Session 15 Motivating

individuals and groups

FAB – Accounting in Business

Lecturer: Tran Minh Thu

 Overview of motivation

• Motivation is the urge to take action to achieve

something or to avoid something.
• If managers understand what motivates their staff, they
can actively use this knowledge to drive towards the
organisation's objectives.
• The basic assumptions of motivation are that
• People seek to satisfy their needs
• Organisations can offer some of the satisfaction people seek
• Organisations can influence people's behaviour
• If people's needs are met they will have job satisfaction and a
positive attitude to work
Content theories
of motivation
Limitation to
Maslow’s hierarchy of needs
• Individual's behaviour may be in response to
several needs.
• The same need may cause different behaviour in
different individuals.
• Not all needs manifest themselves on a hierarchical
order
 Motivating factors Herzberg

• Frederick Herzberg produced his two factor

theories of motivation in 1959. He concluded that
certain factors led to job satisfaction (motivators)
and a different group led to dissatisfaction (hygiene
factors).
Expectancy Theory Vroom

• A high Force is only possible if both a high Valence

and a high Expectancy are present
Mc Gregor
 Rewards and incentives

• A reward is something given to an individual or team in

recognition of contribution and success.
• An incentive is the offer of a reward designed to motivate
current and future performance.
• Financial rewards and incentive can motivate
• Job satisfaction is a key motivator and is created through:
• Variety
• Task identity/clarity
• Autonomy/ownership
• Constructive feedback
• Task significance
 Rewards and incentives

• Job design or redesign can increase motivation.

• Job rotation
• Job enlargement
• Job enrichment
• Participation in decision making is usually perceived as a
motivator and there are two main streams:
• Immediate participation
• Distant participation
• Participation works as a motivator if the '5 Cs' are present:
• Certainty
• Consistency
• Clarity
• Capacity
• Commitment
Designing Jobs That Motivate (continued):

Job Enlargement

Job Enlargement - Broadening the types of

tasks performed in a job.

Job Extension -
Enlarging jobs by combining Job Rotation - Enlarging
several relatively simple jobs jobs by moving employees
to form a job with a wider among several different jobs.
range of tasks.
Designing Jobs That Motivate (continued)

Job Enrichment Self-Managing Work Teams

• Empowering workers by adding • Have authority for an entire work
more decision-making authority process or segment:
to jobs. – schedule work
• Based on Herzberg’s theory of – hire team members
motivation. – resolve team performance
problems
• Individuals are motivated more by
– perform other duties traditionally
the intrinsic aspects of work. handled by management
• Team members motivated by
autonomy, skill variety, and task
identity.
Test Your Knowledge

• Adding more tasks to an existing job is called ____________, while adding

more decision- making authority to jobs is called _________.
A. Job extension; job rotation
B. Job rotation; job enrichment
C. Job enlargement; job enrichment
D. Job enlargement; job rotation
Designing Jobs That Motivate (continued):

Flexible Work Schedules

Flextime Job Sharing

• A scheduling policy in which full- • A work option in which two part-
time employees may choose time employees carry out the
starting and ending times within tasks associated with a single job.
guidelines specified by the
organization. • Enables an organization to attract
• A work schedule that allows time or retain valued employees who
for community and family want more time to attend school
interests can be extremely or take care of family matters.
motivating.
Figure 4.7:
Alternatives to
the 8-to-5 Job
Designing Jobs That Motivate (continued):

Telework
• Telework – the broad term for doing one’s work away from a centrally
located office.
• Advantages to employers include:
– less need for office space
– greater flexibility to employees with special needs
• Easiest to implement for managerial, professional, or sales jobs.
• Difficult to set up for manufacturing workers.
 Pay as a motivator

• Maslow and Herzberg both recognise money as a

means of satisfying some needs and symbolising
worth.
• However, pay does not satisfy higher order needs
and should thus be considered a hygiene factor.
• Performance related pay (PRP) is a type of incentive
which rewards extra pay for extra output or
performance. PRP schemes include:
• Piecework
• Bonuses for achievement of specific objectives/
outstanding performance.
Incentive Pay

 Incentive pay – forms of pay linked to an employee’s performance as an

individual, group member, or organization member.
 Incentive pay is influential because the amount paid is linked to certain
predefined behaviors or outcomes.
 For incentive pay to motivate employees to contribute to the
organization’s success, the pay plans must be well designed.
 Effective incentive pay plans meet
the following requirements:
1. Performance measures are linked to the
organization’s goals.
2. Employees believe they can meet performance
standards.
3. The organization gives employees the
resources they need to meet their goals.
4. Employees value the rewards given.
5. Employees believe the reward system is fair.
6. The pay plan takes into account that
employees may ignore any goals that are not
rewarded.
Pay for Individual Performance

Piecework rates

Standard hour plans

Merit pay

Individual bonuses

Sales commissions
Pay for Individual Performance:
Piecework Rates

Straight Differential
Piecework Rate
Piecework Plan Piece Rates
• A wage based • Incentive pay • Incentive pay
on the in which the in which the
amount employer pays piece rate is
workers the same rate higher when a
produce. per piece, no greater
matter how amount is
much the produced.
worker
produces.
Figure 12.1:
How Incentives Sometimes “Work”

SOURCE: DILBERT reprinted by permission of United Feature Syndicate, Inc.

Pay for Individual Performance:
Standard Hour Plans and Merit Pay

Standard Hour Plan Merit Pay

 An incentive plan that pays  A system of linking pay increases
workers extra for work done in to ratings on a performance
less than a preset “standard scale.
time.”
 They make use of a merit
 These plans are much like increase grid.
piecework plans.
 The system gives the lowest paid
 They encourage employees to best performers the biggest pay
work as fast as they can, but not increases.
necessarily to care about quality
or service.
Pay for Individual Performance:
Performance Bonuses
 Performance bonuses are not rolled into base pay.
 The employee must re-earn them during each performance period.
 Sometimes the bonus is a one-time reward.
 Bonuses may also be linked to objective performance measures, rather
than subjective ratings.
Pay for Individual Performance:
Sales Commissions
 Commissions – incentive pay calculated as a percentage of sales.
 Some salespeople earn a commission in addition to a base salary.
 Straight commission plan – some salespeople earn only commissions.
 Some salespeople earn no commissions at all, but a straight salary.
 Many car salespeople earn a straight
commission, meaning that 100% of
their pay comes from commission
instead of salary.
Test Your Knowledge

 John works twisting pretzels in a pretzel factory. Pablo works on IT

systems integration at a credit card company. The best pay plans for these
individuals would be ________ and _______, respectively.
a) Merit pay, individual bonus
b) Sales commissions; merit pay
c) Piecework, Merit pay
d) Individual bonus, sales commissions
Pay for Group Performance

Gainsharing

Bonuses

Team Awards
Pay for Group Performance:
Gainsharing
 Gainsharing – group  Gainsharing addresses
incentive program the challenge of
identifying
that measures appropriate
improvements in performance measures
productivity and for complex jobs.
effectiveness and  Gainsharing frees
distributes a portion employees to
of each to employees. determine how to
improve their own and
their group’s
performance.
Organization Conditions Necessary for
Gainsharing to Succeed
1. Management commitment.
2. Need for change or strong commitment to
continuous improvement.
3. Management acceptance and encouragement
of employee input.
4. High levels of cooperation and interaction.
5. Employment security.
6. Information sharing on productivity and costs.
7. Goal setting.
Organization Conditions Necessary for
Gainsharing to Succeed (continued)
8. Commitment of all involved parties to the
process of change and improvement.
9. Performance standard and calculation that
employees understand and consider fair and
that is closely related to managerial
objectives.
10. Employees who value working in groups.
Figure 12.3:
Finding the Gain
in a Scanlon Plan
Scanlon Plan – a
gainsharing
program in which
employees receive
a bonus if the
ratio of labor costs
to the sales value
of production is
below a set
standard.
Pay for Group Performance:
Group Bonuses and Team Awards

Group Bonuses Team Awards

 Bonuses for group performance  Similar to group bonuses, but are
tend to be for smaller work more likely to use a broad range
groups. of performance measures:
 These bonuses reward the  Cost savings
members of a group for attaining  Successful completion of a
a specific goal, usually measured project
in terms of physical output.
 Meeting deadlines
 Group members that meet a sales goal or
a product development team that meets
a deadline or successfully launches a
product may be rewarded with a bonus
for group performance.
Figure 12.4: Types of Pay for
Organizational Performance
Pay for Organizational Performance:
Profit Sharing
 Profit sharing – incentive pay in which payments are a percentage of the
organization’s profits and do not become part of the employees’ base
salary.
 Profit sharing may encourage employees to think like owners.
 Evidence is not clear whether profit sharing helps organizations perform
better.
Considerations for Setting Up a
Profit-Sharing Plan
1. Get supervisors on board with the plan.
2. Make sure employees understand how the plan
works.
3. Identify the behaviors and results that
contribute to greater profits.
4. Make sure managers understand that they
contribute to the profit-sharing goals by
encouraging their employees and keeping
them focused on their goals.
Considerations for Setting Up a
Profit-Sharing Plan (continued)
5. Consider linking rewards to the department’s
or division’s performance, if profits can be
assigned to the group.
6. Make the rewards big enough to matter.
7. Time the profit-sharing payments for
maximum effect.
Pay for Organizational Performance:
Stock Ownership

Stock Options ESOPs

 Rights to buy a certain number of  Employee Stock Ownership Plan
shares of stock at a specified (ESOP) – an arrangement in which
price. the organization distributes
shares of stock to all its
 Traditionally, stock options have
employees by placing it in a trust.
been granted to executives.
 This is the most common form of
 Some companies are trying to
employee ownership.
push eligibility for options further
down the organization’s
structure.
Figure 12.5: Number of ESOPs
Test Your Knowledge

 For each of the following jobs, identify the best

type of incentive (e.g., individual, group,
organizational). Be prepared to explain your
answer.
1. Director of Marketing, Pepsi
2. Recruiter, Verizon
3. Cashier, CVS (drugstore)
4. Salesperson, Macy’s
a) Individual
b) Group
c) Organizational
Balanced Scorecard

 Balanced scorecard – a  The four categories of a balanced

combination of performance scorecard include:
measures directed toward the  financial
company’s long- and short-term
goals and used as the basis for  customer
awarding incentive pay.  internal
 learning and growth
 Tellabs is one company
that uses a balanced
scorecard.
 The company conducts
quarterly meetings at
which employees learn
how their performance
will be evaluated
according to the
scorecard.
 The company also makes
this information
available on the their
intranet.
Processes That Make Incentives Work

Participation in
Decisions Communication
 Employee participation in pay-  Communication demonstrates to
related decisions can be part of a employees that the pay plan is
fair.
general move toward employee
empowerment.  When employees understand the
requirements of the incentive pay
 Employee participation can plan, the plan is more likely to
contribute to the success of an influence their behavior as
incentive plan. desired.
 Important when the pay plan is
being changed.
Incentive Pay for Executives

Short-Term Incentives Long-Term Incentives

 Bonuses based on the year’s  Include stock options and stock
profits, return on investment, or purchase plans.
other measures related to the
 Rationale for these long-term
organization’s goals.
incentives is that executives will
 Actual payment of the bonus may want to do what is best for the
be delayed to gain tax organization because that will
advantages. cause the value of their stock to
grow.
Incentive Pay for Executives:
Ethical Issues
 Incentive pay for executives lays the groundwork for significant ethical
issues.
 When an organization links pay to its stock performance, executives need
the courage to be honest about their company’s performance even when
dishonesty or clever shading of the truth offers the tempting potential for
large earnings.
Thank you for
attention