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CHAPTER8 Motivation: From Concepts to Applications LEARNING OBJECTIVES After studying this chapter, students should be able to: Describe how the job characteristics model motivates by changing the work environment. Compare the main ways jobs can be redesigned. Explain how specific alternative work arrangements can motivate employees. Describe how employee involvement measures can motivate employees. Demonstrate how the different types of variable-pay programs can increase employee motivation. Show how flexible benefits turn benefits into motivators. Identify the motivational benefits of intrinsic rewards. INSTRUCTOR RESOURCES Instructors may wish to use the following resources when presenting this chapter. Text Exercises Myth or Science?: “Money Can’t Buy Happiness” Personal Inventory Assessments: Diagnosing the Need for Team Building Career Objectives: How Can I Get Flextime? An Ethical Choice: Sweatshops and Worker Safety Point/Counterpoint: “Face-Time” Matters Questions for Review Experiential Exercise: Occupations and the Job Characteristics Model Ethical Dilemma: Inmates for Hire Text Cases Case Incident 1: Motivation for Leisure Case Incident 2: Pay Raises Every Day Instructor’s Choice This section presents an exercise that is NOT found in the student's textbook. Instructor's Choice reinforces the text's emphasis through various activities. Some Instructor's Choice activities are centered on debates, group exercises, Internet research, and student experiences. Some can be used in class in their entirety, while others require some additional work on the student's part. The course instructor may choose to use these at anytime throughout the class—some may be more effective as icebreakers, while some may be used to pull together various concepts covered in the chapter. Web Exercises At the end of each chapter of this Instructor’s Manual, you will find suggested exercises and ideas for researching OB topics on the Internet. The exercises “Exploring OB Topics on the Web” are set up so that you can simply photocopy the pages, distribute them to your class, and make assignments accordingly. You may want to assign the exercises as an out-of-class activity or as lab activities with your class. Summary and Implications for Managers Understanding what motivates individuals is ultimately key to organizational performance. Employees whose differences are recognized, who feel valued, and who have the opportunity to work in jobs that are tailored to their strengths and interests will be motivated to perform at the highest levels. Employee participation can also increase employee productivity, commitment to work goals, motivation, and job satisfaction. However, we cannot overlook the powerful role of organizational rewards in influencing motivation. Pay, benefits, and intrinsic rewards must be carefully and thoughtfully designed in order to enhance employee motivation toward positive organizational outcomes. Specific implications for managers are below: Recognize individual differences. Spend the time necessary to understand what’s important to each employee. Design jobs to align with individual needs and maximize their motivation potential. Use goals and feedback. You should give employees firm, specific goals, and they should get feedback on how well they are faring in pursuit of those goals. Allow employees to participate in decisions that affect them. Employees can contribute to setting work goals, choosing their own benefits packages, and solving productivity and quality problems. Link rewards to performance. Rewards should be contingent on performance, and employees must perceive the link between the two. Check the system for equity. Employees should perceive that experience, skills, abilities, effort, and other obvious inputs explain differences in performance and hence in pay, job assignments, and other obvious rewards. This chapter begins with a vignette describing the ongoing saga of Lee Farkas, former CEO of mortgage firm TBW. As we can see, money can be an extremely powerful motivator. For most individuals, though, pay is not the only motivator. It is a central means of motivation, but what you’re actually doing for the money matters, too. The process of motivating employees is complex, and people feel strongly about the implications of change to their extrinsic or intrinsic benefits. In Chapter 7, we focused on motivation theories. While it’s important to understand the underlying concepts, it’s also important to see how you can use them as a manager. In this chapter, we apply motivation concepts to practices, beginning with job design. BRIEF CHAPTER OUTLINE Motivating by Job Design: The Job Characteristics Model (Exhibit 8-1) The job characteristics model(JCM) proposed that any job may be described by five core job dimensions: Skill variety: the degree to which the job requires a variety of different activities, so the worker can use a number of different skills and talent. Task identity: the degree to which the job requires completion of a whole and identifiable piece of work. Task significance: the degree to which the job affects the lives or work of other people. Autonomy: the degree to which the job provides the worker freedom, independence, and discretion in scheduling the work and determining the procedures to be used in carrying it out. Feedback: the degree to which carrying out the work activities generates direct and clear information about your own performance. Much evidence supports the JCM concept that the presence of a set of job characteristics—variety, identity, significance, autonomy, and feedback—does generate higher and more satisfying job performance. We can combine the core dimensions of the JCM into a single predictive index, called the motivating potential score (MPS) and calculated as follows: MPS = Skill variety + Task identity + Task SignificancexAutonomyx Feedback 3 But we can better calculate motivating potential by simply adding the characteristics rather than using the formula. A few studies have tested the job characteristics model in different cultures, but the results aren’t consistent. Job Redesign Introduction Repetitive jobs provide little variety, autonomy, or motivation. People generally seek out jobs that are challenging and stimulating. Job rotation Periodic shifting of an employee from one task to another. Often referred to as cross-training. Strengths of job rotation are that it reduces boredom, increases motivation, and helps employees better understand their work contributions. Drawbacks include creates disruptions, extra time for supervisors addressing questions, training time, and efficiencies. Relational Job Design While redesigning jobs on the basis of job characteristics theory is likely to make work more intrinsically motivating to people, more contemporary research is focusing on how to make jobs more prosocially motivating to people. In other words, how can managers design work so employees are motivated to promote the well-being of the organization’s beneficiaries? This view of relational job design shifts the spotlight from the employee to those whose lives are affected by the job that employee performs. One way to make jobs more prosocially motivating is to better connect employees with the beneficiaries of their work, for example, by relating stories from customers who have found the company’s products or services to be helpful. Meeting beneficiaries firsthand allows employees to see that their actions affect a real, live person, and that their jobs have tangible consequences. In addition, connections with beneficiaries make customers or clients more accessible in memory and more emotionally vivid, which leads employees to consider the effects of their actions more. Finally, connections allow employees to easily take the perspective of beneficiaries, which fosters higher levels of commitment. Alternative Work Arrangements Flextime Flextime or flexible work hours. Allows employees some discretion over when they arrive at and leave work. (Exhibit 8-2) Benefits include reduced absenteeism, increased productivity, reduced overtime expense, reduced hostility toward management, and increased autonomy and responsibility for employees. Major drawback is that it’s not applicable to all jobs. Job Sharing Job sharing. Allows two or more individuals to split a traditional 40-hour-a-week job. Only 18 percent of large organizations offered job sharing in 2014, a 29 percent decline from 2008. Job sharing allows an organization to draw on the talents of more than one individual in any given job. It also opens the opportunity to acquire skilled workers—for instance, women with young children and retirees—who might not be available on a full-time basis. From the employee’s perspective, job sharing increases flexibility and can increase motivation and satisfaction when a 40-hour-a-week job is just not practical. In the United States, the national Affordable Care Act may create an incentive for companies to increase job sharing arrangements in order to avoid the fees employees must pay the government for full-time employees. Telecommuting Telecommuting. Employees who do their work at home at least two days a week on a computer that is linked to their office. Despite the benefits of telecommuting, large organizations such as Yahoo! and Best Buy have eliminated it. While the movement away from telecommuting by some companies made headlines, it appears that for most organizations, it remains popular. Almost 50 percent of managers in Germany, the United Kingdom, and the United States are permitted telecommuting options. In developing countries, this percentage is between 10 and 20 percent. Potential benefits of telecommuting: Larger labor pool Higher productivity Improved morale Reduced office-space costs Downsides of telecommuting: Employer Less direct supervision of employees Difficulty coordinating teamwork Reduced knowledge transfer Employee Increased feelings of isolation Reduced job satisfaction Less “face-time” Employee Involvement and Participation Introduction Employee involvement and participation (EIP) is a participative process that uses employees’ input to increase their commitment to the organization’s success. Employee involvement programs differ among countries. A study of four countries, including the United States and India, confirmed the importance of modifying practices to reflect national culture. Examples of Employee Involvement Programs Participative management Common to all participative management programs is joint decision making, in which subordinates share a significant degree of decision making power with their immediate superiors. Participative management has, at times, been promoted as a panacea for poor morale and low productivity. But for it to work, employees must have trust and confidence in their leaders. Leaders should refrain from coercive techniques and instead stress the organizational consequences of decision making to employees. Studies of the participation–performance relationship have yielded mixed findings. Representative participation Almost every country in Western Europe requires companies to practice representative participation. The goal is to redistribute power within an organization, putting labor on a more equal footing with the interests of management and stockholders by letting workers be represented by a small group of employees who actually participate. The two most common forms of representation are work councils and board representatives. Using Rewards to Motivate Employees Introduction As we saw in Chapter 3, pay is not a primary factor driving job satisfaction. However, it does motivate people, and companies often underestimate its importance in keeping top talent. What to Pay: Establishing the Pay Structure Complex process that entails balancing internal equity and external equity. Some organizations prefer to pay leaders by paying above market. Paying more may net better-qualified and more highly motivated employees who may stay with the firm longer. How to Pay: Rewarding Individual Employees Through Variable-Pay Programs Introduction A number of organizations are moving away from paying solely on credentials or length of service. Piece-rate plans, merit-based pay, bonuses, profit sharing, gain sharing, and employee stock ownership plans are all forms of a variable-pay program, which bases a portion of an employee’s pay on some individual and/or organizational measure of performance. Earnings therefore fluctuate up and down. Variable-pay plans have long been used to compensate salespeople and executives. Globally, around 80 percent of companies offer some form of variable-pay plan. In Latin America, more than 90 percent of companies offer some sort of variable pay. Unfortunately, most employees still don’t see a strong connection between pay and performance. The fluctuation in variable pay is what makes these programs attractive to management. Piece-rate pay plans—workers are paid a fixed sum for each unit of production completed. A pure piece-rate plan provides no base salary and pays the employee only for what he or she produces. The chief concern of both individual and team piece-rate workers is financial risk. Although incentives are motivating and relevant for some jobs, it is unrealistic to think they can constitute the only piece of some employees’ pay. Merit-based pay plans—based on performance appraisal ratings. Main advantage is that it allows employers to differentiate pay based on performance. Create perceptions of relationships between performance and rewards. Despite their intuitive appeal, merit pay plans have several limitations. One is that they are typically based on an annual performance appraisal and thus are only as valid as the performance ratings. Another limitation is that the pay-raise pool fluctuates on economic or other conditions that have little to do with individual performance. Finally, unions typically resist merit pay plans. Bonuses An annual bonus is a significant component of total compensation for many jobs. Bonus plans increasingly include lower-ranking employees; many companies now routinely reward productive employees with bonuses in the thousands of dollars when profits improve. Downsides of bonuses: employees’ pay is more vulnerable to cuts. Profit-sharing plans Profit-sharing plans are organization-wide programs that distribute compensation based on some established formula centered around a company’s profitability. Employee stock ownership plans An employee stock ownership plan (ESOP) is a company-established benefit plan in which employees acquire stock, often at below-market prices, as part of their benefits. Research on ESOPs indicates they increase employee satisfaction and innovation. Evaluation of variable pay Do variable-pay programs increase motivation and productivity? Generally, yes, but that doesn’t mean everyone is equally motivated by them. Using Benefits to Motivate Employees Flexible benefits: developing a benefits package Flexible benefits individualize rewards by allowing each employee to choose the compensation package that best satisfies his or her current needs and situation. Flexible benefits can accommodate differences in employee needs based on age, marital status, spouses’ benefit status, and number and age of dependents. Today, almost all major corporations in the United States offer flexible benefits. However, it may be surprising that their usage is not yet global. Using Intrinsic Rewards to Motivate Employees Intrinsic Rewards: Employee Recognition Programs Organizations are increasingly recognizing that important work rewards can be both intrinsic and extrinsic. Rewards are intrinsic in the form of employee recognition programs and extrinsic in the form of compensation systems. Despite the increased popularity of employee recognition programs, critics argue they are highly susceptible to political manipulation by management. Summary and Implications for Managers Understanding what motivates individuals is ultimately key to organizational performance. Employees whose differences are recognized, who feel valued, and who have the opportunity to work in jobs that are tailored to their strengths and interests will be motivated to perform at the highest levels. Employee participation also can increase employee productivity, commitment to work goals, motivation, and job satisfaction. However, we cannot overlook the powerful role of organizational rewards in influencing motivation. Pay, benefits, and intrinsic rewards must be carefully and thoughtfully designed in order to enhance employee motivation toward positive organizational outcomes. Specific implications for managers are below: Recognize individual differences. Spend the time necessary to understand what’s important to each employee. Design jobs to align with individual needs and maximize their motivation potential. Use goals and feedback. You should give employees firm, specific goals, and they should get feedback on how well they are faring in pursuit of those goals. Allow employees to participate in decisions that affect them. Employees can contribute to setting work goals, choosing their own benefits packages, and solving productivity and quality problems. Link rewards to performance. Rewards should be contingent on performance, and employees must perceive the link between the two. Check the system for equity. Employees should perceive that experience, skills, abilities, effort, and other obvious inputs explain differences in performance and hence in pay, job assignments, and other obvious rewards. EXPANDED CHAPTER OUTLINE Motivating by Job Design: The Job Characteristics Model Job design suggests that the way elements in a job are organized can influence employee effort, and the job characteristics model, discussed next can serve as a framework to identify opportunities for changes to those elements. The Job Characteristics Model (JCM) proposed that any job may be described by five core job dimensions(Exhibit 8-1): Skill variety: the degree to which the job requires a variety of different activities, so the worker can use a number of different skills and talent. Task identity: the degree to which the job requires completion of a whole and identifiable piece of work. Task significance: the degree to which the job has a substantial impact on the lives or work of other people. Autonomy: the degree to which the job provides the worker freedom, independence, and discretion in scheduling the work and determining the procedures to be used in carrying it out. Feedback: the degree to which carrying out the work activities generates direct and clear information about the effectiveness of your own performance. The first three dimensions—skill variety, task identity, and task significance—combine to create meaningful work the incumbent will view as important, valuable, and worthwhile. From a motivational standpoint, the JCM proposes that individuals obtain internal rewards when they learn (knowledge of results) that they personally (experienced responsibility) have performed well on a task they care about (experienced meaningfulness). Individuals with a high growth need are more likely to experience the critical psychological states when their jobs are enriched—and respond to them more positively—than are their counterparts with low growth need. We can combine the core dimensions into a single predictive index called the motivating potential score(MPS). MPS = Skill variety + Task identity + Task SignificancexAutonomyx Feedback 3 To be high on motivating potential, jobs must be high on at least one of the three factors that lead to experienced meaningfulness, and high on both autonomy and feedback. If jobs score high on motivating potential, the model predicts motivation, performance, and satisfaction will improve and absence and turnover will be reduced. But we can better calculate motivating potential by simply adding the characteristics rather than using the formula. A few studies have tested the job characteristics model in different cultures, but the results aren’t consistent. One study suggested that when employees are “other oriented” (concerned with the welfare of others at work), the relationship between intrinsic job characteristics and job satisfaction was weaker. The fact that the job characteristics model is relatively individualistic (considering the relationship between the employee and his or her work) suggests job enrichment strategies may not have the same effects in collectivistic cultures as in individualistic cultures (such as the United States). Another study suggested the degree to which jobs had intrinsic job characteristics predicted job satisfaction and job involvement equally well for U.S., Japanese, and Hungarian employees. Job Redesign Introduction Repetitive jobs provide little variety, autonomy, or motivation. People generally seek out jobs that are challenging and stimulating. Job rotation Often referred to as cross-training. Periodic shifting of an employee from one task to another. Strengths of job rotation are that it reduces boredom, increases motivation, and helps employees better understand their work contributions. Weaknesses include: disruptions, extra time for supervisors addressing questions, training time, and efficiencies. Relational Job Design While redesigning jobs on the basis of job characteristics theory is likely to make work more intrinsically motivating to people, more contemporary research is focusing on how to make jobs more prosocially motivating to people. In other words, how can managers design work so employees are motivated to promote the well-being of the organization’s beneficiaries? This view of relational job design shifts the spotlight from the employee to those whose lives are affected by the job that the employee performs. One way to make jobs more prosocially motivating is to better connect employees with the beneficiaries of their work, for example, by relating stories from customers who have found the company’s products or services to be helpful. Meeting beneficiaries firsthand allows employees to see that their actions affect a real, live person, and that their jobs have tangible consequences. In addition, connections with beneficiaries make customers or clients more accessible in memory and more emotionally vivid, which leads employees to consider the effects of their actions more. Finally, connections allow employees to easily take the perspective of beneficiaries, which fosters higher levels of commitment. Alternative Work Arrangements Flextime Flextime or flexible work hours. Allows employees some discretion over when they arrive at and leave work. (Exhibit 8-3) Benefits include reduced absenteeism, increased productivity, reduced overtime expense, and reduced hostility toward management, and increased autonomy and responsibility for employees. Major drawback is that it’s not applicable to all jobs or every worker. Job sharing. Allows two or more individuals to split a traditional 40-hour-a-week job. Only 18 percent of larger organizations now offer job sharing, a 29 percent decline from 2008. Reasons it is not more widely adopted are likely the difficulty of finding compatible partners to share a job and the historically negative perceptions of individuals not completely committed to their job and employer. Job sharing allows an organization to draw on the talents of more than one individual in a given job. Telecommuting. Employees who do their work at home at least two days a week on a computer that is linked to their office. Despite the benefits of telecommuting, large organizations such as Yahoo! and Best Buy have eliminated it. While the movement away from telecommuting by some companies made headlines, it appears that for most organizations, it remains popular. Almost 50 percent of managers in Germany, the United Kingdom, and the United States are permitted telecommuting options. In developing countries, this percentage is between 10 and 20 percent. Writers, attorneys, analysts, and employees who spend the majority of their time on computers or the telephone—such as telemarketers, customer service representatives, reservation agents, and product support specialists—are natural candidates. As telecommuters, they can access information on their computers at home as easily as in the company’s office. Potential benefits of telecommuting Larger labor pool Higher productivity Less turnover Improved morale Reduced office-space costs Downsides of Telecommuting Employer Less direct supervision of employees Difficult coordinating teamwork Reduced knowledge transfer Employee Increased feeling of isolation Reduced job satisfaction Less ‘face-time’ Employee Involvement and Participation Introduction Employee involvement is a participative process that uses employees’ input to increase their commitment to the organization’s success. The logic is that if we engage workers in decisions that affect them and increase their autonomy and control over their work lives, they will become more motivated, more committed to the organization, more productive, and more satisfied with their jobs. Employee involvement programs differ among countries. A study of four countries, including the United States and India, confirmed the importance of modifying practices to reflect national culture. While U.S. employees readily accepted employee involvement programs, managers in India who tried to empower their employees were rated low by those employees. These reactions are consistent with India’s high power-distance culture, which accepts and expects differences in authority. Similarly, Chinese workers who were very accepting of traditional Chinese values showed few benefits from participative decision making, but workers who were less traditional were more satisfied and had higher performance ratings under participative management. Examples of Employee Involvement Programs Participative management Common to all participative management programs is joint decision making, in which subordinates share a significant degree of decision making power with their immediate superiors. Participative management has, at times, been promoted as a panacea for poor morale and low productivity. But for it to work, employees must have trust and confidence in their leaders. Leaders should refrain from coercive techniques and instead stress the organizational consequences of decision making to employees. Studies of the participation–performance relationship have yielded mixed findings. Organizations that institute participative management do have higher stock returns, lower turnover rates, and higher estimated labor productivity, although these effects are typically not large. Research at the individual level shows participation typically has only a modest influence on employee productivity, motivation, and job satisfaction. This doesn’t mean participative management can’t be beneficial under the right conditions. But it is not a sure means for improving performance. Representative participation Most countries in Western Europe require companies to practice participative management. The goal is to redistribute power within an organization, putting labor on a more equal footing with the interests of management and stockholders by letting workers be represented by a small group of employees who actually participate. The two most common forms: Works councils: groups of nominated or elected employees who must be consulted when management makes decisions involving personnel. Board representatives: employees who sit on a company’s board of directors and represent the interests of employees. The influence of representative participation on working employees seems to be mixed, but generally an employee would need to feel his or her interests are well represented and make a difference to the organization in order for motivation to increase. Thus, representative participation as a motivational tool is surpassed by more direct participation methods. Using Rewards to Motivate Employees Introduction As we saw in Chapter 3, pay is not a primary factor driving job satisfaction. However, it does motivate people, and companies often underestimate its importance in keeping top talent. One study found that while 45% of employers thought pay was a key factor in losing top talent, 71% of top performers called it a top reason. What to Pay: Establishing the Pay Structure Complex process that entails balancing internal equity and external equity. Some organizations prefer to pay leaders by paying above market. Paying more may net better-qualified and more highly motivated employees who may stay with the firm longer. How to Pay: Rewarding Individual Employees Through Variable-Pay Programs Introduction A number of organizations are moving away from paying solely on credentials or length of service. Piece-rate plans, merit-based pay, bonuses, profit sharing, gain sharing, and employee stock ownership plans are all forms of a variable-pay program, which bases a portion of an employee’s pay on some individual and/or organizational measure of performance. Variable-pay plans have long been used to compensate salespeople and executives. Globally, around 80% of companies have some form of variable-pay plan. Unfortunately, most employees still don’t see a strong connection between pay and performance. The fluctuation in variable pay is what makes these programs attractive to management. It turns part of an organization’s fixed labor costs into a variable cost, thus reducing expenses when performance declines. When the U.S. economy encountered a recession in 2001 and 2008, companies with variable pay were able to reduce their labor costs much faster than others. When pay is tied to performance, the employees’ earnings also recognize contribution rather than being a form of entitlement. Over time, low performers’ pay stagnates, while high performers enjoy pay increases commensurate with their contributions. Piece-rate pay plans—workers are paid a fixed sum for each unit of production completed. A pure piece-rate plan provides no base salary and pays the employee only for what he or she produces. Although incentives are motivating and relevant for some jobs, it is unrealistic to think they can constitute the only piece of some employees’ pay. Merit-based pay plans—based on performance appraisal ratings. Main advantage is that it allows employers to differentiate pay based on performance. Creates perception of relationships between performance and rewards. Most large organizations have merit pay plans, particularly for salaried employees. Despite their intuitive appeal, merit pay plans have several limitations. One is that they are typically based on an annual performance appraisal and thus, are only as valid as the performance ratings. Another limitation is that the pay-raise pool fluctuates on economic or other conditions that have little to do with individual performance. Finally, unions typically resist merit pay plans. Bonuses—becoming a wider used system in many organizations. An annual bonus is a significant component of total compensation for many jobs. Bonus plans increasingly include lower-ranking employees; many companies now routinely reward productive employees with bonuses in the thousands of dollars when profits improve. Bonus plans have a clear upside, they are motivating for workers. Profit-sharing plans Profit sharing plans are organization-wide programs that distribute compensation based on some established formula centered around a company’s profitability. Compensation can be direct cash outlays or, particularly for top managers, allocations of stock options. Profit-sharing plans at the organizational level appear to have positive impacts on employee attitudes; employees report a greater feeling of psychological ownership. Employee stock ownership plans An employee stock ownership plan(ESOP) is a company-established benefit plan in which employees acquire stock, often at below-market prices, as part of their benefits. Research on ESOPs indicates they increase employee satisfaction and innovation. ESOPs have the potential to increase employee job satisfaction and work motivation, but employees need to psychologically experience ownership. That is, in addition to their financial stake in the company, they need to be kept regularly informed of the status of the business and have the opportunity to influence it in order to significantly improve the organization’s performance. ESOP plans for top management can reduce unethical behavior. Evaluation of variable pay Do variable-pay programs increase motivation and productivity? Generally, yes, but that doesn’t mean everyone is equally motivated by them. Using Benefits to Motivate Employees Flexible benefits: developing a benefits package Flexible benefits individualize rewards by allowing each employee to choose the compensation package that best satisfies his or her current needs and situation. Flexible benefits can accommodate differences in employee needs based on age, marital status, spouses’ benefit status, and number and age of dependents. Today, almost all major corporations in the United States offer flexible benefits. They’re becoming the norm in other countries too. But are flexible benefits more motivating than traditional plans? It’s difficult to tell. Some organizations that have moved to flexible plans report an increased employee retention, job satisfaction, and productivity. However flexible benefits may not substitute for higher salaries when it comes to motivation. Furthermore, as more organizations worldwide adopt flexible benefits, the individual motivation they produce will decrease (the plans will be seen as a standard work provision). Intrinsic Rewards: Employee Recognition Programs Organizations are increasingly recognizing that important work rewards can be both intrinsic and extrinsic. Rewards are intrinsic in the form of employee recognition programs and extrinsic in the form of compensation systems. Employee recognition programs range from a spontaneous and private thank-you to widely publicized formal programs in which specific types of behavior are encouraged and the procedures for attaining recognition are clearly identified. Some research suggests financial incentives may be more motivating in the short term, but in the long run, it’s nonfinancial incentives. A few years ago, research found that recognition, recognition, and more recognition was key to employee motivation. An obvious advantage of recognition programs is that they are inexpensive, since praise is free! Despite the increased popularity of employee recognition programs, critics argue they are highly susceptible to political manipulation by management. When applied to jobs for which performance factors are relatively objective, such as sales, recognition programs are likely to be perceived by employees as fair. However, in most jobs, the criteria for good performance aren’t self-evident, which allows managers to manipulate the system and recognize their favorites. Abuse can undermine the value of recognition programs and demoralize employees. Using Intrinsic Rewards to Motivate Employees Intrinsic Rewards: Employee Recognition Programs Organizations are increasingly recognizing that important work rewards can be both intrinsic and extrinsic. Rewards are intrinsic in the form of employee recognition programs and extrinsic in the form of compensation systems. Despite the increased popularity of employee recognition programs, critics argue they are highly susceptible to political manipulation by management. Summary and Implications for Managers Understanding what motivates individuals is ultimately key to organizational performance. Employees whose differences are recognized, who feel valued, and who have the opportunity to work in jobs that are tailored to their strengths and interests will be motivated to perform at the highest levels. Employee participation can also increase employee productivity, commitment to work goals, motivation, and job satisfaction. However, we cannot overlook the powerful role of organizational rewards in influencing motivation. Pay, benefits, and intrinsic rewards must be carefully and thoughtfully designed in order to enhance employee motivation toward positive organizational outcomes. Specific implications for managers are below: Recognize individual differences. Spend the time necessary to understand what’s important to each employee. Design jobs to align with individual needs and maximize their motivation potential. Use goals and feedback. You should give employees firm, specific goals, and they should get feedback on how well they are faring in pursuit of those goals. Allow employees to participate in decisions that affect them. Employees can contribute to setting work goals, choosing their own benefits packages, and solving productivity and quality problems. Link rewards to performance. Rewards should be contingent on performance, and employees must perceive the link between the two. Check the system for equity. Employees should perceive that experience, skills, abilities, effort, and other obvious inputs explain differences in performance and hence in pay, job assignments, and other obvious rewards. Myth or Science? “Money Can’t Buy Happiness” Along with this clichéd statement, you’ve probably heard that money does buy happiness. Both may be true. Economist Richard Osterlin argued that once basic financial needs have been met, more money doesn't really do much to make a person happy. Researchers set the limit at around $75, 000, recently prompting one CEO to give away all his earnings above that amount to his employees. This is by no means the last word, nor is it a directive to be unhappy until you make $75, 000 and no happier afterward. More recent research worldwide indicates the exact opposite: the more money, the better. The authors said, “If there is a satiation point, we are yet to reach it.” Given these mixed findings, the relationship between happiness and income is probably not direct. In fact, other research suggests that your level of income is less important than how you spend it. Think about why you may be motivated by money. Do you envision the number of zeros in your bank account increasing? Probably not. You’re probably more motivated by what you can buy with the money than by the money itself. From research, we know: Giving money away makes people happier than spending it on themselves. In one study, students were given money and told to either give it away or spend it on themselves. Then the study asked people to give away their own money. Either way, people were happier giving away the money, even if the givers were relatively poor. What seems to matter is not the amount, but how much impact you think your donation will have on others. People are happier when they spend money on experiences rather than products. Research professor Thomas Gilovich says we think to ourselves, “I have a limited amount of money, and I can either go there or I can have this. If I go there, it’ll be great, but it’ll be over in no time. If I buy this thing, at least I’ll always have it. That is factually true, but not psychologically true. We adapt to our material goods.” People are happier when they buy time, but only if they use it well. Outsource tasks when you can, for instance, and “think of it as ‘windfall time’ and use it to do something good,” says researcher Elizabeth Dunn. Saying that money brings more happiness when spent on our experiences (and the time to do them) may seem counterintuitive until we think about it closely. What did you think of your cellphone when you bought it compared to what you think of it now? Chances are you were interested and engaged when you bought it, but now it is an everyday object. For experiences, what did you think of your greatest vacation when you were on it, and what do you think of it now? Both the experience at the time and the recollection now may bring a smile to your face. Sources: A. Blackman, “Can Money Buy Happiness?” The Wall Street Journal, November10, 2014, R1, R2; D. Kurtzleben, “Finally: Proof That Money Buys Happiness (Sort Of), ”USNews.com, April 29, 2013; and A. Novotney, “Money Can’t Buy Happiness, ” Monitoron Psychology (July/August 2012): 24–26. Class Exercise Divide the class into groups of three to five students. Ask students to make a list of what factors bring happiness. Then, ask students to read the article found at: http: //www.forbes.com/sites/jennagoudreau/2011/03/14/why-money-does-equal-happiness/ Ask students to compare their list to the discussion in the article. What similarities exist? What differences exist? What do the results imply about money and happiness? Ask the teams to make a presentation to the class regarding their findings. Teaching Notes This exercise is applicable to face-to-face classes or synchronous online classes such as BlackBoard 9.1, Breeze, WIMBA, and Second Life Virtual Classrooms. See http: //www.baclass.panam.edu/imob/SecondLife for more information. Personal Inventory Assessments Diagnosing the Need for Team Building We might be tempted to think that assembling a group for a project is team building, but intentional team building is much different. Take this PIA to find out how to diagnose the need for planned team building. Career Objectives How can I get flextime? My job is great, but I can’t understand why management won’t allow flextime. After all, I often work on a laptop in the office! I could just as easily be working on the same laptop at home without interruptions from my colleagues. I know I’d be more productive. How can I convince them to let me? —Sophia Dear Sophia: We can’t help but wonder two things: 1) Is the ban on working from home a company policy or your manager's policy; and 2) Do you want flextime or telecommuting? If you work for Yahoo!, for instance, you may not be able to convince anyone to let you work from home after CEO Marissa Mayer’s very public decree against the policy. If the ban is your manager’s policy—or even your division’s policy—in an organization open to alternative work arrangements, you just may be able to get your way. That leads us to the second question, about flextime versus telecommuting. If you want flextime as you stated and just want to work from home during some non-core hours (say, work in the office for 6 hours a day and work another 2 hours a day from home), your employer may be more likely to grant your wish than if you want to completely telecommute (work all your hours from home). Research indicates that employees are most likely to be granted work-from-home privileges as a result of a direct, sympathetic relationship with their managers (not as a result of a company policy). Employees are also more likely to gain acceptance for partial than full telecommuting (either flextime or by alternating days). It helps if you have a legitimate need to be home and if you do knowledge-based work. Jared Dalton, for instance, telecommutes two days a week as a manager for accounting firm Ernst & Young, and his wife Christina telecommutes on two different days so they can oversee the care of their infant. If it sounds like flextime depends on favoritism, you might be right. It’s also, however, a reflection of the state of telecommuting: only 38 percent of U.S. organizations permit some of their employees to regularly work from home. To be one of the lucky few: Check your organization’s flexible options policies. Develop a plan for working from home to show your manager. Include how many hours per week, which days per week, and where you will work, and explain how your manager can retain oversight of you. Assemble evidence of your productivity. Have you worked from home before? If so, show how much you have achieved. You stated you would be more productive at home. How much more? Outline your reasons for working from home. Do you need to care for an aging relative, for instance? Would working from home save you commute time you could use for work? Address management’s concerns. Research indicates the biggest ones are the possibility of abuse of the system and issues of fairness. Consider your relationship with your manager. Has he or she been supportive of you in the past? Is your manager approachable? When you’re ready, discuss your request with your manager. Remember, pitching the idea of telecommuting is the same as pitching any idea—you've got to think about what’s in it for your employer, not for yourself. Sources: “The 2015 Workplace Flexibility Study, ” WorkplaceTrends.com, February 3, 2015, https: //workplacetrends.com/the-2015-workplace-flexibility-study/; T. S. Bernard, “For Workers, Less Flexible Companies, ”The New York Times, May 20, 2014, B1, B7; and C. C. Miller and L. Alderman, “The Flexibility Gap, ” The New York Times, December 14, 2014, 1, 5. An Ethical Choice Sweatshops and Worker Safety Industrialized countries have come a long way in terms of worker safety and compensation. The number of worker-related injuries has decreased substantially over generations, and many employees earn better wages than in the past. Unfortunately, the same cannot be said for all parts of the world. To keep costs down, many Western companies and their managers turn to suppliers in developing nations, where people have little choice but to work for low pay and no benefits, in top-down management structures without participative management opportunities or unions to represent them. Unregulated and even unsafe working conditions are common, especially in the garment industry. However, three recent accidents in Bangladesh are raising questions about the ethics of tolerating and supporting such conditions. In November 2012, a fire at the Tazreen Fashion factory that made low-cost garments for several U.S. stores, including Walmart, killed 112 workers. In April 2013, the collapse of Rana Plaza, home to a number of garment factories, killed more than 1,100 people. And in May 2013, a fire at the Tung Hai Sweater Company killed eight. workers. An investigation of the RanaPlaza incident revealed that the building had been constructed without permits, using substandard materials. Although workers reported seeing and hearing cracks in the structure of the building, they were ordered back to work. In response, some companies, such as PVH, owner of Tommy Hilfiger and Calvin Klein, as well as Tchibo, a German retailer, have signed the legally binding “IndustriALL” proposal, which requires overseas manufacturers to conduct building and fire safety inspections regularly and to make their findings public. However, many other companies have not signed, and none of the 15 companies whose clothing was manufactured at the Rana Plaza plant donated to the International Labour Organization Fund for survivors. With the rise of CSR initiatives, what is the responsibility of organizations toward the working conditions of their subcontractors, at home or abroad? Professor Cindi Fukami asks, “Should [companies] outsource the production of these items made under conditions that wouldn’t be approved of in the United States, but... are perfectly legal in the situation where they are [produced]?” There is clearly no easy solution. Sources: B. Kennedy, “The Bangladesh Factory Collapse One Year Later, ” CBS, April 23, 2014, http: //www.cbsnews.com/news/thebangladesh-factory-collapse-one-year-later/; J. O’Donnell and C. Macleod, “Latest Bangladesh Fire Puts New Pressure on Retailers, ” USA Today, May 9, 2013, www.usatoday.com; and T. Hayden, “Tom Hayden: Sweatshops Attract Western Investors, ” USA Today, May 17, 2013, www.usatoday.com. Class Exercise Divide the class into groups of three to five students each. Assign each group to act as a stakeholder in a debate on sweatshop labor. Teams should include sweatshop workers, management, stockholders, consumers, and workers in the home country. Ask students to research the perspective of their stakeholder. Finally, ask teams to debate the existence of a garment factory with sweatshop conditions in India. The factory provides garments to several large multinational companies. Teaching Notes This exercise is applicable to face-to-face classes or synchronous online classes such as BlackBoard 9.1, Breeze, WIMBA, and Second Life Virtual Classrooms. See http: //www.baclass.panam.edu/imob/SecondLife for more information. Point/Counterpoint “Face-Time” Matters Point Although allowing employees to work from home is gaining popularity, telecommuting is a practice that will only hurt them and their employers. Sure, employees say they’re happier when their organization allows them the flexibility to work wherever they choose, but who wouldn’t like to hang around at home in their pajamas pretending to work? I know plenty of colleagues who say, with a wink, that they’re taking off to “work from home” the rest of the day. Who knows whether they are really contributing? The bigger problem is the lack of face-to-face interaction between employees. Studies have shown that great ideas are born through interdependence, not independence. It’s during those informal interactions around the water cooler or during coffee breaks that some of the most creative ideas arise. If you take that away, you stifle the organization’s creative potential. Trust is another problem. Ever trust someone you haven’t met? I didn’t think so. Again, face-to-face interactions allow people to establish trusting relationships more quickly, which fosters smoother social interactions and allows the company to perform better. But enough about employers. Employees also would benefit by burning the midnight oil at the office. If you’re out of sight, you’re out of mind. Want that big raise or promotion? You’re not going to get it if your supervisor doesn’t even know who you are. So think twice the next time you either want to leave the office early or not bother coming in at all, to “work from home.” Counterpoint Please. So-called “face-time” is overrated. If all managers do is reward employees who hang around the office the longest, they aren’t being very good managers. Those who brag about the 80 hours they put in at the office (being sure to point out they were there on weekends) aren’t necessarily the top performers. Being present is not the same thing as being efficient. Besides, there are all sorts of benefits for employees and employers who take advantage of telecommuting practices. For one, it’s seen as an attractive perk companies can offer. With so many dual-career earners, the flexibility to work from home on some days can go a long way toward achieving a better balance between work and family. That translates into better recruiting and better retention. In other words, you’ll get and keep better employees if you offer the ability to work from home. Plus, studies have shown that productivity is higher, not lower, when people work from home. And this result is not limited to the United States. For example, one study found that Chinese call center employees who worked from home out-produced their “face-time” counterparts by 13 percent. You say all these earth-shattering ideas would pour forth if people interacted. I say, consider that one of the biggest workplace distractions is chatty co-workers. So, although I concede there are times when “face-time” is beneficial, the benefits of telecommuting far outweigh the drawbacks. Sources: J. Surowiecki, “Face Time, ” The New Yorker (March 18, 2013), downloaded from www.newyorker.com on May 17, 2013; and L. Taskin and F. Bridoux, “Telework: A Challenge to Knowledge Transfer in Organizations, ” International Journal of Human Resource Management 21, no. 13 (2010), pp. 2503–2520. Class Exercise Ask students to read the following articles: http: //www.forbes.com/sites/jacobmorgan/2015/05/04/5-things-you-need-to-know-about-telecommuting/ http: //www.forbes.com/sites/nextavenue/2013/03/01/the-problem-with-yahoos-work-at-home-ban/ http: //www.forbes.com/sites/work-in-progress/2013/11/26/four-ways-to-make-working-from-home-work-for-you/ http: //www.forbes.com/sites/sap/2013/03/08/big-data-streamlines-the-workplace-and-may-end-telecommuting/ Then, assign groups to debate the pros and cons of working at home versus working on-site. Finally, conduct an informal poll asking students about the value they place on face-time. Are the results what you expected? Teaching Notes This exercise is applicable to face-to-face classes or synchronous online classes such as BlackBoard 9.1, Breeze, WIMBA, and Second Life Virtual Classrooms. See http: //www.baclass.panam.edu/imob/SecondLife for more information. Instructor Manual for Organizational Behavior Timothy A. Judge Stephen P. Robbins 9781292146300, 9780133507645, 9780136124016

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