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Relationships between incentives and employee performance
The expectancy theory and equity theory
Components of expectancy theory
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There are several organizational issues within the Engstrom Auto Mirror Plant that needs to be addressed. The top three organizational issues that would need to be addressed are the following: employee suggestions needs to be taken in account seriously, ensuring that the employees are valued and equality is maintained within the company, and revising the Scanlon Bonus Plan. Therefore, the root causes of these organizations issues when it comes to employee suggestions needing to taken in account seriously. The Engstrom Auto Mirror Plant employee suggestion rate dropped drastically from hundreds to just fifty a year (Beer & Collins, 2008, p.5). The significance of this number dropping so low portrays that the employees of the company possibly …show more content…
“Equity considerations play a major role not only in the evolution of distributive systems but all in the emergence of supporting ideologies and the processes through which distributive systems are challenged and replaced” (Cook,K.S., & Parcel, T.L. 1997, p.2). Therefore, when the employees are rewarded for their work they will most likely work harder to restore the balance of equity. Whereas if an employee is under rewarded the employee will most likely do the opposite and not work as hard. The ongoing issue at Engstrom Auto Mirror Plant was that the employees were being under- rewarded and not appreciated by upper management, which lead to low productivity that severely impacted the companies …show more content…
The plan paid out bonuses regularly along with paying a percentage of the labor savings each month. Which motivated all of the employees to increase their morale and increase their productivity. However, the only misleading part about the Scanlon plan was that the employees began to believe that the bonus was part of their regular paycheck, instead of relating the bonus with their own improved efforts they put into the company. Therefore, expectancy theory has been a dominant model in explaining how people make decisions regarding effort expenditure at a workplace; the conventional approach while applying the theory involved in multiplying the outcomes such as pay raise or promotion by expectancy of an outcome that will occur if a person works hard. (Biberman, G., Baril, G. L., & Kopelman, R. E., 1986, p.2). Furthermore, the results in the expectancy theory would be obtained by a motivational force score that would possibly predict work effort and job performance across the employees. So, it is ideal that the employees would respond in a positive manner to the following three essentials for them to employ extra effort and performance on a specific job. The three essentials are the following: expectancy, instrumentality and valence are linked to motivation. If an employee feels valued and rewarded for the efforts they’ve
Firstly, there was compelling emphasis placed on exterior factors, for instance, Scanlon Bonus Plan, a motivator plan that inspires and drives employees’ performance, yet neglected to cultivate workers ' needs. If the Plant business integrates the Maslow’s Hierarchy of Needs into their strategic management process, it will guide them in evaluating employees’ needs. Engstrom Auto Mirror Plant should settle on the choice of keeping the current system in place, modify it, or design a new incentive plan. Keeping the ongoing incentive plan would be an awful decision for different reasons that were examined in preceding milestones; subsequently, the undeniable decisions would be to either correct the present plan or to make an altogether new one. For this proposition, it is ideal that a new incentive system be
According to Herzberg’s two factor theory, there exists ‘hygiene factors’, extrinsic factors of a workplace that lead to either dissatisfaction or non-dissatisfaction, but not motivation. As well, there are motivation factors, intrinsically rewarding factors of a workplace that “[emphasize] factors associated with the work itself or with outcomes directly derived from it”. In raising the salary of his employees, Dan hoped that the extrinsic reward of a pay increase would lead to intrinsically beneficial opportunities for personal growth for his employees. The opportunities for personal growth should in turn further motivate employees in their job. When Dan chose to raise the salaries of his employees, he was “influenced by research showing
Management should share the responsibility with employees to calculate how fast bonuses are generated and earn. This may be a sensible strategy explained by the Vroom 's Expectancy theory; which suggest that people will be motivated to accomplish an objective if they feel it benefits them and also help accomplish the objective. Thus, the employees feel a significant worth of respect, and their sense of liberty increases. The modification to the Scanlon Bonus Plan directly relates to the motivation of employees and has them embrace the social system they operate in at the organization. These adjustments of the Scanlon Bonus Plan straightforwardly identifies with the motivation of employees and how they embrace the social
The root causes of the organizational issues at the Engstrom Auto Mirror plant are clear and obvious. After reading and rereading the article by Beer and Collins (2008), it appears that the main root causes of Engstrom Auto Mirror’s productivity problems are the economy, a lack of needed employees, and finally, Bent’s failure to keep open communication and positive behavioral theories like neo-classical organizational theory and systems theory alive in the organization. The economic downturn in the auto mirror industry and the subsequent layoffs of 46 workers (around 18 percent of its workforce) caused Engstrom Auto Mirror’s production and product quality to fall behind, leading to the disgruntlement of Bent’s employees. The company had promised
The effective Human Resource Management in an organization requires an exceptional standard set for motivation, job design, reward system and equity. Nowadays, people are more willing to avoid unfair treatment in the workplace than any other aspect. The fundamental concept behind Equity is an attempt to balance what has been put in and taken out at the workplace with a feeling of justice being served. Unconsciously, values are assigned to many various contributions made to the organization, hence causing an air of misbalance in the environment. There has always been a disparity in the view on the desirability or the cost effectiveness of policy measures. The importance of equity or reducing discrimination has gained a lot of attention in the labour market (Milkovich, Newman & Ratnam, 2009).
Motivation play an important role in today’s work environment as motivated employees are more productive employees. However, the ways how we motivate the employees have to be improved from time to time as employees are being more demanding and that they are more concern about their needs than before. Motivational strategies have probably affected the most by employee concerns and values (Greiner 1986, p. 82). ‘A motivational strategy is any effort to induce employees to initiate and sustain activities that can directly or indirectly improve service productivity’ (Greiner 1986, p. 82). Motivation can have an effect on the output of your business and concerns both quantity and quality. For example, if you are in a manufacturing company, your business actually relies heavily on your production staff to make sure that quality product are being produce and being delivered to your client at the right time. However, if your production employees are lack of motivation they will be not motivated to produce the amount of product demanded, thus will be very costly. In the essay below, we will be discussing on the strength and weaknesses of McClelland’s acquired needs theory and the expectancy theory.
A number of motivational theories explain how rewards affect the behavior of individuals and teams. Performance related pay can have a motivational effect. Employees are motivated to increase prod...
Process theories include Adam’s Equity Theory and Vroom’s Expectancy Theory. The Equity Theory, developed by J. Stacy Adams, demonstrates how motivation is related to how people compare themselves to others. The theory states that a person will look at their own qualifications as well as their salary and benefits to see how they compare to others. They then judge if they are being treated fairly (Harell & Daim, 2010). Vroom’s Expectancy Theory is based on the belief that three factors drive how an employee thinks and motivates how they perform. “The theory contends that human behavior is a function of three related factors: (1) belief that effort will result in a desired performance level, (2) belief that performance will lead to rewards, and (3) the value of performing and accomplishing a task and the associated believed reward for that performance” (Harell & Daim,
Rewarding employees and managers based on productivity and merit rather than seniority is a productivity enhancing business practice that encourages innovative thinking and hard work.
(International Journal of HRM pp.1318) The idea is that an employee evaluates his or hers compensation, rewards then compares it to his/her job requirements and outputs. The employee will compare the compensation equality against a worker with comparable duties both inside and outside an organization. This perception can have a positive or negative affect on the employees’ behavior, attitude and moral, based on the results of the comparison or how the employee believes that he or she is being compensated or treated in the organization. Positive and negative attitudes can also play an important role in an organization as a worker or employees’ attitude can affect his/her performance but will also affect other co-workers around the individual.
The Expectancy Theory of Motivation states that motivation is a result of a rational calculation; people do what they want. Expectancy is the probability that work effort will be followed by performance accomplishment, instrumentality is the probability that performance will lead to various work outcomes, and valence is the value to the individual of various work outcomes. When any of these categories are diminished, then overall motivation will decrease. In this case, Mary may not feel self-confident that she has the skills and education to complete the job given by her manager. Although she was given a ten percent increase in pay, her salary was still lower than the average co-worker. Therefore, she is still lacking a difference in pay between herself and Sue after the raise. Therefore, since she is low, motivation will be significantly also lower. The Expectancy Theory Predication explains Vroom process which employees undergo when making personal choices. The theory suggests that motivation is the result of a rational calculation people will so what they want to do. Individuals may have different sets of goals, they can be motivated if they believe that there is a positive link between efforts and performance, favorable performance will result in a desirable reward, the reward will satisfy an important need or/and the desire to
“Inequality at work is the existence of unequal opportunities and any form of bias or discrimination that takes place in a work environment. It is allowed and promoted by the workplace authority.” (Acker, 2006) Inequality will bring drawbacks to the workplaces such as lower the productivity and inferior performances of the workers, this will result in negative outcomes of the whole business. There are several forms of inequality at work: gender, social class and race (Undurraga, 2014). In the workplace, a hierarchy is usually existed (Hyman, 1979). Employees who have a higher position such as managers are paid higher salaries and have more prestige and authority than the employees who have a lower position (Cowherd, 1992). “ Management means
Equitable pay has a part to play in the implementation of this plan. However, organizations can motivate staff with commitment to their staff in the performance of their jobs. Staff deserves fair pay and they deserve to be motivated by managers who have the farsightedness to trust, delegate to and include their staff members in the decision making process.
Research has shown that motivation in an employee is an important factor which determines his performance. Motivation is the “driving force within individuals” (Mullins, 2007, p. 285). It is the concerned with finding out the reasons which shape and direct the behaviour of the individuals. The people act to achieve something so that they can satisfy some needs (Gitman and Daniel, 2008). It is important for the manager to understand this motivation of individual employees in order to inspire them and devise an appropriate set of incentives and rewards which would satisfy the needs that they have individually (Kerr, 2003). Once these needs are expected to be met in return for some specific behaviour or action, they would work more diligently to have that behaviour in them and to achieve that objective (Meyer and Hersovitch, 2001). Since it would lead to early and fuller achievement of the company objectives as the individual would work more diligently, it would lead to better organizational performance (Wiley, 1997).
Management spends a huge amount of time to design incentive systems and schemes to motivate their workers and to ensure they work in their best possible manner. Motivating workers by giving them decent pay helps in winning employees heart to make the work done efficiently, significantly and effectively. The most effective way to motivate people to work productively is through individual incentive compensation (Pfeffer, 1998). An attraction of getting more is a powerful incentive to people for high performance. While most people agree that money plays a major role in motivating people, in organizations there is a widespread belief that money may also have some undesirable effects on morale.