Organizational behavior 4th by MShean chap006

6

Applied Performance
Practices
McGraw-Hill/Irwin

© 2008 The McGraw-Hill Companies, Inc. All rights reserved.


Applied Performance Practices at Nucor

Courtesy Nucor

Nucor has survived and thrived in the turbulent steel
industry through the benefits of performance-based
rewards, job design, and empowerment.

McShane/Von Glinow OB4e

Slide 6-2

© 2008 The McGraw-Hill Companies, Inc. All rights reserved.


Financial Reward Practices
• Money has multiple meanings
– Symbol of success
– Reinforcer and motivator
– Source of reduced anxiety

• Meaning of money varies

– Higher value to men than to women
– Cross-cultural differences

© Corel Corp. With permission.

McShane/Von Glinow OB4e

Slide 6-3

© 2008 The McGraw-Hill Companies, Inc. All rights reserved.


Types of Rewards in the Workplace
•
•
•
•

Membership and seniority
Job status
Competencies
Performance-based

© Corel Corp. With permission.

McShane/Von Glinow OB4e

Slide 6-4

© 2008 The McGraw-Hill Companies, Inc. All rights reserved.

Membership/Seniority Based Rewards
• Fixed wages, seniority increases
• Advantages
– Guaranteed wages may attract job applicants
– Seniority-based rewards reduce turnover
• Disadvantages
– Doesn’t motivate job performance
– Discourages poor performers from leaving
– May act as golden handcuffs

McShane/Von Glinow OB4e

Slide 6-5

© 2008 The McGraw-Hill Companies, Inc. All rights reserved.


Job Status-Based Rewards
• Includes job evaluation and status perks
• Advantages:
– Job evaluation tries to maintain pay equity
– Motivates competition for promotions
• Disadvantages:
– Employees exaggerate duties, hoard resources
– Focuses employees on own jobs, not customers
– Inconsistent with workplace flexibility

McShane/Von Glinow OB4e

Slide 6-6

© 2008 The McGraw-Hill Companies, Inc. All rights reserved.


Competency-Based Rewards
• Pay increases with competencies acquired and
demonstrated
• Skill-based pay
– Pay increases with skill modules learned
• Advantages
– More flexible work force, better quality,
consistent with employability
• Disadvantages
– Potentially subjective, higher training costs

McShane/Von Glinow OB4e

Slide 6-7

© 2008 The McGraw-Hill Companies, Inc. All rights reserved.


Performance Pay at Hugo Boss
Hugo Boss Industries (HBI) attributes
relies on a balanced scorecard that
captures diverse performance
measures across the Swiss
company’s various product groups.

“The scorecard serves a very
important purpose in focussing
attention on the things that are being
measured and where we are trying to
go,” explains Werner Lackas, HBI’s
head of operations.

McShane/Von Glinow OB4e

Slide 6-8

© 2008 The McGraw-Hill Companies, Inc. All rights reserved.


Performance-Based Rewards
•
Organizational •
•
rewards •

Profit sharing
Stock ownership
Stock options
Balanced scorecard

Team • Bonuses
rewards • Gainsharing

• Bonuses

Individual • Commissions
rewards • Piece rate

McShane/Von Glinow OB4e

Slide 6-9

© 2008 The McGraw-Hill Companies, Inc. All rights reserved.


Evaluating Organizational Rewards
• Positive effects
– Creates an “ownership culture”
– Adjusts pay with firm's prosperity
– Scorecards align rewards with several specific organizational
outcomes

• Concerns with performance pay
– Weak connection between individual effort and rewards
– Reward amounts affected by external forces

McShane/Von Glinow OB4e

Slide 6-10

© 2008 The McGraw-Hill Companies, Inc. All rights reserved.


Improving Reward Effectiveness
• Link rewards to performance

• Ensure rewards are relevant
• Team rewards for interdependent
jobs
• Ensure rewards are valued
• Watch out for unintended
consequences
© Corel Corp. With permission.

McShane/Von Glinow OB4e

Slide 6-11

© 2008 The McGraw-Hill Companies, Inc. All rights reserved.


Job Design
• Assigning tasks to a job, including the
interdependency of those tasks with other
jobs
• Organization's goal -- to create jobs that allow
work to be performed efficiently yet
employees are motivated and engaged

McShane/Von Glinow OB4e

Slide 6-12

© 2008 The McGraw-Hill Companies, Inc. All rights reserved.

Job Specialization
• Dividing work into separate jobs that include a subset of
the tasks required to complete the product or service
• Scientific management
– advocates job specialization
– also emphasized person-job matching, training, goal
setting, work incentives

McShane/Von Glinow OB4e

Slide 6-13

© 2008 The McGraw-Hill Companies, Inc. All rights reserved.


Evaluating Job Specialization
Advantages
• Less time changing
activities
• Lower training costs
• Job mastered quickly
• Better person-job
matching

McShane/Von Glinow OB4e

Disadvantages
•
•
•

•
•

Slide 6-14

Job boredom
Discontentment pay
Higher costs
Lower quality
Lower motivation

© 2008 The McGraw-Hill Companies, Inc. All rights reserved.


Job Characteristics Model
Core Job
Characteristics

Critical
Psychological
States

Outcomes

Work
motivation

Skill variety
Task identity
Task significance

Meaningfulness

Autonomy

Responsibility

General
satisfaction

Feedback
from job

Knowledge
of results

Work
effectiveness

Growth
satisfaction

Individual
differences
McShane/Von Glinow OB4e

Slide 6-15

© 2008 The McGraw-Hill Companies, Inc. All rights reserved.

Job Rotation
• Moving from one job
to another
• Benefits

Job ‘A’

– Minimizes repetitive
strain injury
– Multiskills the
workforce
– Potentially reduces job
boredom

McShane/Von Glinow OB4e

Job ‘B’

Job ‘D’

Job ‘C’

Slide 6-16

© 2008 The McGraw-Hill Companies, Inc. All rights reserved.


Job Enlargement
• Adding tasks to an existing job

• Example: video journalist

Traditional news team
Video journalist

Employee 1
Operates camera

• Operates camera
• Operates sound
• Reports story

Employee 2
Operates sound
Employee 3
Reports story

McShane/Von Glinow OB4e

Slide 6-17

© 2008 The McGraw-Hill Companies, Inc. All rights reserved.


Job Enrichment
Given more responsibility for scheduling,
coordinating, and planning one’s own work
1. Clustering tasks into natural groups
– Stitching highly interdependent tasks into one job
– e.g., video journalist, assembling entire product

2. Establishing client relationships
– Directly responsible for specific clients
– Communicate directly with those clients

McShane/Von Glinow OB4e

Slide 6-18

© 2008 The McGraw-Hill Companies, Inc. All rights reserved.


Kambuku Empowerment
Pretoria Portland Cement
introduced “Kambuku”, a
companywide initiative
that made the South
African company more
performance-oriented
through employee
empowerment.
Courtesy Pretoria Portland Cement

McShane/Von Glinow OB4e

Slide 6-19

© 2008 The McGraw-Hill Companies, Inc. All rights reserved.

Dimensions of Empowerment
Selfdetermination

Meaning

Employees believe their work is
important

Competence

Employees have feelings of selfefficacy

Impact

McShane/Von Glinow OB4e

Employees feel they have
freedom and discretion

Employees feel their actions
influence success

Slide 6-20

© 2008 The McGraw-Hill Companies, Inc. All rights reserved.


Supporting Empowerment
• Individual factors
– Possess required

competencies, able to
perform the work

• Job design factors
– Autonomy, task identity, task
significance, job feedback

• Organizational factors
– Resources, learning
orientation, trust
Courtesy Pretoria Portland Cement

McShane/Von Glinow OB4e

Slide 6-21

© 2008 The McGraw-Hill Companies, Inc. All rights reserved.


Self-Leadership
• The process of influencing oneself to establish the
self-direction and self-motivation needed to perform
a task
• Includes concepts/practices from:
– Goal setting
– Social learning theory
– Sports psychology

McShane/Von Glinow OB4e

Slide 6-22

© 2008 The McGraw-Hill Companies, Inc. All rights reserved.


Elements of Self-Leadership
Personal
Goal Setting

Constructive
Thought
Patterns

Designing
Natural
Rewards

SelfMonitoring

SelfReinforcement

• Personal goal setting
– Employees set their own goals
– Apply effective goal setting practices

McShane/Von Glinow OB4e

Slide 6-23

© 2008 The McGraw-Hill Companies, Inc. All rights reserved.

Elements of Self-Leadership
Personal
Goal Setting

Constructive
Thought
Patterns

Designing
Natural
Rewards

SelfMonitoring

SelfReinforcement

• Positive self-talk
– Talking to ourselves about thoughts/actions
– Potentially increases self-efficacy

• Mental imagery
– Mentally practicing a task
– Visualizing successful task completion

McShane/Von Glinow OB4e

Slide 6-24

© 2008 The McGraw-Hill Companies, Inc. All rights reserved.


Elements of Self-Leadership
Personal
Goal Setting

Constructive
Thought
Patterns

Designing
Natural
Rewards

SelfMonitoring

SelfReinforcement

• Finding ways to make the job itself more
motivating
– eg. altering the way the task is accomplished

McShane/Von Glinow OB4e

Slide 6-25

© 2008 The McGraw-Hill Companies, Inc. All rights reserved.