Ch. 7 Management By Objectives: MBO

1. Ch. 7 Management By Objectives: MBO MBO is a program that encompasses: • specific goals (goal setting theory) • participatively set (this is emphasized in MBO systems) • for an explicit time period • with feedback on goal progress MBO operationalizes the concept of objectives by devising a process by which objectives cascade down through the organization. • The result is a hierarchy of objectives that links objectives at one level to those at the next level. • For the individual employee, MBO provides specific personal performance objectives.

2. Cascading of Objectives

3. What Are Employee Recognition Programs? • Programs that use multiple sources and recognizes both individual and group accomplishments. Linking Programs and Reinforcement Theory • Consistent with the reinforcement theory, rewarding a behavior with recognition immediately following that behavior is likely to encourage its repetition. Employee Recognition Programs in Practice • In contrast to most other motivators, recognizing an employee’s superior performance often costs little or no money, making them highly attractive to industry.

4. What are Employee Involvement Programs • A participative process that uses the entire capacity of employees and is designed to encourage increased commitment to the organization’s success. • Examples of Employee Involvement • Participative Management • Representative Participation • Work Councils • Board Representatives • Quality Circles • Employee Stock Ownership Plans (ESOPs) *Note: these strategies use concepts found in Theory X and Y, the two-factor theory, and needs (i.e. N achievement) and ERG. These approaches are popular around the world.

5. Variable Pay Programs • Programs where a portion of an employee’s pay is based on some individual and/or organizational measure of performance. • piece-rate pay plans • profit-sharing plans • gainsharing plans • Linking Variable-Pay Plans and Expectancy Theory • Evidence supports the importance of this linkage, especially for operative employees working under piece-rate systems. • Group and organization wide incentives reinforce and encourage employees to sublimate personal goals for the best interests of their department or organization. • Many of these plans are used in organizations around the world. Again, be careful – some involve risk (and not all employees nor employers are risk takers!)

6. Skill-Based Pay Plans • Pay levels based on how many skills employees have or how many jobs they can do… • Benefits of Skill-based Pay Plans: • Provides staffing flexibility. • Facilitates communication across the organization. • Lessens “protection of territory” behaviors. • Meets the needs of employees for advancement (without promotion). • Leads to performance improvements. • * Downside: you can “top out”, get frustrated, skills become obsolete, paying for skills not used

7. Flexible Benefits

8. Special Issues in Motivation • Motivating Professionals • Provide challenging projects. • Allow them the autonomy to be productive. • Reward with educational opportunities. • Reward with recognition. • Express interest in what they are doing. • Create alternative career paths. • Motivating Contingent Workers • Provide opportunity for permanent status. • Provide opportunities for training. • Provide equitable pay.

9. Special Issues in Motivation (cont’d) • Motivating the Diversified Workforce • Provide flexible work, leave, and pay schedules. • Provide child and elder care benefits. • Structure working relationships to account for cultural differences and similarities. • Motivating Low-Skilled Service Workers • One of the most challenging problems in industry today. • Many “plans” have been tried, almost all unsuccessfully • Try flexible work schedules, slight increase in pay, recruit widely • Create broader responsibility for inventory, scheduling, and hiring • Try creating a “family” atmosphere among employees • Unless pay and benefits rise significantly, continued high turnover can be expected.

10. Special Issues in Motivation (cont’d) • Motivating People Doing Highly Repetitive Tasks • Motivating individuals in these jobs can be made through careful selection • People vary in their tolerance for ambiguity. • Many individuals prefer jobs that have a minimal amount of discretion and variety. • High pay and careful selection can reduce recruitment problems and high turnover, however… this doesn’t necessarily lead to highly motivated workers. • Creative personnel programs have exhibited some success by providing: clean and attractive work surroundings, ample work breaks and opportunity to socialize during breaks, and empathetic supervisors.

11. Summary and Implications for Managers • Recognize Individual Differences! Employees have different needs – don’t treat them all alike! • Spend the time necessary to understand what’s important to each employee. • Use Goals and Feedback (This is KEY!) • Allow Employees to Participate in Decisions That Affect Them • Link Rewards to Performance (seems so simple, huh?) • Employees must perceive a clear linkage • Check the System for Equity – do rewards match inputs?