This chapter is organised around two key questions or issues: encouraging and facilitating desired work behaviours through use of extrinsic rewards; and the difference between teaching and learning organisations. Both issues depend upon a broad understanding of learning.

Learning is about acquiring the capacity to perform, whereas performance implies that a person has acquired these capacities, and is motivated to engage in appropriate behaviour, to apply the learning. Learning can be defined as a relatively permanent change in behaviour resulting from experience. It is an important part of rewards management.

The four general approaches to understanding or describing learning are classical conditioning, operant conditioning, cognitive learning and social learning.

Classical conditioning is a form of learning through association that involves the manipulation of stimuli (which incite action) to influence behaviour.

Operant conditioning is the process of controlling behaviour by manipulating its consequences. Reinforcement is the means through which operant conditioning takes place. Its foundation is the law of effect, which states that behaviour will be repeated or extinguished, depending on whether the consequences are positive or negative. Reinforcement is related to extrinsic rewards (valued outcomes that are given to the individual by some other person) because these rewards serve as environmental consequences that can influence people’s work behaviours through the law of effect.

Organisational behaviour modification (OB Mod) systematically utilises four reinforcement strategies to change behaviour: positive reinforcement, negative reinforcement (avoidance), punishment and extinction. Positive reinforcement is used to encourage desirable behaviour through the administration of positive consequences that tend to increase the likelihood of a person’s repeating a behaviour in similar settings. Positive reinforcement should be contingent (administered only if the desired behaviour is exhibited) and immediate (as close in time to the desired behaviour as possible). It can be scheduled either continuously or intermittently. The latter involves variable intervals and ratios schedules of reinforcement as somewhat different applications are better in difference situations.

Negative reinforcement, or avoidance, is also used to encourage desirable behaviour. The withdrawal of negative consequences tends to increase the likelihood that a person will repeat a desirable behaviour in similar settings. Punishment is the administration of negative consequences or the withdrawal of positive consequences, which tends to reduce the likelihood of repeating a given behaviour in similar settings. Punishment is used to weaken or eliminate undesirable behaviour. There are a number of problems that can occur with punishment. Thus, one must be especially careful to follow appropriate reinforcement guidelines (including the laws of contingent and immediate reinforcement), when using it. Punishment is likely to be more effective if combined with positive reinforcement.

Extinction is the withdrawal of the reinforcing consequences for a given behaviour. It is often used to withhold reinforcement for an undesirable behaviour that has previously been reinforced. This is done to weaken or eliminate the undesirable behaviour. It is an especially powerful strategy when combined with positive reinforcement.

Reinforcement strategies continue to be analysed and debated. A number of success stories have been reported, but many lack controlled scientific research designs. Some argue that these results may be due to variables other than reinforcement. Others point out that using the various reinforcement strategies may manipulate workers and lead to managerial abuse of power (somewhat contrary to the empowerment approach of chapter 4). The criticisms raise ethical considerations. Advocates of reinforcement approaches respond that all managerial strategies are manipulative in some sense and that managers must be sensitive to the abuse of their power. Employees can also be encouraged to provide input to the design of the reinforcement system and to use behavioural self-management whenever feasible.

Social learning theory advocates learning through the reciprocal interactions among people, behaviour and environment. Thus, it combines operant and cognitive learning approaches. Behavioural self-management builds on social learning theory to emphasise both behavioural and cognitive foci with a special emphasis on enhancing a worker’s self-efficacy and feeling of self-control. Self-management is useful both in treating workers as individuals and as part of self-managed teams.

Managing pay as an extrinsic reward is particularly important because pay has multiple meanings — some positive and some negative. A major and highly visible extrinsic reward, pay plays a role in reinforcement and in the motivation theories discussed previously. Its reward implications are especially important in terms of merit pay. Other pay practices that are important and offer creative reward opportunities are skill-based pay, gain-sharing plans, lump-sum pay increases and flexible benefit plans.

The role of learning is highlighted as a critical factor if organisations are to cope effectively with the transition to an information society. A learning organisation is a new, company-wide philosophy which involves all organisational participants. Factors involved in creating a learning organisation include a shared vision of future growth, the development of strategies and action plans to inspire commitment to future goals, a process of ongoing consultation to achieve consensus, renewal of organisational structures and processes, employing systems thinking and creating self-directed teams of employees.

Following the rise to significance of the learning organisation in the 1990s, the notion of a teaching organisation has become apparent for the new millennium. Organisational learning is acquiring or developing new knowledge that modifies or changes behaviour and improves organisational performance. Teaching organisations aim to pass on learning experiences to others, thereby allowing the organisation to achieve and maintain success.