1. Reward and Recognition
 What do people want from work?
 What sort of reward systems can organisations
develop?
 What is the difference between reward and
recognition?
 What can we learn from motivational theories about
reward?
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2. What people want from work is dependent on:
 Age e.g. ‘older worker’
 Circumstances e.g. current needs
 Values e.g. to do ‘good’ rather than $
 Social needs e.g. acceptance
 Cultural influences e.g. ‘golden generation’
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3. Rewards organisations traditionally
offer
 Extrinsic and intrinsic rewards
 $$$$
 Membership and seniority
 Status
 Opportunity to acquire skills
Growth and development
© Corel Corp
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4. Rewards and the skills crisis
 Lowest unemployment rate in the OECD – ‘full
employment’
 Ageing population
 Falling birth rate
 ‘Brain-drain’
 Immigration policies (politicians and the election)
 Competitors e.g. Australia are doing much better.
 Why would skilled immigrants want to come here?
 Do we need them?
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5. Attracting skilled immigrants
 How do we look as a nation?
 What do we offer?
 What do they bring (why do we need them anyway)
 Do we welcome them?
 Do we want them?
 What do we do in terms of immigration policies to
attract skilled immigrants?
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6. To refresh your memories: theories
of motivation
 Theories of motivation need to explain:
 1. Why an individual decides to join an organisation
 2. Why he or she decides to stay or leave
 3. Why the individual decides to perform at the level required by the
organisation or decides not to put in the effort required.
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7. Three Sets of Motivation Theories
 Content theories (Maslow, ERG, Herzberg etc)
 Process theories (Adams, Vroom, etc)
 Behaviour modification (Skinner)
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8. Content Theories
 Concerned with the content of the work itself e.g
was it challenging?
 How work could be ‘enriched’ to provide more
satisfaction
 Led to attempts to re-design work; job enlargement,
rotation and ‘enrichment’
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9. Content theories of motivation
Needs hierarchy ERG Motivator−hygiene McClelland’s
theory theory theory learned needs
Self- Need for
actualisation achievement
Growth Motivators
Need for
Esteem
power
Need for
Belongingness Relatedness
affiliation
Safety Hygienes
Existence
Physiological
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10. Process theories
 Concerned with individual decision-making, why
individuals decide to put in or withhold effort.
 Why?
 Equitable outcomes
 Commensurate reward
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11. Expectancy theory of motivation
E-to-P P-to-O Outcomes
expectancy expectancy and valences
Outcome 1
+ or -
Outcome 2
Effort Performance + or -
Outcome 3
+ or -
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12. Equity theory
 Outcome/input ratio
 inputs − what employee contributes (eg skill)
 outcomes − what employees receive (eg pay)
 Comparison other
 person/people with whom we compare ratio
 not easily identifiable
 Equity evaluation
 compare outcome/input ratio with the comparison
other
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13. Overreward vs underreward inequity
Comparison
You
other
Outcomes
Overreward Outcomes
inequity
Inputs Inputs
Underreward Outcomes
inequity Outcomes
Inputs Inputs
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14. Designing effective Reward Systems
 Rewards must be:
 Perceived as fair
 Timely
 Of a significant magnitude to motivate
 Individualised
 Current
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15. Types of reward schemes
 Merit schemes
 Pay for Performance schemes
 ‘behaviour that appears to lead to positive
consequences will be repeated.’
 Does this approach increase motivation?
 Does it rely on externally mediated rewards rather
than a system in which individuals can be motivated
by their jobs?
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16. Why do merit pay systems often fail?
 Is it because the theoretically base is not strong or
 the schemes are not well implemented my
managers?
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17. (cont)
 1. Pay is not perceived to be related to Job
Performance
 Lawler: ‘employees do not see the relationship
between their hard work and the rated
performance.’
 Why?
 The rewards e.g. share options take too long to
come
 Unrealistic goals
 Secrecy surrounding annual increase
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18. Performance ratings are seen as
biased
 Can mangers make objective distinctions between
good and bad performance?
 In theory, based on ‘objective’ measures but…
 Somebody – your superior – has to implement the
plan
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19. Rewards are not Viewed as Rewards
 A pay increase might be meant to say ‘you are well
regarded’ but might send another message’ you are
only average’
 Message about inequity in the company
 Worsened by secrecy
 Performance reviews too far apart to have effect
 Do we need to keep changing the merit plan to ‘fit’
with changes in the environment e.g. inflation
 What about under-performers?
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20. Trust and openness about merit
increases is low.
 ‘You need a good PA system’
 Good human relations climate
 Explain the reasons for increases
 Need an open climate for it to work
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21. Organisation view money as the primary
motivator ignoring the importance of the job itself
 Detracts from the job itself
 Motivate intrinsically
 Merit pay takes external focus
 Overlooks the value and importance of the job itself
 Back to job re-design
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22. Making a merit pay system work
 Openness and trust are the basics
 Supervisors need to be trained in rating and
feedback techniques
 Components of annual pay should be clearly and
openly specific – so that merit forms an average for
distribution
 Need to customise to needs and individuals
 Don’t overlook other rewards
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23. Making it work
 Good preformance measures – what do we mean
by ‘high performance’?
 Better communication about the systems; how it
works, what will be delivered
 Better delivery systems – make clear the
relationship between performance and pay
 Managerial behaviour – negative perception of
connection between pay and performance
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24. Membership/seniority-based rewards
 Fixed wages, seniority increases
 Advantages
 guaranteed wages may attract job applicants
 seniority-based rewards reduce turnover
 Disadvantages
 don’t motivate job performance
 discourage poor performers from leaving
 may act as ‘golden handcuff’
 Too limited
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25. Skill-based rewards
 Pay increases with skill or competencies acquired
or 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
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26. Status-based rewards
 Include perks e.g. company car
 Advantages
 job evaluation tries to maintain pay equity
 motivate competition for promotions
 Disadvantages
 employees exaggerate duties, hoard resources
 create psychological distance across hierarchy
 inconsistent with flatter organisations
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27. Performance-based rewards
• Share ownership
Organisational • Share options
rewards • Profit sharing
Team • Gainsharing
rewards • Bonuses
• Piece rate
Individual • Commissions
rewards • Royalties
• Merit pay
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28. Do we want individuals to reach
‘high’ levels of performance?
 What does performance depend on?
 Performance is a function of Motivation x Ability x
Opportunity
 P = (f) M X A X O
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29. Based on Expectancy-theory; effort,
performance and reward
 Makes sense (?) but . . we have to:
 1. Agree on what we mean by performance e.g. for
a child-minder
 2. Agree how we will assess individual performance
 3. Agree how we are going to reward individual
performance
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30. Improving performance?
 Performance is a {f} of Motivation x Ability x
Opportunity
 What do we mean by the performance of waiter or
waitress?
 What would we mean by a high performing retail
sales assistant?
 How can a geriatric nurse improve her or his
performance?
 Do organisations really want ‘high performance’ or
‘adequate performance’?
 Do many jobs have within them the scope to
‘improve ‘ performance?
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31. Performance-reward problems
 Shift attention away from motivation of job itself to
extrinsic rewards
 Create a psychological distance with reward giver
 Discourage risk taking
 Used as quick fix
 But more importantly . . .
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32. Focus on rewards
 Effort, performance and reward must be
perceived to be linked
 Ensure rewards must be relevant to the
employee
 Rewards must be valued
 Rewards must be of sufficient magnitude
to motivate
 Use team rewards for interdependent
jobs
 Beware of unintended consequences
© Corel Corp
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33. But we reward individuals while talking
teams
 Performance assessment invariably
individually-based e.g. PA
 On which individuals are rewarded
 But organisations stress team work!
 So why not more team-based rewards?
 Difficult to assess e.g. equity
 Difficult to administer
 Cost
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34. Team and organisational rewards
 Gainsharing plans
 based on cost reductions and increased labour
efficiency
 Employee Share Ownership Programme e.g. The
Warehouse
 employees own company shares
 Share options e.g. senior management
 right to purchase company shares at a future date at
a predetermined price
 Profit sharing e.g. Mainfreight
 employees receive share of profits
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35. Job design
 Assigning tasks to a job, including the
interdependency of those tasks with other jobs
 Technology has a great influence on the design of
jobs (technological determinism)
 Taylorist/Fordist design
 Employability affects job design
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36. Evaluating job specialisation
Advantages Disadvantages
 Basically greater efficiency  Job boredom
 Less time changing tasks  Discontentment pay
 Lower training costs  Lower quality?
 Job mastered quickly  Lower motivation
 Better person-job matching
 Lower costs
 Greater control over quality
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37. Job characteristics model (Hackman &
Lawler)
Core job Critical
characteristics psychological Outcomes
states
Skill variety Work
motivation
Task identity Meaningfulness
Task significance Growth
satisfaction
Autonomy Responsibility General
satisfaction
Feedback Knowledge Work
from job of results effectiveness
Individual
differences
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38. Job rotation vs job enlargement
Job rotation
Job 1 Job 2 Job 3
Operate camera Operate sound Report story
Job enlargement
Job 1 Job 2 Job 3
Operate camera Operate camera Operate camera
Operate sound Operate sound Operate sound
Report story Report story Report story
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39. Job enrichment strategies – based on
Lawler & Hackman and Herzberg
 Empowering employees
 gives employees more autonomy
 feeling of control and self-efficacy
 actual control?
 over what?
 Forming natural work units
(autonomous work groups)
 completing an entire task
 assigning employees to specific clients
 Establishing client relationships
 employees put in direct contact with
clients © Marlborough Express (NZ)
 limited by the nature of the business
e.g. production workers
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40. Major obstacles to job design
 Difficult to accurately measure job characteristics
 Cost effectiveness
 Resistance to change
 skilled workers
 union
 supervisors
 Problem finding optimal level of enrichment and
specialisation
 Maintaining ‘enrichment’
 Concerns about the validity of the theoretical base
 Over-taken by speed of technological change
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41. Some major practical difficulties
 What do we mean by ‘performance’?
 How can we fairly ‘measure’ performance?
 How will we relate ’performance’ with appropriate
reward?
 Intrinsic recognition or
 Extrinsic reward
 Major issues:
 Establishing, testing, and maintaining system
 Cost effectiveness of such a system e.g. BHP
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42. Conclusion
 Difficult to apply motivational theories in practice
 Lots of failures e.g. Volvos JE programmes
 Selective use of profit sharing, P-f-P, skill-based
reward systems
 Always the question of size and resources
 How do NZ SME go about motivating and rewarding
their employees?
 ‘Family-feel’
 ‘culture’
 Informal
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