Rewarding Organizational Behavior

1. Chapter Rewarding Organizational Behavior

2. Introduction • Organizations use a variety of rewards to attract and retain people and to motivate them to achieve their personal and organizational goals • The manner and timing of distributing rewards are important issues for managers • To distribute rewards equitably, it is necessary to evaluate employee performance

3. Attract qualified people Keep employees coming to work Reward programs Motivate achieve high performance

4. The Reward Process Ability and skill Intrinsic rewards Performance results: Individual Motivation to exert effort Performance evaluation Satisfaction Extrinsic rewards Experience Feedback

5. Conclusion from behavioral research • Satisfaction with reward is a function of both how much is received and should be receive • Satisfaction influenced by comparing with what happens to other • Influenced by how satisfied employees are with both intrinsic and extrinsic • People differ in the reward they desire • Some extrinsic reward are satisfying because they lead to other rewards

6. Management Considerations for Developing and Distributing Rewards • The rewards available must be sufficient to satisfy basic human needs • Individuals tend to compare their rewards with those of others • The process by which rewards are distributed should be perceived as fair • The managers distributing the rewards must recognize individual differences

7. Extrinsic reward – initiated from outside the person Salary and wages Employee benefits Interpersonal rewards (e.g. receiving recognition, socially interact) Promotions Intrinsic reward – one that is self-administered by the person Completion Achievement Autonomy Personal growth (e.g. training) Intrinsic and Extrinsic Rewards

8. REWARDS Job Performance Organizational Commitment

9. Rewards Affect Organizational Concerns • Rewards affect employee perceptions, attitudes, and behavior • Key organizational concerns affected by rewards: • Turnover • Absenteeism • Performance • Commitment

10. Skill-based pay Broadbanding Team-based rewards Concierge services Banking time off Part-time Benefits Gainsharing Employee stock ownership plans Innovative Reward Systems

11. Purposes of Evaluation: Judgmental • Provide a basis for reward allocation (e.g., raises, promotions, transfers, etc.) • Identify high-potential employees • Validate the effectiveness of employee selection procedures • Evaluate previous training programs

12. Purposes of Evaluation: Developmental • Stimulate performance improvement • Develop ways of overcoming obstacles and performance barriers • Identify training and development opportunities • Establish supervisor-employee agreement on performance expectations

13. Focus of Evaluation • Evaluations should focus on translating the position responsibilities into each employee’s day-to-day activities • Performance evaluations should focus on job performance, not individuals • Evaluations should have proper weighting of relevant behaviors

14. Relevancy of Evaluation • Deficiency – occurs when the evaluation does not focus on all aspects of the job • Contamination – occurs when activities not part of the job are included in the evaluation • Distortion – occurs in the evaluation process when an improper emphasis is given to various job elements

15. Improving Evaluations (1 of 3) • Higher levels of employee participation in the evaluation process lead to more satisfaction with the system • Setting specific performance goals to be met results in greater performance improvement than discussions of more general goals

16. Improving Evaluations (2 of 3) • Supervisors should receive training in how to evaluate employee performance • They should be evaluated on how effectively they do this • Systematic evaluation of performance does little good if the results are not communicated to employees

17. Improving Evaluations (3 of 3) • Performance evaluation feedback should not focus solely on problem areas • Good performance should be actively recognized and reinforced • Effective performance evaluation is a continuous, ongoing process

18. Performance Evaluation Feedback • The need for feedback among people on and off the job is significant • People want to know: • how they are doing • how they are being perceived by others • how they can make adjustments to perform better • Delivering feedback to a poor performing employee is a difficult experience for a manager

19. A Feedback Model Evaluated Person Individual Characteristics: • Perceptual Process • Values • Needs • Goals • Self-Concept • Self-Efficacy Behavioral Results • Effort • Self-motivation to Adjust • Persistence • Disregard or Non-acceptance • Person • Others • Job Cognitive Evaluation: • Creditive of Feedback Source • Expectancies • Personal Standards • Form of Feedback • (Objective or Subjective)

20. Multisource Feedback: A 360-Degree Approach • 90 percent of Fortune 1000 firms use some form of multisource program • The increasing use of multisource programs is the result of calls for more • fairness • clarity • credibility • Everyone in the person’s full domain could serve as an evaluator

21. Best Practices to Improve 360-Degree Feedback Programs (1 of 2) • Use 360-degree feedback primarily for individual development • Link the feedback process with the overall strategy and direction of the firm • Exert administrative control over every aspect of the 360-degree process

22. Best Practices to Improve 360-Degree Feedback Programs (2 of 2) • Use senior management as role models • Use highly trained internal coaches to leverage the investment • Evaluate the effectiveness or return on investment of the process

23. Reinforcement Theory • Reinforcement is the most important principle of learning • Desirable or reinforcing consequences will increase the strength of a behavior and increase the probability of being repeated • Undesirable or punishment consequences will decrease the strength of a response and decrease its probability of being repeated

24. Rewards, Reinforcement, and Punishment Punishment (behavior decreases) Positive reinforcement (behavior increases) Negative reinforcement (behavior increases) Punishment (behavior decreases) II I Applied IV III Withdrawn Undesirable Desirable

25. Reinforcement Theory: Operant Conditioning • Operant conditioning – attempts to influence behavior through the use of rewards and punishments • Operants – behaviors that can be controlled by altering the consequences that follow them • Most workplace behaviors are operants