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Principles of Management

Managing Employee Motivation and Performance

Lecture 10Lecture 10

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The Nature of Motivation Motivation

– The set of forces that cause people to behave in certain ways.

– The goal of managers is to maximize desired behaviors and minimize undesirable behaviors.

The Importance of Motivation in the Workplace– Determinants of Individual Performance

• Motivation—the desire to do the job.• Ability—the capability to do the job.• Work environment—the resources to do the job.

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Figure 16.1: TheMotivation Framework

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Content Perspectives on Motivation Content Perspectives

– Approaches to motivation that try to answer the question, “What factors in the workplace motivate people?”

Content Perspectives of Motivation– Maslow’s Hierarchy of Needs– Aldefer’s ERG Theory– Herzberg’s Two-Factor Theory– McClelland’s Achievement, Power, and Affiliation

Needs

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Content Perspectives on Motivation (cont’d) The Need Hierarchy Approach

– Maslow’s Hierarchy of Needs• Physiological—basic survival and biological function.• Security—a safe physical and emotional environment.• Belongingness—love and affection.• Esteem—positive self-image/self-respect and recognition and

respect from others.• Self-actualization—realizing one’s potential for personal

growth and development.

– Weakness of Maslow’s theory• Five levels of need are not always present.• Ordering or importance of needs is not always the same.• Cultural differences.

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Figure 16.2: Maslow’s Hierarchy of Needs

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Content Perspectives on Motivation (cont’d) The ERG Theory

– Needs are grouped into three overlapping categories:• Existence needs—physiological and security needs.

• Relatedness needs—belongingness and esteem by others.

• Growth needs—self-esteem and self-actualization.

– ERG theory assumes that:• Multiple needs can be operative at one time (there is no

absolute hierarchy of needs).

• If a need is unsatisfied, a person will regress to a lower-level need and pursue that need (frustration-regression).

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Content Perspectives on Motivation (cont’d) The Two-Factor Theory (Herzberg)

– Satisfaction and dissatisfaction are influenced by two independent sets of factors.

– Theory assumes that job satisfaction and job dissatisfaction are on two distinct continuums:

• Motivational factors (work content) are on a continuum that ranges from satisfaction to no satisfaction.

• Hygiene factors (work environment) are on a separate continuum that ranges from dissatisfaction to no dissatisfaction.

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Content Perspectives on Motivation (cont’d) The Two-Factor Theory (cont’d)

– Theory posits that motivation is a two-step process:

• Ensuring that the hygiene factors are not deficient and not blocking motivation.

• Giving employees the opportunity to experience motivational factors through job enrichment.

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Figure 16.3: The Two-Factor Theory of Motivation

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Content Perspectives on Motivation (cont’d) Individual Human Needs (McClelland)

– The need for achievement• The desire to accomplish a goal or task more effectively than

in the past.

– The need for affiliation• The desire for human companionship and acceptance.

– The need for power• The desire to be influential in a group and to be in control of

one’s environment.

Implications of the Content Perspectives– Content (what causes motivation) → Process (how motivation occurs)

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Process Perspectives on Motivation Process Perspectives

– Approaches to motivation that focus on:• Why people choose certain behavioral options to satisfy their

needs• How they evaluate their satisfaction after they have attained

their goals.

Process Perspectives of Motivation– Expectancy Theory– Porter-Lawler Extension of Expectancy Theory– Equity Theory– Goal-Setting Theory

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Process Perspectives on Motivation (cont’d) Expectancy Theory

– Motivation depends on how much we want something and how likely we are to get it.

– Assumes that:

• Behavior is determined by personal and environmental forces.

• People make decisions about their behavior in organizations.

• People have different types of needs, desires, and goals.

• People choose among alternatives of behaviors in selecting one that that leads to a desired outcome.

• Motivation leads to effort that, when combined with ability and environmental factors, results in performance which leads to various outcomes that have value (valence) to employees.

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Process Perspectives on Motivation (cont’d)

Elements of Expectancy Theory– Effort-to-Performance Expectancy

• The employee’s perception of the probability that effort will lead to a high level of performance.

– Performance-to-Outcome Expectancy• The employee’s perception of the

probability that performance will lead to a specific outcome—the consequence or reward for behaviors in an organizational setting.

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Process Perspectives on Motivation (cont’d) Elements of Expectancy Theory (cont’d)

– Valence• An index of how much an individual values a particular

outcome.• It is the attractiveness of the outcome to the individual.

– Attractive outcomes have positive valences and unattractive outcomes have negative valences.

– Outcomes to which an individual is indifferent have zero valences.

– For motivated behavior to occur:• Both effort-to-performance expectancy and performance-to-

outcome expectancy probabilities must be greater than zero.• The sum of the valences must be greater than zero.

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Figure 16.4: The Expectancy Model of Motivation

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Process Perspectives on Motivation (cont’d) The Porter-Lawler Extension of Expectancy

Theory– Assumptions:

• If performance results in equitable and fair rewards, people will be more satisfied.

• High performance can lead to rewards and high satisfaction.

– Types of rewards:• Extrinsic rewards are outcomes set and awarded by external

parties (e.g., pay and promotions).• Intrinsic rewards are outcomes internal to the individual (e.g.,

self-esteem and feelings of accomplishment).

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Figure 16.5: The Porter-Lawler Extension of Expectancy Theory

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Process Perspectives on Motivation (cont’d) Equity Theory

– People are motivated to seek social equity in the rewards they receive for performance.

• Equity is an individual’s belief that the treatment he or she receives is fair relative to the treatment received by others.

– Individuals view the value of rewards (outcomes) and inputs of effort as ratios and make subjective comparisons of themselves to other people.

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outcomes (self)inputs (self)

=outcomes (other)

inputs (other)

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Process Perspectives on Motivation (cont’d) Equity Theory (cont’d)

– Conditions of and reactions to equity comparisons:• Feeling equitably rewarded.

– Maintain performance and accept comparison as fair estimate.

• Feeling under-rewarded—try to reduce inequity.– Change inputs by trying harder or slacking off.– Change outcomes by demanding a raise.– Distort the ratios by altering perceptions of self or of others.– Leave situation by quitting the job.– Change comparisons by choosing another object person.

• Feeling over-rewarded.– Increase or decrease inputs.– Distort ratios by rationalizing.– Help the object person gain more outcomes.

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Process Perspectives on Motivation (cont’d) Goal-Setting Theory

– Assumptions• Behavior is a result of conscious goals and intentions.• Setting goals influence the behavior of people in organizations.

Characteristics of Goals– Goal difficulty

• Extent to which a goal is challenging and requires effort.• People work harder to achieve more difficult goals.• Goals should be difficult but attainable.

– Goal specificity• Clarity and precision of the goal.• Goals vary in their ability to be stated specifically

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Process Perspectives on Motivation (cont’d)

Characteristics of Goals (cont’d)– Goal acceptance

• The extent to which persons accept a goal as their own.

– Goal commitment• The extent to which an individual is

personally interested in reaching a goal.

Implications of the Process Perspectives– If rewards are to motivate employees,

they must be perceived as being valued, attainable, fair and equitable.

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Figure 16.6: The Expanded Goal-setting Theory of Motivation

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Reinforcement Perspectives on Motivation Reinforcement Theory

– The role of rewards as they cause behavior to change or remain the same over time.

– Assumes that:• Behavior that results in rewarding consequences is

likely to be repeated, whereas behavior that results in punishing consequences is less likely to be repeated.

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Reinforcement Perspectives on Motivation (cont’d) Kinds of Reinforcement in Organizations

– Positive reinforcement• Strengthens behavior with rewards or positive outcomes after a

desired behavior is performed.

– Avoidance • Strengthens behavior by avoiding unpleasant consequences

that would result if the behavior is not performed.

– Punishment• Weakens undesired behavior by using negative outcomes or

unpleasant consequences when the behavior is performed.

– Extinction• Weakens undesired behavior by simply ignoring or not

reinforcing that behavior.

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Reinforcement Perspectives on Motivation (cont’d) Providing Reinforcement in Organizations

– Reinforcement schedules

• Fixed interval schedule—reinforcement applied at fixed time intervals, regardless of behavior.

• Variable interval—reinforcement applied at variable time intervals.

• Fixed ratio—reinforcement applied after a fixed number of behaviors, regardless of time.

• Variable Ratio—reinforcement applied after a variable number of behaviors, regardless of time.

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Table 16.1: Elements of Reinforcement Theory

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Reinforcement Perspectives on Motivation (cont’d) Providing Reinforcement in Organizations

(cont’d)– Behavior modification (OB mod)

• A method for applying the basic elements of reinforcement theory in an organizational setting.

• Specific behaviors are tied to specific forms of reinforcement.

Implications of the Reinforcement Perspectives– Consistently applied reinforcement helps maintain

employee motivation by:• encouraging (rewarding) positive behaviors• discouraging (punishing) dysfunctional behaviors in an

organization.

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Popular Motivational Strategies Empowerment and Participation

– Empowerment• Enabling workers to set their own work goals, make decisions,

and solve problems within their sphere of influence.

– Participation• Giving employees a voice in making decisions about their

work.

– Areas of participation for employees:• Making decisions about their jobs.• Decisions about administrative matters (e.g., work schedules).• Participating in decision making about broader issues of

product quality.

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Popular Motivational Strategies (cont’d) Techniques and Issues in Empowerment

– Using work teams• Collections of employees empowered to plan, organize, direct,

and control their work.

– Decentralization• Changing the overall method of organizing the firm

– Conditions necessary for empowerment:• Power spread to lower organizational levels• Commitment to empowering workers• Systematic and patient efforts to empower workers.• Increased commitment to training.

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Using Reward Systems to Motivate Performance (cont’d) Reward System

– The formal and informal mechanisms by which employee performance is defined, evaluated, and rewarded.

Effects of Organizational Rewards– Higher-level performance-based rewards motivate

employees to work harder.– Rewards help align employee self-interest with

organizational goals.– Rewards foster increased retention and citizenship

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Using Reward Systems to Motivate Performance (cont’d) Merit Reward Systems

– Base a meaningful portion of individual compensation on merit—the relative value of an individual’s contributions to the organization.

• Employees who make greater contributions are given higher pay than those who make lesser contributions.

Incentive Reward Systems– Concept: employee pay is based on employee output.– Assume that:

• Performance is under the control of the individual worker.• The employee work at a single task continuously.• Pay is tightly tied to performance (i.e., pay varies with output).

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Using Reward Systems to Motivate Performance (cont’d) Incentive Reward Systems (cont’d)

– Incentive pay plans• Piece-rate systems• Sales commissions

– Other forms of incentives• Non-monetary incentives (perks)

Team and Group Incentive Reward Systems– Gainsharing programs– Scanlon Plan– Employee stock ownership plans (ESOPs)

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Using Reward Systems to Motivate Performance (cont’d) Executive Compensation

– Standard forms of executive compensation• Base salary• Incentive pay (bonuses)

– Special forms of executive compensation• Stock option plans• Executive perks

– Criticism of executive compensation• Excessively large compensation amounts• Compensation not tied to overall performance of the

organization• Earnings gap between executive pay and typical employee pay

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Using Reward Systems to Motivate Performance (cont’d) New Approaches to Performance-Based Rewards

– Leveraging the value of incentives• Allowing individuals and groups in the organization to have a

say in how rewards are distributed.

– Getting increasingly innovative in incentive programs:• Offering stock options to all employees

• Individualizing the rewards available to individuals in reward systems

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Key Terms motivation content perspectives Maslow’s hierarchy of

needs ERG theory of motivation two-factor theory of

motivation need for affiliation need for achievement need for power process perspectives expectancy theory

effort-to-performance expectancy

outcomes valence equity theory avoidance positive reinforcement extinction variable-ratio schedule variable-interval schedule participation

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Key Terms behavior modification

(OB Mod) compressed work

schedule job sharing telecommuting merit pay plan reward system piece-rate incentive plan gainsharing programs Scanlon plan

stock option plan

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