Creating a Productive Work Environment

WORK ENVIRONMENTS

Creating a Productive Work Environment

 

Many managers believe they can increase productivity by adding robots, intro­ducing information systems, or modifying production procedures. Managers know, how­ever, that productivity and the achievement of total-quality management are not only a matter of computers and production systems but of people. Proactive managers under-stand that human resources and the motivation of people through effective leadership makes the difference between mediocrity and excellence.
Recent data suggest that some industrialized countries, particularly the United States, have fallen far behind other nations in one measure of productivity, output per hour. (See Figure 14-1.) One way to address productivity problems is to focus on the impact of HR practices--selection, performance appraisal, and compensation, for instance--on productivity. A corresponding approach is to value employees, at all levels, as necessary contributors to organizational success. According to U.S. Labor Secretary Robert Reich, total-quality management flourishes where (1) there is an unusual reliance on front-line workers; (2) workers are treated as assets to be developed, not costs to be cut; (3) new forms of worker-management collaboration break down adversarial barriers; and (4) technology and work are integrated in such ways that machines serve human beings, not vice versa.' This chapter addresses the conditions that Reich sets forth.
Before managers can address problems of organizational productivity, they must first understand the motivational bases of performance as well as the leadership skills required to motivate employees to increase their output. In this chapter we will examine selected approaches to motivation and leadership that research and practice suggest can help managers improve employee productivity. We begin by discussing motivation, including re­wards systems, perceptions of equity, various employee involvement programs, and goal setting Later we will focus on various theories of leadership, including trait leadership, situational leadership, self-leadership, and transformational leadership.

(Insert Figure 14-1: Annual Index of Manufacturing Productivity, 1991)

 

Using Rewards to Motivate

Managers have numerous choices in motivating employees to be productive. Quite often, a combination of strategies works best. Employee needs and organi­zational objectives will often determine which motivational technique to use.

Rewards: The Key to Performance

Rewards are an increasingly important motivational tool for any organization. According to a poll of 179 companies conducted by Total Quality and the Service Edge Newsletter, 94percent reported having a reward and recognition program.2 Although rewards may include a wide range of incentives--paychecks, produc­tivity bonuses, five-year pins, certificates, special vacations--rewards are not al­ways effectively used to enhance productivity. For example, if pay raises are given simply for “showing up” for work rather than for increasing output, they will do little to motivate employees to work harder. in the language of the behav­ioral scientist, rewards such as these are not “performance-contingent.”
According to two noted experts in this field, Fred Luthans and Robert Kreitner, whether employees maintain high productivity depends on how they perceive the consequences of their efforts. If they believe high productivity will be rewarded, they will be more likely to work to achieve it. For this reason, orga­nizations should place considerable emphasis on rewards that employees perceive as desirable.4

 

Using Pay as a Reward

One rather obvious reward for performance is pay and the various forms of in­centive pay systems that we discussed in Chapter 11. Since pay can be a powerful incentive, those whose job includes establishing pay systems need to understand the effect of pay on motivation. Managers who understand this relationship are in a much better position to implement effective pay-for-performance systems.
Foremost, pay is something that employees value, and its value may be best understood in terms of the different needs employees have. Abraham Maslow de­veloped the hierarchy of needs, a theory of motivation that arranges five univer­sal needs in order of priority: (1) physiological needs for food, water, etc.; (2) safety needs for physical and psychological security; (3) belongingness needs for love and inclusion; (4) esteem needs for self-respect; and (5) self-actualization needs, or the need to reach one’s potential.5 Pay is an important reward in part because it may satisfy several of these needs. It provides employees with the means to purchase food to satisfy their physiological needs; it allows them to afford shelter to satisfy their need for safety; and it enables them to meet their esteem needs, since pay is one measure of relative worth.6
In addition, there are four other important reasons for managers to imple­ment effective pay-for-performance systems. First, pay serves to differentiate among employees. High-performing employees usually resent systems that reward everyone equally, and they may feel that there is no reason to stay with an orga­nization that allows the less competent to “beat the system” by receiving the same reward with less effort or ability. By serving to differentiate among em­ployees, pay strengthens feelings of equity, a topic discussed later in the chapter.
Second, using pay as a reward makes the formal performance appraisal a sig­nificant event. Where there is no link between pay and performance, employees may see appraisals as nothing more than a perfunctory requirement of the HR department. Where pay is clearly based on performance, however, it is seen as an important consequence of effective performance, thus underscoring the impor­tance of the appraisal process.
Third, pay-for-performance can be an important means of allocating scarce compensation dollars. Even in difficult financial circumstances, organizations are well advised to retain merit pay for their high-performing employees. Not only will rewarding outstanding performance help retain the superior employees, it may also encourage the poorer-performing employees to leave the organization.
Fourth, pay-for-performance can be used to encourage a culture of high pro­ductivity in the organization. Transforming an apathetic culture into one where productivity is highly valued can be a very difficult task. Effective motivational strategies, including using pay as a performance reward, can help to move the or­ganizational culture in the direction of better performance. After all, pay affects every employee in the organization, so it has considerable potential to change the entire culture, one employee at a time.7
For example, Northern Telecom changed its organizational culture from one based on the job’s sophistication to one in which employees were paid on the ba­sis of the number of skills they possessed. (See Chapter 10 for a more complete description of skill-based pay.) Employees were thus rewarded for acquiring a greater variety of skills, the plant gained flexibility in assigning work to em­ployees, performance improved, and supervision requirements decreased because workers were more knowledgeable about their jobs.8

Using Other Rewards

There are a variety of other rewards that are very important to employees and quite useful as a means of motivating performance. Simple feedback from man­agers serves as a valued reward. A survey conducted for the Council of Communication Management indicated that recognition for a job well done is the top motivator of employee performance.  For feedback to be most effective, however, it should be face to face and it should be immediate rather than delayed. Also It should be positive. A high amount of feedback is better than a low amount, since a low amount of feedback conveys low confidence in the subordinate and may even anger the employee.
Positive feedback follows the principles advocated in reinforcement theory, which states that behavior is contingent upon reinforcement. In other words, when reinforcement (rewards) follows performance, performance improves. The-process of influencing behavior through reinforcement is known as operant conditioning. There is general agreement among behaviorists that positive reinforcement is the most effective way to motivate and modify behavior. It is an especially useful approach in organizations where a wide variety of positive reinforcers are available to managers and supervisors. Several forms of positive reinforcement are discussed below.

 

Using Awards Programs to Motivate

What do organizations such as Whitestone Products, Delta Machinery, the City of Atlanta, and Diamond International Corporation all have in common?12 Each has one or more successful employee awards programs. An example of such a program is provided in Highlights in HRM 1. These programs can include many different awards, such as certificates or gifts of jewelry, crystal, or blazers. Besides these traditional awards, novel and unexpected rewards can be offered. For ex­ample, some organizations may find the following useful for encouraging higher levels of performance:

• Workplace visits by top executives to high-performing employees
• Surprise announcements of afternoons or days off
• Trophies, wall plaques, certificates, or pins for exceptional performance

• Letters to the spouse commending the employee’s performance
• Personal handwritten notes of thanks accompanying paychecks
• Invitations to lunch by managers
• Achievement decals for hats or cloth badges for jackets
• Small cash awards
• Telephone calls by top executives to employees at home13

It should be remembered that, if awards are to be effective, they must be given only to those employees who have performed well. In other words, they must differentiate the mediocre performer from the high performer. Further­more, to be effective, such programs must ensure that the award is valued by the employee. Research shows awards have less effect when they are given as part of a regular meeting or sandwiched between departmental activities. Special occa­sions--annual dinners and award meetings--are required if awards are to be perceived as anything more than an afterthought.  Figure 14-2 provides addi­tional suggestions for ensuring an effective award system.

 

Figure 14-2:  Making Awards Count for Employees

 

1.  Tie awards to employees' needs. Managers must get to know their employees well enough to understand their needs.
2.  Make sure an award is large enough to have symbolic value. A $25 increase in the monthly
paycheck may go unnoticed. A $300 bonus check is more likely to get an employee's attention.
3.  Proper timing is important. Schedule the presentation of the award close to the time the award was announced.
4.  Attend the awards presentation. The manager’s presence shows the importance of an awards ceremony and thus of the awards themselves.
5.  Talk up the value of an award. Pointing out the benefits of the award helps to make it more meaningful.
6.  Make certain the presenter is someone the employees respect
7.  Use a public forum for the presentation. Schedule a special event to highlight the importance of the award.
8.  Set high standards for the awards, and make them contingent upon meeting or exceeding those standards.
9.  Increase the exclusiveness of an award. Awards received by fewer employees are valued more highly.
10. Do not oversell the award. Attempting to make a weekly sales bonus seem tremendously valuable only makes the award look meaningless.
11. Clearly establish the goals you want to achieve with the awards program and make sure those
goals coincide with your overall objectives.

Equity Theory and Motivation

A basic principle in HR management is equity. Employees expect that what they give to the organization will be equivalent to what they receive from it. When things are out of balance, employees will take actions to bring them back into balance. Equity theory is the motivation theory that explains how employees respond to situations in which they feel they have received less or more than they deserve. The theory states that feelings of inequity will motivate a person to reduce inequity.15

Theory of Inequity

Adams's version of equity theory is perhaps the most extensive and explicit.16 It is a general theory of social inequity. Central to the theory is the role of percep­tion in motivation and the fact that individuals make comparisons. It states that individuals form a ratio of their inputs in a situation to their outcomes in that situation. They then compare the value of that ratio with the value of the input/outcome ratio for other individuals in a similar class of jobs. If the value of their ratio equals the value of another’s, they perceive the situation as equitable and no tension exists. However, if they perceive their input/outcome ratio as inequi­table relative to others', this creates tension and motivates them to eliminate or reduce the inequity. The strength of their motivation is proportional to the mag­nitude of the perceived inequity.

Perceived Inequity

Employees may develop feelings of inequity for a variety of reasons, the most ob­vious of which is pay. If employees believe they give more effort, but know they are paid less than the person with whom they compare themselves, they will feel that the organization is treating them inequitably. Older, more experienced em­ployees who believe that younger employees are receiving more than their fair share of compensation will feel that they are being treated inequitably. An em­ployee who believes it is her turn to have the day off may resent it and perceive inequity when the day off is given to another employee.

Reactions to Inequity

When faced with perceptions of inequity, employees handle it in a variety Of ways. They may behave in one or more of the following ways:

·   Sabotage the work process
·   Reduce the amount of effort they put into their work
·   Seek more pay to achieve equity because of their perceived larger contribution

• Quit their job or increase their absenteeism, thereby avoiding the situation or the person that is the source of their feelings of inequity
• Try to persuade their fellow employees to reduce their effort
• Cognitively reevaluate original estimates of inputs and outcomes

 

 

Employees may also decide to compare themselves with yet another person thus reducing the perceived inequity of the earlier comparison. Some of these means of reducing inequity can be particularly damaging to an organizatiofl.

  Motivation and Leadership

 

One way for an employer to m.inimiz~ feeli~gs otl~~i.ty in its employees is through a fair compensati6n plan. Suc~ p~ans are' ~i~u~din detail in Chap­ter 10 on compensation.

Managing Equity
That inequity can lead to productivity problems for the organization is ample reason for managers to address perceptions of inequity and unfairness, beyond the usual compensation plans. Recognizing the need to address unfairness in a variety of managerial settings, one senior vice president of a Fortune 500 firm stated, "What's fair is whatever the workers think is fair. My job is to convince them that what's good for the company is fair for them as individuals." Common techniques managers use to ensure equity in the workplace include (1) announc­ing all pay raises and promotions, (2) explaining how pay raises are determined, (3) allowing workers to participate in decisions, and (4) explaining why work as­signments are made. Other means of addressing inequity and unfairness include the following:

·     Emphasizing equitable rewards for employees
·     Recognizing that the basis for perceived inequity is comparison with others
·     Listening carefully to employees to understand the basis of comparisons
·     Responding to employees individually
·     Letting employees know of the contributions of others
·     Describing employees' current accomplishments in relation to their earlier accomplishments
·     Accurately describing the outcomes for specific levels of performance
·     Using public meetings to recognize employees1"

 

Expectancy Theory and Motivation

Expectancy theory of motivation has developed from the work of psychologists who consider humans as thinking, reasoning persons who have beliefs and antici­pations concerning future life events. This theory argues that the motivational force to perform (effort) is a function of the expectancies that individuals have concerning future outcomes times the value (valence) they place on these out­comes. Victor Vroom defines an expectancy as a "momentary belief concerning

the likelihood that a particular act will be followed by a particular outcome.
Thus beliefs that "hard work will lead to desired promotions" and "studying hard will result in good grades" are expectancies. Valences are the positive or negative values people place on outcomes. One application of expectancy theory is in predicting behavior in situations where choices are made. For example, it can be used to predict whether to expect large or minimal effort on a task and whether to expect an employee to quit or stay.
Vroom's work has been extended by two organizational behaviorists, Lyman
W. Porter and Edward Lawler. Their theoretical model is illustrated in Fig­ure 14-3. According to their theory, the amount of effort or energy expended by