Create a workforce that can meet organizational objectives.

In the Lesson Notes you learned about different types of reward systems e.g. seniority-based, status and membership, performance and competency. Describe the reward system that your organization uses to reward its employees. What are the advantages and disadvantages of the reward system? What would you differently if you could change the reward system? You need to think “big” for this posting. Try to identify the actual reward system, instead of listing all the specific rewards that you receive–a reward system is a comprehensive sum of monetary and non-monetary compensation.

the lesson notes are here:please read

Lesson Notes

Imagine if you were managing the HR Department of a new organization and you were asked to create a total reward system for employees. What a challenge that could be!

The decision on how to reward employees is a critical aspect of an organization’s Human Resource Management process.  This decision is based on several different factors including the value system of the organization, priorities and objectives and the organization’s beliefs as to what motivates humans.

Purpose of an Organizational Reward System

For the most part, organizational reward systems are designed to accomplish the following tasks:

  • Recruit suitable candidates to the organization
  • Create a workforce that can meet organizational objectives
  • Retain employees and reward according to their contribution to the organization

Watch this 2 minute video and ask…

Teachers to be paid based on performance

Why is there such push back from the teachers to the proposal to change the reward system under which they are currently working?

Organizational reward systems typically consist of predictable components including:

  • Financial and non-financial compensation and benefits and in some cases may also include
  • Work/life balance, team-based rewards, performance recognition and career development opportunities.

When you look across organizations, you will see that the financial and non-financial compensation and benefits are managed using one of the following models:

  • Pay and benefits based on seniority
  • Pay and benefits based on status and/or membership
  • Pay and benefits based on performance
  • Pay and benefits based on competence

Each of these systems has its own set of advantages and disadvantages. See if you can identify several advantages and disadvantages of each system.

Basis of Reward Description Advantages Disadvantages
  • Employees are paid a base salary and awarded the same increase at regularly scheduled intervals
  • Tenure is used to determine increase in benefits such as holidays and sick days
  • Tenure may also be used to make decisions as to holiday scheduling  and choosing of work schedules e.g. working day shift and no weekends
  • Easy to administer—based on tenure
  • Eliminate perception of favoritism
  • Will attract a pool of potential employees
  • Creates a stable  & loyal workforce with relatively low turnover
  • Difficult to create a flexible high-performing team
  • Lack of seniority may cause newer employees to leave as they cannot see moving up in organization
  • Seniority-based pay may create maintenance of status quo and demonstration of continuance commitment among staff
Status membership
  • Based on rank and position within an organization
  • Rewards based on status
  • Encourages high level of achievement
  • May create feelings of status differences e.g. managers and staff
  • May cause political tactics to gain promotions
  • Considers performance as primary basis for pay
  • May use tenure to determine non-financial benefits like number of holidays and sick days
  • Can create an environment where all employees are working hard to achieve maximum performance
  • High turnover as average and low achievers cannot compete
  • Competitive environment may create conflict in workplace
  • Pay is based on how well an employee performs competencies established by the employer e.g. communication, ability to problem solve, service excellence orientation, leadership skills.
  • Pay can also be based on the competencies and academic skills that the employee brings to the job e.g. a teacher must have a Masters of Education as a per-requisite to be hired.
  • Seniority is not a factor so even new employees can earn rewards based on the degree to which they demonstrate the required competencies
  • Motivates employees to be high achievers and to learn the competencies valued by the organization.
  • Creates a culture of improvement and self-development
  • As competencies are based on general aspects, there is a potential  for subjectivity in the evaluation process by raters
  • May have potential for favoritism in rating system.
  • Not always a straight line between being able to demonstrate required competencies and increased work performance and productivity.
  • Seniority is not a factor so even new employees can earn rewards based on the degree to which they demonstrate the required competencies
  • Motivates employees to be high achievers and to learn the competencies valued by the organization.
  • Creates a culture of improvement and self-development
  • As competencies are based on general aspects, there is a potential for subjectivity in the evaluation process by raters
  • May have potential for favoritism in rating system.
  • Not always a straight line between being able to demonstrate required competencies and increased work performance and productivity

Many of us assume the most important motivator at work is pay. While money is likely a motivator, the key question to ask is “a motivator to do what?”  Money is certainly a motivator to apply for a job and get us to work each day, but it is not a strong motivator for us to experience engagement in our work. This is particularly true if our salary is not directly tied to our performance. Depending on our reward systems in place, we are able to stay home from work and still get paid i.e. have sick days.

So, while money may certainly be a motivator for some elements of our job, I don’t think that we can say that it is the most important motivator for all people.

In Lesson 6,  you studied the Heidelberg Model of motivation, which argues that the only true motivator relates to factors associated with the job itself i.e. job design. Heidelberg is pointing out that motivational factors can be separated into two types i.e. extrinsic e.g. pay and benefits and intrinsic e.g. motivating factors coming from the job itself.

How a job is designed has a major impact on employee motivation, job satisfaction, and commitment to an organization, absenteeism, and turnover.

Job Design as a Motivator

The question of how to properly design jobs so that employees are more productive and more satisfied has received attention from managers and researchers since the beginning of the 20th century.  Three of the most common job design strategies found to add to employee motivation are job rotation, job enlargement and job enrichment.

Job Design Strategy Description
Job rotation
  • Job rotation involves moving employees from job to job at regular intervals. When employees periodically move to different jobs, the monotonous aspects of job specialization can be relieved and repetitive injuries may be avoided.
  • It is an effective way for employees to acquire new skills and in turn for organizations to increase the overall skill level of their employees.
  • When workers move to different positions, they are cross-trained to perform different tasks, thereby increasing the flexibility of managers to assign employees to different parts of the organization when needed and to transfer knowledge among departments.
  • From the employee standpoint, rotation is a benefit, because they acquire new skills that keep them marketable in the long run.
  • To be effective, job rotation must be meaningful i.e. of sufficient duration that the employee will learn new skills and be planned so that employee will be aware of the schedule of rotation
Job enlargement
  • Job enlargement refers to expanding the tasks performed by employees to add more variety. By giving employees several different tasks to be performed, as opposed to limiting their activities to a small number of tasks, organizations hope to reduce boredom and monotony as well as utilize human resources more effectively.
  • Job enlargement may have similar benefits to job rotation, because it may also involve teaching employees multiple tasks.
Job enrichment
  • Job enrichment is a job redesign technique that allows workers more control over how they perform their own tasks.
  •  Employees who have the authority and responsibility over their work can be more efficient, eliminate unnecessary tasks, take shortcuts, and increase their overall performance.

These job design strategies are not without their issues.

Can you apply what you have learned in the course to date to predict possible reactions by an employee to the news that the job they are currently doing is going to be enlarged or enriched?

Rather than job enlargement and enrichment being a motivator, it could very well be a source of dissatisfaction if the employee believes that the action is not fair. The employee’s perception of job enlargement could be that the employer is simply dumping more work onto him, especially if there have been lay-offs recently and those positions are not being filled.  Employees who are given additional autonomy and responsibility may expect greater levels of pay or other types of compensation, and if this expectation is not met they may feel frustrated.

While the strategies are good, an organization must present the techniques correctly to staff or risk the misinterpretation of the objectives.

Job Characteristic Model

The Job Characteristic Model describes five core job dimensions leading to three critical psychological states, resulting in work-related outcomes.

View this 3-minute video

on Core Job Characteristics

Can you develop examples of each of the characteristics applied in the workplace?

Core Job Characteristic


Skill Variety
  • The extent to which the job requires a person to utilize multiple high-level skills. An assembly line worker specialized in one task may benefit from job rotation or enlargement to use other skills.
Task Identity
  • The degree to which a person is in charge of completing an identifiable piece of work from start to finish.
Task Significance
  • Task significance refers to whether a person’s job substantially affects other people’s work, health, or well-being.
  • Autonomy is the degree to which a person has the freedom to decide how to perform his or her tasks.
  • Feedback refers to the degree to which people learn how effective they are being at work.

Think of work-related feedback that you have received in the past. Has that feedback always made you more motivated to work harder? The mere presence of feedback is not sufficient for employees to feel motivated to perform better.  In addition to whether feedback is present, the kind of feedback (positive or negative), whether you are ready to receive the feedback, the credibility of the feedback giver, and the manner in which feedback was given will all determine whether you feel motivated or demotivated as a result of feedback.

According to the job characteristics model, the presence of these five core job dimensions leads employees to experience three psychological states: They view their work as meaningful, they feel responsible for the outcomes, and they acquire knowledge of results. These three psychological states in turn are related to positive outcomes such as overall job satisfaction, internal motivation, higher performance, and lower absenteeism and turnover.

Of these three psychological states, experienced meaningfulness is the most important for employee attitudes and behaviors, and it is the key mechanism through which the five core job dimensions operate.

Having said that, the five job characteristics are not objective features of a job. Two employees working in the same job may have very different perceptions regarding how much skill variety, task identity, task significance, autonomy, or feedback the job affords. In other words, motivating potential is in the eye of the beholder. This is both good and bad news. The bad news is that even though a manager may design a job that is supposed to motivate employees, some employees may not find the job to be motivational. The good news is that sometimes it is possible to increase employee motivation by helping employees change their perspective about the job.


The concept of empowerment extends the idea of autonomy. Empowerment may be defined as the removal of conditions that make a person powerless. The idea behind empowerment is that employees have the ability to make decisions and perform their jobs effectively if management removes certain barriers.

Thus, instead of dictating roles, companies should create an environment where employees thrive, feel motivated, and have discretion to make decisions about the content and context of their jobs. Employees who feel empowered believe that their work is meaningful. They tend to feel that they are capable of performing their jobs effectively, have the ability to influence how the company operates, and can perform their jobs in any way they see fit, without close supervision and other interference.

Read this article

on West Jet Empowerment. Identify what specific actions the organization has taken to empower its staff.

As you read the West Jet job vacancy to what extend is the philosophy of empowerment expressed in the advertisement?

Is employee empowerment always the best action to take? Well, it depends! Empowerment of employees tends to be beneficial for organizations, because it is related to outcomes such as employee inattentiveness, managerial effectiveness, and employee commitment to the organization, customer satisfaction, job performance, and behaviors that benefit the company and other employees.

At the same time, empowerment may not necessarily be suitable for all employees. Those individuals with low growth strength or low achievement need may not benefit as strongly from empowerment. Moreover, the idea of empowerment is not always easy to implement, because some managers may feel threatened when subordinates are empowered.

If employees do not feel ready for empowerment, they may also worry about the increased responsibility and accountability. Therefore, preparing employees for empowerment by carefully selecting and training them is important to the success of empowerment interventions.


Early alternatives to job specialization include job rotation, job enlargement, and job enrichment. Research shows that there are five job components that increase the motivating potential of a job: Skill variety, task identity, task significance, autonomy, and feedback. Finally, empowerment is a contemporary way of motivating employees through job design. These approaches increase worker motivation and have the potential to increase performance.

Goal Setting Theory

Can you recall a goal that you set for yourself that you were never able to attain? Your long list of New Years’ resolutions was filled with good intentions but three months later you could not remember what was on the list?

The point is that merely setting a goal does not guarantee that the goal will be achieved.  I said last New Year’s eve that I was going to save some money this year to go on holidays.  It is the end of the year and I have $57 in the savings account. While technically, I did meet my goal, I will not likely be able to have the holiday that I was hoping for with $57 to spend.

So, the process that you use to set goals is important.

Watch this  5 minute video on SMART Goals to learn more about the process of effective goal setting.

The following table will summarize the SMART Goal process and will build on what you have learned from watching the video. Decide if the examples meet the requirements of the factor.

Why do SMART goals motivate?

  • Recall in Lesson six that you learned that one component of motivation is having a direction.  Smart goals provide direction to employees. If the goal is to process 200 cases by December 31st, employees now have a focus.
  • Goals tend to energize us and keep us moving towards the objective. My goal is to complete this lesson so I can take my dog out for a walk.
  • Carefully selected goals offer us a challenge and when we are finished we feel a sense of accomplishment.
  • Stretch goals push us to be creative and to think out of our mental model.

Are some SMART Goals more effective than others?

Just because a goal is SMART, it does not always mean that it is an effective goal. There are three aspects that help create contribute to the effectiveness of the SMART goal:

1.)    Feedback in a timely manner should be given to employees as they progress in accomplishing their goals. Feedback that is measurable is especially useful e.g. number of sales, reduction of wait times in call center.

2.)    Before setting goals, it should be confirmed that all employees involved in goal achievement have the abilities, skills and training required to accomplish the goal.

3.)    The greater the level of Goal commitment held by employees  the higher the probability that goals will be achieved. This reinforces the notion of having employees being involved in setting the goals instead of having goals imposed upon the employee.

What are potentially negative aspects of Goal Setting as a Motivator?

A strong emphasis on goal setting may create the following issues in the workplace.

You learned that an essential factor in having goal setting work as a strategy is to ensure that employees have all the abilities, skills and training required to work on goal accomplishment.  If those abilities, skills and training is not in place, it will put stress on employees and they may not do well.

A strong focus on achieving a specific goal might reduce flexibility within the organization to deal with unforeseen issues or crises that may arise.

A common enough situation in organizations with a strong emphasis on goal setting is that priority tends to be placed on only those factors that are being measured. Other important elements might be overlooked as they are not part of the goal.

Finally, you might see that employees resort to cheating or providing false data if the reward system in place only acknowledges goal achievement and not coming close to achieving.


Does Money Motivate? Financial and Non-financial Performance Incentives

This 9 minute video is called Does Money Motivate?  Ask yourself what your personal motivators are as you watch it.

Perhaps the most tangible way in which companies put motivation theories into action is by instituting incentive systems. Incentives are reward systems that tie pay to performance. There are many incentives used by companies, some tying pay to individual performance and some to company wide performance.

The more common financial and non-financial incentives are included in the table. You should add your own examples based on your own knowledge of incentive plans.



Piece rate systems
  • Employees are paid on the basis of individual output they produce.  These systems are suitable when employee output is easily observable or quantifiable and when output is directly correlated with employee effort.
  • Increases in employee monitoring technology are making it possible to correctly measure and observe individual output.
  • May create priority on quality over quality, so need to factor errors into equation for payment.
One Time Bonus
  • Bonuses are one-time rewards that follow specific accomplishments of employees. For example, an employee who reaches the quarterly goals set for her may be rewarded with a lump sum bonus.
  • Employee needs to know of possibility of bonus early in measured period.
Merit Pay
  • Merit pay involves giving employees a permanent pay raise based on past performance. Often the company’s performance appraisal system is used to determine performance levels and the employees are awarded a raise.
  • Potential to create a sense of entitlement and even poor performers expect merit pay.
Sales Commissions
  • Sales commissions involve rewarding sales employees with a percentage of sales volume or profits generated.
  • Employees who are heavily rewarded with commissions may neglect customers who have a low probability of making a quick purchase. If only sales volume (as opposed to profitability) is rewarded, employees may start discounting merchandise too heavily, or start neglecting existing customers who require a lot of attention.
  • Some companies manage to create effective incentive systems on a small budget while downplaying the importance of large bonuses. It is possible to motivate employees through awards, plaques, or other symbolic methods of recognition to the degree these methods convey sincere appreciation for employee contributions.
Team Bonus
  • In situations in which employees should cooperate with each other and isolating employee performance is more difficult, companies are increasingly resorting to tying employee pay to team performance.
Gain sharing
  • Gain sharing is a company wide program in which employees are rewarded for performance gains compared to past performance. These gains may take the form of reducing labor costs compared to estimates or reducing overall costs compared to past years’ figures.
  • Reduction of operating costs is typically used to calculate Gain sharing and is typically based on receiving a % of cost reductions.
Profit Sharing
  • Profit sharing programs involve sharing a percentage of company profits with all employees. These programs are company wide incentives and are not very effective in tying employee pay to individual effort, because each employee will have a limited role in influencing company profitability.
  • May also be cause for perception of fairness as an employee works very hard but due to economic conditions the company did not make profit and cannot share with staff.
Stock options
  • A stock option gives an employee the right, but not the obligation, to purchase company stocks at a predetermined price. For example, a company would commit to sell company stock to employees or managers 2 years in the future at $30 per share. If the company’s actual stock price in 2 years is $60, employees would make a profit by exercising their options at $30 and then selling them in the stock market.
  • Options are less attractive or motivational for employees when the stock market is going down, because the cost of exercising their options may be higher than the market value of the shares
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