CHPT 6 Goal Setting and Rewards

CHAPTER 6
GOAL SETTING & REWARDS

GOAL SETTING IN ORGANIZATION
 Desirable objective to achieve.
Profession Goals
Politician Winning elections
Students Good Grades
Athletes performance
Executive Organizational growth
 Bandura’s social learning perspective suggests that degree to which

people achieve their goal result in feelings of shame and pride.
 Degree of pride or shame influenced by feelings that one can or

cannot work at desired performance level.
 Feeling called Self-efficacy: A belief that one can achieve more even
though he/she has failed in past
GOAL, STRATEGY, OBJECTIVE, TACTICS
 A goal is a broad primary outcome.
 A strategy is the approach you take

to achieve a goal.
 An objective is a measurable step

you take to achieve a strategy.
 A tactic is a tool you use in pursuing

an objective associated with a
strategy.
EXAMPLE OF INTEL’S LINE
OF CORE PROCESSOR
ROLE OF GOAL SETTING IN
ORGANIZATION
GOAL SETTING THEORY
 In 1960’s, Edwin Locke put forward the Goal-setting theory of
motivation. This theory states that goal setting is essentially linked to task
performance. It states that specific and challenging goals along with
appropriate feedback contribute to higher and better task performance.
 In simple words, goals indicate and give direction to an employee about

what needs to be done and how much efforts are required to be put in. The
important features of goal-setting theory are as follows:
 The willingness to work towards attainment of goal is main source of job

motivation. Clear, particular and difficult goals are greater motivating
factors than easy, general and vague goals.
 Specific and clear goals lead to greater output and better performance.
 Goals should be realistic and challenging. This gives an individual a
feeling of pride when he attains them, and sets him up for attainment of
next goal. The more challenging the goal, the greater is the reward
generally and the more is the passion for achieving it.
THE BASIC MODEL
GOAL SETTING CHARACTERISTICS
 Goal Difficulty - Increasing your employee's goal difficulty
increases their challenge and enhances the amount of effort
expended to achieve them. The more difficult goals lead to
increased performance if they seem feasible.
 Goal Specificity - When given specific goals, employees tend

to perform higher. Telling them to do their best or giving no
guidance increases ambiguity about what is expected.
 Feedback - Providing feedback enhances the effects of goal

setting. Performance feedback keeps their behavior directed
on the right target and encourages them to work harder to
achieve the goal.
 Participation in Goal Setting - Employees who participate in

THE EXPANDED MODEL
MANAGEMENT BY OBJECTIVES
(PETER DUCKER, 1954)
 Management by objectives (MBO) is a strategic
management model that aims to improve the performance
of an organization by clearly defining objectives that are
agreed to by both management and employees.
 Management by objectives (MBO) is the establishment of

a management information system to compare actual
performance and achievements to the defined objectives.
 The major benefits of MBO are that it improves
employee motivation and commitment and allows for
better communication between management and
employees.
 Weakness of MBO is that it unduly emphasizes the
setting of goals to attain objectives, rather than working
PRINCIPLES
 Objectives are laid out with the help of employees and
are meant to be challenging but achievable.
 Employees receive daily feedback, and the focus is on

rewards rather than punishment.
 Personal growth and development are emphasized,

rather than negativity for failing to reach objectives.
THE MBO PROCESS
Establishment of organizational
objectives (Top mgt)
Collaborative goal setting (Supervisor & employee)
Communication
Face to Time &
of Verifiable
Face Counseling resource
organizational goals
meeting Requirement
goals
Periodic Review of Progress
Evaluation of outcomes
MBO IN PRACTICE
 The first step is to either determine or revise
organizational objectives for the entire company. This
broad overview should be derived from the firm's mission
and vision.
 The second step is to translate the organizational

objectives to employees. Drucker used the acronym
SMART (specific, measurable, acceptable, realistic, time-
bound) to express the concept.
 Step three is stimulating the participation of employees

in setting individual objectives. After the organization's
objectives are shared with employees, from the top to the
bottom, employees should be encouraged to help set their
own objectives to achieve these larger organizational
 Step four involves monitoring the progress of
employees. In step two, a key component of the
objectives was that they are measurable in order
for employees and managers to determine how
well they are met.
 The fifth step is to evaluate and reward

employee progress. This step includes honest
feedback on what was achieved and not
achieved for each employee.
REWARDS SYSTEM
 Way to motivate employees in desired ways.
 Rewards are positive outcomes that are earned as a

result of an employee's performance.
 These rewards are aligned with organizational goals.
 When an employee helps an organization in the

achievement of one of its goals, a reward often
follows.
THE EXCHANGE PROCESS
 Employee contribute many resources in organization
 Time
 Effort
 Knowledge
 Skills
 Creativity
 Energy
 In return, organization rewards its employees with both
tangible and intangible compensation.
 Exchange process is dynamic, if either party feels the

exchange is not equitable, the parties may attempt to
reach an agreement on an equitable relationship,
simply they may terminate the exchange relationship
THE INDIVIDUAL-ORGANIZATION
EXCHANGE PROCESS
EXAMPLES OF SURFACE VALUE
AND SYMBOLIC VALUE
 Surface value
 5% increase in salary
 Symbolic value
 Car,
 status,
 safety,
 friendly environment
TYPES OF REWARDS
 Money
 Benefits
 Lifeand health insurance
 Disability and worker’s compensation benefits
 Pension plans
 Unemployment compensation
 Social security contributions
 Perquisites
 Extra allowance additional to main income
 Awards
 Incentives
 Piece work program (workers earning to number of units

produced)
 Gain sharing (grant additional earning to employees for
cost reduction efforts)
 Commission (earnings based on number of units they sell)
 Bonus (receiving amount based on financial performance
of organization)
 Merit pay (raises on employee performance as a result of
performance appraisal)
 Profit sharing (distributing percentage of profit to
employees at a predetermined rate)
TOTAL COMPENSATION PACKAGE
MANAGING REWARD SYSTEM
 Managing rewards entails dealing with issues such as
 Flexiblereward systems,
 Employee participation in the pay system and \
 The secrecy of pay system.
IMPLEMETATION
PAY
SECRACY
PARTICIPATIO
N
FLEXIBILITY
EFFECTIVENESS
 PAY SECRACY
 Exact salary amount of employee is of public knowledge.
 It clarifies the difference between pay and performance for
all concerned
 PARTICIPATIVE PAY SYSTEM
 Pay system designed with involvement of staff members,
HR management, member’s committee, outside consultant
& employee.
 It can be successful only in organizations that are
characterized by climate of trust, joint problem solving & a
participative management style.
 FLEXIBLE REWARDS SYSTEM
 Allow employees to choose the combination of benefits that best
suits their needs.
 Example: younger worker starting a family may prefer additional
maternity benefits or medical family plan or worker nearing
retirement may want to maximize pension benefits

CHPT 6 Goal Setting and Rewards

Uploaded by

Copyright:

Available Formats

CHPT 6 Goal Setting and Rewards

Uploaded by

Document Information

Original Description:

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

CHPT 6 Goal Setting and Rewards

Uploaded by

Copyright:

Available Formats

CHAPTER 6

GOAL SETTING & REWARDS

 Bandura’s social learning perspective suggests that degree to which

 Degree of pride or shame influenced by feelings that one can or

 A strategy is the approach you take

 An objective is a measurable step

 A tactic is a tool you use in pursuing

 In simple words, goals indicate and give direction to an employee about

 The willingness to work towards attainment of goal is main source of job

 Goal Specificity - When given specific goals, employees tend

 Feedback - Providing feedback enhances the effects of goal

 Participation in Goal Setting - Employees who participate in

 Management by objectives (MBO) is the establishment of

 Employees receive daily feedback, and the focus is on

 Personal growth and development are emphasized,

Collaborative goal setting (Supervisor & employee)

Periodic Review of Progress

 The second step is to translate the organizational

 Step three is stimulating the participation of employees

 The fifth step is to evaluate and reward

 Way to motivate employees in desired ways.

 Rewards are positive outcomes that are earned as a

 These rewards are aligned with organizational goals.

 When an employee helps an organization in the

 Exchange process is dynamic, if either party feels the

 Piece work program (workers earning to number of units

You might also like