Piece rate
Individual workers are paid a certain sum of money for each unit of production they complete
Wage incentive plans
Under these circumstances, group incentives are employed.
For example, workers in a steel mill might be paid an hourly wage and a monthly bonus for each tonne of steel produced over some minimum quota.
These various schemes to link pay to performance on production jobs
Potential problems with wage incentives
Lowered quality
Differential opportunity
Reduced cooperation
Incompatible job design
Restriction of productivity
Linking Pay to Performance on White Collar Jobs
Merit pay plans: yearly, managers evaluate performance of employees on rating scale
Using these evaluations, the managers recommend that some amount of merit pay be awarded to individuals over and above their basic salaries
Potential Problem with Merit pay plans
Low discrimination
Small increases
Pay secrecy
Lump-sum bonus
paid out all at one time and not built into base pay
Pay transparency
policy in which an organization will provide employees with information about pay practices or pay levels and ranges and/or will allow employees to discuss pay-related information with each other
Profit sharing
most commonly used group-oriented incentive systems.
In years in which the firm makes a profit, some of this is returned to employees in the form of a bonus, sometimes in cash and sometimes in a deferred retirement fund.
Employee Stock Ownership (ESOPs)
allow employees to own a set amount of the company’s shares that they are allowed to purchase at a fixed price
Gainsharing
group incentive plans that are based on improved productivity or performance over which the workforce has some control
Skill-based pay AKA pay for knowledge
to motivate employees to learn a wide variety of work tasks, irrespective of the job that they might be doing at any given time
Job design
structure, content, and configuration of a person’s work tasks and roles
Job Scope
defined as the breadth and depth of a job
Breadth
the number of different activities performed on the job
Depth
degree of discretion or control the worker has over how these tasks are performed
Stretch assignments
offer employees opportunities to broaden their skills by working on a variety of challenging assignments and projects
Job rotation
involves rotating employees to different tasks and jobs in an organization
Job Characteristics Model
Core Job Characteristics
Critical Psychological States
Outcomes
Core Job Characteristics
Skill variety
Task Identity
Task significance
Autonomy
Feedback from Job
Skill variety
opportunity to do a variety of job activities using various skills and talents,
corresponds fairly closely to the notion of job breadth
Task identity
extent to which a job involves doing a complete piece of work, from beginning to end
Task significance
impact that a job has on others
Autonomy
the freedom to schedule one’s own work activities and decide work procedures,
corresponds to job depth
Feedback from Job
information about one’s performance effectiveness, is also essential for high intrinsic motivation.