Chapter Seven Rewarding Organizational Behavior

1. Chapter SevenRewarding Organizational Behavior

2. Rewards • Why do organizations have rewards? • Should organizations have rewards? • How do you want to be rewarded at work? • What should your rewards be based on? • How does motivation, behavior, individual differences, culture affect rewards? • How does feedback play into the reward?

3. Feedback Feedback: “Objective information about individual or collective performance.” Functions of Feedback:- Instructional - Motivational

4. Timely and instructive feedback • Results • Learning • Personal development • Stable, strong job performance Ability Effort Properly administered rewards Feedback and Rewards Are Important Links In the Job Performance Cycle

5. A Cognitive-Processing Model of Feedback • Recipient • Characteristics • Self-esteem • Self-efficacy • Needs and goals • Desire for performancefeedbackPerception • Sign and content offeedback messageCognitive Evaluations • Feedback accuracy • Source credibility • System fairness • Expectations • Behavioral standards • Behavioral Outcomes • Direction • Effort • Persistence • Resistance • Sources • Others • Task • Self

6. Six Common Trouble Signsfor Organizational Feedback Systems • Feedback is used to punish, embarrass, or put down employees • Those receiving the feedback see it as irrelevant to their work • Feedback information is provided too late to do any good • People receiving feedback believe it relates to matters beyond their control • Employees complain about wasting too much time collecting and recording feedback data • Feedback recipients complain about feedback being too complex or difficult to understand

7. Some Concluding Tips forGiving Good Feedback Managers need to keep the following tips in mind when giving feedback: • Relate feedback to existing performance goals and clear expectations. • Give specific feedback tied to observable behavior or measurable results. • Channel feedback toward key result areas. • Give feedback as soon as possible. • Give positive feedback for improvement, not just final results. • Focus feedback on performance, not personalities. • Base feedback on accurate and credible information.

8. Nontraditional Feedback • Upward Feedback: Subordinates evaluate their manager’s style and performance. • 360-Degree Feedback: Specific (typically anonymous) feedback generated by one’s manager, peers, subordinates, and other key people.

9. Direct supervisor • Manager/Focal PersonSelf-evaluation of: • Planning/administrative/financial skills • Technical/business skills • Interpersonal skills • Problem-solving skills • Team-building skills • Other relevant skills Relevant others such as customers and suppliers Peers/teammembers Directsubordinates Sources and Types of Feedback in the 360-Degree Approach

10. Ability & Skill Intrinsic Rewards Motivation to exert effort Performance Evaluation Performance: Individual Satisfaction Experience Extrinsic Rewards The Reward Process Feedback

11. The Reward Process • Satisfaction with a reward is a function of both how much is received and how much the individual feels should be received. (Equity theory) • An individual’s feelings of satisfaction are influenced by comparisons of what happens to others. • Satisfaction is influenced by how satisfied employees are with both intrinsic and extrinsic rewards. • People differ in the reward they desire and in the relative importance different rewards have for them • Some extrinsic rewards are satisfying because they lead to other rewards. • Rewards must be valued and must be related to a specific level of job performance

12. The Reward Process • Extrinsic rewards – external to the job. What are examples? • Intrinsic rewards – part of the job itself. What are examples? • How do intrinsic and extrinsic rewards interact? • How do rewards influence turnover and absenteeism? Is a low turnover always good?

13. Organization’s Reward Norms • Profit maximization • Equity • Equality • Need • Types of Rewards • Financial/material(extrinsic) • Social (extrinsic) • Psychic (intrinsic) • Desired Outcomes • Attract • Motivate • Develop • Satisfy • Retain • Distribution Criteria • Results • Behavior • Other factors General Model of Organizational Reward Systems

14. Why Do Rewards Fail to Motivate? • Too much emphasis on monetary rewards • Rewards lack an “appreciation effect” • Extensive benefits become entitlements • Counterproductive behavior is rewarded • Too long a delay between performance and rewards • Too many one-size-fits-all rewards • Use of one-shot rewards with a short-lived motivational impact • Continued use of demotivating practices such as layoffs, across-the-board raises and cuts, and excessive executive compensation

15. How To Make Team-Based Pay Work • Prepare employees with interpersonal skills training. • Don’t introduce team-pay until teams are running smoothly. • Blend individual and team incentives. • Start by rewarding teamwork behaviors and then evolve to incentives for team results. • Make sure each team member has a clear line of sight to key team results.

16. Non-Traditional Rewards • Cafeteria benefits • Time off (banked) • Skill-based pay • Gainsharing vs profit sharing

17. Profit Sharing vs. Gainsharing Profit sharing: “Occurs when individual employees or work groups are granted a specified portion of any economic profits earned by the business as a whole.” Gainsharing: “Involves a measurement of productivity combined with the calculation of a bonus designed to offer employees a mutual share of any increases in total organizational productivity. Usually all those responsible for the increase receive the bonus.”

18. Making Pay for Performance Work • Make pay for performance an integral part of the organization’s basic strategy. • Base incentive determinations on objective performance data. • Have all employees actively participate in the development, implementation, and revision of the performance-pay formulas. • Encourage two-way communication so problems with the pay-for-performance plan will be detected early. • Build the pay-for-performance plan around participative structures such as suggestion systems or quality circles.

19. Making Pay for Performance Work(continued) • Reward teamwork and cooperation whenever possible • Actively sell the plan to supervisors and middle managers who may view employee participation as a threat to their traditional notion of authority • If annual cash bonuses are granted, pay them in a lump sum to maximize their motivational impact • Remember that money motivates when it comes in significant amounts, not occasional nickels and dimes