Richard L. Daft - Management. 9th ed., 2010
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PART 5 LEADING450
▪ Change outcomes. A person may change his or her outcomes. An underpaid per-
son may request a salary increase or a bigger of ce. A union may try to improve
wages and working conditions to be consistent with a comparable union whose
members make more money.
▪ Change perceptions. Research suggests that people may change perceptions of
equity if they are unable to change inputs or outcomes. They may arti cially
increase the status attached to their jobs or distort others’ perceived rewards to
bring equity into balance.
▪ Leave the job. People who feel inequitably treated may decide to leave their jobs
rather than suffer the inequity of being under- or overpaid. In their new jobs, they
expect to nd a more favorable balance of rewards.
The implication of equity theory for managers is that employees indeed evaluate the
perceived equity of their rewards compared to others’. Inequitable pay puts pressure
on employees that is sometimes almost too great to bear. They attempt to change their
work habits, try to change the system, or leave the job.
27
Consider Deb Allen, who went
into the of ce on a weekend to catch up on work and found a document accidentally
left on the copy machine. When she saw that some new hires were earning $200,000
more than their counterparts with more experience, and that “a noted screw-up” was
making more than highly competent people, Allen began questioning why she was
working on weekends for less pay than many others were receiving. Allen became so
demoralized by the inequity that she quit her job three months later.
28
As a new manager, be alert to feelings of inequity among your team members. Don’t
play favorites, such as regularly praising some while overlooking others making similar
contributions. Keep equity in mind when you make decisions about compensation and
other rewards.
Expectancy Theory
Expectancy theory suggests that motivation depends on individuals’
expectations about their ability to perform tasks and receive desired
rewards. Expectancy theory is associated with the work of Victor Vroom,
although a number of scholars have made contributions in this area.
29
Expectancy theory is concerned not with identifying types of needs but
with the thinking process that individuals use to achieve rewards. Con-
sider Amy Huang, a university student with a strong desire for a B in
her accounting course. Amy has a C+ average and one more exam to
take. Amy’s motivation to study for that last exam will be in uenced by:
(1) the expectation that hard study will lead to an A on the exam and
(2) the expectation that an A on the exam will result in a B for the course.
If Amy believes she cannot get an A on the exam or that receiving an A
will not lead to a B for the course, she will not be motivated to study
exceptionally hard.
Expectancy theory is based on the relationship among the individ-
ual’s effort, the individual’s performance, and the desirability of outcomes
associated with high performance. These elements and the relationships
among them are illustrated in Exhibit 15.5. The keys to expectancy the-
ory are the expectancies for the relationships among effort, performance,
and the value of the outcomes to the individual.
E ➞ P expectancy involves determining whether putting effort into
a task will lead to high performance. For this expectancy to be high,
the individual must have the ability, previous experience, and neces-
sary equipment, tools, and opportunity to perform. Let’s consider a
simple sales example. If Carlos, a salesperson at the Diamond Gift Shop,
believes that increased selling effort will lead to higher personal sales,
TakeaMoment
Circuit City man-
agers are using expectancy theory principles to
help meet employees’ needs while attaining or-
ganizational goals. By creating an incentive pro-
gram that is a commission-based plan designed
to provide the highest compensation to sales
counselors who are committed to serving every
customer, Circuit City achieves its volume and
profi tability objectives. The incentive program
is also used in other areas such as distribution,
where employees are recognized for accomplish-
ment in safety, productivity, and attendance.
© AP PHOTO/JEFF CHIU
e
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exp
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CHAPTER 15 MOTIVATING EMPLOYEES 451
5
Leading
we can say that he has a high E ➞ P expectancy. However, if Carlos believes he has
neither the ability nor the opportunity to achieve high performance, the expectancy
will be low, and so will be his motivation.
P ➞ O expectancy involves determining whether successful performance will
lead to the desired outcome or reward. If the P ➞ O expectancy is high, the individual
will be more highly motivated. If the expectancy is that high performance will not
produce the desired outcome, motivation will be lower. If Carlos believes that higher
personal sales will lead to a pay increase, we can say that he has a high P ➞ O expec-
tancy. He might be aware that raises are coming up for consideration and talk with
his supervisor or other employees to see if increased sales will help him earn a better
raise. If not, he will be less motivated to work hard.
Valence is the value of outcomes, or attraction to outcomes, for the individual.
If the outcomes that are available from high effort and good performance are not
valued by employees, motivation will be low. Likewise, if outcomes have a high
value, motivation will be higher. If Carlos places a high value on the pay raise,
valence is high and he will have a high motivational force. On the other hand, if
the money has low valence for Carlos, the overall motivational force will be low.
For an employee to be highly motivated, all three factors in the expectancy model
must be high.
30
Expectancy theory attempts not to de ne speci c types of needs or rewards
but only to establish that they exist and may be different for every individual.
One employee might want to be promoted to a position of increased responsi-
bility, and another might have high valence for good relationships with peers.
Consequently, the rst person will be motivated to work hard for a promotion
and the second for the opportunity of a team position that will keep him or her
associated with a group. Recent studies substantiate the idea that rewards need
to be individualized to be motivating. A recent nding from the U.S. Department
of Labor shows that the number 1 reason people leave their jobs is because they
“don’t feel appreciated.” Yet Gallup’s analysis of 10,000 workgroups in 30 indus-
tries found that making people feel appreciated depends on nding the right kind
of reward for each individual. Some people prefer tangible rewards or gifts, while
others place high value on words of recognition. In addition, some want public
recognition while others prefer to be quietly praised by someone they admire and
respect.
31
As a new manager, how would you manage expectations and use rewards to motivate
subordinates to perform well? Complete the New Manager Self-Test on page 452 to
learn more about your approach to motivating others.
TakeaMoment
EXHIBIT 15.5 Major Elements of Expectancy Theory
P
P
P
P
P
P
➞
O expectanc
y
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xpect
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PART 5 LEADING452
Your Approach to
Motivating Others
Think about situations in which you were in a
student group or organization. Think about your
informal approach as a leader and answer the
questions below. Indicate whether each item
below is Mostly False or Mostly True for you.
1. I ask the other person what rewards they value
for high performance.
2. I only reward people if their performance is up
to standard.
3. I fi nd out if the person has the ability to do
what needs to be done.
4. I use a variety of rewards (treats, recognition)
to reinforce exceptional performance.
5. I explain exactly what needs to be done for the
person I’m trying to motivate.
6. I generously and publicly praise people who
perform well.
7. Before giving somebody a reward, I fi nd out
what would appeal to that person.
8. I promptly commend others when they do a
better-than-average job.
SCORING AND INTERPRETATION: The ques-
t
ions above represent two related aspects of
motivation theory. For the aspect of expectancy
theory, sum the points for Mostly True to the odd-
numbered questions. For the aspect of reinforce-
ment theory, sum the points for Mostly True for
the even-numbered questions. The scores for my
approach to motivation are:
My use of expectancy theory _____
My use of reinforcement theory _____
These two scores represent how you apply the
motivational concepts of expectancy and rein-
forcement in your role as an informal leader. Three
or more points on expectancy theory means you
motivate people by managing expectations. You
understand how a person’s effort leads to perfor-
mance and make sure that high performance leads
to valued rewards. Three or more points for rein-
forcement theory means that you attempt to modify
people’s behavior in a positive direction with
frequent and prompt positive reinforcement. New
managers often learn to use reinforcements fi rst,
and as they gain more experience are able to apply
expectancy theory.
SOURCES: These questions are based on D. Whetten and K.
Cameron, Developing Management Skills, 5th ed. (Upper Saddle
River, NJ: Prentice-Hall, 2002), pp. 302–303; and P. M.
Podsakoff, S. B. Mackenzie, R. H. Moorman, and R. Fetter,
“Transformational Leader Behaviors and Their Effects on
Followers’ Trust in Leader, Satisfaction, and Organizational
Citizenship Behaviors,” Leadership Quarterly 1, no. 2 (1990):
107–142.
New ManagerSelf-Test
REINFORCEMENT PERSPECTIVE ON MOTIVATION
The reinforcement approach to employee motivation sidesteps the issues of employee
needs and thinking processes described in the content and process theories.
Reinforcement theory simply looks at the relationship between behavior and its
consequences. It focuses on changing or modifying employees’ on-the-job behavior
through the appropriate use of immediate rewards and punishments.
Behavior modi cation is the name given to the set of techniques by which rein-
forcement theory is used to modify human behavior.
32
The basic assumption under-
lying behavior modi cation is the law of effect, which states that behavior that is
positively reinforced tends to be repeated, and behavior that is not reinforced tends
not to be repeated. Reinforcement is de ned as anything that causes a certain behav-
ior to be repeated or inhibited. The four reinforcement tools are positive reinforcement,
avoidance learning, punishment, and extinction, as summarized in Exhibit 15.6.
▪ Positive reinforcement is the administration of a pleasant and rewarding con-
sequence following a desired behavior, such as praise for an employee who
r
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CHAPTER 15 MOTIVATING EMPLOYEES 453
5
Leading
arrives on time or does a little extra
work. Research shows that positive
reinforcement does help to improve
performance. Moreover, non nancial
reinforcements such as positive feed-
back, social recognition, and attention
are just as effective as nancial incen-
tives.
33
One study of employees at fast-
food drive-thru windows, for example,
found that performance feedback and
supervisor recognition had a signi -
cant effect on increasing the incidence
of “up-selling,” or asking customers
to increase their order.
34
Indeed, many
people value factors other than money.
Nelson Motivation Inc. conducted a
survey of 750 employees across vari-
ous industries to assess the value
they placed on various rewards. Cash
and other monetary awards came in
dead last. The most valued rewards
involved praise and manager support
and involvement.
35
▪ Avoidance learning is the removal of
an unpleasant consequence following
a desired behavior. Avoidance learning
is sometimes called negative reinforcement. Employees learn to do the right thing
by avoiding unpleasant situations. Avoidance learning occurs when a supervisor
stops criticizing or reprimanding an employee once the incorrect behavior has
stopped.
▪ Punishment is the imposition of unpleasant outcomes on an employee. Punish-
ment typically occurs following undesirable behavior. For example, a supervisor
may berate an employee for performing a task incorrectly. The supervisor expects
that the negative outcome will serve as a punishment and reduce the likelihood
© CLAY PETERSON/THE CALIFORNIAN/ASSOCIATED PRESS
Farm managers apply positive reinforcement by basing
a fruit or vegetable picker’s pay on the amount he or she harvests. A variation on this
individual piece-rate system is a relative incentive plan that bases each worker’s pay on
the ratio of the individual’s productivity to average productivity among all co-workers.
A study of Eastern and Central European pickers in the United Kingdom found that
workers’ productivity declined under the relative plan. Researchers theorized that fast
workers didn’t want to hurt their slower colleagues, so they reduced their efforts. The
study authors suggested a team-based scheme—where everyone’s pay increased if the
team did well—would be more effective.
EXHIBIT 15.6 Changing Behavior with Reinforcement
SOURCE: Based on Richard L. Daft and Richard M. Steers, Organizations: A Micro/Macro Approach (Glenview, IL: Scott, Foresman, 1986), p. 109.
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PART 5 LEADING454
of the behavior recurring. The use of punishment in organizations is controver-
sial and often criticized because it fails to indicate the correct behavior. How-
ever, almost all managers report that they nd it necessary to occasionally impose
forms of punishment ranging from verbal reprimands to employee suspensions
or rings.
36
▪ Extinction is the withdrawal of a positive reward. Whereas with punishment,
the supervisor imposes an unpleasant outcome such as a reprimand, extinction
involves withholding pay raises, bonuses, praise, or other positive outcomes. The
idea is that behavior that is not positively reinforced will be less likely to occur
in the future. A good example of the use of extinction comes from Cheektowaga
(New York) Central Middle School, where students with poor grades or bad atti-
tudes are excluded from extracurricular activities such as athletic contests, dances,
crafts, or ice-cream socials.
37
Reward and punishment motivational practices dominate organizations. Accord-
ing to the Society for Human Resource Management, 84 percent of all companies
in the United States offer some type of monetary or nonmonetary reward system,
and 69 percent offer incentive pay, such as bonuses, based on an employee’s perfor-
mance.
38
However, in other studies, more than 80 percent of employers with incen-
tive programs have reported that their programs are only somewhat successful or not
working at all.
39
Despite the testimonies of organizations that enjoy successful incen-
tive programs, criticism of these “carrot-and-stick” methods is growing, as discussed
in the Manager’s Shoptalk.
As a new manager, remember that reward and punishment practices are limited
motivational tools because they focus only on extrinsic rewards and lower-level
needs. Using intrinsic rewards to meet higher level needs is important too.
JOB DESIGN FOR MOTIVATION
A job in an organization is a unit of work that a single employee is responsible for per-
forming. A job could include writing tickets for parking violators in New York City,
performing MRIs at Salt Lake Regional Medical Center, reading meters for Paci c
Gas and Electric, or doing long-range planning for the WB Television Network. Jobs
are an important consideration for motivation because performing their components
may provide rewards that meet employees’ needs. Managers need to know what
aspects of a job provide motivation as well as how to compensate for routine tasks that
have little inherent satisfaction. Job design is the application of motivational theories
to the structure of work for improving productivity and satisfaction. Approaches to
job design are generally classi ed as job simpli cation, job rotation, job enlargement,
and job enrichment.
Job Simplifi cation
Job simpli cation pursues task ef ciency by reducing the number of tasks one person
must do. Job simpli cation is based on principles drawn from scienti c management
and industrial engineering. Tasks are designed to be simple, repetitive, and standard-
ized. As complexity is stripped from a job, the worker has more time to concentrate
on doing more of the same routine task. Workers with low skill levels can perform
the job, and the organization achieves a high level of ef ciency. Indeed, workers are
interchangeable because they need little training or skill and exercise little judgment.
As a motivational technique, however, job simpli cation has failed. People dislike
routine and boring jobs and react in a number of negative ways, including sabotage,
TakeaMoment
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CHAPTER 15 MOTIVATING EMPLOYEES 455
5
Leading
Everybody thought Rob Rodin was crazy when he
decided to wipe out all individual incentives for his
sales force at Marshall Industries, a large distributor of
electronic components based in El Monte, California.
He did away with all bonuses, commissions, vaca-
tions, and other awards and rewards. All salespeople
would receive a base salary plus the opportunity for
pro t sharing, which would be the same percent of
salary for everyone, based on the entire company’s
performance. Six years later, Rodin says productiv-
ity per person has tripled at the company, but still he
gets questions and criticism about his decision.
Rodin is standing right in the middle of a big
controversy in modern management. Do nan-
cial and other rewards really motivate the kind of
behavior organizations want and need? A growing
number of critics say no, arguing that carrot-and-
stick approaches are a holdover from the Industrial
Age and are inappropriate and ineffective in today’s
economy. Today’s workplace demands innovation
and creativity from everyone—behaviors that rarely
are inspired by money or other nancial incentives.
Reasons for criticism of carrot-and-stick approaches
include the following:
1. Extrinsic rewards diminish intrinsic rewards.
When people are motivated to seek an extrinsic
reward, whether it is a bonus, an award, or the
approval of a supervisor, generally they focus
on the reward rather than on the work they
do to achieve it. Thus, the intrinsic satisfaction
people receive from performing their jobs actu-
ally declines. When people lack intrinsic rewards
in their work, their performance stays just ade-
quate to achieve the reward offered. In the worst
case, employees may cover up mistakes or cheat
to achieve the reward. One study found that
teachers who were rewarded for increasing test
scores frequently used various forms of cheat-
ing, for example.
2. Extrinsic rewards are temporary. Offering out-
side incentives may ensure short-term success,
but not long-term high performance. When
employees are focused only on the reward, they
lose interest in their work. Without personal
interest, the potential for exploration, creativity,
and innovation disappears. Although the cur-
rent deadline or goal may be met, better ways
of working and serving customers will not be
discovered and the company’s long-term success
will be affected.
3. Extrinsic rewards assume people are driven by
lower-level needs. Rewards such as bonuses,
pay increases, and even praise presume that the
primary reason people initiate and persist in
behavior is to satisfy lower-level needs. How-
ever, behavior also is based on yearnings for
self-expression and on feelings of self-esteem
and self-worth. Typical individual incentive pro-
grams don’t re ect and encourage the myriad
behaviors that are motivated by people’s need
to express themselves and realize their higher
needs for growth and ful llment.
Today’s organizations need employees who are
motivated to think, experiment, and continuously
search for ways to solve new problems. Al e Kohn,
one of the most vocal critics of carrot-and-stick
approaches, offers the following advice to manag-
ers regarding how to pay employees: “Pay well, pay
fairly, and then do everything you can to get money
off people’s minds.” Indeed some evidence indicates
that money is not primarily what people work for.
Managers should understand the limits of extrinsic
motivators and work to satisfy employees’ higher,
as well as lower, needs. To be motivated, employees
need jobs that offer self-satisfaction in addition to a
yearly pay raise.
SOURCES: Alfi e Kohn, “Incentives Can Be Bad for Business,”
Inc. (January 1998): 93–94; A. J. Vogl, “Carrots, Sticks, and Self-
Deception” (an interview with Alfi e Kohn), Across the Board
(January 1994): 39–44; Geoffrey Colvin, “What Money Makes
You Do,” Fortune (August 17, 1998): 213–214; and Jeffrey
Pfeffer, “Sins of Commission,” Business 2.0 (May 2004): 56.
The Carrot-and-Stick Controversy
Manager’sShoptalk
absenteeism, and unionization. Job simpli cation is compared with job rotation and
job enlargement in Exhibit 15.7.
Job Rotation
Job rotation systematically moves employees from one job to another, thereby
increasing the number of different tasks an employee performs without increasing
the complexity of any one job. For example, an autoworker might install windshields
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.
PART 5 LEADING456
one week and front bumpers the next. Job rotation still takes advantage of engineer-
ing ef ciencies, but it provides variety and stimulation for employees. Although
employees might nd the new job interesting at rst, the novelty soon wears off as
the repetitive work is mastered.
Companies such as Home Depot, Motorola, 1-800-Flowers, and Dayton Hudson
have built on the notion of job rotation to train a exible workforce. As companies
break away from ossi ed job categories, workers can perform several jobs, thereby
reducing labor costs and giving people opportunities to develop new skills. At Home
Depot, for example, workers scattered throughout the company’s vast chain of stores
can get a taste of the corporate climate by working at in-store support centers, while
associate managers can dirty their hands out on the sales oor.
40
Job rotation also
gives companies greater exibility. One production worker might shift among the
jobs of drill operator, punch operator, and assembler, depending on the company’s
need at the moment. Some unions have resisted the idea, but many now go along,
realizing that it helps the company be more competitive.
41
Job Enlargement
Job enlargement combines a series of tasks into one new, broader job. This type of design
is a response to the dissatisfaction of employees with oversimpli ed jobs. Instead of
only one job, an employee may be responsible for three or four and will have more time
to do them. Job enlargement provides job variety and a greater challenge for employees.
At Maytag, jobs were enlarged when work was redesigned so that workers assembled
an entire water pump rather than doing each part as it reached them on the assembly
line. Similarly, rather than just changing the oil at a Precision Tune location, a mechanic
changes the oil, greases the car, airs the tires, checks uid levels, battery, air lter, and so
forth. Then, the same employee is responsible for consulting with the customer about
routine maintenance or any problems he or she sees with the vehicle.
Job Enrichment
Recall the discussion of Maslow’s need hierarchy and Herzberg’s two-factor theory.
Rather than just changing the number and frequency of tasks a worker performs, job
enrichment incorporates high-level motivators into the work, including job respon-
sibility, recognition, and opportunities for growth, learning, and achievement. In an
enriched job, employees have control over the resources necessary for performing
it, make decisions on how to do the work, experience personal growth, and set their
own work pace. Research shows that when jobs are designed to be controlled more
by employees than by managers, people typically feel a greater sense of involvement,
commitment, and motivation, which in turn contributes to higher morale, lower turn-
over, and stronger organizational performance.
42
Many companies have undertaken job enrichment programs to increase employ-
ees’ involvement, motivation, and job satisfaction. At Ralcorp’s cereal manufacturing
EXHIBIT 15.7 Types of Job Design
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CHAPTER 15 MOTIVATING EMPLOYEES 457
5
Leading
plant in Sparks, Nevada, for example, assembly-line employees screen, interview,
and train all new hires. They are responsible for managing the production ow to
and from their upstream and downstream partners, making daily decisions that
affect their work, managing quality, and contributing to continuous improvement.
Enriched jobs have improved employee motivation and satisfaction, and the com-
pany has bene ted from higher long-term productivity, reduced costs, and happier,
more motivated employees.
43
Job Characteristics Model
One signi cant approach to job design is the job characteristics model developed
by Richard Hackman and Greg Oldham.
44
Hackman and Oldham’s research con-
cerned work redesign, which is de ned as altering jobs to increase both the qual-
ity of employees’ work experience and their productivity. Hackman and Oldham’s
research into the design of hundreds of jobs yielded the job characteristics model,
which is illustrated in Exhibit 15.8. The model consists of three major parts: core job
dimensions, critical psychological states, and employee growth-need strength.
Core Job Dimensions Hackman and Oldham identi ed ve dimensions that
determine a job’s motivational potential:
1. Skill variety. The number of diverse activities that compose a job and the number
of skills used to perform it. A routine, repetitious assembly-line job is low in vari-
ety, whereas an applied research position that entails working on new problems
every day is high in variety.
2. Task identity. The degree to which an employee performs a total job with a recog-
nizable beginning and ending. A chef who prepares an entire meal has more task
identity than a worker on a cafeteria line who ladles mashed potatoes.
3. Task signi cance. The degree to which the job is perceived as important and hav-
ing impact on the company or consumers. People who distribute penicillin and
other medical supplies during times of emergencies would feel they have signi -
cant jobs.
4. Autonomy. The degree to which the worker has freedom, discretion, and self-
determination in planning and carrying out tasks. A house painter can determine
how to paint the house; a paint sprayer on an assembly line has little autonomy.
EXHIBIT 15.8 The Job Characteristics Model
SOURCE: Adapted from J. Richard Hackman and G. R. Oldham, “Motivation through the Design of Work: Test of a Theory,” Organizational Behavior and
Human Performance 16 (1976): 256.
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PART 5 LEADING458
5. Feedback. The extent to which doing the job provides information back to the
employee about his or her performance. Jobs vary in their ability to let workers
see the outcomes of their efforts. A football coach knows whether the team won
or lost, but a basic research scientist may have to wait years to learn whether a
research project was successful.
The job characteristics model says that the more these ve core characteristics can
be designed into the job, the more the employees will be motivated and the higher
will be performance, quality, and satisfaction.
Critical Psychological States The model posits that core job dimensions are
more rewarding when individuals experience three psychological states in response
to job design. In Exhibit 15.8, skill variety, task identity, and task signi cance tend
to in uence the employee’s psychological state of experienced meaningfulness of work.
The work itself is satisfying and provides intrinsic rewards for the worker. The job
characteristic of autonomy in uences the worker’s experienced responsibility. The job
characteristic of feedback provides the worker with knowledge of actual results. The
employee thus knows how he or she is doing and can change work performance to
increase desired outcomes.
Personal and Work Outcomes The impact of the ve job characteristics on the
psychological states of experienced meaningfulness, responsibility, and knowledge
of actual results leads to the personal and work outcomes of high work motivation,
high work performance, high satisfaction, and low absenteeism and turnover.
Employee Growth-Need Strength The nal component of the job character-
istics model is called employee growth-need strength, which means that people have
different needs for growth and development. If a person wants to satisfy low-level
needs, such as safety and belongingness, the job characteristics model has less
effect. When a person has a high need for growth and development, including
the desire for personal challenge, achievement, and challenging work, the model
is especially effective. People with a high need to grow and expand their abilities
respond favorably to the application of the model and to improvements in core job
dimensions.
One interesting nding concerns the cross-cultural differences in the impact of job
characteristics. Intrinsic factors such as autonomy, challenge, achievement, and rec-
ognition can be highly motivating in countries such as the United States. However,
they may contribute little to motivation and satisfaction in a country such as Nigeria
and might even lead to demotivation. A recent study indicates that the link between
intrinsic characteristics and job motivation and satisfaction is weaker in economi-
cally disadvantaged countries with poor governmental social welfare systems, and in
high power distance countries, as de ned in Chapter 4.
45
Thus, the job characteristics
model would be expected to be less effective in these countries.
INNOVATIVE IDEAS FOR MOTIVATING
Despite the controversy over carrot-and-stick motivational practices discussed in
the Shoptalk box earlier in this chapter, organizations are increasingly using various
types of incentive compensation as a way to motivate employees to higher levels of
performance. Exhibit 15.9 summarizes several popular methods of incentive pay.
Go to the ethical dilemma on pages 464–465 that pertains to the use of incentive
compensation as a motivational tool.
TakeaMoment
CHAPTER 15 MOTIVATING EMPLOYEES 459
5
Leading
Variable compensation and forms of “at risk” pay are key motivational tools that
are becoming more common than xed salaries at many companies. These programs
can be effective if they are used appropriately and combined with motivational ideas
that also provide employees with intrinsic rewards and meet higher-level needs.
Effective managers don’t use incentive plans as the sole basis of motivation. The most
effective motivational programs typically involve much more than money or other
external rewards. Two recent motivational trends are empowering employees and
framing work to have greater meaning.
Empowering People to Meet Higher Needs
One signi cant way managers can meet higher motivational needs is to shift power
down from the top of the organization and share it with employees to enable them to
achieve goals. Empowerment is power sharing, the delegation of power or authority
to subordinates in an organization.
46
Increasing employee power heightens motiva-
tion for task accomplishment because people improve their own effectiveness, choos-
ing how to do a task and using their creativity.
47
Research indicates that most people
have a need for self-ef cacy, which is the capacity to produce results or outcomes, to
feel that they are effective.
48
Empowering employees involves giving them four elements that enable them
to act more freely to accomplish their jobs: information, knowledge, power, and
rewards.
49
1. Employees receive information about company performance. In companies where
employees are fully empowered, all employees have access to all nancial and
operational information.
2. Employees have knowledge and skills to contribute to company goals. Companies
use training programs and other development tools to help employees acquire
the knowledge and skills they need to contribute to organizational performance.
3. Employees have the power to make substantive decisions. Empowered employ-
ees have the authority to directly in uence work procedures and organizational
performance, such as through quality circles or self-directed work teams.
Program Purpose
Pay for performance Rewards individual employees in proportion to their performance
contributions. Also called merit pay.
Gain sharing Rewards all employees and managers within a business unit when
predetermined performance targets are met. Encourages teamwork.
Employee stock ownership
plan (ESOP)
Gives employees part ownership of the organization, enabling them
to share in improved profi t performance.
Lump-sum bonuses Rewards employees with a one-time cash payment based on
performance.
Pay for knowledge Links employee salary with the number of task skills acquired.
Workers are motivated to learn the skills for many jobs, thus in-
creasing company fl exibility and effi ciency.
Flexible work schedule Flextime allows workers to set their own hours. Job sharing allows two
or more part-time workers to jointly cover one job. Telecommuting,
sometimes called fl ex-place, allows employees to work from home or
an alternative workplace.
Team-based compensation Rewards employees for behavior and activities that benefi t the
team, such as cooperation, listening, and empowering others.
Lifestyle awards Rewards employees for meeting ambitious goals with luxury items,
such as high-defi nition televisions, tickets to big-name sporting
events, and exotic travel.
EXHIBIT 15.9
New Motivational Compen-
sation Programs
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