Pay for performance
Chap 12
Pay for Performance and
Financial Incentives
Motivation, Performance, and Pay
Incentives
Financial rewards paid to workers whose production exceeds a predetermined standard.
Individual Differences
Law of individual differences
The fact that people differ in personality, abilities, values, and needs.
Different people react to different incentives in different ways.
Managers should be aware of employee needs and fine-tune the incentives offered to meets their needs.
Money is not the only motivator.
Employee Preferences for Noncash Incentives
Needs and Motivation
Abraham Maslow’s Hierarchy of Needs
Five increasingly higher-level needs: physiological (food, water, sex) security (a safe environment) social (relationships with others) self-esteem (a sense of personal worth) self-actualization (becoming the desired self)
Lower level needs must be satisfied before higher level needs can be addressed or become of interest to the individual.
Herzberg’s Hygiene–Motivator theory
Hygienes (extrinsic job factors)
Inadequate working conditions, salary, and incentive pay can cause dissatisfaction and prevent satisfaction.
Motivators (intrinsic job factors)
Job enrichment (challenging job, feedback and recognition) addresses higher-level (achievement, self-actualization) needs.
The best way to motivate someone is to organize the job so that doing it helps satisfy the person’s higher-level needs.
Edward Deci
Intrinsically motivated behaviors are motivated by the underlying need for competence and self-determination.
Offering an extrinsic reward for an intrinsically-motivated act can conflict with the acting individual’s internal sense of responsibility.
Some behaviors are best motivated by job challenge and recognition, others by financial rewards.
Instrumentality and Rewards
Vroom’s Expectancy Theory
A person’s motivation to exert some level of effort is a function of three things:
Expectancy: that effort
Pay for Performance and
Financial Incentives
Motivation, Performance, and Pay
Incentives
Financial rewards paid to workers whose production exceeds a predetermined standard.
Individual Differences
Law of individual differences
The fact that people differ in personality, abilities, values, and needs.
Different people react to different incentives in different ways.
Managers should be aware of employee needs and fine-tune the incentives offered to meets their needs.
Money is not the only motivator.
Employee Preferences for Noncash Incentives
Needs and Motivation
Abraham Maslow’s Hierarchy of Needs
Five increasingly higher-level needs: physiological (food, water, sex) security (a safe environment) social (relationships with others) self-esteem (a sense of personal worth) self-actualization (becoming the desired self)
Lower level needs must be satisfied before higher level needs can be addressed or become of interest to the individual.
Herzberg’s Hygiene–Motivator theory
Hygienes (extrinsic job factors)
Inadequate working conditions, salary, and incentive pay can cause dissatisfaction and prevent satisfaction.
Motivators (intrinsic job factors)
Job enrichment (challenging job, feedback and recognition) addresses higher-level (achievement, self-actualization) needs.
The best way to motivate someone is to organize the job so that doing it helps satisfy the person’s higher-level needs.
Edward Deci
Intrinsically motivated behaviors are motivated by the underlying need for competence and self-determination.
Offering an extrinsic reward for an intrinsically-motivated act can conflict with the acting individual’s internal sense of responsibility.
Some behaviors are best motivated by job challenge and recognition, others by financial rewards.
Instrumentality and Rewards
Vroom’s Expectancy Theory
A person’s motivation to exert some level of effort is a function of three things:
Expectancy: that effort