Topic 8 - Performance-based Pay: Motivational Foundations Flashcards
What is employee motivation?
Employee motivation is an employee’s intrinsic enthusiasm and drive to accomplish activities related to work, driven by an internal decision to take action.
Why do organizations use performance-based pay systems?
To provide incentives for behaviors and outcomes that enable higher performance.
What determines the success of performance-based pay systems?
How well the system aligns with employees’ motivation.
What are the five most applicable theories of motivation for performance-based pay systems?
Maslow’s hierarchy of needs, McClelland’s theory of learned needs, Herzberg’s hygiene-motivator theory, self-determination theory, and expectancy theory.
Does the word “theory” in motivation theories imply guesswork?
No, these theories are supported by substantial evidence and help managers design effective reward systems.
What is Maslow’s Hierarchy of Needs Theory?
A theory stating that everyone has five universal needs ordered in a hierarchy, from basic survival needs to self-actualization
What are the five levels in Maslow’s hierarchy of needs?
Physiological needs, safety and security needs, social needs, ego and esteem needs, and self-actualization needs.
What are physiological needs according to Maslow?
Needs necessary for survival, such as food, water, oxygen, sleep, sex, and sensory satisfaction.
What are safety and security needs in Maslow’s theory?
A desire for stability, security, protection, freedom from fear, and a need for structure and order.
What are social needs in Maslow’s hierarchy?
The need for emotional love, friendship, and affectionate relationships with others, including family and friends.
What are ego and esteem needs in Maslow’s hierarchy?
The desire for self-respect, self-esteem, and recognition or esteem from others.
What is self-actualization in Maslow’s hierarchy of needs?
The need for self-realization, continuous self-development, and achieving one’s full potential.
What is the principle of prepotency in Maslow’s theory?
Higher-level needs only become important and influence behavior once lower-level needs are satisfied.
How does Maslow’s hierarchy relate to motivation in the workplace?
Employees are motivated to achieve needs in sequence, starting with basic needs and progressing to self-actualization, which can inform the design of rewards systems.
Why is money significant in motivation theories?
Money impacts motivation across various theories, but its effects can vary and sometimes contradict depending on the theory.
In order to design effective performance-based pay systems, managers must have a good understanding of __________________.
Employee motivation
Employee metrics
Employee merit
Employee management
Employee motivation
The primary reason that organizations use performance-based pay is to:
Provide an incentive for the types of behaviors and outcomes that enable higher performance
Provide an incentive for standing out in a low-performing market
Provide an incentive for standing out in a high-performing economy
None of the above
Provide an incentive for the types of behaviors and outcomes that enable higher performance
What is the core assumption of the Reinforcement Theory of motivation?
Behavior is a function of its consequences.
What does the Reinforcement Principle state?
Positive consequences (rewards) increase the likelihood of a behavior recurring, while negative consequences (punishments) decrease it.
How does the Timing Principle influence behavior in the workplace?
The smaller the time gap between the behavior and the reward or punishment, the greater the impact on behavior.
What is an example of the Timing Principle in action?
Handing an employee a reward immediately after hard work has a stronger motivational impact than giving it months later during a review.
What does the Variability Principle suggest about reinforcing behaviors?
New behaviors are acquired faster when rewards are given every time (low variability), but behaviors persist longer when rewards are given intermittently (high variability).
How should rewards be managed according to the Variability Principle during a system rollout?
Rewards should be more frequent at the beginning and transition to variable over time.
Why is it important to design reward systems with careful consideration of consequences?
Consequences directly influence the likelihood of future performance-related behaviors at work.
What is intermittent reinforcement, and why is it effective?
Intermittent reinforcement involves rewarding behaviors variably, which makes behaviors more persistent even after rewards stop.
The reinforcement theory is:
Behavior follows consequences
Consequences predict behavior
Behavior predicts consequences
Consequences follow behavior
Behavior follows consequences
The timing principle specifies that:
The larger the time gap between the behavior and the reward or punishment, the smaller the impact on behavior
The smaller the time gap between the behavior and the reward or punishment, the smaller the impact on behavior
The smaller the time gap between the behavior and the reward or punishment, the larger the impact on behavior.
The larger the time gap between the behavior and the reward or punishment, the larger the impact on behavior
The smaller the time gap between the behavior and the reward or punishment, the larger the impact on behavior.
The reinforcement principle states:
That when positive consequences follow a behavior, that behavior does not become more likely to be seen in the future
That when negative consequences follow a behavior, that behavior does not become more likely to be seen in the future
That when negative consequences follow a behavior, that behavior becomes more likely to be seen in the future
That when positive consequences follow a behavior, that behavior becomes more likely to be seen in the future
That when positive consequences follow a behavior, that behavior becomes more likely to be seen in the future
What is Expectancy Theory?
A cognitive model of motivation that explains how individuals decide what to do by evaluating the outcomes and probabilities associated with them.
What philosophical principle is Expectancy Theory rooted in?
Hedonism, as proposed by English utilitarians like Jeremy Bentham and John Stuart Mill.
Who presented the first systematic formulation of Expectancy Theory?
Victor Vroom in his book Work and Motivation.
What are the three key determinants of effort in Expectancy Theory?
Expectancy (effort-performance relationship), Instrumentality (performance-reward relationship), and Valence (value of the reward).
What question does the Expectancy Perception address?
“Can I perform at the level required for the reward?”
What influences an employee’s Expectancy Perception?
The clarity of performance expectations and their confidence in their abilities.
What question does the Instrumentality Perception address?
“If I perform, will I receive the reward?”
How can managers strengthen employees’ Instrumentality Perception?
By ensuring rewards are fairly distributed and by building trust in the performance evaluation process.
What question does the Valence Perception address?
“Do I value the reward?”
What determines the Valence Perception?
Employees’ personal value systems and individual circumstances.
What happens if the answer to any of the three perceptions in Expectancy Theory is negative?
Employee motivation will significantly decrease.
How does Expectancy Theory build upon Reinforcement Theory?
It considers not only the contingency of rewards but also the employee’s value of the reward and belief in their ability to achieve it.
What is the Law of Unintended Consequences in relation to reward systems?
It states that not all consequences of a reward system change are foreseeable and may lead to unintended behaviors.
What unplanned consequence might arise from high performance in a reward system?
High-performing employees may experience social consequences, such as being shunned by peers.
Why is it important for managers to understand employees’ Valence Perception?
Because what management values may not align with what employees find rewarding.
What happens when employees perceive they are not capable of meeting performance expectations?
Their motivation decreases due to low Expectancy Perception.
Why is trust in management critical for Instrumentality Perception?
Employees need to believe their performance is fairly recognized and rewarded.
What should managers consider when implementing reward systems to avoid unintended consequences?
The potential for rewards to motivate undesirable behaviors alongside the desired outcomes.
Motivation results in three specifics. These include all except:
Valance
Instrumentality
Expectancy
Theory
Theory
Motivation results from employees having three specific perceptions: Expectancy, Instrumentality, and Valence.
The valance perception asks:
If I perform, will I receive the reward?
Can I perform at the level required for the reward?
How long will it take to receive the reward?
Do I value the reward?
Do I value the reward?
The expectancy perception asks:
If I perform, will I receive the reward?
Do I value the reward?
How long will it take to receive the reward?
Can I perform at the level required for the reward?
Can I perform at the level required for the reward?
The instrumentality perception asks:
Can I perform at the level required for the reward?
How long will it take to receive the reward?
Do I value the reward?
If I perform, will I receive the reward?
If I perform, will I receive the reward?
The law of unintended consequences states:
Many of the consequences of a reward system can be predicted
All of the consequences of a reward system can be predicted
It is impossible to predict consequences of a reward system
Not all of the consequences of a reward system change are foreseeable
Not all of the consequences of a reward system change are foreseeable
What is Tournament Theory?
A theory stating that people are highly motivated to pursue extremely valuable rewards, even when the probability of receiving the reward is small.
How does Tournament Theory relate to Expectancy Theory?
When Valence (value of the reward) is very high, Expectancy and Instrumentality become less significant in driving motivation.
Why are large differences in pay between grades or high-potential bonuses effective?
They create a high degree of motivation, even when the odds of receiving the reward are small.
Why is it important for some employees to visibly receive low-probability rewards?
To maintain high Instrumentality perceptions and ensure employees believe rewards are achievable.
How does Tournament Theory explain behaviors like buying lottery tickets?
The magnitude of the reward overwhelms the perception of small odds, making the potential outcome highly motivating.
The ________ states that people are highly motivated to receive extremely valuable rewards, even when the probability of receiving the reward is quite small.
Intrinsic motivation theory
Reinforcement theory
Tournament theory
Justice (equity) theory
Tournament theory
True or False. The tournament theory suggests the magnitude of the reward overwhelms the perception of small odds.
True
The tournament theory states:
People are highly motivated to receive extremely valuable rewards, even when the probability of receiving the reward is quite small
People are less motivated to receive extremely valuable rewards, even when the probability of receiving the reward is quite large
People are less motivated to receive extremely valuable rewards, even when the probability of receiving the reward is quite small
People are highly motivated to receive extremely valuable rewards, even when the probability of receiving the reward is quite large
People are highly motivated to receive extremely valuable rewards, even when the probability of receiving the reward is quite small
Using expectancy theory terms, when valence is high, then expectancy and instrumentality matter _____________.
Less
None of the above
About the same
More
Less
True or False. The expectancy theory describes why people would play the lottery, even if the chances are 1 in 150 million.
False
Tournament theory explains the reason
The magnitude of the reward overwhelms the perception of __________ odds.
Large
Minimum
Small
Maximum
Small
Simply stated, the magnitude of the reward overwhelms the perception of small odds.
It is essential that some employees are seen receiving the _______________ award to ensure that instrumentality perceptions remain sufficiently high.
Low-probability
Rewards
High-probablility
None of the above
Low-probability
What is Justice Theory in the context of motivation?
A theory that highlights the human need for justice in social exchanges, where individuals are motivated to achieve a sense of equity and take steps to change situations perceived as inequitable.
What are the three types of justice relevant for reward system design?
Distributive Justice, Procedural Justice, and Interactional Justice.
What does Distributive Justice focus on?
The fairness of the distribution of rewards in relation to employees’ inputs compared to others’ inputs and rewards.
How does low Distributive Justice affect employee behavior?
Employees may reduce their inputs, seek higher rewards, or leave the organization to restore perceived equity.
Why is it important to have Internal Reward Alignment and External Reward Positioning?
To address the variety of comparisons employees may use, such as peers, family members, or market standards, when judging Distributive Justice.
What does Procedural Justice emphasize?
The fairness of the process by which reward distribution decisions are made
How can organizations enhance Procedural Justice?
By providing employees with a Voice in decisions, giving an Explanation for decisions, using Multiple Sources of information, and implementing a Correcting Mechanism.
Why is Procedural Justice particularly important when Distributive Justice is low?
A fair process can reduce negative reactions to perceived inequities in reward distribution.
What is Interactional Justice?
The perception of whether employees are treated with due respect and professionalism in pay-related interactions.
How can low Interactional Justice perceptions arise?
When managers fail to show respect, empathy, or allow employees to save face during pay-related interactions.
What is an example of low Interactional Justice?
Publicly mocking an employee for failing a certification exam.
How does employee Voice impact Procedural Justice?
Allowing input into compensation design and personal reward decisions increases perceptions of procedural fairness.
Why should organizations use Multiple Sources of information in evaluations?
To ensure fairness by incorporating diverse perspectives, including input from non-management peers.
What is the purpose of a Correcting Mechanism in reward systems?
To address and fix mistakes in the reward distribution process, enhancing Procedural Justice.
Why is providing an Explanation for reward decisions important?
It helps employees understand how decisions were made, increasing their perception of procedural fairness.
Procedural justice can be defined as:
The process by which the reward distribution was determined
The process by which the reward distribution was carried out
The process by which the reward distribution was created
None of the above
The process by which the reward distribution was determined
Which of the following will not enhance procedural justice?
Multiple sources
Device strategy
Correcting mechanism
Explanation
Voice
Device strategy
Interactional justice refers to:
Perceptions of the extent to which the families of employees are treated with due respect
Perceptions of the extent to which the employee was treated with due respect
Perceptions of the extent to which the customers were treated with due respect
Perceptions of the extent to which the management are treated with due respect
Perceptions of the extent to which the employee was treated with due respect
A correcting mechanism is:
In place to fix hardware in the organization
In place to fix misinformation between employees
in place to fix any mistake made by the system
None of the above
in place to fix any mistake made by the system
Every system needs a correcting mechanism in place to fix any mistake it makes.
Which item can job evaluation, job analysis, market surveys, and performance measurement assist with?
Voice
Correcting mechanism
Multiple sources
Explanation
Explanation
The systematic processes of job evaluation, job analysis, market surveys, and performance measurement are important because they provide managers with the explanation of how a system was designed and a decision was made.
What does Intrinsic Motivation Theory (Self-determination Theory) focus on?
It focuses on how employees attribute their behavior to either intrinsic (self-chosen) or extrinsic (imposed) causes, which impacts their attitudes and motivation.
How does a contingent bonus reward system affect motivation according to Intrinsic Motivation Theory?
Employees may attribute their efforts to the presence of the bonus rather than intrinsic enjoyment, leading to reduced motivation if the bonus is removed.
What are Intangible Rewards, and how do they relate to Intrinsic Motivation Theory?
Intangible Rewards, such as recognition, meaning, and culture, go beyond pay and significantly influence employee motivation and performance.
Why should managers design pay systems with intrinsic motivation in mind?
To ensure motivation is not overly reliant on external rewards, which may diminish if those rewards are removed.
What broader perspective should managers adopt according to Intrinsic Motivation Theory?
Managers should embrace a Total Rewards perspective that includes both tangible (e.g., pay) and intangible rewards to sustain motivation.
True or False. Employees attribute their own behavior to being self-chosen (intrinsic) or imposed (extrinsic), and that attribution has implications for their attitudes and their motivation when the external factors are reduced.
True
Which of the following is not an example of an intangible reward?
Base salary
Culture
Meaning
Recognition
Base salary
Intangible rewards such as recognition, meaning, and culture play a large part in employee motivation and performance.
What is a Job Performance Model, and why is it important?
A Job Performance Model defines performance and outlines its causes, helping managers design reward systems aligned with specific roles and organizational goals.
How does a Job Performance Model influence employee engagement and motivation?
When job performance is influenced more by factors outside employees’ control (e.g., funding constraints), motivation and engagement may have a smaller impact on performance.
Why is it important to consider employee Motivational Preferences in reward systems?
Different employees are motivated by different rewards (e.g., cash bonuses vs. time off), so flexible and customizable systems are more likely to engage the workforce effectively.
What is an example of how motivational preferences can vary between employees?
One employee may value a cash bonus for financial goals, while another may prefer additional time off for personal fulfillment.
What is Motivational Judgment, and why is it significant?
Motivational Judgment involves understanding when different motivational theories are compatible or conflicting, helping managers make informed decisions about reward system design.
How do reinforcement and expectancy theory align in designing reward systems?
Both recommend making pay contingencies clear to enhance motivation.
How does Intrinsic Motivation Theory conflict with reinforcement and expectancy theories?
Intrinsic Motivation Theory suggests that clear pay contingencies can undermine intrinsic reasons for working, creating a potential conflict in reward design.
Why must managers balance tradeoffs in reward system design?
Balancing tradeoffs ensures the system supports strategic goals while considering the complexities and potential conflicts between motivational theories.
Why should managers have strategic reasons and supporting data for reward system methods?
Strategic reasons and data ensure that the chosen methods are effective, evidence-based, and aligned with organizational goals.
What role do tangible and intangible rewards play in motivation?
Both tangible (e.g., bonuses) and intangible (e.g., recognition) rewards contribute to creating an engaging and motivating work environment.
________________ and ___________ theory would both recommend that contingencies in pay be made very clear.
Enforcement and expectancy
Reinforcement and expected
Reinforcement and expectancy
None of the above
Reinforcement and expectancy
True or False. Intrinsic motivation would suggest that the clear contingencies in pay serve to undermine employees’ intrinsic reasons for working.
True
True or False. Reinforcement and expectancy theory would both recommend that contingencies in pay be made very clear.
True
Employees attribute their own behavior to being ______________ or ________________.
imposed; unavoidable
self-chosen; imposed
imposed; exposed
self-chosen; automatic
self-chosen; imposed
Intrinsic Motivation Theory (also referred to as Self-determination Theory) stipulates that employees attribute their behavior to internal and external causes.
Intangible rewards include all except:
Paid time off
Meaning
Recognition
Culture
Paid time off
Intangible rewards such as recognition, meaning, and culture that play a large part in employee motivation and performance.
Interactional justice perceptions grow out of whether or not managers and other personnel show _________________________ to employees in their pay-related interactions.
Kindness and respect
Admiration and respect
Professionalism and respect
Professionalism and love
Professionalism and respect
For example, publicly announcing with laughter that an employee did not pass a certification exam would lead to low interactional justice perceptions.
True or False. Every reward system should be reviewed to ensure that there are policies in place to address each driver of procedural justice.
True
When employees have a ___________ in the design of the compensation system they are more likely to see the system as procedurally fair.
Thought
Voice
Memory
Idea
Voice
When employees have a Voice in the design of the compensation system and in the process by which their personal rewards are determined, they are more likely to see the system as procedurally fair.
Employees should always be provided an ___________ for the reward decision.
Evaporation
Evaluation
Evacuation
Explanation
Explanation
The systematic process of job evaluation, job analysis, market surveys, and performance measurement are important because they provide managers with the explanation of how a system was designed and a decision was made.
True or False. The primary reasons that organizations use performance-based pay is to provide an incentive for the types of behaviors and outcomes that enable higher performance.
True
Whether or not those incentives actually produce the desired results depends, in part, upon how well the performance-based system squares with how employees are motivated.
It is important that multiple people had input into the process. This can be done through all except:
Government mandates
Market prices established
Performance assessed
Competencies rated
Government mandates
Multiple sources of information should be used whenever possible.
When distributive justice is low, procedural justice receives a lot of_________________.
Managerial attention
Psychological attention
Employee attention
None of the above
Employee attention
Distributive justice perceptions are based upon __________ views of the distribution of rewards in the organization.
Customers’
Employees’
Governments’
Employers’
Employees’
Distributive justice perceptions are based upon employees’ views of the distribution of rewards in the organization.
Distributive justice is also known as the:
Grace theory
Equity theory
Quantity theory
Equality theory
Equity theory
It is also known as equity theory, and is based on comparisons between the ratio of employees’ inputs and rewards to the ratio of inputs and rewards of others.
When low distributive justice occurs, which of the following changes will employees not make?
Seeking higher rewards
Leaving the organization
Changing inputs
Earning lower rewards
Earning lower rewards
Employees perceiving low distributive justice take action to bring balance to the comparisons by changing their inputs, seeking higher rewards, or leaving the organization for a more equitable distribution.
True or False. It is not important to have both the internal reward alignment process and the external reward alignment process in place.
False
Employees will compare their rewards to those both __________ and ___________ to the organization.
Aligned, misaligned
Functioned, malfunctioned
Internal, external
None of the above
Internal, external
Employees will compare their rewards to those both internal and external to the organization.
True or False. Human beings have an inherent need for justice in social exchanges.
True
Justice theory has three types of justice. Which is not included?
Distributive
Interactional
Interchangeable
Procedural
Interchangeable
This theory explains why people purchase lottery tickets:
Reinforcement theory
Tournament theory
Justice theory
Expectancy theory
Tournament theory
Simply stated, the magnitude of the reward overwhelms the perception of small odds.
The Law of Unintended Consequences can appear in the:
Tournament theory
Reinforcement theory
Expectancy theory
Justice theory
Expectancy theory
This principle states that not all of the consequences of a reward system change are foreseeable.
