Chapter 6: applied performance

THE MEANING OF MONEY IN THE WORKPLACE Medium of exchange People use money to buy and sell goods. Buyers give up money and receive goods. Sellers give up goods and receive money. Money makes transactions easier because everyone is willing to trade money for goods and goods for money. Object of compensation Employees provide their skills, labour and knowledge in return for money and benefits from the organization Money as a source of enhanced or reduced anxiety. Money fulfils a variety of needs, influences emotions and shapes or represents a persons self co ncept.

TYPES OF REWARDS IN THE WORKPLACE A) MEMBERSHIP/SENIORITY BASED REWARDS -Fixed wages, seniority increases B) JOB STATUS-BASED REWARDS -Includes job evaluation and status perks *JOB EVALUATION- widely used to assess the worth or status of each job. Most job evaluation methods give higher value to jobs that require more skill and effort, have more responsibility, and have more difficult working conditions. C) COMPETENCY-BASED REWARDS -Pay increases with competencies acquired and demonstrated *Skill-based pay- Pay increases with skill modules learned D) PERFORMANCE-BASED REWARDS Individual rewards a) Commission- a fee paid to an agent and other sales people for providing a service, especially a percentage of the total sales b) Piece-rate system- rewards employees according to the number of units produced c) Bonus- an amount of money given in addition to normal pay, especially as a reward Team rewards a) Gain sharing plans- form of team-based compensation that calculates bonuses from the work units cost savings and productivity improvement b) Bonus- an amount of money given in addition to normal pay, especially as a reward Organizational rewards a) Stock options- gives employees the right to purchase shares from the company at a future date at a predetermined price up to a fixed expiration date b) Profit sharing plans- a system by which the employees of a company receive a prearranged share of the company's profits c) Employee stock ownership plans (ESOPs)- encourages employees to buy company stock, usually at a discounted price or through a no-interest loan Improving Reward Effectiveness Link rewards to performance Ensure rewards are relevant Companies need to align rewards with performance within the employees control. The more employees see a line of sight between their daily actions and the reward, the more they are motivated to improve performance. Team rewards for interdependent jobs Team rewards should be used rather than individual rewards when employees work in highly interdependent jobs because it is difficult to measure individual performance in these situations. Team rewards also encourage cooperation, which is more important when work is highly interdependent. A third benefit of team rewards is that they tend to support employee preferences for team-based work.

 Ensure rewards are valued It seems obvious that rewards work best when they are valued. Yet companies sometimes make false assumptions about what employees want, with unfortunate consequences. The solution of course is to ask employees what they value. Watch out for unintended consequences Performance-based reward systems sometimes have an unexpected-and-undesirable-effect on employee behaviours. The solution here is to carefully think through the consequences of rewards and, where possible, test incentives in a pilot project before applying them across the organization. Job Design Practices *Job design -Assigning tasks to a job, including the interdependency of those tasks with other jobs. Constantly changing due to changing technology and psychological contracts especially employability. *Job- a set of tasks performed by a person Job design and work efficiency *Job specialization- occurs when the work required to build an automobile or any other product or service is subdivided into separate jobs assigned to different people. *Cycle time- the time required to complete the task before starting over with a new work unit. Job design and work motivation * Motivator-hygiene theory- proposes that employees experience job satisfaction when they fulfil growth and esteem needs (called motivators) and they experience dissatisfaction when they have poor working conditions, job security, and other factors categorized as lower-order needs (called hygienes). Core job characteristics The job characteristics model identifies five core job characteristics. Under the right conditions, employees are more motivated and satisfied when jobs have higher level of these characteristics. Skill variety. Skill variety refers to the use of different skills and talent to complete a variety of work activities. Task identity. Task identity is the degree to which a job requires completion of a whole or identifiable piece of work, such as assembling an entire broadband modem rather than just soldering in the circuitry. Task Significance. Task Significance is the degree to which the job affects the organization and/or larger society. Autonomy. Autonomy Job with high levels of autonomy provides freedom, independence, and discretion in scheduling the work and determining the procedures to be used to complete the work. Job feedback. Job feedback is the degree to which employees can tell how well they are going on the basis of direct sensory information from the job itself. Job design practices that motivate Job Rotation. Job rotation is the practice of moving employees from one another. Job Enlargement. Job Enlargement is the practice of adding more jobs to an existing job. Job Enrichment. Job Enrichment is the practice of giving employees more responsibility for scheduling, coordinating, and planning their own work. a) Clustering tasks into natural groups Stitching highly interdependent tasks into one job e.g., video journalist, assembling entire product b) Establishing client relationships Directly responsible for specific clients Communicate directly with those clients Empowerment Practices A psychological concept in which people experience more self-determination, meaning, competence, and impact regarding their role in the organization. Dimensions of Empowerment Self-determination. -Employees feel they have freedom and discretion Meaning -Employees believe their work is important Competence -Employees have feelings of self-efficacy

Impact -Employees feel their actions influence success Creating Empowerment Individual factors Possess required competencies, able to perform the work Job design factors Autonomy, task identity, task significance, job feedback Organizational factors Resources, learning orientation, trust Self-Leadership practices The process of influencing oneself to establish the self-direction and self-motivation needed to perform a task Includes concepts/practices from: Goal setting Social learning theory Sports psychology Elements of Self-Leadership Personal goal setting o Employees set their own goals o Apply effective goal setting practices Constructive Thought Patterns a) Positive self-talk o Talking to ourselves about thoughts/actions o Potentially increases self-efficacy b) Mental imagery o Mentally practicing a task o Visualizing successful task completion Designing Natural Rewards o Finding ways to make the job itself more motivating e.g. Altering the way the task is accomplished Self- Monitoring o Keeping track of your progress toward the self-set goal Looking for naturally-occurring feedback Designing artificial feedback Self- Reinforcement o Taking a reinforcer only after completing a self -set goal e.g. Watching a movie after writing two more sections of a report e.g. Starting a fun task after completing a task that you dont like