This document discusses motivation and monetary rewards in the workplace. It makes several key points: 1) Pay is most motivating for lower-level employees as it helps satisfy basic needs, while pay is additionally motivating for upper-level employees as it helps gain social status. 2) Pay becomes less important as a sole motivator once basic needs are satisfied, unless it also satisfies higher-order needs like independence and status. 3) Dissatisfaction with pay can result in lower work commitment, absenteeism, and turnover if expectations are not met.

1. MOTIVATION, SATISFACTION AND PERFORMANCE SATURDAY, December 19, 09

2. IMPORTANT POINTS Presentations on next class Submit all compensatory assignments Check the quiz sheet and discuss if there are any issues No marks to the student, who does not present the proof and does not deliver

3. Course Outline Sr. | Chap|Final Exam Chapter Heading No.|No. | Q. No. 1. 1 1 An Introduction to Motivational Concept (260909) 2. 2 2 Motivation in the History (101009) 3. 3 3 Darwinian Theory of Evolution and Motivation (171009) 4. 4 4 Instinct and Motivation (311009) 5. 5 5 The Effect of Frustration, Conflict and Stress (051109 & 071109) 6. 6 6 Need Theories of Motivation (211109) 7. 7 7 Reinforcement/Incentive Theories (051209) 8. 8 8 Expectancy Theories of Motivation (171209) 9. 9 9 Motivation, Satisfaction, and Performance (191209) 10. 10 10 Motivation and Monetary Rewards (211209) 11. 11 11 Motivation Through MBO and Performance Appraisal Marks Distribution: Number of Quizzes attended + Midterm + Final assignment

4. MOTIVATION AND MONETARY REWARDS Salaries should be variable as per individual’s performance There should be an incentive reward that is paid regularly A ratio schedule is more effective in arousing motivation than an interval schedule Incentives should match with needs A partial reinforcement schedule can be a more effective motivational tool than a continuous schedule The rewards should be instrumental, ie the results must be followed by rewards as devised.

5. Employee’s pay holds a motivational value if it satisfies basic needs as well as self esteem and independence needs For lower level employees pay is motivational because it helps them cope up with basic financial requirements For upper level employees it additionally helps to gain them social status in society Designing a pay system for an organization is a very important and critical process MOTIVATIONAL VALUE OF PAY

6. Economic being 1911, Taylor Social being 1930s, Human relationists Self actualizing man, Growth needs focus, 1960s Herzber says, money/ pay is important and a dis-satisfier On the contrary, money not only brings basic need-fulfilling, it also satisfies other needs such as independency, status, security etc IMPORTANCE OF PAY INCENTIVE

7. If there is a valence attached to pay, then it becomes a motivator/ reinforcer and hence increase productivity Money acquired through pay has a greater incentive value than money acquired through bonuses Pay should be performance driven IMPORTANCE OF PAY INCENTIVE

8. Dissatisfaction with pay results in lesser commitment with work Their expectations if not met with pay result in dissatisfaction This dissatisfaction results in low motivation, sabotage, absenteeism, turnovers Employees stop responding to motivational initiatives such as job enlargement, enrichment, MBO etc IMPORTANCE OF PAY INCENTIVE

9. Pay has a motivational power, because it buys the means of satisfying physiological needs, after the satisfaction of these needs any other need occurs Pay can buy shelter, the job security and insurance plans serve as fulfilling the security needs for employees Pay indirectly facilitates socialization needs It satisfies status, power and self esteem needs It does not satisfy self actualization need but may serve as a measure of achievement Pay is instrumental for satisfying Physiological, security, status, power, esteem and achievement needs It is least likely to satisfy socialization and self actualization needs IMPORTANCE OF PAY

10. First: NEED; Very important for the one whose basic needs are unfulfilled It loses importance after the satisfaction of those needs, unless it satisfies higher order needs Second: How much he receives; For high paid employees, pay becomes less important hence motivational tools other than monetary incentives, need to be devised Third: Function of job levels; Lower level and blue collar workers give more value to pay as compared to even low paid high level workers/ managers. The importance of pay is associated with what it can buy not what it itself is How much the pay is important

11. PIECE RATE SYSTEM VS HOURLY RATE SYSTEM This system as introduced by Taylor, was instrumental in increasing the productivity of employees This is not very much preferred now: Output measurement is not easy Technological changes made less blue collar workers engaged in such activities where the piece rate system is used Workers fear that increased productivity may result in increased productivity standards, rate cuts, lay offs, loss of health and self esteem Loss of cooperation amongst employees [PAY PREFERENCES

12. HOURLY WAGE VS SALARY INDIVIDUAL AND GROUP INCENTIVES Piece rate plans Production bonus plans Commission plans Merit rate plans Group incentive plans COMPANY WIDE INCENTIVE PLANS Scanlon plan (profit sharing by labor cost saving) Profit sharing plan Cash plan Deferred payment Combination Employee Stock ownership plans Executive bonus plans Stock option plans [PAY PREFERENCES

13. NON PERFORMANCE CONTINGENT PAYMENTS

14. GOOD LUCK