Reinforcement theory

Expectancy theory
Behavior that is rewarded will
be repeated.
Expectancy
If I attempt this level of
performance, am I likely to
succeed?
I nstrumentality
If I achieve this level of
performance, am I likely to be
rewarded?
Valence
What value do I place on the
rewards available to me?
Motivational Force =
E * I * V
Differ by
payment method
frequency of payout
ways of measuring performance
choice of which employees are covered
Fitting program to situation depends on
organizational structure
management style
type of work
Merit Pay
Individual Incentives
Profit Sharing
Ownership
Gainsharing
Group Incentives
Alternative Reward Systems
link performance appraisal ratings
to annual pay increases
focus: identifying individual
differences in performance
better performance results in higher
reward, contingent on position in the
range (compra-ratio)
merit pay systems focusing on individual
performance discourage teamwork
if performance is not measured fairly and
accurately, the whole process will be
contaminated
apparent differences between people arise
almost entirely from the system that they
work in, not the people themselves
coworkers, job materials, customers,
management, supervision
reward individual performance
payments are NOT rolled into
base pay
performance is usually measured
as a physical output rather than
subjective ratings
most jobs have no physical output measure
administrative problems of setting and
maintaining acceptable standards
plans may be inconsistent with other goals
(e.g. acquiring multiple skills, proactive
problem solving)
people may focus on what they get paid for
and nothing else
plans may reward output at the expense of
quality
payments are based on a measure of
organizational performance (profits)
payments do NOT become a part of base
pay
Advantage: may encourage workers to
think more like owners
Drawbacks:
workers may perceive their performance has
little to do with profit
deferred nature of payouts
encourages employees to focus on the
success of the organization as a whole
but may not result in motivation for
high individual performance
gains not realized until stock sold
(employees leaving company?)
Methods:
stock options
ESOPs (employee stock ownership plans)
sharing productivity gains with employees
differs from profit sharing in that instead of
using an organization-level performance
measure (profits) plans measure group or
plant performance
better for motivation
Examples:
Scanlon plan, Rucker plan, Improshare
goes beyond money -- participation in
problem solving = key
management commitment
need to change or a process of continuous improvement
management acceptance & encouragement of employee input
high levels of cooperation and interaction
employment security
information sharing on all productivity and costs
goal setting
commitment of all involved parties to change and
improvement
agreement on a performance standard
calculation that is understandable, perceived as fair, closely
related to managerial objectives
Focus = smaller work groups
While gainsharing typically measures
physical output, group incentives tend
to measure performance in terms of a
broader array such as
cost savings
successful completion of product design
meeting deadlines
Drawback: competition among teams
alternatives to cash --
travel
merchandise
earned time off
symbolic awards
plaques, coffee cups, bananas
Plan is clearly communicated.
Plan is understood by employees and management.
Bonuses are easy to calculate.
Employees participate in administrating the plan.
Employees believe they are being treated fairly.
Employees believe they can trust the company and
that they have security.
Bonuses are awarded as soon as possible after the
desired performance.
Pay-performance linkage must be perceived by employees
Pay is valued by employees
Employees must perceive that effort and ability lead to
rewarded behavior
Performance measurement must be fair
Employees must trust the organization
Pay program must be understood
Employees must be able to control their performance
Performance appraisal system cannot be biased
There must be enough money to fund incentives
A valid job evaluation must have been conducted