Improving Job Performance with Goals, Feedback, Rewards, and Positive Reinforcement Our focus in Chapter 9 will be on improving individual job performance with goal setting, feedback, organizational reward systems, and positive reinforcement. This chapter concludes Part 2 of the textbook on individual differences and provides a practical capstone to what we’ve learned so far about cultural and individual differences, perceptions, and motivation. McGraw-Hill/Irwin Copyright © 2010 by the McGraw-Hill Companies, Inc. All rights reserved.

Ch. 9 Learning Objectives Define the term performance management, distinguish between learning goals and performance outcome goals, and explain the three-step goal setting process. Identify the two basic functions of feedback, and specify at least three practical lessons from feedback research. Define 360-degree feedback, and summarize how to give good feedback in a performance management program. Distinguish between extrinsic and intrinsic rewards, and explain the four building blocks of intrinsic rewards and motivation If we use the four topics of this chapter as an outline for the learning objectives, then Objective 1 focuses on goal setting, Objectives 2 and 3 relate to feedback, Objective 4 on this slide and Objectives 5 and 6 on the next slide cover organizational reward systems. 9-2

Ch. 9 Learning Objectives Summarize the reasons why extrinsic rewards often fail to motivate employees. Discuss how managers can generally improve extrinsic reward and pay for performance plans. State Thorndike’s “law of effect,” and explain Skinner’s distinction between respondent and operant behavior. Define positive reinforcement, negative reinforcement, punishment, and extinction, and distinguish between continuous and intermittent schedules of reinforcement. Demonstrate your knowledge of behavior shaping. And Objectives 7-9 focus on positive reinforcement. 9-3

Your Experience A=Yes, B=No, C= NA Have you had a performance management discussion with your manager? Have you ever conducted a performance management discussion with an employee? Do you look forward to performance evaluation meetings with your boss? What would your ideal performance management session be like? As you consider your personal experiences addressed in the questions on this slide, you will probably have identified both positive and negative experiences with performance management. As you relate your experience to the topics covered in this chapter, you will see ways to improve the process from both management’s and employees’ perspectives. 9-4

Improving Performance Performance management Continuous cycle of improving job performance with goal setting, feedback and coaching, and rewards and positive reinforcement. The focus in this chapter, as stated earlier, is to improve performance. Factors that contribute to employee success include knowledge, skills, ability, organizational resources, motivation, and culture. Organizations can have an impact on all of these factors if they carefully consider their strategic objectives and the individual needs of their employees. 9-5

Improving Individual Performance The performance improvement cycle involves goal setting, feedback and coaching, and then rewards. Effective implementation of these tools can yield desired outcomes as shown in this figure. 9-6

Goal Setting Performance outcome goal: targets a specific end result Learning goal: Encourages learning, creativity, and skill development It is important to emphasize both learning and performance outcome goals. A mistake managers sometimes make is to focus on the performance goals rather than on the learning goals. Sometimes a developmental goal is critical to accomplish before a performance goal may be achieved. 9-7

Line of Sight 56% of workers in US don’t “clearly understand their organization's most important goals” 81% don’t have clearly defined goals Line of Sight: Knowledge of the organization’s strategic goals and how they need to contribute A survey by Franklin Covey found that 56% of workers in US don’t “clearly understand their organization's most important goals” and that 81% don’t have clearly defined goals Thus, it is important for employees to understand what their organization’s goals are and exactly how they are expected to contribute. This is called Line of Sight. 9-8

Guidelines for SMART Goals You will recall seeing these guidelines for goal setting in Chapter 8. You can use goal setting most effectively when you remember to apply the principles from the acronym SMART when establishing goals for yourself or others. 9-9

Steps for Effective Goal Setting Programs Set Goals What do you base the goals on? How do you know what is appropriate? Promote Goal Commitment Under what conditions will an employee be motivated to pursue a goal? Provide Support and Feedback How will the employee reach the goal? What resources will be necessary? Management by objectives is a system that incorporates participation in decision making, goal setting, and feedback The three steps to effective implementation of goal-setting programs are outlined here. Key points to remember under each are as follows: Number one, goals can be based on such things as time and motion studies or the average past performance of job holders. Deciding what is appropriate needs to be decided participatively between the employee and the boss. Number two, employees are typically motivated to pursue a goal that they consider reasonable, obtainable, and fair. Number three, in providing support, managers must consider factors, besides motivation, that will impact the successful accomplishment of the goal. For example, employees may require training or extra support before they can reach their goals. 9-10

Feedback Feedback objective information about performance Functions of Feedback Instructional Motivational When employees receive feedback about their performance, it can be either instructional or motivational. Instructional feedback serves to clarify roles or teach new behavior. Motivational feedback serves as a reward or a promise of a reward. 9-11

Six 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. People receiving feedback believe it relates to matters beyond their control. Employees complain about wasting too much time collecting and recording feedback data. Feedback recipients complain about feedback being too complex or difficult to understand. These signs of trouble in organizational feedback systems indicate the feedback system needs work in order to build a system that is credible and effective. 9-12

Nontraditional Feedback 360-Degree Feedback comparison of anonymous feedback from one’s superior, subordinates, and peers with self-perceptions Research on 360-degree feedback found that improvement was more likely to occur when feedback indicates change is necessary; and recipients have a positive feedback orientation, perceive a need to change their behavior, believe the change is feasible, and set goals to enact the change. 9-13

Tips for Giving Good Feedback Focus feedback on performance, not personalities Give specific feedback tied to observable behavior or measurable results Channel feedback toward key result areas Give feedback as soon as possible Give positive feedback for improvement, not just final results Base feedback on accurate and credible information Pair feedback with clear expectations for improvement. Managers would do well to keep these points in mind when giving feedback as part of a comprehensive performance management program. 9-14

General Model of Organizational Reward Systems Types of Rewards Desired Outcomes Attract Motivate Develop Satisfy Retain Financial/material (extrinsic) Social (extrinsic) Psychic (intrinsic) Distribution Criteria Results Behavior Other factors This model focuses on three common components of an organizational reward system. The types of rewards can be either extrinsic or intrinsic, a topic discussed on the next slide. The desired outcomes organizations hope to achieve from their organizational reward system are broadly described as attracting, motivating, developing, satisfying, and retaining employees. The distribution criteria can be based on results or actions and behaviors, which are performance criteria. Results are the tangible outcomes such as individual, group, or organization performance and quantity and quality of performance; whereas, action and behavior examples include teamwork, cooperation, risk taking, and creativity. Other distribution criteria are non-performance considerations such as the type of job, tenure, or seniority. 9-15

Intrinsic vs. Extrinsic Rewards Intrinsic Rewards Self-granted, psychic rewards What are examples of intrinsic rewards? Extrinsic Rewards Financial, material, or social rewards from the environment What are examples of extrinsic rewards? Reward systems need to incorporate the aspects of a job that allow employees to grow and develop as a person, and at the same time realize the power of pay and benefits. Examples of intrinsic rewards are feelings of competence or accomplishment. These are driven by positive feelings associated with doing well on a task or job. Examples of extrinsic rewards are money, praise, and recognition. 9-16

A Model of Intrinsic Motivation Opportunity Rewards Accomplishment Rewards Sense of Choice Sense of Competence From Task Activities Sense of Meaningfulness Sense of Progress From Task Purpose Four key intrinsic rewards underlie a person’s level of intrinsic motivation: A sense of meaningfulness is the opportunity you feel to pursue a worthy task purpose. Managers lead for meaningfulness by creating a a non-cynical climate, clearly identifying each employee’s passions, communicating an exciting vision and relevant task purposes, and assigning whole tasks. A sense of choice is the opportunity you feel to select task activities that make sense to you and to perform them in ways that seem appropriate. Managers lead for choice by delegating authority, placing trust in workers, not punishing for honest mistakes, communicating a clear purpose, and providing information. A sense of competence is the accomplishment you feel in skillfully performing tasks you have chosen. Managers lead for competence by making sure employees have the knowledge they need to succeed at their jobs, providing positive feedback, recognizing employees’ skills, providing challenging assignments, and setting high, non-comparative standards. A sense of progress is the accomplishment you feel in achieving the task purpose. Managers lead for progress by creating a collaborative climate, recognizing and rewarding milestones, promoting celebrations, providing access to customers, and measuring improvement. 9-17

Why Do Extrinsic 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 As you see listed here, extrinsic rewards can fail to motivate for a variety of reasons. 9-18

Use and Effectiveness of Incentive Pay Plans Pay for performance is the popular term for monetary incentives tied to one’s results or accomplishments that determine at least some portion of employees’ paychecks. Research has shown that 41 percent of companies with single-digit revenue growth said the cost outweighed the benefits of the pay for performance plan and actually led to adverse results for 26% of those surveyed. The result was just the opposite for companies with double-digit revenue growth. It is clear that the implementation, support, and communication of these plans is critical for their success and that they may not be appropriate in some situations. 9-19

Maximizing Motivational Impact of Extrinsic Rewards Make pay for performance an integral part of the organization’s basic strategy. Base incentive determinations on objective performance data. Have all employees actively participate in the development, implementation, and revision of the performance-pay formulas. Encourage two-way communication so problems with the pay-for-performance plan will be detected early. In order the maximize the motivational impact of extrinsic rewards, organizations would do well to follow the guidelines outlined on this and on the next slide. 9-20

Maximizing Motivational Impact of Extrinsic Rewards Cont. Build the pay-for-performance plan around participative structures such as suggestion systems or problem-solving teams Reward teamwork and cooperation whenever possible Actively sell the plan to supervisors and middle managers who may view employee participation as a threat to their traditional notion of authority If annual cash bonuses are granted, pay them in a lump sum to maximize their motivational impact Selectively use creative noncash rewards to create buzz and excitement [No narration required.] 9-21

Positive Reinforcement Law of effect Behavior with favorable consequences is repeated, behavior with unfavorable consequences disappears. I work really hard and am not rewarded. The law of effect would suggest that I will Quit Keep trying to impress the right people Thorndike’s famous law of effect is described here. If you were to apply the law of effect to this scenario: “You work really hard and are not rewarded,” what would the law of effect suggest that you would do? Quit Keep trying to impress the right people The simple answer is a, Quit. However, we know that the law of effect is not the only factor contributing to this decision. For example, some individuals would put more priority on factors such as financial concerns or enjoyment or sense of fulfillment from the work than on the law of effect. 9-22

Contingent Consequences in Operant Conditioning Nature of Consequences Positive or Pleasing Negative or Displeasing Positive Reinforcement Punishment Contingent Presentation Punishment (Response Cost) Negative Reinforcement Behavior-Consequence Relationship Contingent Withdrawal The four ways that contingent consequences control behavior are positive reinforcement, negative reinforcement, punishment, and extinction. Positive reinforcement makes behavior occur more often by contingently presenting something positive. Negative reinforcement makes behavior occur more often by contingently withdrawing something negative. Punishment makes behavior occur less often by contingently presenting something negative or withdrawing something positive. And extinction makes behavior occur less often by ignoring or not reinforcing it. (no contingent consequence) Extinction 9-23

Test Your Knowledge Martin’s boss tells him “the next time you come to work late, I’m going to dock your pay”. This best represents: Positive reinforcement Negative reinforcement Punishment Response Cost Punishment Martin’s boss tells him “the next time you come to work late, I’m going to dock your pay”. This best represents: Positive reinforcement Negative reinforcement Punishment Response Cost Punishment D. Response Cost punishment because the behavior can happen but there is a cost associated with it. 9-24

Ten Practical Tips to Effectively Shape Job Behavior Accommodate the process of behavioral change. Define new behavior patterns specifically. Give individuals feedback on their performance. Reinforce behavior as quickly as possible. Use powerful reinforcement. Use a continuous reinforcement schedule (for new behaviors) Use a variable reinforcement schedule for maintenance Reward teamwork -- not competition. Make all rewards contingent on performance. Never take good performance for granted. Let’s conclude the chapter with this listing of ten practical tips to shape job behavior. 9-25