problem 5 - pay & rewards Flashcards
what is expectancy theory?
expectations about behavior–outcome relationships shape the motivation to act
applies in the situation where an individual is confronted with the necessity or the opportunity to make a choice among alternative courses of action
expectancy theory
what are the 3 cognitions of expectancy theory
3 cognitions will jointly determine the employee’s choice:
1. the probability that a particular level of effort leads to a specific performance level
2. the probability that this performance level causes the attainment of particular outcomes
3. the attractiveness of these outcomes
the alternative that gets the highest subjective utility for the employee is eventually chosen
motivation = Valence x Instrumentality x Expectancy
expectancy theory
how do the cognitions relate to compensation
lawler (1971): applied the last two components to compensation → the relative importance of pay to an individual is a function of:
* the extent to which compensation is perceived to provide a means to satisfy particular needs (i.e. to reach particular goals)
* the importance of these needs (or goals) to the individual
more compensation is seen as ‘essential’ to gain more recognition, to get more security, to learn more about one’s own level of achievement + the more these needs are important/attractive to a person
= the more important compensation is
expectancy theory
pay-for-performance systems
instrumentality perception → the employee’s or manager’s belief that a particular performance outcome is related to a specified amount of pay
this belief is also affected by the quality of feedback, trust in the system, self-efficacy and several other variables
instrumentality belief is much lower when a salary system with performance bonuses is applied than when a system of hourly wages exists
organizational behavior modifcation model
(skinner 1969)
behavior is a function of its contingent consequences
5 steps for changing performance behavior–consequences linkages:
1. the identification of observable critical performance-related behaviors
2. the measurement of those behaviors’ baseline frequencies
3. the analysis of antecedents and contingent consequences of these behaviors
4. the intervention to increase the frequencies of these behaviors
5. the test whether frequencies have increased
= a consequence is reinforcing when it strengthens a behavior–consequence linkage and increases its frequency
organizational behavior modification
reinforcements: feedback & pay
pay may be reinforcing as it is tied directly and frequently to preceding performance behavior
partial reinforcement → causes stronger behavior to occur
continuous reinforcement (everytime behavior happens) VS variable reinforcement (only sometimes)
* CR often resulted in high perf, but in some instances only when workers were still inexperienced
* VR caused higher perf in some and lower performance in other settings compared to CR
goal setting theory
specifies the conditions under which an individual is motivated to perform on a high level
generally, 4 conditions are crucial for high performance to occur:
1. goals should be set at a high, difficult level
2. specfic goals
3. regular feedback
4. employees must accept these goals
various additional moderating (ability, commitment) and mediating (persistence, task-specific strategies) variables
goal setting theory
self-set goals & self efficacy
main determinants of motivation for high performance: self-set goals and self-efficacy
* similar to expectancy theory in that pay-for-performance only motivates to act if the individual believes that this action for getting extra pay is feasible
* bonus pay→higher level of goal commitment
* inconclusive whether goals and self-efficacy mediate pay effects
* ppl with moderate goals did best under a bonus system that paid only for goal success
goal setting theory
bartol & locke’s threefold approach to pay-for-performance
for people with difficult goals all-or-none bonuses should be used → although this kind of bonus might increase the negative effects of failure, it might challenge highly motivated individuals to find new methods to reach their goals
degree of success should be paid → performance pay is increasing proportionally as performance is getting better
when self-set goals apply, rewards may be determined afterwards - e.g. based upon the value of achieved performance to the organization
equity & justice: adam’s equity model
an individual tries to achieve balance between their inputs and outcomes relative to their perception of the input–outcome ratio of a referent
inputs: have LT investments & ST costs - e.g. eduction, abilities & effort
outcomes: task performance, recognition, compensation, and critique
a feeling of equity results when the person’s perceived input–outcome ratio is equal to the person’s perception of the referent’s ratio
adam’s equity model
dissonance & retaliation
inequity or dissonance manifests itself in the case of an unequal balance between ratios
when dissonance occurs → person will try to restore the balance - difficult to predict which strategy will be chosen bcuz a condition of ‘under-reward’ elicits different emotions than an ‘over-reward’ condition
retaliation → may occur when unfairness is perceived
less commitment, theft, illness - depends on personality
equity & justice
interaction between the different types of justice
procedural justice: perceived fairness of the formal procedures a company is using
interactional justice: perceived quality of interpersonal relations and treatments going along with these formal procedures
distributive justice: perceived fairness of rewards received
distributive dissatisfaction → retaliation will occur when either procedural or interactional justice is low
if either procedural or interactional justice is high → no retaliation will take place
cognitive evalutation theory
intrinsic motivation: results from 2 basic human needs - the need to be competent + the need for an internal locus of causality of behavior
intrinsic motivation = looking for challenge
extrinsic rewards can affect instrinsic motivation
cognitive evaluation theory
effects of extrinsic rewards on intrinsic motivation
when an employee is faced with an extrinsic reward like pay-for-performance → any outcome may have 1 of 3 properties:
1. informational: outcome informs the person about their competence level → IM is continued
2. controlling: outcome is perceived as controlling the person (by a source external to him or her) → IM decreases since the locus of causality is now externally attributed
3. motivational: outcome contains a negative feedback message. skills and competencies are poor → IM decreases
cognitive evaluation theory
effect of nature of reward on instrinsic motivation
the nature of a particular reward determines whether IM is going to be affected - 5 different kinds:
1. unexpected pay → does not affect IM
2. pay that is not task-contingent (i.e. pay for participating in a activity) → does not reduce IM
3. task-contingent pay → neg effect
4. performance-contingent pay → reduces IM
5. verbal rewards → increase IM
