Motivation: From Concepts to ApplicationsChapter FIVEFIVE 1.Goal Setting in Action: MBO ProgramsManagement By Objectives ProgramsCompany wide goals & objectivesGoals aligned at all levelsBased on Goal Setting TheoryWhat is MBO?Key Elements1.Goal specificity2.Participative decision making3.An explicit time period4.Performance feedbackManagement by Objectives (MBO)A program that encompasses specific goals, participatively set, for an explicit time period, with feedback on goal progress.Cascading of ObjectivesLinking MBO and Goal-Setting TheoryMBO Goal-Setting TheoryGoal SpecificityYesYesGoal DifficultyYesYesFeedbackYesYesParticipationYesNo(qualified)Why MBOs FailUnrealistic expectations about MBO resultsLack of commitment by top managementFailure to allocate reward properlyCultural incompatibilitiesSelf-EfficacySelf Esteem, which is. Individuals degree of liking or disliking themselves. An individuals feeling that s/he can complete a task (e.g. “I know I can!”)Enhances probability that goals will be achievedNot to be confused with: Self-Efficacy and Goal Setting Four Ways of Increasing Self Efficacy (Bandura)1.Enactive Mastery 2.Vicarious Modeling3.Verbal Persuasion4.ArousalNote: Basic Premise/Mechanism of Pygmalion Effects2.Employee Involvement ProgramWhat is Employee Involvement?A participative process that uses the entire capacity of employees and is designed to encourage increased commitment to the organizations success.Examples of Employee Involvement ProgramsParticipative ManagementA process in which subordinates share a significant degree of decision-making power with their immediate superiors.Examples of Employee Involvement Programs (contd)Quality CircleA work group of employees who meet regularly to discuss their quality problems, investigate causes, recommend solutions, and take corrective actions.ProblemselectionDecisionProblemidentification ProblemreviewSolutions recommendedSolution reviewEmployee Stock Ownership Plans (ESOPs)Company-established benefit plans in which employees acquire stock as part of their benefits.Linking EI Programs and Motivation TheoriesEmployee Employee Involvement Involvement ProgramsProgramsTheory YTheory Y(Believing (Believing employees employees want to be want to be involved)involved)Two-Factor Two-Factor TheoryTheory( (Intrinsic Intrinsic Motivation)Motivation)ERG TheoryERG Theory( (EmployeeEmployeeNeeds)Needs)Rewarding Employees: Four Aspects What to Pay (Internal vs. external equity)How to Pay (e.g Piece rate, merit based, bonuses, profit sharing, gain sharing, ESOPs，skill-based pay) What Benefits to Offer (e.g.,Flexible benefits)How to Recognize EmployeesRewarding Employees: Variable Pay ProgramsVariable Pay ProgramsA portion of an employees pay is based on some individual and/or organization measure of performance. Piece rate pay plans Profit sharing plans Gain sharing plansVariable Pay Programs (contd)Profit-Sharing PlansOrganization wide programs that distribute compensation based on some established formula designed around a companys profitability.Gain SharingAn incentive plan in which improvements in group productivity determine the total amount of money that is allocated.Piece-rate Pay PlansWorkers are paid a fixed sum for each unit of production completed.Skill-Based Pay PlansBenefits of Skill-based Pay Plans:1.Provides staffing flexibility.2.Facilitates communication across the organization.3.Lessens “protection of territory” behaviors.4.Meets the needs of employees for advancement (without promotion).5.Leads to performance improvements.Pay levels are based on how many skills employees have or how many jobs they can do.Skill-Based Pay Plans (contd)Drawbacks of Skill-based Pay Plans:1.Lack of additional learning opportunities that will increase employee pay.2.Continuing to pay employees for skills that have become obsolete.3.Paying for skills which are of no immediate use to the organization.4.Paying for a skill, not for the level of employee performance for the particular skill.Linking Skill-based Plans and Motivation TheoriesSkill Based Skill Based Pay PlansPay PlansReinforcement Reinforcement TheoryTheoryEquity Equity Theory Theory ERG Theory ERG Theory (Growth)(Growth)McClellands McClellands Need for Need for AchievementAchievementFlexible BenefitsFlexible Spending Plans: allow employees to use their tax-free benefit dollars to purchase benefits and pay service premiums.Modular Plans: predesigned benefits packages for specific groups of employees.Core-Plus Plans:a core of essential benefits and a menu-like selection of other benefit options.Employees tailor their benefit program to meet their personal need by picking and choosing from a menu of benefit options.Employee Recognition ProgramsIntrinsic rewards: stimulate intrinsic motivation Personal attention given to employeeApproval & appreciation for a job well doneGrowing in popularity and usageBenefits of programsFulfill employees desire for recognitionInexpensive to implement Encourages repetition of