strategic compensation in canda

NETA PowerPoint® Slides to accompany

Prepared by Cheryl Dowell,Algonquin College, and Greg Cole,Saint Mary’s University

A Behavioural Framework for Compensation

Chapter 3

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Chapter Learning Objectives

1. Identify the three main types of reward problems that can afflict organizations.

2. Define the three key employee behaviours desired by employers.

3. Identify three key job attitudes and explain their roles in determining employee behaviour.

4. Describe the causes and consequences of reward dissatisfaction.

5. Explain how to generate membership behaviour.

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Chapter Learning Objectives

6. Explain how to generate membership behaviour.

7. Outline the process through which task behaviour is motivated.

8. Explain how to generate organizational citizenship behaviour.

9. Discuss the role that managerial strategy plays in determining the type of employee attitudes and behaviour needed by an organization.

10. Describe the implications of the behavioural framework for designing effective reward systems.

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Types of Reward Problems

Failure to produce desired behaviour

Production of desired behaviour and undesirable consequences

Production of reward dissatisfaction

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Three Key Employee Behaviours

1. Membership behaviour occurs when employees decide to join and remain with a firm.

2. Task behaviour occurs when employees perform the specific tasks that have been assigned to them.

3. Organizational citizenship behaviour occurs when employees voluntarily undertake special behaviours beneficial to the organization that go beyond simple membership.

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Three Key Attitudes

1. Job satisfaction, the attitude one holds toward one’s job and workplace, either positive or negative

2. Work motivation, the attitude one holds toward good job performance, either positive or negative. Essentially, it is the strength of an employee’s desire to perform his or her job duties well.

3. Organizational identification consists of three interrelated elements: a sense of shared goals and values with the organization, a sense of membership or belongingness, and an intention to remain a member of the organization.

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Perceived Inequity

• Equity theory: employees’ base perceptions of equity (fairness) on a comparison of their contributions/rewards ratio to the ratios of others perceived as being similar

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Relative Deprivation Crosby Theory• Employees experience dissatisfaction with pay when:

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1 there is a discrepancy between the outcome they want and what they actually receive.

2 they see that a comparison “other” receives more than they do.

3 past experience has led them to expect more than they now receive

4 future expectancies for achieving better outcomes are low.

5 they feel that they are entitled to more.

6 they absolve themselves of personal responsibility for the lack of better outcomes.

Organizational Justice

Distributive justice

Procedural justice

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consistent procedures are applied uniformly to different jobs and time periods

free of bias personal interests do not enter into application of the procedures

flexible there must be procedures for employees to appeal pay system decisions

accurate application of procedures must be based on factual information

ethical accepted moral principles must guide application of the procedures

representative all affected employees must have an opportunity to express their concerns, which are given serious consideration by the organization

Procedural Justice: The Pay System Must Be …

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Consequences of Reward Dissatisfaction:Attempt to Increase Rewards

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Find more rewarding job

Acquire illicit rewards

Demand higher pay / unionize

Increase effort / performance

Demand improved job duties

Consequences of Reward Dissatisfaction:Attempt to Reduce Contributions

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Demand reduced job duties

Reduce effort / performance

Increased absenteeism

Find less demanding job

Membership Behaviour: Statistics Canada

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Employed62%

Not em-

ployed7%

Not interested31%

Canadian Labour Force

Causes of Membership Behaviour

Job satisfaction

Organizationalidentification

Job attitudes

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Organizational Commitment

• Affective commitment, attachment to an organization based on positive feelings toward the organization

• Continuance commitment, attachment to an organization based on perceived lack of better alternatives

• Research shows no relationship between continuance commitment and affective commitment or between continuance commitment and job satisfaction.

• However, affective commitment and job satisfaction are related.

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Theories of Motivation

Content Theories Process Theories theories that focus on

understanding motivation by identifying underlying human needs

theories that focus on understanding motivation by determining the process humans use to make choices about the specific actions they will take

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Two-Factor Theory

Job content Job

context

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HygienesMotivators

ExtrinsicIntrinsic

Job Characteristics Theory

Task identity the extent to which a worker performs a complete cycle of job activities

Task significance the perceived importance or social value of a given task

Skill variety the variety of skills required for task completion

Job autonomy the degree of freedom workers have in decidinghow to perform their jobs

Job feedback the extent to which the job itself provides feedback on worker performance

Job enrichment the process of redesigning jobs to incorporate more of the five core dimensions of intrinsically satisfying work

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Reinforcement Theories

• Positive reinforcement takes place when a reward follows a valued behaviour.

• Negative reinforcement takes place when an undesirable consequence occurs whenever the valued behaviour does not occur.

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A behaviour will be repeated if valued outcomes flow from that behaviour or if performing the behaviour reduces undesirable outcomes.

Expectancy Theory

1.

• Is the task worth doing?• Do the rewards exceed the costs? Is net valence

positive?

2.

• Will I actually receive the rewards if I accomplish the task?

• Is the instrumentality clear?

3.

• Will I actually be able to accomplish the task if I exert the effort ?

• Is my expectancy strong?

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Attribution and Economic Theories of Motivation• Attribution theory: theory of motivation arguing that humans

often act without understanding their motives for their behaviour and afterward attempt to attribute motives for their actions

• Economic theory: assumes that people are motivated only by extrinsic (economic) rewards, and they will always seek to maximize these rewards while minimizing their contributions to the organization

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Agency Theory and Money as the Motivator

• Agency theory: Agents (employees) will pursue their own self-interests rather than the interests of their principals (employers) unless they are closely monitored or their interests are aligned with the interests of their principals.

• Noncash employee recognition program: a program that provides noncash rewards to employees in recognition of employee accomplishments or actions that are valued by the organization

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Causes of Citizenship Behaviour

Shared organizational

goals

Feelings of membership

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Creating Citizenship Behaviour

Security

Trust

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Behavioural Implications

• Task• Membership• Organizational citizenship

Define the necessary employee behaviour

• Personal competencies• Values• Characteristics

Determine the necessary employee

attributes

• Demographic characteristicsIdentify salient employee needs

• Tangible, physical• Psychological and opportunity

Ensure a positive reward valence

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Discussion Questions

1. Discuss the three main types of reward problems. Have you ever encountered any of these problems?

2. Discuss how employee job attitudes serve as the link between reward systems and employee job behaviour.

3. Discuss how reward systems can be used to generate task behaviour, membership behaviour, and citizenship behaviour.

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