1. Organizational Behavior Chapter Seven Rewarding Organizational Behavior

2. Organizational Behavior Rewards Why do organizations have rewards? Should organizations have rewards? How do you want to be rewarded at work? What should your rewards be based on? How does motivation, behavior, individual differences, culture affect rewards? How does feedback play into the reward?

3. Organizational Behavior Feedback Feedback: “Objective information about individual or collective performance.” Functions of Feedback: - Instructional - Motivational

4. Organizational Behavior Feedback and Rewards Are Important Links In the Job Performance Cycle Results Learning Personal development Stable, strong job performance Properly administered rewards Timely and instructive feedback EffortAbility

5. Organizational Behavior A Cognitive-Processing Model of Feedback Recipient Characteristics Self-esteem Self-efficacy Needs and goals Desire for performance feedback Perception Sign and content of feedback message Cognitive Evaluations Feedback accuracy Source credibility System fairness Expectations Behavioral standards Sources Others Task Self Behavioral Outcomes Direction Effort Persistence Resistance

6. Organizational Behavior Six Common Trouble Signs for Organizational Feedback Systems ¶Feedback is used to punish, embarrass, or put down employees ·Those receiving the feedback see it as irrelevant to their work ¸Feedback information is provided too late to do any good ¹People receiving feedback believe it relates to matters beyond their control ºEmployees complain about wasting too much time collecting and recording feedback data »Feedback recipients complain about feedback being too complex or difficult to understand

7. Organizational Behavior Some Concluding Tips for Giving Good Feedback Managers need to keep the following tips in mind when giving feedback: 4Relate feedback to existing performance goals and clear expectations. 4Give specific feedback tied to observable behavior or measurable results. 4Channel feedback toward key result areas. 4Give feedback as soon as possible. 4Give positive feedback for improvement, not just final results. 4Focus feedback on performance, not personalities. 4Base feedback on accurate and credible information.

8. Organizational Behavior Nontraditional Feedback  Upward Feedback: Subordinates evaluate their manager’s style and performance.  360-Degree Feedback: Specific (typically anonymous) feedback generated by one’s manager, peers, subordinates, and other key people.

9. Organizational Behavior Sources and Types of Feedback in the 360-Degree Approach Direct supervisor Peers/team members Direct subordinates Relevant others such as customers and suppliers Manager/Focal Person Self-evaluation of: Planning/administrative/ financial skills Technical/business skills Interpersonal skills Problem-solving skills Team-building skills Other relevant skills

10. Organizational Behavior The Reward Process Motivation to exert effort Performance: Individual Experience Ability & Skill Performance Evaluation Satisfaction Extrinsic Rewards Intrinsic Rewards Feedback

11. Organizational Behavior The Reward Process Satisfaction with a reward is a function of both how much is received and how much the individual feels should be received. (Equity theory) An individual’s feelings of satisfaction are influenced by comparisons of what happens to others. Satisfaction is influenced by how satisfied employees are with both intrinsic and extrinsic rewards. People differ in the reward they desire and in the relative importance different rewards have for them Some extrinsic rewards are satisfying because they lead to other rewards. Rewards must be valued and must be related to a specific level of job performance

12. Organizational Behavior The Reward Process Extrinsic rewards – external to the job. What are examples? Intrinsic rewards – part of the job itself. What are examples? How do intrinsic and extrinsic rewards interact? How do rewards influence turnover and absenteeism? Is a low turnover always good?

13. Organizational Behavior General Model of Organizational Reward Systems Organization’s Reward Norms Profit maximization Equity Equality Need Distribution Criteria Results Behavior Other factors Types of Rewards Financial/material (extrinsic) Social (extrinsic) Psychic (intrinsic) Desired Outcomes Attract Motivate Develop Satisfy Retain

14. Organizational Behavior Why Do Rewards Fail to Motivate? Too much emphasis on monetary rewards Rewards lack an “appreciation effect” Extensive benefits become entitlements Counterproductive behavior is rewarded Too long a delay between performance and rewards Too many one-size-fits-all rewards Use of one-shot rewards with a short-lived motivational impact Continued use of demotivating practices such as layoffs, across-the-board raises and cuts, and excessive executive compensation

15. Organizational Behavior How To Make Team-Based Pay Work  Prepare employees with interpersonal skills training.  Don’t introduce team-pay until teams are running smoothly.  Blend individual and team incentives.  Start by rewarding teamwork behaviors and then evolve to incentives for team results.  Make sure each team member has a clear line of sight to key team results.

16. Organizational Behavior Non-Traditional Rewards Cafeteria benefits Time off (banked) Skill-based pay Gainsharing vs profit sharing

17. Organizational Behavior Profit Sharing vs. Gainsharing Profit sharing: “Occurs when individual employees or work groups are granted a specified portion of any economic profits earned by the business as a whole.” Gainsharing: “Involves a measurement of productivity combined with the calculation of a bonus designed to offer employees a mutual share of any increases in total organizational productivity. Usually all those responsible for the increase receive the bonus.”

18. Organizational Behavior Making Pay for Performance Work JMake pay for performance an integral part of the organization’s basic strategy. JBase incentive determinations on objective performance data. JHave all employees actively participate in the development, implementation, and revision of the performance-pay formulas. JEncourage two-way communication so problems with the pay-for-performance plan will be detected early. JBuild the pay-for-performance plan around participative structures such as suggestion systems or quality circles.

19. Organizational Behavior Making Pay for Performance Work (continued) JReward teamwork and cooperation whenever possible JActively sell the plan to supervisors and middle managers who may view employee participation as a threat to their traditional notion of authority JIf annual cash bonuses are granted, pay them in a lump sum to maximize their motivational impact JRemember that money motivates when it comes in significant amounts, not occasional nickels and dimes