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7-1

ChapterChapter

Rewarding Organizational BehaviorRewarding Organizational Behavior

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7-2

IntroductionIntroduction

• Organizations use a variety of rewards to attract and retain people and to motivate them to achieve their personal and organizational goals

• The manner and timing of distributing rewards are important issues for managers

• To distribute rewards equitably, it is necessary to evaluate employee performance

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7-3

Reward programs

Attract qualified people

Keep employees coming to work

Motivate achieve high performance

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7-4

The Reward ProcessThe Reward Process

Feedback

Motivation to exert effort

Ability and skill

Experience

Performance results: Individual

Performance evaluation

Intrinsic rewards

Extrinsic rewards

Satisfaction

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7-5Conclusion from behavioral researchConclusion from behavioral research• Satisfaction with reward is a function of both

how much is received and should be receive

• Satisfaction influenced by comparing with what happens to other

• Influenced by how satisfied employees are with both intrinsic and extrinsic

• People differ in the reward they desire

• Some extrinsic reward are satisfying because they lead to other rewards

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7-6Management Considerations for Developing and Distributing Rewards

Management Considerations for Developing and Distributing Rewards• The rewards available must be sufficient

to satisfy basic human needs• Individuals tend to compare their rewards

with those of others• The process by which rewards are

distributed should be perceived as fair• The managers distributing the rewards

must recognize individual differences

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7-7

Intrinsic and Extrinsic RewardsIntrinsic and Extrinsic Rewards

• Extrinsic reward – initiated from outside the person• Salary and wages

• Employee benefits

• Interpersonal rewards (e.g. receiving recognition, socially interact)

• Promotions

• Extrinsic reward – initiated from outside the person• Salary and wages

• Employee benefits

• Interpersonal rewards (e.g. receiving recognition, socially interact)

• Promotions

• Intrinsic reward – one that is self-administered by the person• Completion

• Achievement

• Autonomy

• Personal growth (e.g. training)

• Intrinsic reward – one that is self-administered by the person• Completion

• Achievement

• Autonomy

• Personal growth (e.g. training)

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7-8

REWARDS

Job PerformanceOrganizational Commitment

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7-9Rewards Affect Organizational Concerns

Rewards Affect Organizational Concerns

• Rewards affect employee perceptions, attitudes, and behavior

• Key organizational concerns affected by rewards:• Turnover• Absenteeism• Performance• Commitment

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7-10

Innovative Reward SystemsInnovative Reward Systems

• Skill-based pay

• Broadbanding

• Team-based rewards

• Concierge services

• Skill-based pay

• Broadbanding

• Team-based rewards

• Concierge services

• Banking time off

• Part-time Benefits

• Gainsharing• Employee stock

ownership plans

• Banking time off

• Part-time Benefits

• Gainsharing• Employee stock

ownership plans

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7-11Purposes of Evaluation: Judgmental

Purposes of Evaluation: Judgmental

• Provide a basis for reward allocation (e.g., raises, promotions, transfers, etc.)

• Identify high-potential employees

• Validate the effectiveness of employee selection procedures

• Evaluate previous training programs

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7-12Purposes of Evaluation: Developmental

Purposes of Evaluation: Developmental

• Stimulate performance improvement• Develop ways of overcoming obstacles

and performance barriers• Identify training and development

opportunities• Establish supervisor-employee

agreement on performance expectations

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7-13

Focus of EvaluationFocus of Evaluation

• Evaluations should focus on translating the position responsibilities into each employee’s day-to-day activities

• Performance evaluations should focus on job performance, not individuals

• Evaluations should have proper weighting of relevant behaviors

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Relevancy of EvaluationRelevancy of Evaluation

• Deficiency – occurs when the evaluation does not focus on all aspects of the job

• Contamination – occurs when activities not part of the job are included in the evaluation

• Distortion – occurs in the evaluation process when an improper emphasis is given to various job elements

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Improving Evaluations (1 of 3)Improving Evaluations (1 of 3)

• Higher levels of employee participation in the evaluation process lead to more satisfaction with the system

• Setting specific performance goals to be met results in greater performance improvement than discussions of more general goals

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Improving Evaluations (2 of 3)Improving Evaluations (2 of 3)

• Supervisors should receive training in how to evaluate employee performance• They should be evaluated on how effectively they do

this• Systematic evaluation of performance does little

good if the results are not communicated to employees

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7-17

Improving Evaluations (3 of 3)Improving Evaluations (3 of 3)

• Performance evaluation feedback should not focus solely on problem areas• Good performance should be actively recognized and

reinforced

• Effective performance evaluation is a continuous, ongoing process

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7-18Performance Evaluation Feedback

Performance Evaluation Feedback

• The need for feedback among people on and off the job is significant

• People want to know:• how they are doing• how they are being perceived by others• how they can make adjustments to perform better

• Delivering feedback to a poor performing employee is a difficult experience for a manager

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A Feedback ModelA Feedback Model

• Person

• Others

• Job

Behavioral Results

• Effort

• Self-motivation to Adjust

• Persistence

• Disregard or Non-acceptance

Evaluated Person

Individual Characteristics:• Perceptual Process

• Values

• Needs

• Goals

• Self-Concept

• Self-Efficacy

Cognitive Evaluation:

• Creditive of Feedback Source

• Expectancies

• Personal Standards

• Form of Feedback

(Objective or Subjective)

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7-20Multisource Feedback: A 360-Degree ApproachMultisource Feedback: A 360-Degree Approach

• 90 percent of Fortune 1000 firms use some form of multisource program

• The increasing use of multisource programs is the result of calls for more• fairness• clarity• credibility

• Everyone in the person’s full domain could serve as an evaluator

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7-21Best Practices to Improve 360-Degree Feedback Programs (1 of 2)

Best Practices to Improve 360-Degree Feedback Programs (1 of 2)

1. Use 360-degree feedback primarily for individual development

2. Link the feedback process with the overall strategy and direction of the firm

3. Exert administrative control over every aspect of the 360-degree process

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7-22

Best Practices to Improve 360-Degree Feedback Programs (2 of 2)

Best Practices to Improve 360-Degree Feedback Programs (2 of 2)

4. Use senior management as role models

5. Use highly trained internal coaches to leverage the investment

6. Evaluate the effectiveness or return on investment of the process

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7-23

Reinforcement TheoryReinforcement Theory

• Reinforcement is the most important principle of learning

• Desirable or reinforcing consequences will increase the strength of a behavior and increase the probability of being repeated

• Undesirable or punishment consequences will decrease the strength of a response and decrease its probability of being repeated

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7-24

Positive reinforcement(behavior increases)

Punishment(behavior decreases)

Punishment(behavior decreases)

Negative reinforcement(behavior increases)

Rewards, Reinforcement, and Punishment

Rewards, Reinforcement, and Punishment

I II

III IV

Applied

Withdrawn

Desirable Undesirable

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7-25Reinforcement Theory: Operant ConditioningReinforcement Theory: Operant Conditioning

• Operant conditioning – attempts to influence behavior through the use of rewards and punishments

• Operants – behaviors that can be controlled by altering the consequences that follow them

• Most workplace behaviors are operants