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  1. 1. Reward and Recognition What do people want from work? What sort of reward systems can organisations develop? What is the difference between reward and recognition? What can we learn from motivational theories about reward? 1
  2. 2. What people want from work is dependent on: Age e.g. ‘older worker’ Circumstances e.g. current needs Values e.g. to do ‘good’ rather than $ Social needs e.g. acceptance Cultural influences e.g. ‘golden generation’ 2
  3. 3. Rewards organisations traditionally offer  Extrinsic and intrinsic rewards  $$$$  Membership and seniority  Status  Opportunity to acquire skills Growth and development © Corel Corp 3
  4. 4. Rewards and the skills crisis Lowest unemployment rate in the OECD – ‘full employment’ Ageing population Falling birth rate ‘Brain-drain’ Immigration policies (politicians and the election) Competitors e.g. Australia are doing much better. Why would skilled immigrants want to come here? Do we need them? 4
  5. 5. Attracting skilled immigrants How do we look as a nation? What do we offer? What do they bring (why do we need them anyway) Do we welcome them? Do we want them? What do we do in terms of immigration policies to attract skilled immigrants? 5
  6. 6. To refresh your memories: theoriesof motivation Theories of motivation need to explain: 1. Why an individual decides to join an organisation 2. Why he or she decides to stay or leave 3. Why the individual decides to perform at the level required by the organisation or decides not to put in the effort required. 6
  7. 7. Three Sets of Motivation Theories Content theories (Maslow, ERG, Herzberg etc) Process theories (Adams, Vroom, etc) Behaviour modification (Skinner) 7
  8. 8. Content Theories Concerned with the content of the work itself e.g was it challenging? How work could be ‘enriched’ to provide more satisfaction Led to attempts to re-design work; job enlargement, rotation and ‘enrichment’ 8
  9. 9. Content theories of motivationNeeds hierarchy ERG Motivator−hygiene McClelland’s theory theory theory learned needs Self- Need for actualisation achievement Growth Motivators Need for Esteem power Need for Belongingness Relatedness affiliation Safety Hygienes Existence Physiological 9
  10. 10. Process theories Concerned with individual decision-making, why individuals decide to put in or withhold effort. Why? Equitable outcomes Commensurate reward 10
  11. 11. Expectancy theory of motivation E-to-P P-to-O Outcomes expectancy expectancy and valences Outcome 1 + or - Outcome 2Effort Performance + or - Outcome 3 + or - 11
  12. 12. Equity theory Outcome/input ratio  inputs − what employee contributes (eg skill)  outcomes − what employees receive (eg pay) Comparison other  person/people with whom we compare ratio  not easily identifiable Equity evaluation  compare outcome/input ratio with the comparison other 12
  13. 13. Overreward vs underreward inequity Comparison You other OutcomesOverreward Outcomes inequity Inputs InputsUnderreward Outcomes inequity Outcomes Inputs Inputs 13
  14. 14. Designing effective Reward Systems Rewards must be: Perceived as fair Timely Of a significant magnitude to motivate Individualised Current 14
  15. 15. Types of reward schemes Merit schemes Pay for Performance schemes ‘behaviour that appears to lead to positive consequences will be repeated.’ Does this approach increase motivation? Does it rely on externally mediated rewards rather than a system in which individuals can be motivated by their jobs? 15
  16. 16. Why do merit pay systems often fail? Is it because the theoretically base is not strong or the schemes are not well implemented my managers? 16
  17. 17. (cont) 1. Pay is not perceived to be related to Job Performance Lawler: ‘employees do not see the relationship between their hard work and the rated performance.’ Why? The rewards e.g. share options take too long to come Unrealistic goals Secrecy surrounding annual increase 17
  18. 18. Performance ratings are seen as biased Can mangers make objective distinctions between good and bad performance? In theory, based on ‘objective’ measures but… Somebody – your superior – has to implement the plan 18
  19. 19. Rewards are not Viewed as Rewards A pay increase might be meant to say ‘you are well regarded’ but might send another message’ you are only average’ Message about inequity in the company Worsened by secrecy Performance reviews too far apart to have effect Do we need to keep changing the merit plan to ‘fit’ with changes in the environment e.g. inflation What about under-performers? 19
  20. 20. Trust and openness about merit increases is low. ‘You need a good PA system’ Good human relations climate Explain the reasons for increases Need an open climate for it to work 20
  21. 21. Organisation view money as the primarymotivator ignoring the importance of the job itself Detracts from the job itself Motivate intrinsically Merit pay takes external focus Overlooks the value and importance of the job itself Back to job re-design 21
  22. 22. Making a merit pay system work Openness and trust are the basics Supervisors need to be trained in rating and feedback techniques Components of annual pay should be clearly and openly specific – so that merit forms an average for distribution Need to customise to needs and individuals Don’t overlook other rewards 22
  23. 23. Making it work Good preformance measures – what do we mean by ‘high performance’? Better communication about the systems; how it works, what will be delivered Better delivery systems – make clear the relationship between performance and pay Managerial behaviour – negative perception of connection between pay and performance 23
  24. 24. Membership/seniority-based rewards Fixed wages, seniority increases Advantages  guaranteed wages may attract job applicants  seniority-based rewards reduce turnover Disadvantages  don’t motivate job performance  discourage poor performers from leaving  may act as ‘golden handcuff’  Too limited 24
  25. 25. Skill-based rewards Pay increases with skill or competencies acquired or demonstrated Skill-based pay  pay increases with skill modules learned Advantages  more flexible work force, better quality, consistent with employability Disadvantages  potentially subjective, higher training costs 25
  26. 26. Status-based rewards Include perks e.g. company car Advantages  job evaluation tries to maintain pay equity  motivate competition for promotions Disadvantages  employees exaggerate duties, hoard resources  create psychological distance across hierarchy  inconsistent with flatter organisations 26
  27. 27. Performance-based rewards • Share ownership Organisational • Share options rewards • Profit sharing Team • Gainsharing rewards • Bonuses • Piece rate Individual • Commissions rewards • Royalties • Merit pay 27
  28. 28. Do we want individuals to reach‘high’ levels of performance? What does performance depend on? Performance is a function of Motivation x Ability x Opportunity P = (f) M X A X O 28
  29. 29. Based on Expectancy-theory; effort, performance and reward Makes sense (?) but . . we have to: 1. Agree on what we mean by performance e.g. for a child-minder 2. Agree how we will assess individual performance 3. Agree how we are going to reward individual performance 29
  30. 30. Improving performance? Performance is a {f} of Motivation x Ability x Opportunity What do we mean by the performance of waiter or waitress? What would we mean by a high performing retail sales assistant? How can a geriatric nurse improve her or his performance? Do organisations really want ‘high performance’ or ‘adequate performance’? Do many jobs have within them the scope to ‘improve ‘ performance? 30
  31. 31. Performance-reward problems Shift attention away from motivation of job itself to extrinsic rewards Create a psychological distance with reward giver Discourage risk taking Used as quick fix But more importantly . . . 31
  32. 32. Focus on rewards  Effort, performance and reward must be perceived to be linked  Ensure rewards must be relevant to the employee  Rewards must be valued  Rewards must be of sufficient magnitude to motivate  Use team rewards for interdependent jobs  Beware of unintended consequences© Corel Corp 32
  33. 33. But we reward individuals while talking teams Performance assessment invariably individually-based e.g. PA On which individuals are rewarded But organisations stress team work! So why not more team-based rewards? Difficult to assess e.g. equity Difficult to administer Cost 33
  34. 34. Team and organisational rewards Gainsharing plans  based on cost reductions and increased labour efficiency Employee Share Ownership Programme e.g. The Warehouse  employees own company shares Share options e.g. senior management  right to purchase company shares at a future date at a predetermined price Profit sharing e.g. Mainfreight  employees receive share of profits 34
  35. 35. Job design Assigning tasks to a job, including the interdependency of those tasks with other jobs Technology has a great influence on the design of jobs (technological determinism) Taylorist/Fordist design Employability affects job design 35
  36. 36. Evaluating job specialisationAdvantages Disadvantages Basically greater efficiency  Job boredom Less time changing tasks  Discontentment pay Lower training costs  Lower quality? Job mastered quickly  Lower motivation Better person-job matching Lower costs Greater control over quality 36
  37. 37. Job characteristics model (Hackman & Lawler) Core job Criticalcharacteristics psychological Outcomes states Skill variety Work motivation Task identity MeaningfulnessTask significance Growth satisfaction Autonomy Responsibility General satisfaction Feedback Knowledge Work from job of results effectiveness Individual differences 37
  38. 38. Job rotation vs job enlargementJob rotation Job 1 Job 2 Job 3 Operate camera Operate sound Report storyJob enlargement Job 1 Job 2 Job 3 Operate camera Operate camera Operate camera Operate sound Operate sound Operate sound Report story Report story Report story 38
  39. 39. Job enrichment strategies – based on Lawler & Hackman and Herzberg Empowering employees  gives employees more autonomy  feeling of control and self-efficacy  actual control?  over what? Forming natural work units (autonomous work groups)  completing an entire task  assigning employees to specific clients Establishing client relationships  employees put in direct contact with clients © Marlborough Express (NZ)  limited by the nature of the business e.g. production workers 39
  40. 40. Major obstacles to job design Difficult to accurately measure job characteristics Cost effectiveness Resistance to change  skilled workers  union  supervisors Problem finding optimal level of enrichment and specialisation Maintaining ‘enrichment’ Concerns about the validity of the theoretical base Over-taken by speed of technological change 40
  41. 41. Some major practical difficulties What do we mean by ‘performance’? How can we fairly ‘measure’ performance? How will we relate ’performance’ with appropriate reward? Intrinsic recognition or Extrinsic reward Major issues: Establishing, testing, and maintaining system Cost effectiveness of such a system e.g. BHP 41
  42. 42. Conclusion Difficult to apply motivational theories in practice Lots of failures e.g. Volvos JE programmes Selective use of profit sharing, P-f-P, skill-based reward systems Always the question of size and resources How do NZ SME go about motivating and rewarding their employees? ‘Family-feel’ ‘culture’ Informal 42