Money and Employee Motivation in Business - DOC

Document Sample
Money and Employee Motivation in Business - DOC Powered By Docstoc
					                                  Chapter 9

           Motivating, Satisfying, and Leading Employees

Chapter Overview

Psychological contracts in the workplace are the set of expectations held by
employees concerning what they will contribute to an organization and what the
organization will in return provide to them. Psychological contracts have changed
significantly in the last decade. Employers offer less security but more benefits,
while employees offer less loyalty but are often willing to work longer hours and
assume more responsibility.

Good human relations – positive interactions between employers and employees –
lead to high levels of job satisfaction and morale. As a result, employees are
more productive and more loyal, with a lower level of grievances, absenteeism,
and turnover.

Theories of employee motivation have changed dramatically over the years. The
most important models are summarized below:

      Classical Theory: People are motivated solely by money. This theory
       impacted business via scientific management, which focused on analyzing
       jobs and finding more efficient ways to perform tasks.
      Behavior Theory: People’s needs play a role in motivation. Employees
       perform better when they believe that management is paying attention to
       them. This theory was first demonstrated in the Hawthorne Studies.
      Human Resources Model: There are two kinds of managers – Theory X
       managers who believe that people are inherently uncooperative and must
       be constantly punished or rewarded, and Theory Y managers who believe
       that people are naturally responsible and self-motivated to be productive.
      Maslow’s Hierarchy of Needs Model: People have different needs which
       they attempt to satisfy in their work. Lower level needs must be satisfied
       before people seek to meet higher level needs.
      Two-Factor Theory: If basic hygiene needs are not met, workers will be
       dissatisfied. Only by increasing more complex motivation factors can
       companies increase employee performance.
      Expectancy Theory: People will work hard if they believe that their
       efforts will lead to desired rewards.
      Equity Theory: Motivation depends on the way employees evaluate their
       treatment by an organization, relative to its treatment of other workers.

Managers can use several strategies to improve employee satisfaction and
motivation. The principle of reinforcement or behavior modification theory
proposes that rewards and punishments can control behavior. Management by

objectives, participative management, and empowerment can improve human
relations by increasing the level of employee commitment and involvement in the
organizational team. Job enrichment, job redesign, and modified work schedules
can build job satisfaction by adding motivation factors to jobs in which they are
normally lacking.

Effective managerial leadership is a key contributor to employee satisfaction and
motivation. Autocratic managers typically issue orders that they expect
employees to obey. Democratic managers generally seek subordinates’ input into
decisions. Free-rein managers more often advise than make actual decisions.
The contingency approach to leadership suggests that managers should assess
each situation individually and exercise a leadership style based on the elements
of the situation.

Chapter Objectives

   1. Describe the nature and importance of psychological contracts in the
   2. Discuss the importance of job satisfaction and employee morale and
      summarize their roles in human relations in the workplace.
   3. Identify and summarize the most important theories of employee
   4. Describe some of the strategies used by organizations to improve job
      satisfaction and employee motivation.
   5. Discuss different managerial styles of leadership and their impact on
      human relations in the workplace.


   Opening Case: Bringing the Bounty Back to P & G

   I.      Psychological Contracts in Organizations

   II.     The Importance of Satisfaction and Morale
           A. Recent Trends in Managing Satisfaction and Morale

   III.    Motivation in the Workplace
           A. Classical Theory
           B. Behavior Theory: The Hawthorne Studies
           C. Contemporary Motivational Theories
                    1. Human Resources Model: Theories X & Y
                    2. Maslow’s Hierarchy of Needs Model
                    3. Two-Factor Theory
                    4. Expectancy Theory
                    5. Equity Theory

  IV.   Strategies for Enhancing Job Satisfaction and Morale
        A. Reinforcement / Behavior Modification Theory
        B. Management by Objectives (MBO)
        C. Participative Management and Empowerment
        D. Team Management
        E. Job Enrichment and Job Redesign
                  1. Job Enrichment Programs
                  2. Job Redesign Programs
                        a. Combining Tasks
                        b. Forming Natural Work Groups
                        c. Establishing Client Relationships
        F. Modified Work Schedules
                  1. Work-Share Programs
                  2. Flextime Programs and Alternative Workplace Strategies
                  3. Telecommuting and Virtual Offices
                  4. Advantages and Disadvantages

  V. Managerial Styles and Leadership
       A. Managerial Styles
       B. The Contingency Approach of Leadership
       C. Motivation and Leadership in the Twenty-First Century—
           Changing Patterns of Motivation


  I.    Psychological Contracts in Organizations (Use PowerPoint 9.3.)

        A psychological contract is the set of expectations held by employees
        concerning what they will contribute to an organization and what the
        organization will provide the employees in return.


  II.   The Importance of Satisfaction and Morale (Use PowerPoint 9.4.)

        Levels of job satisfaction and morale among employees depend
        largely upon employees’ motivation levels and the leadership
        exhibited by management.

        A. Recent Trends in Managing Satisfaction and Morale (Use
           PowerPoint 9.5.)

             Worker layoffs and downsizing programs implemented by
             companies in the last decade have created low morale among many
             workers. Firms have responded by announcing and implementing
             solid plans for future growth in an attempt to rebuild employee


   III.   Motivation in the Workplace (Use PowerPoint 9.6.)

          Theories that address employee motivation are divided into three
          categories: classical theory, behavior theory, and many contemporary
          motivational theories.

          A. Classical Theory

             According to the classical theory, employees are motivated solely
             by money. Fred Taylor, the father of scientific management,
             proposed that paying workers more money would prompt them to
             produce more.

          B. Behavior Theory: The Hawthorne Studies

             A group of Harvard researchers studied the relationship between
             changes in the physical work environment and worker output. The
             result, known as the Hawthorne effect, surprisingly revealed that
             productivity rose to almost any management action. The study
             concluded that employees responded with increased output
             because the management action or changes in the physical work
             environment were interpreted as special attention.

          C. Contemporary Motivational Theories (Use PowerPoint 9.7,
             9.8, 9.9, 9.10, 9.11.)

                   1. Human Resources Model: Theories X and Y.
                      McGregor’s Theory X is the managerial assumption that
                      workers are lazy and need direction; Theory Y is the
                      managerial assumption that workers are energetic,
                      cooperative, and self-motivated.

                   2. Maslow’s Hierarchy of Needs Model. Maslow
                      proposed that workers each have a set of needs that they
                      seek to fulfill in their jobs and that these needs are

                    arranged in a hierarchy of importance. Those needs are
                    physiological, safety, social, self-esteem, and self-
                    actualization. Maslow further proposed that lower-level
                    needs must be met before higher-level needs and that
                    once one set of needs is met, it ceases to motivate

                 3. Two-Factor Theory. Frederick Herzberg proposed that
                    job satisfaction depends on motivating factors, such as
                    recognition in the workplace, as well as the presence of
                    hygiene factors, such as work conditions. Hygiene
                    factors do not enhance satisfaction, but they do prevent
                    dissatisfaction. Research suggests that the theory works
                    only in some situations.

                 4. Expectancy Theory. This theory states that employees
                    are especially motivated to work toward rewards when
                    they have a greater probability of success in achieving
                    them. This theory explains why people may not work as
                    hard when their salaries are based solely on seniority, for

                 5. Equity Theory. This theory focuses on employees’
                    perceptions of fairness and unfairness in the workplace.
                    Many people evaluate their treatment relations to an
                    employee’s treatment of others.


   IV.   Strategies for Enhancing Job Satisfaction and Motivation (Use
         PowerPoint 9.12.)

         A. Reinforcement / Behavior Modification Theory (Use
            PowerPoint 9.13.)

            Many managers try to control employees’ behaviors through
            rewards, including praise, pay, promotion, and job security, as
            well as through punishments, such as suspensions and reductions
            in pay.

B. Management by Objectives (MBO) (Use PowerPoint 9.14.)

   MBO is a system of collaborative goal setting, extending through
   all levels of an organization. MBO is primarily concerned with the
   implementation of plans in organizations.

C. Participative Management and Empowerment (Use
   PowerPoint 9.15.)

   In participative management and empowerment, employee
   suggestions and opinions are welcomed. Employees may feel
   more committed to the firm’s goals if they have helped to shape

D. Team Management

   Participative programs may not be for everyone. The key may be
   to invite participation only to the extent that employees want to
   have input and only if participation will have real value for the

E. Job Enrichment and Job Redesign (Use PowerPoint 9.16.)

   Both of these programs typically increase worker satisfaction in
   jobs that lack motivating factors.

        1. Job Enrichment Programs. These programs attempt to
           add motivating factors to job activities.

        2. Job Redesign Programs. These programs attempt to
           create a better fit between employees and their jobs by
           restructuring work. Job redesign can usually be carried
           out through combining tasks, forming natural work
           groups, and/or establishing client relationships.

              a. Combining Tasks. Enlarging jobs and increasing
                 their variety can make employees feel that their
                 work is more meaningful.
              b. Forming Natural Work Groups. People who
                 perform different jobs on the same projects are
                 candidates for natural work groups that help
                 employees see the place and importance of their
                 jobs in the total structure of the firm.

                      c. Establishing Client Relationships. Allowing
                         employees to interact with customers can increase
                         job variety.

        F. Modified Work Schedules (Use PowerPoint 9.17, 9.18, 9.19.)

                 1. Work-Share Programs. These programs allow
                    employees to share a single, full-time job. Employees
                    appreciate the schedule flexibility to accommodate their
                    personal needs and firms can reduce turnover and save on
                    the cost of benefits.

                 2. Flextime Programs and Alternative Workplace
                    Strategies. These programs allow workers to choose
                    their working hours by adjusting a standard work

                 3. Telecommuting and Virtual Offices. Telecommuting,
                    a new form of flextime, allows employees to perform
                    some or all of their jobs away from standard office
                    settings; virtual offices are redesigned conventional
                    office space made to accommodate jobs and schedules
                    that do not depend much on assigned spaces.

                 4. Advantages and Disadvantages. Some advantages
                    include: (a) more freedom in employees’ personal lives;
                    (b) ability of employees to coordinate work around
                    family members’ schedules; (c) an increased sense of
                    freedom for employees; and (d) higher commitment and
                    satisfaction for employees. Some disadvantages include:
                    (a) the inability of employees to meet deadlines; (b)
                    coordinating work schedule with family members’
                    schedules; and, (c) employer perceptions that unobserved
                    workers are not actually working.


  V.    Managerial Styles and Leadership (Use PowerPoint 9.20.)

        Leadership is the process of motivating others to work to meet
        specific organizational or personal objectives.

        A. Managerial Styles (Use PowerPoint 9.21.)

            Managerial styles are patterns of behavior that a manager exhibits
            in dealing with subordinates. An autocratic style is one in which
            managers expect orders to be obeyed without question. While
            retaining final decision-making power, managers who adopt a
            democratic style welcome input from subordinates. A free-rein
            style allows subordinates to make their own decisions with a very
            basic set of guidelines. Most managers typically do not exhibit any
            one particular style of leadership.

        B. The Contingency Approach to Leadership

            Managerial responses are usually situational. With the
            contingency approach, a manager’s behavior is dependent on the
            specific elements unique to each situation. This approach
            recommends that human relations skills are critical and that people
            from differing cultures behave differently, expecting different
            things from their managers.

        C. Motivation and Leadership in the Twenty-First Century (Use
           PowerPoint 9.22.)

            The diversity in the contemporary workforce makes motivating
            behavior more complex for managers; today’s leaders are also
            finding it necessary to change their own behavior. Leadership is
            becoming more democratic throughout organizations as employees
            become more empowered.

                 1. Changing Patterns of Motivation. There is now a trend
                    toward job security, not money, as a motivator.
                    Additionally, contemporary motivators are flexible work
                    hours, casual dress, telecommuting, nap time, massages,
                    day care, and the opportunity to bring a pet to work.


Answers to Questions and Exercises

Questions for Review

   1. Describe the psychological contract you currently have or have had in
      the past with an employer. If you have never worked, describe the
      psychological contact that you have with the instructor in this class.

      Answers will vary, but should all revolve around the concept of
      contributions and inducements.

   2. Do you think that most people are relatively satisfied or dissatisfied
      with their work? Why are they mainly satisfied or dissatisfied?

      Answers will vary.

   3. Compare and contrast Maslow’s hierarchy of needs with the two-
      factor theory of motivation.

      The two are somewhat similar in that they both depict hierarchical needs,
      however Maslow describes five basic needs, while Herzberg describes two
      categories of needs. In both cases, lower-level needs must be satisfied
      first. However, in Maslow’s model, when needs are met they cease to be
      motivating, while in Herzberg’s model hygiene factors only affect
      motivation in that they are absent or fail to meet expectations.

   4. How can participative management programs enhance employee
      satisfaction and motivation?

      Participative management encourages employees to offer opinions and
      suggestions on how they do their jobs and on how the firm is operated. As
      a result of helping to shape the organization’s goals, employees are more
      committed to achieving them. Furthermore, virtually all employees
      appreciate knowing that managers will listen to their input.

Questions for Analysis

   5. Some evidence suggests that recent college graduates show high levels
      of job satisfaction. Levels then drop dramatically as they reach their
      late twenties, only to increase gradually once they get older. What
      might account for this pattern?

      Early levels of satisfaction might stem from the excitement of landing a
      first career job. As workers reach their late twenties, a range of factors
      might account for the drop: perceived inequities among their co-workers

      and between their co-workers and management, boredom with the daily
      grind, a lack of anticipated advancement, financial pressure for family
      obligations, etc. In later years, job satisfaction may increase as workers
      either gain more responsibility and control of their work life or come to
      terms with their jobs as they stand.

   6. As a manager, under what sort of circumstances might you apply each
      of the theories of motivation discussed in this chapter? Which would
      be easiest to use? Which would be hardest? Why?

      Answers will vary. Students may note that classical theory would be easy
      to apply, but too simplistic to be effective. Two-factor theory, expectancy
      theory, and equity theory allow for more complexity, and include clear,
      applicable motivating factors. Behavior theory, the human resources
      model, and Maslow’s hierarchy may be the most difficult to apply since
      they are somewhat vague and limited in terms of specific applications.

   7. Suppose you realize one day that you are dissatisfied with your job.
      Short of quitting, what might you do to improve your situation?

      Answers will vary, although analyzing the source of dissatisfaction should
      clearly be the first step, followed by at least discussing the causes with

   8. List five U.S. managers who you think would also qualify as great

      Answers will vary.

Application Exercises

   9. At the library or using the Internet, research the manager or owner of
      a company in the early 20th century and the manager or owner of a
      company in the 1990s. Compare and contrast the two in terms of
      their times, leadership styles, and views of employee motivation.

      Students’ answers will vary.

   10. Interview the manager of a local manufacturing company. Identify as
       many different strategies for enhancing job satisfaction at that
       company as you can.

      Answers will vary, but should include discussions of the strategies
      reviewed in the chapter.

Answers to Exercising Your Ethics

   1. What are the ethical issues in this case?

      The new HR manager is deeply concerned that the behavior modification
      approach demonstrates a lack of respect for employees.

   2. What do you think most managers would do in this situation?

      Answers will vary.

   3. What would you do?

      Answers will vary, but students will probably consider the possibility of
      including elements of expectancy theory while implementing the behavior
      modification approach.

Answers to Building Your Business Skills

   1. What is your group’s most important recommendation? Why do you
      think it is likely to succeed?

      Answers will vary, but will most likely focus on revamping the
      pay/incentive structure to reward those employees for performance,
      thereby increasing accountability.

   2. Changing the corporate culture to make it less paternalistic may
      reduce employees’ sense of belonging to a family. If you were an
      employee, would you consider a greater focus on profits to be an
      improvement or a problem? How would it affect your motivation and

      Answers will vary, but students should recognize that the new corporate
      culture will be alienating for some and will only be effective for others if
      the company generously shares rewards with employees.

   3. What steps would you take to improve the attitude and productivity
      of longtime employees who resist change?

      Answers will vary, but students should consider that the change process
      would likely be long term. It may be most effective to begin the process
      with newer employees, working backward to longtime employees who
      tend to be less flexible. Behavior modification and reinforcement may be
      the most effective strategies.

Classroom Activities

   1. This activity is based on data collected by students via a short survey. Ask
      students to survey a small group of working individuals, finding out what
      motivates those workers in the workplace. Surveys may simply be
      designed in a way that allows respondents to merely fill in their top two
      motivators in the workplace, for example; or, students can design the
      survey to include numerous options from which the respondents will pick
      any two. Once the data are collected, compare results in class. Is there a
      trend in how the respondents answered? What were the top choices of the

   2. According to Maslow, our needs are arranged in a hierarchy, with our
      most basic needs being met first. According to the model, safety needs
      may not take precedence over physiological needs as long as the
      physiological needs are unmet. Working in groups of three or four,
      students should come up with real-life and/or hypothetical examples of
      physiological needs that definitely take precedence over safety needs,
      safety needs that take precedence over social needs, etc.


Description: Money and Employee Motivation in Business document sample