CHAPTER 6

APPLIED
PERFORMANCE
PRACTICES
China’s Pearl River Delta is home to 60 million people and 100,000
manufacturing plants. Many factory employees in this sprawling area north of
Hong Kong work by piece rate; the more they produce, the more they earn.
Employees at Shenzhen Rishen Cashmere Textile factory earn (all figures in
U.S. dollar) 17 cents for each piece of garment sewed- about $240 per month
for the fastest employees and little more than $100 for the slowest. Other
factories pay a flat amount for reaching the production quota and a bonus
based on output beyond the quota. Most factories also use financial
disincentives. Employees’ pay is docked if they are late for work, lose their ID
card, talk with coworkers, walk on the grass, or produce less than the
production quota.
Many factories in the Pearl River Delta require employees to work
overtime. Work shifts often violate China’s regulation, but employees usually
accept the long hours because of the pay-for-performance rewards. “I always
wanted to work overtime because we got paid more if we exceeded our daily
quota of pillows”, says Wang, who works at a pillow factory. Unfortunately, the
long hours also cause fatigue. Wang mangled his right hand on a machine
while working overtime. “I’d been working 11 hours straight and was tired,” he
explains.
Most factory work is tedious. Li Mei’s first job at a toy factory in the Pearl River Delta
involved using four pens to paint the yes on dolls. The 18-year old was given exactly
7.2 seconds to paint each doll- about 4,000 every day. Eventually, the paint fumes
made Li Mei too faint to work, so she was moved to another department that
stamped out plastic doll parts. Again, the work was repetitive: Open the machine,
insert the plastic, press the machine, remove the plastic. Li Mei repeated this cycle
3,000 times each day. After several months of this work, Li Mei has grown exhausted
and disillusioned. “I’m tired to death and I don’t earn much,” she says despondently.
“It makes everything meaningless.”

This opening vignette is not a good news story about rewards and job design, but it
does illustrate the importance of pay and job duties in motivating and demotivating
employees. This chapter looks out about both of these topics, as well as two other
applied performance practices: empowerment and self-leadership. The chapter
begins by examining the meaning of money. This is followed by an overview of
financial reward practices, including the different types of rewards and how to
implement rewards effectively. Next, we look at the dynamics of job design,
including specific job design strategies for motivating employees. We then consider
the elements of empowerment, as well as conditions that support empowerment.
The final part of the chapter explains how employees manage their own
performance through self-leadership.
Rewarding people with money is one of the oldest and
certainly the most widespread applied performance
practices.
Money and other financial rewards:
- represent a form of exchange employees provide their
labor, skills, and knowledge in return for money and
benefits from the organization
-align employee goals with organizational goals.

Meaning of money in the

workplace
relates to our needs, our emotions and our self-
concepts

symbol of achievement and status

reinforce and motivator

source of enhanced or reduced anxiety

According to one source “Money is probably the

most emotionally meaningful object in
contemporary life: only food and sex are its close
competitors as common carriers of such strong and
diverse feelings, significance and strivings.”

Money
 Financial rewards
practices
MEMBHERSHIP/SENIORITY COMPETENCIES

TASK PERFORMANCE
JOB STATUS
MEMBERSHIP/SENIORITY-BASED
REWARDS
– Sometimes called “pay for pulse”

– represent the largest part of the

pay checks.
Advantages Disadvantages

• May attract applicants • Doesn’t directly motivate

• Minimizes stress of
security
• Reduces turnover
performance
• May discourage poor
performers from leaving
• “Golden handcuffs“ may
undermine performances
 JOB STATUS-BASED
REWARDS
– try to improve feelings of fairness, such that
people in higher-valued jobs should get higher
pay.

JOB
EVALUATION

-systematically rating the worth of jobs w/I an

organization by measuring their required skill,
effort, responsibility and working conditions
 JOB STATUS-BASED
REWARDS
Advantages Disadvantages

• Encourages hierarchy, which

• Tries to maintain may increase costs and
internal equity reduce responsiveness
• Reinforces status differences
• Minimizes pay
• Motivates job competition
discrimination and exaggerated job worth
• Motivates employee
to compete for
promotions
 Competency-based
rewards
– rewards employees based on
the skills, knowledge and
experience they apply in the
workplace rather their job titles
or position.

– motivate employees to
learn new skills.

– form of competency reward in which

SKILL-BASED PAY there is a reward based on mastery of a
specific skill block
 Competency-based
rewards

• Improves workforce
flexibility Advantages
• Tends to improve quality
• Is consistent with
employability

• Relies on subjective
Disadvantages measurement of
competencies
• Skill-based pay plans
are expensive
Task Performance-Based
rewards

-are those rewards which are given

on the basis of performance of an
employee in an organization it can
paid by way of commissions,
incentive systems, piece work play
plans etc.
 Task Performance-Based
rewards
Advantages Disadvantages

• Motivates task • May weaken job content

performance motivation
• Attracts performance- • May distance reward giver
oriented applicants from receiver
• Organizational rewards • May discourage creativity
create an ownership • Tends to address
culture symptoms, not underlying
• Pay variability may avoid causes of behavior
layoffs during downturns
INDIVIDUAL
REWARDS

- Many employees receive

individual bonuses or other
rewards for accomplishing a
specific task or exceeding annual
performance goals.
 - Organizations have shifted
TEAM REWARDS their focus from individuals to
teams over the past two
decades, and accompanying
this transition how been the
introduction of more team-
based rewards.
GAIN SHARING
PLAN
- Another form of team-based performance rewards,
it calculates bonuses from the work units saving
and productivity improvement.
ORGANIZATIONAL
REWARDS

- Some firms reward all staff members for achieving

challenging sales goals or other indicators of
organizational performance.

EMPLOYEE STOCK
OWNERSHIP PLAN

- Encourage employees to buy company

stock, usually in discounted price or
through a no-interest loan.
PERFORMANCE REWARDS

STOCK OPTIONS

- Give employees the right to purchase company

stock at a predetermined price to a fixed
expiration date

PROFIT-SHARING
PLANS

-Represents another type of organization-level reward in

which employees receive a percentage of the previous
years company profit.
- Research indicates 540h and stock options
tend to create an ownership culture in which
employees feel agreed with the organization
success. Profit sharing tends to create less
ownership culture, but it has the advantage
of automatically adjusting employee
compensation with the firms property,
thereby reducing the need of layoffs or
negotiated pay reductions during recession.
 LINK REWARDS - Organizational behavior modification
theory and expectancy theory both
TO recommend that employees with better
PERFORMANCE performance should be rewarded more than
those with poorer performance.

-Companies need to align rewards with ENSURE THAT

performance within the employees control.
The more employees see a “line of sight”
REWARDS ARE
between their daily actions and the reward, RELEVANT
the more they are motivated to improve
performance.
 DEBATING POINT
Is it time to ditch the Performance Review

- More than 90 percent of Fortune 500 companies

use performance reviews to link rewards to the
performance of some or most employees

- Several experts and most employees

disagree
- According to various polls and studies performance
reviews are stressful morale sapping and
dysfunctional events that typically descend into
political arenas and paperwork bureaucracies
 USE TEAM REWARDS FOR
INDEPENDENT JOBS
- Team rewards are better than
individual rewards when
employees work in highly
interdependent jobs because it
is difficult to measure individual
performance in these situations.
 WHEN REEWARDS GO
WRONG

- There is a saying that “what

gets rewarded gets done”
but what companies
reward isn’t always what
they had intended their
employees to do.
 JOB
DESIGN
- Is the process of assign
task to a job, including
the interdependency of
those tasks with other
jobs.

JOB – is a set of tasks

performed by one
person.

JOB DESIGN PRACTICES

 JOB
- Occurs when the work required to
SPECIALIZATION make a toy — or any other product or
services — is subdivided into separate
jobs assignment to different people.

-is the time required top complete

CYCLE TIME
the task before starting over with a
new work unit.

The opening vignette to chapter not only described how factory

workers in china paid; it also highlighted how much of the work they
produce is tedious and repetitive.

JOB DESIGN AND WORK

EFFICIENCY
 - The simple answer is that job specialization
potentially improves work efficiency.

 one reason for this higher efficiency is that employees

spend less time changing activities because they have
fewer tasks to juggle.
 second reason for increased work efficiency is that
specialized jobs require fewer physical and mental
skills to accomplished the assigned work, so less time
and fewer resources are needed for training.

WHY WOULD COMPANIES DIVIDE

WORK INTO SUCH TINY UNITS?
 third reason is that shorter work cycles give
employees mere frequent practice with the task,
so jobs are mastered more quickly.

 fourth reason specialization tends to increase

work efficiency is that employees with specific
aptitudes or skills can be matched more precisely to
the jobs for which they are the best suited.

WHY WOULD COMPANIES DIVIDE

WORK INTO SUCH TINY UNITS?
 Frederick Taylor and his contemporaries focused on how
job specialization reduces labor “waste ” by improving the
mechanical efficiency of work (i.e. matching skills, faster
learning, less switchover time).Job specialization adversely
affects employee attitudes and motivation. Employee
turnover and absenteeism tend to be higher in specialized
jobs very short time cycles. Job specialization often
reduces work quality because employees see only a small
part of the process. Equally important, job specialization
can undermine the motivational potential of jobs.

PROBLEMS WITH JOB

SPECIALIZATION
Industrial engineers may have overlooked out at it is now central
focus of job design changes.

-introduced motivator hygiene theory in the

1950’s

Motivator
Hygiene Theory
Frederick Herzberg

- Proposes that employees experience job satisfaction when they fulfill

growth and esteem needs (called motivator), and they experience
dissatisfaction when they have poor working conditions, job security
and other factors categorized as lower order needs (called hygiene's).
- Identifies core job dimensions that produce three psychological states

 motivation from the work itself

 Job satisfaction
 Work effectiveness
 -refers to the use of different
SKILL VARIETY
skills and talents.

-degree to which a job requires TASK IDENTITY

completion of a whole or identifiable
piece of work.

TASK SIGNIFICANCE
-degree to which the job affects the
organizational and larger society.

-jobs with high levels of autonomy

prude freedom, independence, and AUTONOMY
discretion.
Customer Talks Raise Task Significance
and Identity

Job feedbacks

-is a degree to which

employees can tell how well
they are doing on the basis of
direct sensory information
from the job itself.
 Critical Psychological States
Experienced
Meaningfulness

Experienced
-the belief that one’s work is
worthwhile or important . Responsibility

-employees must be assigned control of

their work environment to feel
Knowledge of responsible for their success and
Result failures.

-employees want information about the

consequences of their work effort.
Knowledge of result can originate from
co-workers, supervisors, or clients.
 Individual Differences

Job design doesn’t increase work

motivation for everyone in every
situation. Employees must have the
required skills and knowledge to
master the more challenging work.
Otherwise job design tends to
increase stress and reduce job
performance.
 Job Design Practices that Motivate

Job Rotation
Job ‘A’

Job ‘B’

-employees work in
teams and rotate to a
Job ‘D’
different workstation
within that team every Job ‘C’

few hours
Job Design Practices that Motivate
Job
Enlargement

- add tasks to an existing

job. It might involve
combining two or more
complete jobs into one or
two more tasks to an
existing job.
 Job Enrichment
-occurs when employees are given
more responsibility for scheduling,
coordinating, and planning their
work.
-one way to increase job
enrichment is by combining highly
interdependent tasks into jobs.
 Kinds of Job Enrichment
Strategies
Natural
grouping
- Stitching highly interdependent
tasks into one job.

Establishing
client relationship -involves putting employees in direct
contract with their clients rather than
using the supervisor as a go
between.
 Empowerment Practices
Empowerment

- is a term that has been loosely tossed around

in corporate circles and the subject of
consideration debate among academics.
- a management practice of sharing information,
rewards, and power, in employees so that can
take initiative and make decisions to solve
problems and improve service and
performance.
 Dimensions of Empowerment
-empowered employees feel that they have
Self-determination freedom, independence and discretion over their
work activities.

-employees who feel empowered care about their

Meaning
work and believe that what they do is important.

-empowered people are confident about their ability

Competence to perform the work well and have a capacity to
grow with new challenges.

-empowered employees with themselves as active

participants in the organization; that is, their
Impact
decisions and actions have an influence on the
company’s success.
 Empower

Employee
Engage Empowerment Enhance

Enable
 Have greater
variety

Requires higher
Gives meaningful knowledge and
work experience skills

JOB
Have chances
for personal Gives worker
growth more autonomy

Gives worker
more
responsibility
 Self-leadership

-refers to the process of influencing oneself to

establish the self-direction and self-motivation
needed to perform a task.

Leadership potential ability to work in a team, and

good communication skills are important
employee characteristics is self-motivation

SELF LEADERSHIP
PRACTICES
 Personal Goal Setting

-the first step in self-leadership is to set goals for your own work effort
and also requires a high degree of self-awareness.

Constructive Thought
Patterns
-before beginning a task and while performing it, employees should engage in
positive (constructive) thoughts about that work and its accomplishment. In
particular, employees are more motivated and better prepared to accomplish
a task after they have engage in positive self-talk and mental imagery.

SELF-LEADERSHIP
STRATEGIES
 Positive self-talk

-refers to any situation in which we talk to

ourselves about our own thoughts or actions.

Mental Imagery

-the process of mentally practicing a task

and visualizing its successful completion.

SELF-LEADERSHIP
STRATEGIES
 Designing -self-leadership recognizes that
employees actively craft there jobs to
Natural Rewards varying degrees, they can alter tasks
and work relationships to make the
work more motivating.

-the process of keeping track at

Self Monitoring regular intervals of one’s progress
toward a goal by using naturally
occuring feedbacks.

SELF-LEADERSHIP
STRATEGIES
Self-reinforcement

- self-leadership includes engaging in self-

reinforcement, which is part of social
cognitive theory, self-reinforcement occurs
whenever an employee has control over a
reinforcer but doesn’t “take“ the reinforcer
until completing a self set goal.

SELF-LEADERSHIP
STRATEGIES
-is shaping up to be a valuable
applied performance practice
in organizational settings

EFFECTIVENESS OF
SELF-LEADERSHIP
-as with most other forms of
organizational behavior, self-
leadership is more or less likely
to occur depending on the
person and the situation.

SELF-LEADERSHIP
CONTINGENCIES