Organizational Behavior Modification and Rewards

Both theories advocate rewarding employees for high performance over low performance.
Existing gap: Only 20% of US and Canadian companies believe merit pay drives individual performance.

Objective performance measures can alleviate inconsistencies and biases when rewarding employees.
Employ gainsharing, Employee Stock Ownership Plans (ESOPs), etc., for better alignment of performance and rewards.
Multiple Information Sources: Use various sources for performance assessments, especially when subjectivity is involved.
Timeliness of Rewards: Rewards should be provided soon after performance and be substantial enough to evoke positive emotions.

Align Rewards with Controllable Performance: Employees should see a clear connection between actions and outcomes.
Example: At United Rentals, managers are rewarded based on controllable asset management rather than overall company performance.
Adjust for Situational Factors: Tailor bonuses to reflect external economic variables affecting performance.

Rewards based on team performance are more effective in highly interdependent jobs.
Example: Nucor Corp uses team bonuses for steel production, fostering cooperation and joint accountability.
In low-collectivism cultures, employees still prefer individual over team-based rewards, which can affect motivation.

Effective rewards must have perceived value among employees.
An anecdote: A company rewarded employees with branded coffee cups after a significant project, failing to resonate with the workforce; a meaningful lunch and gift card later yielded better reception.
Employee Feedback: Companies should proactively ask employees what types of rewards they find valuable.

Gaming the System: Employees may manipulate their behavior to meet reward criteria rather than improving actual performance.
Example: UK hospitals misused 'hello nurses' strategy just to meet triage times.
Information Manipulation: Employees might falsify or misrepresent data to enhance performance metrics.
Example: A Norwegian hospital inflated success statistics through inaccurate patient coding.
Focus on Measured Activities: Employees often prioritize measured outcomes at the expense of unmeasured but critical behaviors.
Example: Bus drivers in Santiago prioritized fare collection over passenger safety due to incentive structures.
Transactional Employment Relationship: A shift occurs from relational to transactional relationships when rewards become overly quantified and systematic.
Example: Faculty systems measuring publications led to decreased engagement in unmeasured activities.

Specialization Advantages: Reduces labor waste and improves efficiency via better skills matching and fewer task switches.
Historical support for job specialization by Adam Smith noted high production rates due to task division.
Scientific Management: Introduced by Frederick Winslow Taylor, focusing on maximizing efficiency through job specialization and standardization.
Enhanced work practices based on scientific observation and analysis.
Negative Effects of Over-Specialization:
Tedious tasks can lead to employee dissatisfaction, causing potential turnover and absenteeism.
Quality of output can diminish due to lack of engagement and connection with the overall product.
Example: Supermarket cashiers often produce high-quality work due to task proficiency, but repetitiveness can reduce motivation and attentiveness.

While rewards and job specialization can enhance efficiency, attention must be paid to potential negatives such as employee motivation, job satisfaction, and overall work quality.