BUS603: Managing People

2a. Apply theories of motivation (job-oriented, behavior-oriented, cognition-oriented, and needs-oriented) to inspire and motivate individual employees and groups in a variety of work situations to achieve high performance in organizations

• Why is motivation so important to an organization?
• How can you use different models of motivation to motivate people?
• Is there one best way to motivate others?

Through research, we know that motivated employees look for a better way to complete a task, are more quality-oriented, and work with higher productivity and efficiency. Thinking back to Unit 1, can you see how motivated employees might increase employee satisfaction and commitment to the organization? Motivated employees might also lead to less absenteeism and lower turnover!

Needs-oriented motivation theories provide fulfillment of various human needs. These human needs can be as simple as providing food for a family to as complex as helping an employee with self-esteem and confidence. The most well-known of the needs-oriented theories is Abraham Maslow's Hierarchy of Needs. Maslow felt that lower-level needs, such as food, water, and safety, must be met before a person can pursue the higher-level needs of self-esteem, confidence, and self-actualization. It should be easy to see that if an employee is homeless or lacks proper nutrition, they might be more interested in a salary increase rather than a seminar on boosting self-confidence. Atkinson and McClelland proposed the Need for Achievement Theory, these needs being achievement, authority, and affiliation. While everyone might have a need for all three of these needs to be fulfilled, one of them is usually stronger. Can you see that if a person has a high need for affiliation, he/she might be uncomfortable with competition among employees?

Cognitive-oriented theories tell us that people have a need for equitable compensation. The equity theory tells us that employees believe their experience, skill, and performance is equal to their perception of respective compensation and advancement opportunities. The expectancy theory is actually a calculation whereby Motivation = Expectation(∑ Instrumentality ⨉ Valence). Instrumentality is the belief that a level of performance will result in a level of outcome, and valence refers to the value of that outcome. What do you think happens to an employee's motivation when he/she believes their hard work is not resulting in compensation or a promotion?

Behavior-oriented theories, sometimes referred to as Reinforcement Theory, come from the psychological idea of conditioning. You may have heard of the experiments that Ivan Pavlov did with dogs; he trained dogs to begin salivating when they heard a bell ring just as they were being fed. Quickly, the dogs learned to salivate (a conditioned response) when the bell rang, whether they were fed or not. In this theory, then, managers try to promote positive behavior and deter negative behavior. Paying people by commission can create a conditioned response of the employee working harder. Promoting employees and increasing their pay for good performance can also create a conditioned response throughout the organization.

Job-oriented theories contend that employees are innately driven to contribute to the organization and that compensation and other incentives are less important. Herzberg's Two-Factor Theory is built on the idea that hygiene factors, or tangible benefits (salary, benefits, status, for example), only reduce employees' dissatisfaction and that motivators, and intangible benefits (autonomy, recognition, and responsibility, for example) are satisfiers. Do you think that Maslow's Hierarchy and Herzberg's Two-Factor Theory have some commonality?

Looking at these four categories of motivation theories, you can likely assume that there is no one best way to motivate your employees; each employee might respond to different motivators based on their individual differences. However, if we can understand our employees' motivators, we can provide the type of motivator that best meets their needs.

To review, see Motivating an Organization and Motivating Employees.

 

2b. Utilize a system that includes performance appraisals and feedback as tools for employee development and to improve job performance 

• What tools are available for performance appraisals?
• What are the advantages and disadvantages of each method?
• Knowing that no one system is perfect, how can you combine appraisal methods to ensure the goals of the employee and the organization?

Many appraisal methods have been developed to help managers review the performance of the employees: graphic rating scale, essay, checklist scale, critical incidents, work standards approach, ranking, Management by Objectives (MBO), and Behaviorally Anchored Rating Scale (BARS). Each of these methods has advantages and disadvantages, and each of these methods might be appropriate for different work situations. In thinking about a performance appraisal system in your organization, consider how often the performance appraisals will be given, whether pay increases should be tied to performance appraisals, what goals the organization hopes to achieve with performance appraisals, and who should evaluate the performance of the employee.

Errors can occur when choosing or implementing a performance appraisal system. Keep these errors in mind as you develop or change an appraisal system in your organization. The halo effect occurs when the appraiser feels one aspect of the job is high or low and then rates all performance as high or low. Validity issues can occur if you do not measure the key skills and responsibilities of the job. Reliability issues can occur if two or more raters do not rate one employee the same – your rating system may not be written specifically enough to create reliable results. Acceptability occurs when employees accept the performance appraisal system as a valid measure of their performance. If the appraisal system is not acceptable to employees, you will likely get flawed results. Finally, the specificity of the appraisal systems lets employees know the job expectations and how those expectations can be met. If you use an appraisal system that is not specific enough, determining employee development and communicating expectations to the employee can be difficult.

To review, see Performance Appraisal.

 

2c. Recommend incentives and rewards to inspire high performance in teams 

• Why are incentives and rewards important in our organizations?
• What are systems we can use to determine pay?
• What are common forms of incentives and rewards to offer to employees?
• How might you determine the best incentive and reward plans?

Job satisfaction and organizational commitment are strong attributes for organizations. In addition to incentives and rewards helping to build job satisfaction and organizational commitment, they also help tie rewards to good performance – as evidenced by the Expectancy Theory. Rewards and incentives can also reduce absenteeism and turnover. Finally, potential employees can be influenced to join an occupation and/or an organization based on the rewards.

Obviously, how you pay employees can be an incentive and a reward if that employee values increased pay. You have several methods with which to establish pay. Some organizations, especially government agencies, use pay grade levels. Once pay grades are set, all employees earn the same pay as others in their grade. While this system could be a fair pay method, it may not have the motivating effect you desire with your employees. You can also use the going rate model, where considerations such as the going rate and the specific job pay at a particular point in time is considered. Supply and demand in the labor force greatly affect the going rate. Many industries provide salary and hourly pay rates common in that industry.

Beyond pay, how can you motivate employees with incentives and rewards? A broad category consists of benefits – non-pay benefits you can offer to your employees. Some benefits, at least in the United States, are mandated by law: Social Security, Medicare, Unemployment Insurance, Workers' Compensation, and Consolidated Omnibus Budget Reconciliation Act (COBRA) – which requires organizations to allow their employees to extend their medical benefits through the organization if the person is terminated and has reduced hours.

Other benefits you offer to your employees are voluntary on your part. These benefits might include incentive pay systems, such as a commission plan, stock options, employee stock ownership plans, merit pay, and bonuses. Beyond pay benefits, you can offer medical insurance, disability insurance, 401(k) retirement plans, paid time off, paid holidays, sick leave, and paid vacation.

When determining the elements of your incentive and reward systems, how might you decide? Certainly, you need to consider the ability to recruit and retain valuable employees. However, you also need to consider what your workforce would find valuable; talk with the employees to see what they care about. The incentives and rewards you offer might differ among employees – older workers might be more interested in retirement benefits, while younger workers may care more about paid time off. Certainly, the incentives and rewards you offer will be impacted by the age or generation of your employees. As Baby Boomers (those born between 1946-1964) continue retiring, Millennials (those born between 1981-2000) will make up an increasing number of your workforce. Knowing what these Millennials value as incentives and rewards will be crucial to your recruitment and retention plans.

To review, see Reward Systems in Organizations, Compensation, Compensation and Benefits, and Positive Employee Relations with Millennials.

 

Unit 2 Vocabulary

This vocabulary list includes terms you will need to know to successfully complete the final exam.

• acceptability
• behavior-oriented theories
• Behaviorally Anchored Rating Scale (BARS)
• checklist scale
• cognitive-oriented theories
• Consolidated Omnibus Budget Reconciliation Act (COBRA)
• critical incidents
• equity theory
• essay
• expectancy theory
• going rate model
• graphic rating scale
• halo effect
• Herzberg's Two-Factor Theory
• hygiene factors
• job-oriented theories
• Management by Objectives (MBO)
• Maslow's Hierarchy of Needs
• motivators
• needs-oriented motivation
• pay grade levels
• ranking
• reliability
• specificity
• validity
• work standards approach