COMPENSATION AND BENEFITS (Continued):MOTIVATION IN THE WORKPLACE

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STRATEGIES FOR ENHANCING JOB SATISFACTION AND MORALE >>

Introduction to Business MGT 211

Lesson 19

COMPENSATION AND BENEFITS (Continued)

Psychological contracts in the workplace are the set of expectations held by employees

concerning what they will contribute to an organization (contributions) and what the

organization will in return provide to them (inducements). 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 (1927-1932 at the Western Electric

Hawthorne works in Chicago).

�

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.

Introduction to Business MGT 211

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.

1. PSYCHOLOGICAL CONTRACTS IN ORGANIZATIONS

Set of expectations held by an employee concerning what he or she will contribute to an

organization (referred to as contributions) and what the organization will in return provide

the employee (referred to as inducements). All organizations face the basic challenge of

managing psychological contracts. The massive wave of downsizing and cutbacks that

swept the U.S. economy in the 1980s and early 1990s has complicated that challenge.

Because job permanence is less likely now, alternative inducements such as lavish

benefits packages may be needed instead.

Human Relations--Interactions between employers and employees and their attitudes

toward one another

2. THE IMPORTANCE OF SATISFACTION AND MORALE

Job Satisfaction--degree of enjoyment that people derive from performing their jobs.

Satisfied employees are likely to have higher morale, fewer grievances, and fewer

negative behaviors than dissatisfied counterparts.

Morale--overall attitude that employees have toward their workplace. Low morale may

result in high turnover, with negative consequences for production schedules,

productivity,

and

skill

level

within

the

firm.

Turnover--Annual percentage of an organization's workforce that leaves and must be

replaced

a. Recent Trends in Managing Satisfaction and Morale

i. Many major companies went through periods of massive layoffs and

cutbacks during the late 1980s through the mid-1990s, creating a sense

of job insecurity.

ii. A booming economy and the creation of thousands of new jobs led to

low unemployment in most industries and regions by the late 1990s.

As a result, companies found themselves having to work harder not only

to retain current employees but also to offer creative incentives to attract

new employees. Innovative benefits and perks have soared as firms try

to maintain job satisfaction and employee morale and make themselves

more attractive places to work.

iii. The 2000s have brought back layoffs and cutbacks. Workers appear

satisfied enough.

3. MOTIVATION IN THE WORKPLACE

Employee motivation is even more critical to a firm's success than job satisfaction and

morale.

a. Classical Theory--theory holding that workers are motivated solely by money.

i. Scientific Managementan approach to employee motivation

incorporating the classical theory of motivation.

Introduction to Business MGT 211

ii. Frederick Taylor (Principles of Scientific Management, 1911) reasoned

that if workers were motivated by money, paying the more should

prompt them to produce more. At the same time, firms that analyzed

jobs and found better ways to perform them would be able to produce

goods more cheaply, make more profits, and be able to pay and

motivate workers better than its competitors.

iii. Time-and-motion studiesindustrial-engineering techniques applied to

each facet of a job in order to determine how to perform it most

efficiently

b. Behavior Theory: The Hawthorne Studies--a set of experiments aimed at

examining the relationship between changes in the physical environment and

worker output.

i. In 1925 Harvard researchers studied Hawthorne Works of Western

Electric, outside Chicago. Their experiment with increasing lighting

levels to examine the relationship between changes in the physical

environment and worker output showed the surprising result that both

higher and lower levels increased productivity, while increased pay

failed to do so.

ii. The answer proved to be that workers were reacting to the attention

they were receiving, leading to the conclusion that productivity rose in

response to almost any management action that workers interpreted as

special attention.

iii. Hawthorne Effect--tendency for productivity to increase when workers

believe they are receiving special attention from management.

c. Contemporary Motivational Theories--Following the Hawthorne studies,

managers and researchers focused more attention on the importance of good

human relations in motivating employee performance. Most motivation theorists

are concerned with the ways in which management thinks about and treats

employees.

i. Human Resources Model: Theories X and Y--Douglas McGregor's

theory of motivation suggesting that managers have radically different

beliefs about how best to use the human resources employed by a firm.

1. Theory X--theory of motivation holding that people are naturally

irresponsible and uncooperative.

2. Theory Y--theory of motivation holding that people are naturally

responsible, growth oriented, self-motivated, and interested in

being productive.

ii. Maslow's Hierarchy of Needs Model--Psychologist Abraham

Maslow's theory of motivation proposing that people have several

different needs that they attempt to satisfy in their work.

These needs are hierarchical in importance; lower-level needs must be

met before a person will try to satisfy higher-level needs. Once a set of

needs has been satisfied, it ceases to motivate behavior.

Two-Factor Theory--Frederick Herzberg's theory of motivation holding that job

satisfaction

depends

two

types

factors,

hygiene

and

motivation.

This theory suggests that managers should follow a two-step approach to enhancing

motivation--first, ensure that hygiene factors (working conditions, policies) are acceptable,

and then offer motivation factors such as recognition and added responsibility.

Introduction to Business MGT 211

i. Expectancy Theory--theory of motivation holding that people are motivated to work

toward rewards that they want and that they believe they have a reasonable chance

of obtaining. In this theory, a reward that is out of reach is likely to be undesirable

even if it is intrinsically positive.

ii. Equity Theory--theory of motivation holding that people evaluate their treatment by

employers relative to the treatment of others. People derive a ratio of contribution to

return from analyzing what they contribute to their jobs (inputs) and what they receive

in return (outputs); they then compare their own ratios with those of other employees.

The ratios do not have to be the same, only fair.

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