Rewards and motivation
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Rewards and Motivation - PowerPoint PPT Presentation

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Rewards and Motivation. Motivation - a nagging concern. What is the problem? Effort, performance, retention, loyalty, membership, commitment, trust, empowerment, participation, work design Extrinsic and intrinsic rewards Expectancy and Equity Rhetoric versus reality

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Motivation - a nagging concern

  • What is the problem?

    • Effort, performance, retention, loyalty, membership, commitment, trust, empowerment, participation, work design

    • Extrinsic and intrinsic rewards

    • Expectancy and Equity

    • Rhetoric versus reality

    • How I construe my/your motivation, needs & drives

  • How to "motivate people to give their all"

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Would I really work for you without reward?

  • Fundamental to employee contract

  • Traditional economic exchange model. Pay-effort determinism

  • "Rate for the job"

    • Occupational norms, expectations and choices

    • Expediency - "suitable for my life package at the moment"

  • Etzioni & organisational membership

    • Coercive - Remunerative - Normative

    • Alienated - Instrumental - Moral involvement

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The person-as-economist expects

  • ROI - time, effort, commitment

  • "What's in it for me?" calculation

    • Conscious  subconscious (self image and comparisons)

  • Fairness (equitable social (economic) exchange)

    • interpret rewards/pay-offs of others

    • judge what is fair/unfair

    • satisfaction if each party achieves a balance (relative equality)

  • Psychological extension to neutral, economic model

    • Construing the value & importance of input-output

    • Social, psychological - individual & group

  • Validation of personal perceptions and comparisons

    • Clear/distorted

    • internal/external

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Design Features of Reward Systems

  • Monetary

    • Time-based (not directly related to performance)

    • Performance-linked

      • Output, %, PRP, merit pay, commission, skill-based

      • collective-output schemes

      • Corporate performance-related bonuses + profit sharing

  • Monetary-equivalent

    • Car, phone, holidays, loans, accommodation, fees, vouchers

  • Deferred (promotion, pension)

  • Non-monetary / intrinsic benefits - safety, status, recognition, plaques, contribution and empowerment

  • Negatives pressure, penalties, harassment, side-lining, dismissal

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Pay by time schemes - Components

  • simple to administer

    • Defined time – F/T, P/T, mixed-time, casual

    • No attendance, no pay? Hourly, weekly, monthly

    • Premiums – 1.5T, 2T, nights

    • Flexi-time schemes

  • “Door knob syndrome”

  • Job grading/evaluation - evaluate the job not the person doing it

  • Control mechanisms & tools – clocks, supervision, time sheets?

  • Performance assumptions

    • Trust, competence, diligence, fidelity, care, good-will, cooperation

    • Work for Er in Er time ……versus …… your time?

    • Supervision and monitoring - “When the cats away”?

    • Is actual presence necessary? Off-site working.

    • Life increments - pay & career progression, security?

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PRP, merit pay, skill-based schemes

  • Requires

    • targeting, information & measurement

    • Manager appraisal and judgement

    • Problems of "big scheme" rules and controls

  • Pay linked to

    • Individual merit (behaviours, traits & competencies: flexibility, cooperation, punctuality, effort, skills/abilities).

    • concrete individual or group targets

  • Staff appraisal criteria and rating

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Performance-Related Pay (PRP)

  • extensive but partial and sectoral

  • little research data on effectiveness

  • pay linked to specific aspect of performance

    • Intensity of MbO approach

    • Problem of defining the group + outputs

    • What if key results not achieved?

    • How is control and consistency achieved?

    • Fairness + validation of "the manager's judgment"

  • Addition to salary (merit pay or bonus) for this appraisal round.

  • The apparent exaggeration of "Fat cat bonuses" – the "global labour market for stars" + formulae?

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Emotional & social dynamics & expectations

  • Important for employee belief and commitment

  • Impact of rules-of the-scheme (formal contract) on individual sensitivity (psychological contract).

    • personal expectations

    • + formal/informal exchange Er çè Ee

    • my manager as

      • employer (by proxy)

      • as a person I like/dislike, respect?

    • How I "see" what others are getting - internally and externally.

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Pay-offs in the Employer-Employee Relationship(after Mumford 1972)

  • Task structure Work within firm’s policy, procedure & technical constraints. Job roles, work arrangements & relationships

  • Knowledge & skill Employer wants know-how, competence, experience. Employee wants to be put to good use & be developed

  • PsychologicalManagement & co-workers want committed, loyal, motivated staff. Individual wants satisfaction

  • Efficiency/rewards Employer wants performance & output to a quality standard. Employee wants equitable, felt-fair rewards & opportunity

  • EthicalValues & ambiguities/inconsistencies in right/wrong behaviour

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Conscious calculation & instrumentality?

Take-it or leave it + "9-5" sub-optimisation

Tangible over non-tangible rewards

Organisational rationalisation of effort-reward relationship

Structural inflexibility of reward packages

Constructing and controlling the performance review and PRP system

Genuine involvement & participation

Delegation, reliance and confidence

Organisational "Culture" Problems

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Homo economicus

Content theories - needs and factors:

Maslow, Alderfer, McClelland - Needs and satisfactions

Herzberg - hygiene and motivators, job redesign

Process theories

McGregor, Likert et al - on being managed

Adams - Equity theory

Vroom, Lawler - Expectancy theory

Hackman & Oldham - job characteristics

Locke - Goal setting

Reinforcement theory (operant conditioning)

Positive (continuous, fixed and variable intervals/ratios)

Avoidance learning and punishment

How has work-motivation theory dealt with this?

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Abraham Maslow - Need Satisfaction










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Maslow's Need-Satisfaction Model

  • Content theory - the needs that motivate

  • simple description, partial account - not quantifiable

  • chronic deficiency drives (motivates) behaviour

  • gratified needs - equilibrium

  • snakes and ladders or

  • lower needs mediated by higher order consciousness?

  • nb: Alderfer ERG theory - existence, relatedness, growth)

  • cognitive and developmental

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more efficient perception of reality + comfortable with it

acceptance of self & others + social interest

problem-orientation, spontaneity and creativity

detachment - value privacy

autonomy - independence of culture & environment

resistance to enculturation

continued freshness of appreciation

mystic experience or oceanic feeling

interpersonal relations & democratic behaviour

sense of humour

This idealised, self-actualised person?

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Self-actualised? Human… like everyone else…..

  • displays frailty & failings, ups & downs.

  • emotional, critical attitudes towards others

  • urge to decide for themselves

  • may say "NO" & be unpredictable - own destiny.

  • wants reasons without always wishing to conform.

  • accepts need for conformity most of the time to serve their interests

  • avoids being selfish & ego-centred (denying space to others).

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  • expectancy - If I tried could I do it? Get away with it?

  • Instrumentality - if I did it will I attain the outcome?

  • valence (subjective valuation) - do I really value what's available?

  • Expressed as probabilities. Path-goal relationships which “explain” motivation è performance.

Expectancy theory (the process of motivation)

assoc.. with Vroom & Lawler/Porter

Motivated to perform because of expectations relating to perceived payoffs from the performance.


Desirability of payoffs (valence), perception of expectancy + force of expression - intrinsic to the person.


Personal view of what is challenging or interesting, important to self + valuation of extrinsic payoffs - pay & material rewards

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Expectancy Theory - Vroom et al


A robust explanatory, predictive model?

How the individual construes it all?

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Equity & consistency - an impossible ideal?

  • “Felt-fairness” - how I am treated in relation to others

  • Equity balance sheet & "the last straw”

    • "What you gain on the swings….." Trust/good-will

    • “No more … that’s it for me!”

  • Internal & external comparisons (groups & individuals)

  • Feelings & perceptions - not synonymous with equality

  • Proposition… better motivated if treated equitably & consistently

    • distributive equityhow I perceive I am treated & rewarded in comparison to others

    • procedural equityhow I see organisational procedures being applied

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Equity and Justice

  • Distributive justicehow rewards are distributed in accordance with

    • “my contribution” & need

    • what was promised.

  • Procedural equityhow reward decisions are made & managed

    • Adequate consideration of employee’s viewpoint

    • No personal bias

    • Consistent application of criteria

    • Early feedback on outcome of decisions

    • Adequate explanation of decisions made

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Job design & flexibility - matching people to jobs

MbO - defining expectations and feedback

Teams and semi-autonomous groups, empowerment

Concern for staff development, competencies and accreditation

Effort to refine and deliver “reward packages” that "motivate" - PRP

Managerial behaviours

Constant organisational vigilance & sensitivity

A rewarding, supportive climate

Cultures that foster

confidence and identification (one-ness with the firm)

meaningful, practical commitment?

Organisational initiatives