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  • This is Designing a Motivating Work Environment, chapter 6 from the book An Introduction to OrganizationalBehavior (index.html) (v. 1.1).

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  • Chapter 6

    Designing a Motivating Work Environment


    After reading this chapter, you should be able to do the following:

    1. Describe the history of job design approaches.2. Understand how to increase the motivating potential of a job.3. Understand why goals should be SMART.4. Set SMART goals.5. Give performance feedback effectively.6. Describe individual-, team-, and organization-based incentives that can

    be used to motivate the workforce.

    What are the tools companies can use to ensure a motivated workforce? Nucorseems to have found two very useful tools to motivate its workforce: a job designincorporating empowerment, and a reward system that aligns companyperformance with employee rewards. In this chapter, we will cover the basic toolsorganizations can use to motivate workers. The tools that will be described arebased on motivation principles such as expectancy theory, reinforcement theory,and need-based theories. Specifically, we cover motivating employees through jobdesign, goal setting, performance feedback, and reward systems.


  • 6.1 Motivating Steel Workers Works: The Case of Nucor

    Chapter 6 Designing a Motivating Work Environment


  • Figure 6.1

    2010 JupiterimagesCorporation

    Manufacturing steel is not a glamorous job. The industry is beset by many problems, and more than 40 steelmanufacturers have filed for bankruptcy in recent years. Most young employees do not view working at a steelmill as their dream job. Yet, one company distinguished itself from all the rest by remaining profitable for over130 quarters and by providing an over 350% return on investment (ROI) to shareholders. The company is clearlydoing well by every financial metric available and is the most profitable in its industry.

    How do they achieve these amazing results? For one thing, every one of Nucor Corporations (NYSE: NUE) 12,000employees acts like an owner of the company. Employees are encouraged to fix the things they see as wrong andhave real power on their jobs. When there is a breakdown in a plant, a supervisor does not have to askemployees to work overtime; employees volunteer for it. In fact, the company is famous for its decentralizedstructure and for pushing authority and responsibility down to lower levels in the hierarchy. Tasks thatpreviously belonged to management are performed by line workers. Management listens to lower levelemployees and routinely implements their new ideas.

    The reward system in place at Nucor is also unique, and its employees may be the highest paid steelworkers inthe world. In 2005, the average Nucor employee earned $79,000, followed by a $2,000 bonus decided by thecompanys annual earnings and $18,000 in the form of profit sharing. At the same time, a large percentage ofthese earnings are based on performance. People have the opportunity to earn a lot of money if the company isdoing well, and there is no upward limit to how much they can make. However, they will do much worse thantheir counterparts in other mills if the company does poorly. Thus, it is to everyones advantage to help thecompany perform well. The same incentive system exists at all levels of the company. CEO pay is clearly tied tocorporate performance. The incentive system penalizes low performers while increasing commitment to thecompany as well as to high performance.

    Nucors formula for success seems simple: align company goals with employee goals and give employees realpower to make things happen. The results seem to work for the company and its employees. Evidence of thissuccessful method is that the company has one of the lowest employee turnover rates in the industry and

    Chapter 6 Designing a Motivating Work Environment

    6.1 Motivating Steel Workers Works: The Case of Nucor 242

  • remains one of the few remaining nonunionized environments in manufacturing. Nucor is the largest U.S.minimill and steel scrap recycler.

    Case written by [citation redacted per publisher request]. Based on information from Byrnes, N., & Arndt, M.(2006, May 1). The art of motivation. BusinessWeek. Retrieved April 30, 2010, from; Foust, D. (2008, April 7). The bestperformers of 2008. BusinessWeek. Retrieved April 30, 2010, from; Jennings, J. (2003). Ways to really motivate people:Authenticity is a huge hit with Gen X and Y. The Secured Lender, 59, 6270; Marks, S. J. (2001). Incentives thatreally reward and motivate. Workforce, 80, 108114.


    1. What are some potential problems with closely tying employee pay tocompany performance?

    2. Nucor has one of the lowest turnover rates in the industry. How much ofthe organizations employee retention is related to the otherwise lowpay of the steel working industry?

    3. What would Nucors strategy look like in a nonmanufacturingenvironment (e.g., a bank)?

    4. Would Nucors employee profit-sharing system work at a much largercompany? At what point does a company become too large for profitsharing to make a difference in employee motivation?

    5. Imagine that the steel industry is taking a major economic hit andNucors profits are way down. Employees are beginning to feel the pinchof substantially reduced pay. What can Nucor do to keep its employeeshappy?

    Chapter 6 Designing a Motivating Work Environment

    6.1 Motivating Steel Workers Works: The Case of Nucor 243

  • 6.2 Motivating Employees Through Job Design


    1. Learn about the history of job design approaches.2. Consider alternatives to job specialization.3. Identify job characteristics that increase motivating potential.4. Learn how to empower employees.

    Importance of Job Design

    Many of us assume the most important motivator at work is pay. Yet, studies pointto a different factor as the major influence over worker motivationjob design.How a job is designed has a major impact on employee motivation, job satisfaction,commitment to an organization, absenteeism, and turnover.

    The question of how to properly design jobs so that employees are more productiveand more satisfied has received attention from managers and researchers since thebeginning of the 20th century. We will review major approaches to job designstarting from its early history.

    Scientific Management and Job Specialization

    Perhaps the earliest attempt to design jobs came during the era of scientificmanagement. Scientific management is a philosophy based on the ideas ofFrederick Taylor as presented in his 1911 book, Principles of Scientific Management.Taylors book is among the most influential books of the 20th century; the ideaspresented had a major influence over how work was organized in the followingyears. Taylor was a mechanical engineer in the manufacturing industry. He sawwork being done haphazardly, with only workers in charge. He saw theinefficiencies inherent in employees production methods and argued that amanagers job was to carefully plan the work to be performed by employees. He alsobelieved that scientific methods could be used to increase productivity. As anexample, Taylor found that instead of allowing workers to use their own shovels, aswas the custom at the time, providing specially designed shovels increasedproductivity. Further, by providing training and specific instructions, he was able todramatically reduce the number of laborers required to handle each job.Taylor, F.W. (1911). Principles of scientific management. American Magazine, 71, 570581.Wilson, F. M. (1999). Rationalization and rationality 1: From the founding fathers to

    Chapter 6 Designing a Motivating Work Environment


  • Figure 6.2

    This Ford panel assembly line inBerlin, Germany, is an example ofspecialization. Each person onthe line has a different job.

    2010 JupiterimagesCorporation

    eugenics. Organizational Behaviour: A Critical Introduction. Oxford, UK: OxfordUniversity Press.

    Scientific management proposed a number of ideas thathave been influential in job design in the followingyears. An important idea was to minimize waste byidentifying the most efficient method to perform thejob. Using timemotion studies, management coulddetermine how much time each task would require andplan the tasks so that the job could be performed asefficiently as possible. Therefore, standardized jobperformance methods were an important element ofscientific management techniques. Each job would becarefully planned in advance, and employees would bepaid to perform the tasks in the way specified bymanagement.

    Furthermore, job specialization was one of the majoradvances of this approach. Job specialization1 entailsbreaking down jobs into their simplest components andassigning them to employees so that each person wouldperform a select number of tasks in a repetitive manner.There are a number of advantages to job specialization. Breaking tasks into simplecomponents and making them repetitive reduces the skill requirements of the jobsand decreases the effort and cost of staffing. Training times for simple, repetitivejobs tend to be shorter as well. On the other hand, from a motivational perspective,these jobs are boring and repetitive and therefore associated with negativeoutcomes such as absenteeism.Campion, M. A., & Thayer, P. W. (1987). Job design:Approaches, outcomes, and trade-offs. Organizational Dynamics, 15, 6678. Also, jobspecialization is ineffective in rapidly changing environments where employeesmay need to modify their approach according to the demands of thesituation.Wilson, F. M. (1999). Rationalization and rationality 1: From the foundingfathers to eugenics. Organizational Behaviour: A Critical Introduction. Oxford, UK:Oxford University Press.

    Today, Taylorism has a bad reputation, and it is often referred to as the dark agesof management when employees social motives were ignored. Yet, it is importantto recognize the fundamental change in management mentality brought about byTaylors ideas. For the first time, managers realized their role in influencing theoutput levels of employees. The concept of scientific management has had a lastingimpact on how work is organized. Taylors work paved the way to automation andstandardization that is virtually universal in todays workplace. Assembly lineswhere each worker performs simple tasks in a repetitive manner are a direct result

    1. Breaking down tasks to theirsimplest components andassigning them to employeesso that each person wouldperform few tasks in arepetitive manner.

    Chapter 6 Designing a Motivating Work Environment

    6.2 Motivating Employees Through Job Design 245

  • of job specialization efforts. Job specialization eventually found its way to theservice industry as well. One of the biggest innovations of the famous McDonaldbrothers first fast-food restaurant was the application of scientific managementprinciples to their operations. They divided up the tasks so that one person took theorders while someone else made the burgers, another person applied thecondiments, and yet another wrapped them. With this level of efficiency, customersgenerally received their order within 1 minute.Spake, A. (2001). How McNuggetschanged the world. U.S. News & World Report, 130(3), 54; Business heroes: Ray Kroc.(2005, Winter). Business Strategy Review, 16, 4748.

    Rotation, Job Enlargement, and Enrichment

    One of the early alternatives to job specialization was job rotation. Job rotation2involves moving employees from job to job at regular intervals. When employeesperiodically move to different jobs, the monotonous aspects of job specializationcan be relieved. For example, Maids International Inc., a company that providescleaning services to households and businesses, utilizes job rotation so that maidscleaning the kitchen in one house would clean the bedroom in a differentone.Denton, D. K. (1994). I hate this job. Business Horizons, 37, 4652. Using thistechnique, among others, the company is able to reduce its turnover level. In asupermarket study, cashiers were rotated to work in different departments. As aresult of the rotation, employees stress levels were reduced, as measured by theirblood pressure. Moreover, they experienced less pain in their neck andshoulders.Rissen, D., Melin, B., Sandsjo, L., Dohns, I., & Lundberg, U. (2002).Psychophysiological stress reactions, trapezius muscle activity, and neck andshoulder pain among female cashiers before and after introduction of job rotation.Work & Stress, 16, 127137.

    Job rotation has a number of advantages for organizations. It is an effective way foremployees to acquire new skills and in turn for organizations to increase the overallskill level of their employees.Campion, M. A., Cheraskin, L., & Stevens, M. J. (1994).Career-related antecedents and outcomes of job rotation. Academy of ManagementJournal, 37, 15181542. When workers move to different positions, they are cross-trained to perform different tasks, thereby increasing the flexibility of...


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