HRM-Motivation and Reward Management
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Transcript of HRM-Motivation and Reward Management
Motivation & Reward Management
Lt Cdr Kuldeep Dadwal
(05590 B)
Explain the importance of human resource management.
Motivation
Explain how Maslow’s hierarchy-of-needs theory, goal setting, job design, and managers’ attitudes relate to employee motivation
Reward Management
Objectives of Reward Management
Objectives & Element of Reward Strategy
Management Approach to Rewards, Types & Categories of Reward
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Learning
Goals
1) Providing qualified, well-trained employees for the organization.
2) Maximizing employee effectiveness in the organization.
3) Satisfying individual employee needs through monetary compensation, benefits, opportunities to advance, and job satisfaction.
Vital to All
Organizations
Human resource management - function of attracting, developing, and retaining enough qualified employees to perform the activities necessary to accomplish organizational objectives. Three main objectives:
Human Resource
Responsibilities
Motivation
The force within us that activates our behavior. It is a function of three distinct components, Intensity, Direction, and Persistence.
Intensity
Persistence
Direction
MotivationMotivation
Motivation - Intensity
Intensity refers to the amount of mental and physical effort put forth by the salesperson.
Persistence
Direction
MotivationMotivation
Intensity
Motivation - Direction
The extent to which an individual determines and chooses efforts focused on a particular goal.
Intensity
Persistence
Direction
MotivationMotivation
Motivation-Persistence
The extent to which the goal-directed effort is put forth over time.
Intensity
Persistence
Direction
MotivationMotivation
Motivation: Intrinsic vs.
Extrinsic
When doing the job is inherently motivating
Intrinsic
ExtrinsicWhen rewards
such as pay and formal recognition
act as motivators
Motivation
• Motivation starts with good employee morale, the mental attitude of employees toward their employer and jobs.
• High morale = sign of a well-managed organization
• Poor morale shows up through absenteeism, employee turnover, strikes, falling productivity, and rising employee grievances
Motivating
Employees
• Maslow’s hierarchy of needs: people have five levels of needs that they seek to satisfy.
• A satisfied need is not a motivator; only needs that remain unsatisfied can influence behavior.
• People’s needs are arranged in a hierarchy of importance; once they satisfy one need, at least partially, another emerges and demands satisfaction.
– Physiological needs
– Safety needs
– Social (belongingness) needs
– Esteem needs
– Self-actualization needs
Maslow’s Hierarchy
of Needs Theory
Herzberg’s Two-
Factor Theory
Hygiene Factors• Job Environment• Salary• Job Security• Personal Life• Working Conditions• Status• Interpersonal Relations• Supervision• Company Policies
Motivator Factors• Achievement• Recognition• Advancement• The job itself• Growth Opportunities• Responsibility
Expectancy Theory
and Equity Theory
Expectancy Theory – the process people use to evaluate the likelihood their effort will yield the desired outcome and how much they want the outcome.
Equity Theory – individual’s perception of fair and equitable treatment.
Expectancy Theory
Expectation Effort Outcome
Instrumentality Outcome Reward
Valence Reward has Value
Must have all 3 to be motivated!
• Goal: target, objective, or result that someone tries to accomplish.
• Goal-setting theory - people will be motivated to the extent to which they accept specific, challenging goals and receive feedback that indicates their progress toward goal achievement.
Goal-Setting
Theory
• Systematic and organized approach that allows managers to focus on attainable goals and achieve the best results.
• MBO helps motivate individuals by aligning their objectives with the goals of the organization.
• MBO Principals:– A series of related organizations, goals, and objectives– Specific objectives for each individual– Participative decision making– Set time period to accomplish goals– Performance evaluation and feedback
Management by
Objective
Job enlargement: job design that expands an employee’s responsibilities by increasing the number and variety
of tasks assigned to the worker.
Job Design &
Motivation
Job enrichment: change in job duties to increase employees’ authority in planning their work, deciding how
it should be done, and learning new skills.
• Two assumptions manager make about employees, according to psychologist Douglas McGregor:
• Theory X: employees dislike work and try to avoid it whenever possible; managers must coerce or control them or threaten punishment to achieve the organization’s goals.
• Theory Y: typical person likes work and learns to accept and seek responsibilities; managers assume creative people solve work-related problems.
• A third theory from management professor William Ouchi:
• Theory Z: worker involvement is key to increased productivity for the company and improved quality of work life for employees.
Managers’
Attitudes and
Motivation
> > > > > > > >
THE OBJECTIVES OF A REWARD STRATEGYTHE ELEMENTS OF REWARD STRATEGYMANAGEMENT APPRAOCH TO REWARDREASONS TO LINK PAY TO PERFORMANCEDEVELOPING A REWARD STRATEGYTYPES OF REWARDGLAXCO WELLCOME & HALIFAX PLC
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Reward
Management
• Employee Reward is about how people are rewarded in accordance with their value to an organisation.
• Torrington & Hall note hat our attitude to pay is bound up in historical views on pay and attitudes towards capitalism. The concept of `fair day's pay for a fair day's work` is generally accepted but few people can define the term `fair`.
• It involves both financial and non-financial reward which consists of an organisation's integrated policies, processes and practices for rewarding its employees in accordance with their contribution, skill and competence framework of an organisation strategies (Armstrong, 2004).
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Objectives of
Reward Strategy
Armstrong and Mullins (1994) suggest that reward management strategies must:
• Be congruent with and support corporate values and beliefs.
• Be linked to organisational performance• Drive and support desired behaviour at all levels.• Fit desired management styles• Provide the competitive edge needed to attract and
retain the level of skills the organisation needs.
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Elements of
Reward Strategy
1. BASE PAY
2. ADDITIONAL TO BASE PAY• Individual performance related pay• Bonuses-lump-sums paid for successful performance• Incentives-target related pay to motivate people• Commissions-Percentage on sales value• Service related pay-increasing pay scale• Skill based pay-knowledge based• Allowances
3. EMPLOYEE BENEFITS• Pension• Company car• Annual holidays, Insurance cover and sick pays
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Management
Approach To
RewardGenerally, the approach to reward adopted by employers
takes one of three forms:• Focus on service -is characterised by open-ended
agreements about continuity of employment, incremental pay scales ad annual reviews.
• Focus on skills – produces higher rates of pay with greater skills.
• Focus on performance –emphasises target setting, adapting to change and a close relationship between what the employee achieves and what the employee is paid.
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Reasons To Link
Pay To
Performance• MOTIVATION• RETENTION• PRODUCTIVITY• COST-SAVINS• EMPLOYEECOMMITMENT
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Developing A
Reward Strategy
Reward strategies deal with issues concerning:
• Pay structures• The use of job evaluation• The approach to keeping with market rates• Paying for individual performance, competence or skills.• Team pay• Relating bonuses to organisational performance• The provision of pensions and benefits.
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Types of Reward
Type of reward Type of effortIndividual Basic WageReward Over time Time: maintaining work attendance
CommissionsBonusesMerit Competence: completing task without error
paid leaveBenefits
Team Reward Team Bonuses Co-operation with co-workersGain sharing
Organisational profit sharingReward Share ownership
Gain sharingSource: Bratton and Gold, Human Resource Management: Theory and Practice
Two Basic Categories
of Rewards
Compensation Rewards:Those given in return for acceptable performance or effort. They can include nonfinancial compensation.
Non-Compensation Rewards:Those beneficial factors related to the work situation and well-being of each salesperson.
Optimal Sales Force
Reward System
1. Provides an acceptable ratio of costs and sales force output in volume, profit, or other objectives
2. Encourages specific activities consistent with the firm's overall, marketing, and sales force objectives and strategies
3. Attracts and retains competent salespeople, thereby enhancing long-term customer relationships
4. Allows the kind of adjustments that facilitate administration of the reward system.
Types of Sales Force
Rewards
Intrinsic
Extrinsic
Motivation
Pay
Promotion
Sense of AccomplishmentPersonal Growth Opportunities
Recognition
Job security
Compensation
Components
• Salary
• Commission
• Incentive/Bonus
• Benefits
• Sales Contests
Compensation: Salary
Fixed sum of money paid at set intervals
How most of the country is paid Function of experience, competence,
tenure, past performance Motivate effort on non-sales activities Adjust for differences in territory
potential Motivate investment in long-term
sale
Financial Compensation:
Straight SalaryAdvantages
- Salaries are simple to administer- Planned earnings are easy to project.- Salaries can provide control over salespeople’s
activities, and reassignments are less of a problem.
- Salaries are useful when substantial development work is required.
Disadvantages- Salaries offer little incentive for better
performance.- Salary compression could cause perceptions of
inequity among experiences salespeople.- Salaries represent fixed overhead.
Compensation: Commission
Payment based on short-term results
Usually a % of $ sales, or $/volume Direct link between performance
and payment Motivates high level of selling
effort Encourages sales success
Financial Compensation:
Straight Commission
Advantages- Income is linked directly to desired results.- Straight commission plans offer cost-control
benefits.
Disadvantages- Straight commission plans contribute little to
company loyalty.- Problems may also arise if commissions are not
limited by an earnings cap.
Straight Commission:
Plan Variations
1. Commission base — volume or profitability
2. Commission rate — constant, progressive, or a combination
3. Commission splits — between two or more salespeople or between salespeople and the employer
4. Commission payout event — when the order is confirmed, shipped, billed, paid for, or some combination of these events
Straight Commission:
RatesConstant rates:
– Rates that remain unchanged over the pay period. Pay is linked directly to performance.
Progressive rates:– Rates that increase as salespeople reach pre-
specified targets.
Regressive rates:– Rates that decline at some predetermined point.
Compensation:
Incentive/Bonus
Additional commission tied to sales or profitability (e.g. + 1% after $2,000,000)
Bonus for meeting or exceeding target
Direct effort to strategic objectives Provide additional rewards to top
performers Encourage sales success
Financial Compensation:
Performance Bonuses
Advantages- Organization can direct emphasis to what it
considers important in the sales area.- Bonuses are particularly useful for tying rewards
to accomplishment of objectives.
Disadvantages- It may be difficult to determine a formula for
calculating bonus achievement if the objective is expressed in subjective terms.
- If salespeople do not fully support the established objective, they may not exert additional effort to accomplish the goal.
Financial Compensation:
Combination Plans
Advantages- Combination pay plans are flexible.- They are also useful when the skill levels of the
salesforce vary.- Combination pay plans are attractive to high-
potential but unproven candidates for sales jobs.
Disadvantages- Combination pay plans are more complex and
difficult to administer.- A common criticism of combination pay plans is
that they tend to produce too many salesforce objectives.
Non-Financial Rewards
Promotion Career Development Valence declines with age Add perquisites (perks) with
position: Car Better working conditions (hours,
facility) Compensation, Profit-sharing
Nonfinancial Compensation
Opportunity for Promotion:– The ability to move up in an organization along one
or more career paths
Sense of Accomplishment:– The internal sense of satisfaction from successful
performance– Sales managers should facilitate salespeople’s
ability to feel this a sense of accomplishment
Nonfinancial Compensation
Opportunity for Personal Growth:– Access to programs that allow for personal
development (e.g., tuition reimbursement, leadership development seminars)
Recognition:– The informal or formal acknowledgement of a
desired accomplishment
Job Security:– A sense of being a desired employee that comes
from consistent exceptional performance