motivation and its relationship to compensation rev

8/4/2019 Motivation and Its Relationship to Compensation Rev

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Motivation and its relationshipto Compensation

Maritza Soto, Ph.D.

Professor

University of Puerto Rico- Rio Piedras



Copyright©2010 maritza Soto

Why do people work?

What motivates people at work?

What rewards to organizations

offer?




Motivation and Individual Needs

Motivation

The willingness to exert high levels of effort to

reach organizational goals, conditioned by the

effort’s ability to satisfy some individual need

Need

An internal state that makes certain outcomes

appear attractive




Components of Motivation

Motivation

OrganizationalGoals

Needs

Effort




Consider the different perspectives ofemployee groups

Executive

Managerial

Supervisory

Engineering

R & D

Sales

Professional

Financial

Legal

Information

Systems/Technology

Administrative

Production

ClericalMaintenance




Do they seek similar or differentrewards?

Are they motivated in differentways by different things?




Early Theories of Motivation:Maslow’s Hierarchy of Needs




Consider Herzberg’s Job Factors




Consider Herzberg’s Job Factors

Motivators

Achievement

Recognition

Work itself

Responsibility

Advancement

Growth

Herzberg, F. 2003. One more time: How do you motivateemployees? Harvard Business Review (January): 87-96.(This paper was originally published in the HBR in 1968).

•Hygiene Factors

•Company policy and administration

•Supervision

•Relationship with supervisor

•Work conditions

•Salary

•Relationship with peers

•Personal life

•Relationship with subordinates

•Status

•Security




Consider Douglas McGregor’s theory

Theory X In this theory, management assumes employees are inherently lazy and will avoid work if they

can. Because of this, workers need to be closely supervised and comprehensive systems ofcontrols developed. A hierarchical structure is needed with narrow span of control at each level.According to this theory, employees will show little ambition without an enticing incentive programand will avoid responsibility whenever they can. A term originating in military organization theory,but now used more commonly in business management, particularly human resourcemanagement, span of control describes the number of subordinates that report to each manager(or to each military officer). ...

The Theory X manager tends to believe that everything must end in blaming someone. He or shethinks all prospective employees are only out for themselves. Usually these managers feel thesole purpose of the employees interest in the job is money. They will blame the person first inmost situations, without questioning whether it may be the system, policy, or lack of training thatdeserves the blame. Employment is a contract between two parties, one being the employer andthe other being the employee. ...

Furthermore, Theory X supervisors cannot trust any employee, and they reveal this to theirsupport staff via their communications constantly. A Theory X manager can be said to be animpediment to employee morale and productivity.

http://www.nationmaster.com/encyclopedia/Span-of-control


http://www.nationmaster.com/encyclopedia/Employee

http://www.nationmaster.com/encyclopedia/Employee





Consider Douglas McGregor’s theory

In this theory management assumes employees may be ambitious, self-motivated, anxious to accept greater responsibility, and exercise self-control, self-direction, autonomy and empowerment. It is believed thatemployees enjoy their mental and physical work duties. It is also believedthat if given the chance employees have the desire to be creative andforward thinking in the workplace. There is a chance for greater productivityby giving employees the freedom to perform at the best of their abilitieswithout being bogged down by rules.

A Theory Y manager believes that, given the right conditions, most peoplewill want to do well at work and that there is a pool of unused creativity inthe workforce. They believe that the satisfaction of doing a good job is astrong motivation in and of itself. A Theory Y manager will try to remove thebarriers that prevent workers from fully actualizing themselves .

Many people interpret Theory Y as a positive set of assumptions aboutworkers. A close reading of The Human Side of Enterprise reveals thatMcGregor simply argues for managers to be open to a more positive view ofworkers and the possibilities that this creates.

The Human Side of Enterprise, Douglas McGregor

1960

http://www.nationmaster.com/encyclopedia/Creativity

http://www.nationmaster.com/encyclopedia/Creativity




Contemporary Theories of Motivation:Three-needs theory (McClelland)

The needs for achievement, power andaffiliation are major motives in workNeed for Achievement 9nAch): the drive to

excel, to achieve in relation to a set ofstandards, to strive to succeed

Need for power (nPow): the need to makeothers behave in a way that they would not

have behaved otherwiseNeed for affiliation (nAff): the desire for friendly

and close personal relationships




Equity Theory- (Adams)

Employees perceive what they get from a job situation (outcomes) in relation to whatthey put into it (inputs) and then compare

their input-outcome ratio with the input-outcome rations of relevant others





Referent

In equity theory, the other persons, the

systems, or the personal experiences against

which individuals compare themselves toassess quality

The choice of particular set of referents isrelated to the information available aboutreferents as well as to the perceived relevance





When employees perceive an inequitythey may:

Distort either their own or others’ inputs or

outcomes

Behave so as to induce others to change theirinputs or outcomes

Choose a different comparison referentQuit their job




Equity Theory




Job design and Motivation

Job characteristics Model (JCM)- Hackman andOldham

The five core job dimensions are skill variety, task

identity, task significance, autonomy and feedbackInternal rewards are obtained when:

An employee learns (knowledge of results) through(feedback) that he or she personally (experiencedresponsibility through autonomy of work) has performed

well on a task that he or she cares about (experiencedmeaningfulness through skill variety, task identity, and/ortask significance)





Core Job dimensions

Skill variety- the degree to which the job

requires a variety of activities so the worker can

use a number of different skills and talentsTask identity- the degree to which the job

requires completion of a whole and identifiablepiece of work

Task significance- the degree to which the jobaffects the lives or work of other people





Core Job dimensionsAutonomy- the degree to which the job provides

freedom. Independence, and discretion to the

individual in scheduling the work and indetermining the procedures to be used incarrying it out

Feedback- the degree to which carrying out thework activities required by the job results in theindividual’s obtaining direct and clear information about the effectiveness of his or herperformance




Expectancy Theory (Vroom)

A comprehensive theory of motivation thatan individual tends to act in a certain way,in the expectation that the act will be

followed by given outcome, and accordingto the attractiveness of that outcome to theindividualThe extent to which individuals are motivated to

perform to get a reward of value to them isbased on their belief that their performance willresult in the reward they want




Expectancy Theory (Vroom)

Emphasizes self interest in the alignment ofrewards with employee wants

Addresses why employees view certain

outcomes (rewards) as attractive or unattractive Emphasizes the connection among expected

behaviors, rewards, and organizational goals

Is concerned with individual perceptions andprovision of feedback




Expectancy Theory

Work motivation is a sequential function ofemployee perception of three things:Perceived probability that additional effort will

lead to improved performance (i.e. Expectancy)Perceived probability that improved

performance will be instrumental to obtainmentof rewards (i.e. Instrumentality)

Perceived subjective value (i.e. Valence) ofrewards and other outcomes of performanceachievement




Expectancy Theory

Expectancy Theory (also known as the Valence-Instrumentality- Expectancy Theory) (1964) Victor Vroom




Expectancy Relationships (Linkages)

Effort-performanceThe perceived probability that exerting a given

amount of effort will lead to performance

Performance-rewardThe belief that performing at a particular level

will lead to the attainment of a desired outcome

AttractivenessThe importance placed on the potential

outcome of reward that can be achieved on the job




Expectancy Theory Applied

Requirements for success

Identify what behaviors and results we want to

pay for

Link meaningful rewards directly to desiredbehaviors and results

Generate accurate and timely performance datausing a cost-effective system

Employee involvement, understanding andacceptance

Expectancy Theory (also known as the Valence-Instrumentality- Expectancy Theory) (1964) Victor Vroom




Simplified Expectancy Theory

Individualeffort

Individualperformance

Organizational

Rewards

Individual goals

Performanceappraisal

Training and

Development

Human Resources

Management




What rewards do

organizations offer?




Reward is

..something given in return for good or sometimes evil orfor service or merit…

…compensation; profit; return…

Pay is

…to give due compensation; make payment

…the simple, direct word meaning to give money, etc. due

for services rendered, goods received, etc. …compensate

implies a return, whether monetary or not, thought of asequivalent to the service given, the effort expended…

Webster’s New World Dictionary, Second College Edition Inc. 1974




Overall Employee Relations Goals ofCompensation Management

The Ultimate Objective

To attract, retain and motivate employees of thecaliber necessary to achieve the organization’s

objetive.




Compensation Program Objectives

The Bottom Line

Positive impact on employee relations if:

Pay is for performance

Pay is competitive

Pay is fair/equitable

For both the employee and the organization

The compensation challenge is to reconcile three equities:

Individual

External

Internal




Perception

How does perception enter into the worldof compensation?

Who has perceptions?

Are these perceptions positive? Negative?

How can we fight perceptions?




Performance Appraisals

Traditional performance appraisals don’t

work’:

Subjectivity

Non-valid criteria

Absence of standards and measures

Poor communication

Lack of trainingInfrequency




Conditions supporting Pay-for-Performance

The organization supportsperformance-based pay

Managers are trained toappraise performance

Differences in performance are

measurable and significant Management believes that

people can be motivated bymoney

Management knows how to

relate pay increases toperformance/behavior

There is trust betweensupervisors and subordinates

The level of intestinal fortitudeamong the organization’smanagers is high

Pay ranges are wide enough Criteria are fully communicated

to workers

motivation and its relationship to compensation rev

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