadvantagesDisadvantages

Evaluating job specialisationEvaluating job specialisation

Basically greater efficiency

Less time changing tasks

Lower training costs

Job mastered quickly

Better person-job matching

Lower costs

Greater control over quality

Job boredom

Discontentment pay

Lower quality?

Lower motivation

2003 McGraw-Hill Australia Pty Ltd PPTs t/a Organisational Behaviour on the Pacific Rim by McShane and Travaglione 3737

WorkWorkmotivationmotivation

GrowthGrowthsatisfactionsatisfaction

GeneralGeneralsatisfactionsatisfaction

WorkWorkeffectivenesseffectiveness

Job characteristics model (Hackman & Job characteristics model (Hackman & Lawler)Lawler)

FeedbackFeedbackfrom jobfrom job

KnowledgeKnowledgeof resultsof results

Skill varietySkill variety

Task identityTask identity

Task significanceTask significanceMeaningfulnessMeaningfulness

AutonomyAutonomy ResponsibilityResponsibility

IndividualIndividualdifferencesdifferences

CriticalCriticalpsychologicalpsychological

statesstatesCore jobCore job

characteristicscharacteristics OutcomesOutcomes

2003 McGraw-Hill Australia Pty Ltd PPTs t/a Organisational Behaviour on the Pacific Rim by McShane and Travaglione 3838

Job enlargementJob enlargement

Job rotationJob rotation

Job 1Job 1Operate cameraOperate camera

Job 2Job 2Operate soundOperate sound

Job 3Job 3Report storyReport story

Job 1Job 1

Operate cameraOperate cameraOperate soundOperate sound

Report storyReport story

Job 2Job 2

Operate cameraOperate cameraOperate soundOperate sound

Report storyReport story

Job 3Job 3

Operate cameraOperate cameraOperate soundOperate sound

Report storyReport story

Job rotation vs job enlargementJob rotation vs job enlargement

2003 McGraw-Hill Australia Pty Ltd PPTs t/a Organisational Behaviour on the Pacific Rim by McShane and Travaglione 3939

Job enrichment strategies – based on Job enrichment strategies – based on Lawler & Hackman and HerzbergLawler & Hackman and Herzberg

Empowering employees gives employees more autonomy feeling of control and self-efficacy actual control? over what?

Forming natural work units (autonomous work groups) completing an entire task assigning employees to specific

clients

Establishing client relationships employees put in direct contact

with clients limited by the nature of the

business e.g. production workers

© Marlborough Express (NZ)

2003 McGraw-Hill Australia Pty Ltd PPTs t/a Organisational Behaviour on the Pacific Rim by McShane and Travaglione 4040

Major obstacles to job designMajor obstacles to job design

Difficult to accurately measure job characteristics

Cost effectiveness

Resistance to change skilled workers union supervisors

Problem finding optimal level of enrichment and specialisation

Maintaining ‘enrichment’

Concerns about the validity of the theoretical base

Over-taken by speed of technological change

2003 McGraw-Hill Australia Pty Ltd PPTs t/a Organisational Behaviour on the Pacific Rim by McShane and Travaglione 4141

Some major practical difficultiesSome major practical difficulties

What do we mean by ‘performance’? How can we fairly ‘measure’ performance? How will we relate ’performance’ with

appropriate reward? Intrinsic recognition or Extrinsic reward Major issues: Establishing, testing, and maintaining system Cost effectiveness of such a system e.g. BHP

2003 McGraw-Hill Australia Pty Ltd PPTs t/a Organisational Behaviour on the Pacific Rim by McShane and Travaglione 4242

ConclusionConclusion

Difficult to apply motivational theories in practice

Lots of failures e.g. Volvos JE programmes Selective use of profit sharing, P-f-P, skill-

based reward systems Always the question of size and resources How do NZ SME go about motivating and

rewarding their employees? ‘Family-feel’ ‘culture’ Informal