Employee Compensation Strategies Quiz

Podcast

Play an AI-generated podcast conversation about this lesson

Questions and Answers

What is a merit pay plan primarily based on?

Employee's personal goals

Length of service in the company

Individual, group, or organization performance (correct)

General market trends and wages

What is the purpose of employee stock options?

To motivate employees through ownership in the firm (correct)

To provide immediate cash bonuses

To ensure job security for employees

To replace base salary increases

Which theory connects pay to the achievement of goals?

Maslow's hierarchy of needs

Goal setting theory (correct)

Reinforcement theory

Expectancy theory

How can individual performance be accurately measured for merit pay?

By direct metrics like sales figures Signup and view all the answers

What motivates employee performance according to learning theory?

Outcomes distributed upon functional behaviors Signup and view all the answers

What type of needs does Alderfer's ERG theory categorize as the highest level?

Growth needs Signup and view all the answers

According to Alderfer's ERG theory, what motivates a person to satisfy lower-level needs?

Frustration of higher-level needs Signup and view all the answers

In Herzberg's Motivation-Hygiene Theory, which of the following is considered a motivator need?

Sense of accomplishment Signup and view all the answers

Which of the following best describes hygiene needs in Herzberg's theory?

They include factors like job security and working conditions. Signup and view all the answers

What is an example of how managers can help satisfy relatedness needs in the workplace?

Encouraging open two-way communication Signup and view all the answers

In the context of Alderfer's ERG theory, which need corresponds to basic requirements like food and shelter?

Existence needs Signup and view all the answers

Which factor is essential for high job satisfaction according to Herzberg's theory?

Meeting motivator needs Signup and view all the answers

What role does skill development play in satisfying growth needs?

It enhances self-development and meaningful work. Signup and view all the answers

What are motivator needs primarily concerned with?

The nature of the work itself Signup and view all the answers

What does the need for achievement focus on?

Performing challenging tasks well Signup and view all the answers

What defines equity in the context of Equity Theory?

Perceived fairness of outcomes relative to inputs Signup and view all the answers

Which of the following best describes the need for affiliation?

Concern for maintaining good interpersonal relationships Signup and view all the answers

In McClelland’s theory, what does the need for power entail?

Desire to control or influence others Signup and view all the answers

How is job satisfaction most directly affected according to Herzberg’s Motivation-Hygiene Theory?

By both motivator and hygiene needs Signup and view all the answers

What are hygiene needs primarily related to in the workplace?

The physical and psychological work context Signup and view all the answers

Which condition signifies equity in the perception of outcomes and inputs?

Outcomes are equal to inputs Signup and view all the answers

What does expectancy refer to in the Expectancy Theory?

The belief that effort will result in a certain level of performance. Signup and view all the answers

Who formulated Expectancy Theory in the 1960s?

Victor H. Vroom Signup and view all the answers

In the context of Expectancy Theory, what does instrumentality measure?

The likelihood of achieving a reward after performance. Signup and view all the answers

According to Maslow’s Hierarchy of Needs, which level of needs is the primary motivator when unmet?

Physiological needs Signup and view all the answers

Which of the following statements about Need Theories is accurate?

They focus on the outcomes that will satisfy individual needs. Signup and view all the answers

What does valence measure in the Expectancy Theory framework?

The attractiveness or desirability of job outcomes. Signup and view all the answers

How many basic needs are arranged in Maslow's Hierarchy of Needs?

Five Signup and view all the answers

What is a defining characteristic of Need Theories?

They address how individuals seek to satisfy their requirements. Signup and view all the answers

What is informational justice primarily concerned with?

The extent of manager explanations for decisions Signup and view all the answers

Which characteristic is essential for goals to be effective in Goal-Setting Theory?

They must be specific and challenging Signup and view all the answers

What do Learning Theories aim to increase in employees?

Motivation through tangible rewards linked to behavior Signup and view all the answers

What is the purpose of positive reinforcement in operant conditioning?

To reward desired behaviors with positive outcomes Signup and view all the answers

Which of the following tools is NOT used in operant conditioning?

Goal setting Signup and view all the answers

What does extinction in operant conditioning aim to achieve?

To eliminate reinforcement of undesired behaviors Signup and view all the answers

What is a recommended strategy for administering punishment according to the guidelines?

Punish dysfunctional behaviors immediately Signup and view all the answers

In operant conditioning, what is the effect of negative reinforcement?

It rewards desired behaviors by removing negative outcomes Signup and view all the answers

What does Organizational Behavior Modification (OB MOD) specifically focus on?

The systematic application of operant conditioning techniques Signup and view all the answers

Which of the following concepts is part of Social Learning Theory?

Vicarious learning Signup and view all the answers

Which component is essential for vicarious learning to occur?

The observer must perceive the behavior accurately Signup and view all the answers

What is a self-reinforcer?

An outcome that a person gives themselves for good performance Signup and view all the answers

In Expectancy Theory, what must be high for motivation to be high?

Instrumentality, the association between performance and outcomes Signup and view all the answers

What primarily does Need Theory state regarding pay?

Pay is utilized to satisfy various personal and psychological needs Signup and view all the answers

How does Equity Theory view the relationship between pay and inputs?

Pay is given in relation to the inputs contributed by the employee Signup and view all the answers

Which of the following best describes self-efficacy?

A person's belief about their own ability to succeed in performing a behavior Signup and view all the answers

Study Notes

Management - Chapter 11: Motivation and Performance

This chapter explores motivation and its importance for managers.
Motivation is the psychological forces driving behavior in organizations, including effort and persistence.
It explains why people behave the way they do in organizations.
This includes the direction of behavior, effort level, and persistence.
Motivation can be categorized as intrinsically motivated (done for own sake), extrinsically motivated (for rewards or to avoid punishment), and prosocially motivated (benefits or helps others).
A key concept is the input-outcome relationship, where inputs are contributions and outcomes are benefits from the job/organization.
Important factors include:
- Time, effort, skills, knowledge, and work behaviors as inputs.
- Pay, job security, benefits, and vacation time as examples of outcomes.
The Motivation Equation demonstrates this relationship: inputs from organizational members lead to performance contributing to outcomes received.

Learning Objectives

Explain motivation and why managers should be concerned about it.
Explain expectancy and equity theory to understand how managers can foster a highly motivated workforce.
Understand how goals and needs drive motivation and identify factors resulting in high performance.
Identify motivational lessons learned from theories of operant conditioning and social learning.
Explain how pay impacts motivation and its use as a motivational tool.

Expectancy Theory

High motivation arises when employees believe effort leads to performance, and performance leads to desired outcomes.
Victor Vroom developed this concept in the 1960s.
Key components of this theory are expectancy, instrumentality, and valence.
- Expectancy: The perceived relationship between effort and performance.
- Instrumentality: The perceived association between performance and rewards.
- Valence: The value an individual places on a particular outcome.

Need Theories

These theories focus on the needs people try to satisfy at work, and the outcomes that fulfill these needs.
Maslow's Hierarchy of Needs: A theory presenting five levels of needs, with lower-level unmet needs being the primary motivators, and only one need level motivational at a time; needs include physiological, safety, belongings, esteem, and self-actualization.

Alderfer's ERG Theory

This theory proposes three universal needs (existence, relatedness, and growth) that motivate behaviour.
Unlike Maslow's theory, Alderfer's suggests needs at more than one level can be motivational at the same time.

Herzberg's Motivation-Hygiene Theory

This theory distinguishes between motivator needs (e.g., interesting work, autonomy, responsibility) and hygiene needs (e.g., comfortable work environment, pay, job security).
Meeting motivator needs is key for high motivation and job satisfaction.

McClelland's Needs for Achievement, Affiliation, and Power

This theory focuses on needs for achievement (performing challenging tasks well), affiliation (establishing good interpersonal relations), and power (controlling or influencing others).

Equity Theory

This theory focuses on the fairness perceptions of outcomes compared to inputs.
- Equity exists when a person's outcome-to-input ratio is equal to a referent's ratio.
- Inequity arises when the ratios are unequal (underpayment or overpayment).
Underpayment inequity: when a person's outcome-to-input ratio is less than a referent's.
Overpayment inequity: when a person's outcome-to-input ratio is greater than a referent's.

Equity and Justice in Organizations

Distributive justice: perception of fairness in outcome distribution.
Procedural justice: perception of fairness in the procedures determining outcomes.
Interpersonal justice: perception of fairness in interpersonal interactions related to outcomes.
Informational justice: extent to which procedures/decisions are explained.

Goal-Setting Theory

This theory identifies effective goals to drive high motivation and performance.
Effective goals are typically specific and challenging.

Learning Theories

These theories focus on linking outcomes to performance, leading to desired behavior and goal attainment.
Operant Conditioning: People learn through consequences, performing desired behaviors rewarded and undesired ones discouraged.
- Four tools used in operant conditioning: positive reinforcement, negative reinforcement, punishment, and extinction.
- Positive reinforcement: giving desired outcomes for desired behavior.
- Negative reinforcement: removing an undesirable outcome for desired behavior.
- Punishment: employing an unwanted outcome for unwanted behavior.
- Extinction: eliminating reinforcement to diminish unwanted behavior.
Organizational behavior modification (OB Mod) is an application of operant conditioning to promote desired and discourage undesirable behavior.
Social learning theory: Learning via observing and modeling others' behaviors, and motivating based on thoughts, beliefs, and observations.
- Vicarious learning: Learning through observing and imitating others; occurs when a person is motivated to perform a behavior that is positively reinforced to others.
- Self-efficacy: a person's belief of his or her ability to successfully perform a behavior.

Pay and Motivation

Pay is a motivator because it satisfies many needs.
Different theories explain how pay impacts motivation, including expectancy, need, and equity theory.
Merit pay plans link pay to individual, team, or organizational performance.
- Examples of merit pay plans include individual plans (e.g., sales) and group or organizational performance systems.
Employee stock options offer a potential method for motivating employees via a sense of ownership.

Example: Warren Buffett

Investor Warren Buffett is donating a significant portion of his wealth to the Gates Foundation.
He attributes this to the foundation's important work regarding world health and educational improvement initiatives.

Studying That Suits You

Use AI to generate personalized quizzes and flashcards to suit your learning preferences.

Description

This quiz explores various employee compensation strategies, including merit pay plans, stock options, and performance measurement methods. Dive into theories that connect pay to performance and motivation, uncovering what drives employee success in the workplace.