Lesson 6

Question 1

1.1 Describe the key types of problems that can result from an organization’s reward and compensation systems (3)

Answer 1

1) Failure to produce the desired behaviour

2) Production of the desired behaviour but with undesirable consequences

3) Production of reward dissatisfaction

Question 2

1.2 Explain the implications of reward dissatisfaction for an organization

Answer 2

When employees believe the rewards they receive are not consistent with the contributions they are making to the organization or when they believe the compensation system is unfair they may experience reward dissatisfaction.

This can negatively impact work performance, turnover, customer service and can produce EE dishonesty

Question 3

1.3 Explain the concept of membership behaviour

Answer 3

when an individual decides to join and remain with an organization

Question 4

1.3 Explain the concept of task behaviour

Answer 4

When employees perform specific tasks that have been assigned to them within an organization

Question 5

1.3 Explain the concept of organizational citizenship behaviour

Answer 5

When an employee voluntarily undertakes special behaviors that are beneficial to an organization.

Such as extra effort, high cooperation, high initiative, high innovativeness, and a general willingness to make sacrifices for the good of an organization

Question 6

1.4 Explain why an understanding of job satisfaction, work motivation and organizational identification is key to designing reward and compensation systems (explain plus what each leads to)

Answer 6

Reward and compensation systems don’t directly affect employee behaviour. They first affect perception and attitudes.

Job satisfaction leads to membership behaviour,

work motivation leads to task behaviour and

organizational identifications leads to citizenship behaviors

Question 7

1.4 List 3 employee attitudes that need to be created to generate desired behaviour

Answer 7

1) Job satisfaction

2) work motivation

3) Organizational identification ( sense of shared goals and values, a sense of membership or belongingness and an intention to remain a member of the organization)

Question 8

1.5 Identify consequences of job satisfaction

Answer 8

Job satisfaction decreases work stress, grievances, absenteeism and turnover and leads to positive group norms

Question 9

1.5 Identify consequences of work motivation

Answer 9

Motivation increases job effort which should in turn lead to task performance

Question 10

1.5 Identify consequences of organizational identification (4)

Answer 10

Organizational identification decreases grievances, absenteeism and turnover.

leads to positive group norms,

increased job effort and

cooperative innovative behaviour

Question 11

1.6 Explain the importance of creating job satisfaction, work motivation and organizational identification attitudes through the compensation system under a classical managerial strategy

Answer 11

Requires only sufficient rewards to create some degree of membership behaviour.

Doesn’t need to focus on job satisfaction.

Motivation for task behaviour can be achieved through rewards directly tied to task behaviours or through control systems

Question 12

1.6 Explain the importance of creating job satisfaction, work motivation and organizational identification attitudes through the compensation system under a human relations strategy

Answer 12

Relies on job satisfaction and positive work norms.

An equitable compensation system that generates job satisfaction and a substantial degree of commitment must be provided.

The success of this strategy depends on high membership behaviours and adequate task behaviour.

Organizational identification, while desirable, is not essential since a high degree of organization citizenship behaviour is not required.

Question 13

1.6 Explain the importance of creating job satisfaction, work motivation and organizational identification attitudes through the compensation system under a High involvement strategy

Answer 13

Requires the most complex EE behaviours and highest level of performance.

The compensation system needs to generate all three key job attitudes and behaviours with the highest bein organizational identification.

This plays a major role in generating membership and task behaviour. Work motivation needs to be high.

Job satisfaction must be high enough to help generate high membership behaviours.

Question 14

2.1 Describe a psychological contract and identify how it might be violated

Answer 14

A psychological contract is the EE’s expectations about rewards they will receive and contributions they will make. Also the Employer has expectations about the contributions the EE will make and the rewards they will receive.

This can be violated if the EE has gotten inaccurate communication about rewards or the contributions required are different from what the EE expects.

A violation can also occur when an employer unilaterally changes the contract in a way the EE perceives as detrimental.

Consequences of a violation can include decreased job performance, reduced citizenship behaviour, and decreased job satisfaction. This can lead to turnover, theft or even sabotage.

Question 15

2.2 Explain how individuals use an internal calculus screen and equity theory to determine whether the rewards/contributions offered by an organization are fair

Answer 15

When applying the internal calculus screen the individual is using their own valuations of the rewards vs contributions.

If applying equity theory the individual is comparing their rewards/contributions ratio to others

Question 16

2.3 Identify conditions that create employee dissatisfaction with pay level. (6)

Answer 16

1) Discrepancy between the outcome EEs want and what they actually get

2) EEs see that a comparison other gets more than they do

3) Past experience has led EEs to expect more than they now receive

4) Expectations for achieving better outcomes are low

5) EEs feel entitled to more pay

6) EEs absolve themselves of personal responsibility for the lack of better outcomes

Question 17

2.4 Differentiate between distributive and procedural justice.

Answer 17

Distributive justice is the perception that overall reward outcomes are fair

Procedural justice is the perception that the process through which rewards are determined to be fair.

Unless there are both components EEs will not perceive the rewards system as fair

Question 18

2.5 Identify conditions that a pay level must have to achieve procedural justice. (6)

Answer 18

1) Consistent - uniformly applied to different jobs and time periods

2) Free of bias - personal interests don’t enter into the process

3) Flexible - There must be procedures for EEs to appeal the pay system decisions

4) Accurate - based on factual information

5) Ethical - accepted moral principals must guide the process

6) Representative - all affected EEs must have an opportunity to express their concerns

Question 19

2.6 Describe the approaches an EE can take to attempt to increase their rewards. (5)

Answer 19

1) Leave the organization for a more rewarding job

2) Demand higher extrinsic rewards either individually or collectively

3) Acquiring illicit rewards - adding to expense accounts, theft

4) Increasing effort/performance - if this will lead to a promotion

5) Asking for improved duties - intrinsic rewards if job is more satisfying

Question 20

2.6 Describe how EEs may reduce contributions to improve reward dissatisfaction (4)

Answer 20

1) Reducing job duties - may formally request this

2) Reducing effort/performance

3) Increasing absenteeism

4) Looking for a less demanding job

Question 21

3.1 Identify the factors that influence why an EE stays with an organization (4)

Answer 21

1) Job satisfaction - the job meets the EEs important needs

2) Job security

3) organizational commitment

4) Work motivation

The most important is job satisfaction

Question 22

3.1 what are 5 components to job satisfaction

Answer 22

Satisfaction with:

• co-workers
• pay
• promotion
• supervisors
• job itself

Question 23

3.2 Explain how the reward and compensation system can help generate organizational commitment

Answer 23

Psychological contracts, trust and procedural justice play major roles in building organizational commitment..

Strong relationship between procedural justice and affective commitment.

Rewards geared to organizational performance such as profit sharing increase commitment and a feeling of shared goals.

Seniority based rewards are a cornerstone for generating continuance commitment. It is possible for individuals to have low satisfaction, low affective commitment and yet have high continuance commitment.

Question 24

4.1 Explain the basic premise of content theories of motivation (explain + 3 examples)

Answer 24

Focus on identifying and understanding underlying needs that drive behaviour and can be used for motivation.

Content theories include Maslow’s hierarchy of needs, Herzbergs two facto theory and Hackman/Oldham’s job characteristics theory

Question 25

4.1 Explain the basic premise of process theories of motivation (explain + 4 examples)

Answer 25

Focus on understanding motivation by determining the process individuals use to make choices about the specific actions they will take to satisfy a need.

Include reinforcement theory, expectancy theory, attribution theory and economic theory

Question 26

4.2 Describe Maslow’s hierarchy or needs theory of motivation

Answer 26

Human needs are grouped in 5 levels:

1) survival/psychological needs

2) Safety/security needs

3) social needs (sense of belonging)

4) ego/esteem needs (accomplishment, achievement, competency)

5) self actualization (learning, growth, development)

Once a need is satisfied it no longer motivates behaviour. Self actualization can never be satisfied

Question 27

4.3 Describe Herzberg’s two factor theory of motivations

Answer 27

There are certain factors that cause job satisfaction (called motivators) and a separate set that can cause job dissatisfaction (called Hygiene factors)

Eliminating dissatisfaction is only one half of the story. The other half is to increase satisfaction.

Hygiene corresponds to lower levels of Maslow’s hierarchy

Question 28

4.3 In Herzberg’s two factor theory of motivations define Motivators

Answer 28

(e.g challenging work, recognition for achievements, responsibility, opportunity to do something meaningful)

Give positive satisfaction arising from the intrinsic conditions of the job itself

Question 29

4.3 In Herzberg’s two factor theory of motivations define Hygiene factors

Answer 29

(e.g status, job security, salary,, benefits, working conditions)

Don’t give positive satisfaction or lead to higher motivation but their absence gives rise to dissatisfaction

Question 30

4.4 Describe Hackman/Oldham’s job characteristics theory of motivation

Answer 30

5 core dimensions for intrinsic motivation

1) Task identify
2) Task significance
3) skill variety
4) Job autonomy
5) Job feedback

Intrinsic characteristics here correspond to the motivators identified under Herzberg and address higher order needs under Maslow

Question 31

4.4 Under Hackman/Oldham’s job characteristics theory of motivation define: Task Identify

Answer 31

Extent to which an employee performs a complete set of activities rather than only one small part of the job cycle

Question 32

4.4 Under Hackman/Oldham’s job characteristics theory of motivation define: Task Significance

Answer 32

Perceived importance or social value of a given task in the general scheme of things

Question 33

4.4 Under Hackman/Oldham’s job characteristics theory of motivation define: Skill variety

Answer 33

The number of skills required for task completion

Question 34

4.4 Under Hackman/Oldham’s job characteristics theory of motivation define: Job autonomy

Answer 34

Degree of freedom that EEs have to decide how to perform their jobs

Question 35

4.4 Under Hackman/Oldham’s job characteristics theory of motivation define: Job feedback

Answer 35

Level of feedback on work quality and quantity that an EE Receives from the job itself

Question 36

4.5 Explain how the content theories of motivation relate to the classical managerial strategy

Answer 36

Aligns with lower order needs under Maslow

Aligns with the Hygiene’s in Herzberg

Aligns with extrinsic factors under Hackman/Oldham

Question 37

4.5 Explain how the content theories of motivation relate to the human relations managerial strategy

Answer 37

Aligns best with the social needs under Maslow

Question 38

4.5 Explain how the content theories of motivation relate to the High involvement strategy

Answer 38

Aligns with the ego/esteem needs and self actualization needs under Maslow.

Aligns with motivators under Herzberg

Aligns with the intrinsic characteristics of Hackman/Oldham

Question 39

4.6 Describe the reinforcement theory of motivation

Answer 39

Behaviour will be repeated (or not) if linked with consequences (positive or negative)

Desired behaviour need to be clearly specified and must be followed with a significant reward of value close in time to the behaviour.

Tends to work best for simple behaviours and short term behaviour change

Question 40

4.7 Describe the expectancy theory of motivation (describe + 3 things it depends on)

Answer 40

Premise: EEs are more likely to exert effort to perform a behaviour if they believe it will lead to valued consequences and they think they can do it.

Depends on:
1) Valence - net value of consequences of the behaviour

2) Instrumentality - likelihood of a positive consequence

3) Expectancy - likelihood they can do the behaviour

All three must be positive before a person exerts effort. Where there are various competing behaviours an EE will choose behaviour with the highest net Valence

Question 41

4.8 Describe the attribution theory of motivation

Answer 41

Extrinsic rewards may cancel out or destroy intrinsic rewards.

After performing an activity people often try to understand their behaviour. They try to attribute some motive to that activity. If there is an obvious reason for doing so they attribute it to that motive

Question 42

4.9 Describe the agency theory of motivation (5 points)

Answer 42

One of the most prominent economic theories

Makes a key distinction between principles that own an organization and agents that work for them.

Assumes that agents will pursue their own self interest rather than the interests of the ERs unless they are carefully monitored or those interest align with those of the principles.

Principals tend to favour systems of rewards that closely tie individual rewards to desired behaviour such as individual performance based pay.

IN general this is only useful for designing compensation systems if EEs of the organization actually match those assumptions.

Question 43

5.1 Identify 5 dimensions of organizational citizenship behaviour

Answer 43

1) Altruism - willingness to help coworkers, supervisors or clients without expectation of personal reward

2) General compliance - how much attendance, use of work time, adherence to policies goes beyond the necessary minimum

3) Courtesy - Practice of checking in with other EEs before taking action that could affect them

4) Sportsmanship - ability to tolerate with good grace minor nuisances and impositions that are a part of normal work life

5) Civic Virtue - Extent to which EEs take an interest and participate in the broader governance of an organization

Question 44

5.2 Identify components of organizational identification (2)

Answer 44

The primary source of citizenship behaviour is organizational identification

1) Shared organizational goals - affects organizational integration (congruent goals between EE and ER) or when organizational goals match important values of an EE

2) Feelings of membership or belonging. EEs who feel respected and valued are more likely to engage in citizenship behaviour - connected to perceptions of justice, fair treatment and reciprocity

Question 45

5.3 List 5 conditions that must be present to promote organizational citizenship behaviour

Answer 45

1) Job security

2) Trust between EEs and management

3) Sense of distributive and procedural justice

4) Compensation system where both the EE and the organization benefit when organizational goals are met. (stock/profit sharing plans) - ER identifies needs of individuals that share organizational goals and gears compensation system to those needs

5) Participation in decision making - especially in goal setting - EEs who help set goals are more likely to be committed to them. EEs that participate in setting a compensation system will produce a system consistent with their needs

Question 46

6.1 Outline 6 key considerations in designing a compensation system that will support the EE behaviours desired by the organization

Answer 46

Considerations

1) The necessary EE behaviour (task, membership, organizational citizenship)

2) The EE attributes and qualifications required (competencies, personal values, personality)

3) The needs EEs with these qualifications are likely to find salient

4) A positive valence for the needed behaviour (can be done by providing salient rewards or reducing costs)

5) A high likelihood that performance of the behaviour will lead to the promised rewards

6) Conditions that make it likely that EE effort will lead to the desired behaviour

Question 47

6.2 Explain how an ER can create a positive expectancy that the EE effort will lead to successful performance of a behaviour (3)

Answer 47

1) Ensuring that desired behavioral outcomes are realistic

2) Providing organizational context that supports achievement of the desired behavioral outcome

3) Ensuring EEs believe that they have the necessary personal competencies and abilities to achieve the desired performance and that their effort will lead to performance.