Motivation in Practice Flashcards
Variable Pay (Incentive Compensation)
Providing employees some portion of their pay based on a measure of performance
Many organizations use these kinds of programs
Some evidence that can cause increased mental health issues
Piece-Rate
Individual workers paid a certain sum of money for each unit of production they complete
Variation: workers paid a basic hourly wage and paid a piece rate differential on top of hourly wage
Wage Incentive Plans
Schemes linking pay to performance on production jobs
Production Job Pay Incentives
Piece rate
Wage incentive plans
Usually lead to increased productivity
Problems With Wage Incentives
Lowered quality
Differential opportunities
Reduced cooperation
Incompatible job designs
Restriction of productivity
White Collar Pay Incentives
Fewer objective performance criteria
Employed more frequently than wage incentive plans
Often used to attract and retain employees instead of increasing wages
Merit pay plans
Merit Pay Plans
Managers required to evaluate performance of employees on rating scale or written description
Use evaluations to recommend a certain amount of merit pay
Problems With Merit Pay
Low discrimination between workers
Small increases (combatted by lump sum bonuses)
Pay secrecy between employees
Ways To Use Pay To Motivate Teamwork
Profit sharing
Employee stock ownership plans (ESOPs)
Gainsharing
Skill-based pay
Profit Sharing
If firm makes a profit some of it is returned to employees
Unlikely that profit sharing is motivational (difficult to see effects of own actions on organization)
Employee Stock Ownership Plans (ESOP)
Allow employees to own set amount of company’s shares purchased at a fixed price
Can help to create sense of ownership
Increase loyalty and motivation
Works best in small organizations that regularly turn a profit
Gainsharing
Group incentive plans based on improved productivity or performance over which workforce has some control
Reduce other costs and the ‘gain’ shared between employees
Skill-Based Pay
Motivate employees to learn a wide variety of work tasks, irrespective of the job they are doing at a given time
Useful on self managed teams where employees divide work as they see fit
Job Design
Structure, content, configuration of a person’s work tasks and roles
Job Scope
Breadth and depth of a job
Breadth: number of different activities performed on the job
Depth: degree of discretion or control the worker has over how these tasks are performed