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The objectives in MBO are not unilaterally set by the boss and then
assigned to employees.
The manager and employee jointly choose the goals and agree on how
they will be measured.
7. Performance feedback
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3. The only area of possible disagreement with goal setting theory is participation
MBO strongly advocates it. Goal-setting theoryassigning goals to
subordinatesfrequently works just as well participation.
C. MBO in Practice
Notes:
Where it has failed, the problems rarely lie with MBOs basic components.
Instructor Note: At this point in the lecture you may want to introduce the TEAM EXERCISE Goal Setting Task
found in the text and at the end of these chapter notes. The purpose of the exercise is to learn how to write
tangible, verifiable, measurable, and relevant goals as might evolve from an MBO program.
Employee Recognition Programs
A. What Are Employee Recognition Programs?
1. Employee recognition programs consist of personal attention, expressing
interest, approval, and appreciation for a job well done. They can take
numerous forms.
2. The best ones use multiple sources and recognize both individual and group
accomplishments.
B. Linking Recognition Programs and Reinforcement Theory
1. Fifteen-hundred employees were surveyed in a variety of work settings about
what they considered to be the most powerful workplace motivator. Their
response was recognition!
2. Consistent with reinforcement theory, rewarding a behavior with recognition
immediately following that behavior is likely to encourage its repetition.
3. Recognition can take many forms:
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1. Most organizations are under severe cost pressures, which is why recognition
programs are particularly attractive. Recognizing an employees superior
performance often costs little or no money.
2. One of the most well known and widely used recognition devices is the use of
suggestion systems. Employees offer suggestions for improving processes or
cutting costs and are recognized with small cash awards.
3. The Japanese have been especially effective at making suggestion systems
work. A typical high performing Japanese plant generates 47 suggestions per
employee a year and pays approximately the equivalent of U.S. $35 per
suggestion.
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It has been promoted as a panacea for poor morale and low productivity.
However, it is not appropriate for every organization. For it to work, there
must be adequate time to participate, the issues in which employees get
involved must be relevant to their interests, employees must have the
ability (intelligence, technical knowledge, communication skills) to
participate, and the organizations culture must support employee
involvement.
Dozens of studies have been conducted but the findings are mixed. It
appears that participation typically has only a modest influence on
productivity, motivation, and job satisfaction.
3. Representative participation:
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Quality circles are probably the most widely discussed and undertaken
formal style of employee involvement. Originally begun in the United
States and exported to Japan in the 1950s, the quality circle became quite
popular in North America and Europe during the 1980s.
A review of the evidence indicates that they are likely to positively affect
productivity, however, they tend to show little or no effect on employee
satisfaction.
One author offers two possible explanations for their disappointing results:
a. First is the little bit of time (usually just an hour per week) that actually
deals with employee involvement. That does not translate to much
impact on the job.
b. Second, the ease of implementing quality circles often worked against
them. The lack of planning and top-management commitment often
contributed to quality circle failures.
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The research indicates that they increase employee satisfaction, but their
impact on performance is less clear.
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1. Variable Pay Programs can take the form of piece-rate plans, wage incentives,
profit sharing, bonuses, and gainsharing.
2. A portion of an employees pay is based on some individual and/or
organizational measure of performance. Unlike more traditional base-pay
programs, variable pay is not an annuitythere is no guarantee.
3. The fluctuation in variable pay programs makes them attractive to
management. The organizations fixed labor costs turn into a variable cost
reducing expenses when performance declines. Also, tying pay to performance
recognizes contribution rather than being a form of entitlement.
4. Four widely used programs are piece-rate wages, bonuses, profit sharing, and
gain sharing:
Piece-rate wages
a.
b.
c.
d.
Bonuses
a. These can be paid exclusively to executives or to all employees.
b. Increasingly, bonus plans are taking on a larger net within
organizations to include lower-ranking employees to reward production
and increased profits.
Profit-sharing plans
a. Organization wide programs that distribute compensation based on
some established formula designed around a companys profitability
b. Direct cash outlays or, particularly in the case of top managers,
allocated as stock options
Gainsharing
a. This is a formula-based group incentive plan.
b. Improvements in group productivityfrom one period to another
determine the money allocated.
c. Gainsharing and profit sharing are similar but not the same thing. It
focuses on productivity gains rather than profits.
d. Gainsharing rewards specific behaviors that are less influenced by
external factors. Employees in a gainsharing plan can receive
incentive awards even when the organization is n0t profitable.
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People can top out, learning all the skills the program calls for them to
learn.
Skills can become obsolete. Organizations paying for skills they no longer
need.
Skill-based plans do not address level of performance.
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Flexible Benefits
A. What Are Flexible Benefits?
Notes:
Modular Plans: pre-designed with each module put together to meet the
needs of a specific group of employees.
Core-plus Plans: a core of essential benefits and a menu like selection of
other benefit options.
Flexible Spending Plans: employees set aside a specific dollar amount for
benefits tax-free and draw against the account for medical and dental
services as needed.
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Money and promotions typically are low on their priority list. They tend to
be well paid, and they enjoy what they do.
Job challenge tends to be ranked high. They like to tackle problems and
find solutions.
Professions value support.
The place a high value on skill development opportunities.
4. Implications
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Notes:
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