Leadership

Leadership

Organizational Reward Systems

Organizational Reward Systems include everything that an employee receives from an organization.

Rewards may be: Intrinsic Extrinsic

What type of rewards do you earn in school?


Intrinsic Rewards – intangible and internal to the individual, such as: Sense of achievement Feelings of accomplishment Informal recognition Job satisfaction Personal growth Status


Extrinsic Rewards – controlled and distributed by the organization, such as: Formal recognition Fringe benefits Incentive payments Base wages Promotion Social relationships


Patagonia, the outerwear company provides extrinsic rewards to employees of the company, such as: Child care Sand Volleyball court Yoga classes twice a week Private beach for surfing in the Pacific

Relating Rewards for Performance

Free Enterprise System – Based on the idea that rewards should be related to performance.

The theory is that people will be motivated to improve their performance in order to achieve greater rewards.


In a Free Enterprise, many extrinsic rewards that companies provide are not directly tied to performance.

Insurance plans are generally awarded to all employees

Vacation days are based on seniority


Merit Pay System – system where salaries increase based on performance and ties rewards to performance.

Most U.S. companies do not employ this tactic, instead they will apply an across-the-board pay increases of a fixed percentage


Employees should have a clear picture of how performance effects their pay

Merit increases should be distinguishable from Seniority increases and cost-of-living adjustment

Motivation

Motivation – the factors that give people a reason to act

Motivation is concerned with 3 issues What makes people act Why people try to achieve particular goals What makes individuals stick with their goals

MotivationNeeds

Drives or

Motives

Achievement of Goals•Motivation begins with a need

• You may need to earn a lot of money, or work with an interesting group of people, or need to live abroad

•Needs produce drives or motives, which then lead people to try to achieve goals• The desire to earn a lot of money may lead to taking business classes• The desire to live abroad may lead to studying a foreign language

•To fulfill this need, individuals will set goals• Receiving a college degree in Business Administration• Mastering a foreign language

Theories of Motivation

Researchers have studied how people are motivated.

Theories of motivation are: Maslow’s Hierarchy of Needs Herzberg’s Motivation Maintenance Model McClelland’s Achievement-Power-Affiliation Approach Expectancy Theory Reinforcement Theory


Maslow’s Hierarchy of NeedsMaslow believes most people seek to meet

lower-level needs before they address higher level ones Example

A person will fulfill the need for shelter before that of personal satisfaction

Managers should ensure a safe and adequate working environment before creating interest and satisfying job requirements.


Herzberg’s Motivation-Maintenance Model

Theory that states people are motivated by two sets of factors: Motivators – factors that lead to job satisfaction Hygiene Factors – primarily negative factors that are

taken for granted until something goes wrong.



Motivators include: Achievement Recognition Work itself Responsibility Advancement possibilities Growth on the Job



Hygiene Factors include: Company rules and policies Quality of supervision Interpersonal relations Working conditions Salary and benefits Status Job security



People are satisfied at work if they encounter positive factors, such as motivators

They are unhappy if they encounter negative factors, such as hygiene factors Employees will be unhappy in a job where they are

paid poorly, inadequately supervised, and unable to interact with others


McClelland Achievement-Power-Affiliation Approach

McClelland believed people are motivated by 3 things The need for achievement, or the desire to accomplish

something The need for power, or the desire to influence people

and events The need for affiliation, or the desire to have close

relations with other people


Expectancy TheoryTheory based on if employees believe that

extra effort will result in better performance, they are likely to be motivated to work

If they believe no matter how hard they work, they will not succeed, they will not be highly motivated


Expectancy TheoryEmployees need to believe improving

performance will result in more extrinsic rewards Pay raise More vacation days


Reinforcement TheoryThe theory that punishing or rewarding

people will affect their future behavior.

This is a common parenting method


Reinforcement Theory

This theory uses two kinds of reinforcement Positive Reinforcement Negative Reinforcement


Positive Reinforcement – rewarding people for actions or behavior that you wish to encourage

Managers use positive reinforcement when they: Praise for work well done Offer a Pay raise Offer extra vacation days

Employees who are treated this way are likely to be motivated to behave the same way again


Negative Reinforcement – punishing or reprimanding people for actions or behavior that you wish to discourage

Employees who receive negative reinforcement see that they did wrong and will be aware of and not repeat the behavior


Reinforcement Theory

Many managers believe that positive reinforcement is more effective

Negative reinforcement should be based on a learning experience of the employee to learn from mistakes made

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