Week 9- Employee motivation, incentives and compensation systems

Question 1

why is it important to motivate staff?

Answer 1

• To improve staff satisfaction levels
• To increase turnover and profits
• To enhance customer service

Question 2

what does performance equal?

Answer 2

Motivation * ability

Question 3

what are the two major classes of motivational theory?

Answer 3

Content theories

Process theories

Question 4

when did content theories emerge?

Answer 4

1950s

Question 5

what is the principal aim of content theories?

Answer 5

To identify factors associated with motivation

Question 6

Describe Maslows hierachy of needs

Answer 6

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.

Question 7

what are the advantages of maslows hierachy?

Answer 7

Visually appealing

simple framework

Question 8

what are the disadvantages of maslows hierachy?

Answer 8

• Positioning specific incentives within this framework is difficult
• Lower-level needs dominate until satisfied
• It is however silent regarding the next order of needs

Question 9

what are Hertzberg’s two groups of factors?

Answer 9

Hygiene factors and Motivating factors

Question 10

what are hygiene factors?

Answer 10

These are factors that dont motivate employees but if they are not fulfilled then they will impact performance eg. Pay, working conditions

Question 11

what are motivating factors according to Hertzberg?

Answer 11

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

Question 12

Describe what Macgregor meant by Theory X

Answer 12

Assumes that all humans are naturally lazy, must be forced and controlled and they avoid responsibility

Question 13

Describe what Macgregor meant by theory Y

Answer 13

Humans work as naturally as they rest. They can lead and control themselves

Question 14

Name two other content theories

Answer 14

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

Question 15

what is the central concept in process theories?

Answer 15

Activation

Question 16

what is activation?

Answer 16

How motivated (activated) an employee is to chase a goal. Calculated by (Uncertainty over outcome)(Importance of outcome)(Ability to influence outcome)

Question 17

when is it assumed that activation will be achieved?

Answer 17

• When targets are challenging
• employees will be rewarded
• employees perceive their actions will have an impact on performance

Question 18

give an example of a process theory

Answer 18

expectancy theory: when motivation is influneced by the value that is attached to an outcome and how likely it is to occur

Question 19

what are the three categories of awards that Vancil identified?

Answer 19

Pleasure from managing an entity, enjoying power and status, earning monetary rewards

Question 20

give some examples of nonfinancial rewards?

Answer 20

Praise, recognition, responsibility

Question 21

what are the two types of incentive compensation?

Answer 21

Fixed and performance based

Question 22

What are short term incentive compensation plans?

Answer 22

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

Question 23

what is the disadvantage with bonus plans?

Answer 23

They have upper levels which once reached dont continue to encourage an employee to perform

Question 24

What re long term incentive compensation plans?

Answer 24

Usually linked to the value of a firms stock. Paid out in stock options, performance units etc

Question 25

Describe the characteristics of superior measures of performance

Answer 25

• Sensitive to managers performance
• Motivational
• Limit managers exposure to uncontrollable risk

Question 26

Describe the characteristics of inferior measures of performance

Answer 26

• Fail to capture the managers performance

- Fail to encourage the manager to improve

Question 27

what is the ideal mix between long term and short term incentive system plans

Answer 27

Companies should use a mix of both

Question 28

what is a good measure when designing incentive compensation plans?

Answer 28

Economic value added