Maf651 Final Notes 6-8 PDF

lOMoARcPSD|11675594 ¥ Internal Benchmarking INCENTIVE SCHEME AND REWARD SYSTEM Comparing different departments or units Reward is benefits provided by the employers, within your own organization to identify...

lOMoARcPSD|11675594 ¥ Internal Benchmarking INCENTIVE SCHEME AND REWARD SYSTEM Comparing different departments or units Reward is benefits provided by the employers, within your own organization to identify usually money, promotion or benefits and best practices and areas for improvement. satisfaction derived from the job itself such as Example: Assessing the sales performance of pride in one’s work, a feeling of accomplishment one region against another within your or being part of a team. company. Types of Rewards ¥ External Benchmarking 1. Extrinsic reward Looking outside your organization for Tangible rewards such as pay raises, comparison, involving competitors, industry bonuses. Some intangible rewards like leaders, or companies in different sectors. praises also fall under this category. Example: Analyzing customer service practices in your industry by looking at 2. Intrinsic reward successful companies outside your Non-physical rewards such as feeling of organization. contentment, sense of achievement, words of praise, recognition & work ¥ International Benchmarking freedom. Comparing your organization's performance or practices with those of Performance related reward system companies in different countries. Example: 1. Individual incentive plans Evaluating environmental sustainability Individuals are rewarded for achieving practices by benchmarking against individual performance targets. international companies with strong green initiatives. 2. Profit sharing plans *** Cash bonuses are paid to each employee, Benefits of benchmarking based on a specified percentage of the company’s profit. ¥ Identifying areas for improvement and boosting overall performance. 3. Employee share plans ¥ Gaining insights for better strategic Provide employees with the right to decision-making. purchase company's shares at a specified ¥ Achieving cost savings through optimized price at some specified future time. processes. ¥ Aligning financial goals with industry 4. Gainsharing norms and competitors. Cash bonuses are distributed to ¥ Setting clear performance standards and employees when the performance of the promoting transparency. company, or their segment of the company, exceeds some performance Common pitfalls to avoid target. ¥ Skipping the definition of clear objectives. ¥ Choosing the wrong benchmarking partner. 5. Team based incentive scheme *** ¥ Benchmarking too many areas and KPIs. Individuals are rewarded based on their ¥ Ending the benchmarking with a variance work team exceeding certain report not action plans. performance targets. Intended to ¥ Assume results stay stable for long periods. encourage teamwork and cooperation between employees. ¥ Difficult to obtain data especially from competitors. *** Does not tie individual effort to ¥ Always a follower and not a first mover. individual rewards. Downloaded by EZZA NURFADZREEN RUSLI ([email protected])  lOMoARcPSD|11675594 Nonperformance related reward system Motivation Theories Giving reward to employees not based on their 1. Vroom’s Expectancy Theory work performance such as paid because of good The theory argues that humans act behavior. For instance, rewarding loyal employees according to their conscious expectations or employees who never took annual leaves etc. that a particular behavior will lead to specific desirable goals. Group vs individual performance reward Consider the following issues: ¥ Effort-performance expectancy ¥ Identification with the group. ¥ Performance-outcome ¥ Equity among employees ¥ Outcome- personal goal ¥ Competitiveness between employees ¥ Relating individual effort to reward Motivation = Expectancy x Instrumentality ¥ Rewarding only good performers x Valence Job performance Expectancy: individual’s capability and Performance = Motivation x Ability x difficulty of task assigned. Environment Instrumentality: The belief of the person Motivation is an internal and external factor that he/she will receive a reward (R) if the that stimulate desire and energy in people to be performance (P) expectation is met. [P > R] continually interested and committed to a job, role, or subject, or to try to attain a goal. result Valence: Refers to the value of the reward from the interaction of both conscious and according to the person. unconscious factors such as the intensity of desire or need, incentive or reward value and 2. Herzberg’s Two-factor Theory expectation of the individual and of his/her ¥ Hygiene (extrinsic factor) superior or peers. Provide the necessary setting for motivation, but do not themselves Ability meaning having the skills and knowledge motivate employees. required to perform the job is also important. Examples: salaries, incentives, job security Environmental factors such as having sufficient and working conditions, organizational resources, information, and support are critical policies. to determine performance. May create dissatisfaction if individuals Types of Motivations perceive them as inadequate or 1. Intrinsic Motivation inequitable, however, individuals will not Driven by internal individual's desire and be significantly motivated if these interests to perform a particular task. Exists factors are viewed as adequate or good. within the individual rather than relying on external pressures or desire for rewards. ¥ Motivators (intrinsic factors) Relate to job content or outcomes of the 2. Extrinsic Motivation job that encourage motivation. It focuses on performance which leads to attain an outcome and achieve a reward Examples: achievement, recognition, for showing the desired behavior. It is nature of work, responsibility, linked to competition because this opportunities for personal growth. encourages the individuals or team members to succeed and reap rewards. Downloaded by EZZA NURFADZREEN RUSLI ([email protected])  lOMoARcPSD|11675594 It can give satisfaction to employees in Principles of effective goal setting an organization. It is crucial to instill ¥ Clarity satisfaction in employees as it will create A goal must be specific and clear. confidence, loyalty and ultimately improves the quality of their outputs. ¥ Challenge An easy or tedious goal is demotivating. Keep 3. McClelland’s Needs Theory a realistic balance: don’t expect TOO much! The theory states that human behavior is affected by three needs: ¥ Commitment Need for Power: Urge to excel, to Your employees must understand and buy in accomplish a set of standards, to to the goal from the outset. struggle to achieve success. Need for Achievement: Desire to ¥ Feedback influence other individual’s behavior as Provide regular feedback throughout the per your wish. It is the desire to have whole process. This helps to keep the goal on control over others and to be influential. track. Need for Affiliation: Need for open and sociable interpersonal relationships. The ¥ Task complexity desire for relationship based on co- Prepare realistic timescale and break down operation & mutual understanding. the process into sub-goals with regular reviews. 4. Locke’s Goal Setting Theory states that specific and challenging goals alongside Prospects of GST with appropriate feedback contribute to ¥ Increase self-efficiency: higher and better task performance. The individual’s self-confidence and faith that he has potential of performing the task. Features: The higher the level of self-efficiency, the Willingness to work towards goal greater will be the efforts put in by the attainment. individual when they face challenging tasks. Specific and clear goals lead to greater output and performance. Realistic and challenging goals give an ¥ Create goal commitment: individual a feeling of pride and Goal setting theory assumes that the triumph when he attains them and sets individual is committed to the goal and will him/her up for the next achievement. not leave the goal. Better and appropriate feedback on results direct employees’ behavior & Goal commitment is dependent on the contribute to higher future following factors: performance. Goals are made open, known, and Employees participation in setting goal communicated. makes goal more acceptable and leads Goals are set self by individual rather to more involvement. than designated. Individual’s goals are consistent with organizational direction. Downloaded by EZZA NURFADZREEN RUSLI ([email protected])