Week 9- Employee motivation, incentives and compensation systems Flashcards
why is it important to motivate staff?
- To improve staff satisfaction levels
- To increase turnover and profits
- To enhance customer service
what does performance equal?
Motivation * ability
what are the two major classes of motivational theory?
Content theories
Process theories
when did content theories emerge?
1950s
what is the principal aim of content theories?
To identify factors associated with motivation
Describe Maslows hierachy of needs
There are five needs that can motivate an employee: Physiological, Safety, social, self esteem and self actualisation. However the one need that will motivate employees is the one above their current level as these are recognised but unfulfilled.
what are the advantages of maslows hierachy?
Visually appealing
simple framework
what are the disadvantages of maslows hierachy?
- Positioning specific incentives within this framework is difficult
- Lower-level needs dominate until satisfied
- It is however silent regarding the next order of needs
what are Hertzberg’s two groups of factors?
Hygiene factors and Motivating factors
what are hygiene factors?
These are factors that dont motivate employees but if they are not fulfilled then they will impact performance eg. Pay, working conditions
what are motivating factors according to Hertzberg?
these are factors that actively motivate employees to perform better. However, they mean nothing to employees if the hygiene factors have not been satisfied eg. Responsibility and recognition
Describe what Macgregor meant by Theory X
Assumes that all humans are naturally lazy, must be forced and controlled and they avoid responsibility
Describe what Macgregor meant by theory Y
Humans work as naturally as they rest. They can lead and control themselves
Name two other content theories
Equity theory: when people compare themselves to people in a similar situation (remember the monkey video)
Goal theory: Suggests that the goal that the employee sets for temselves is the most motivating factor for them
what is the central concept in process theories?
Activation
what is activation?
How motivated (activated) an employee is to chase a goal. Calculated by (Uncertainty over outcome)(Importance of outcome)(Ability to influence outcome)
when is it assumed that activation will be achieved?
- When targets are challenging
- employees will be rewarded
- employees perceive their actions will have an impact on performance
give an example of a process theory
expectancy theory: when motivation is influneced by the value that is attached to an outcome and how likely it is to occur
what are the three categories of awards that Vancil identified?
Pleasure from managing an entity, enjoying power and status, earning monetary rewards
give some examples of nonfinancial rewards?
Praise, recognition, responsibility
what are the two types of incentive compensation?
Fixed and performance based
What are short term incentive compensation plans?
When the incetive is determined from a % of company profits, return on captital, % of the sales a employee has made. These are usually paid in money via a bonus scheme
what is the disadvantage with bonus plans?
They have upper levels which once reached dont continue to encourage an employee to perform
What re long term incentive compensation plans?
Usually linked to the value of a firms stock. Paid out in stock options, performance units etc
Describe the characteristics of superior measures of performance
- Sensitive to managers performance
- Motivational
- Limit managers exposure to uncontrollable risk
Describe the characteristics of inferior measures of performance
- Fail to capture the managers performance
- Fail to encourage the manager to improve
what is the ideal mix between long term and short term incentive system plans
Companies should use a mix of both
what is a good measure when designing incentive compensation plans?
Economic value added
