Managing Employee Motivation and Performance

Chapter 10

Learning ObjectivesAfter studying this chapter, you should be able to:

1. Characterize the nature of motivation.2. Identify & Describe the major content

perspectives on motivation.3. Identify and describe the major process

perspectives on motivation.4. Describe reinforcement perspectives on

motivation.5. Identify and describe popular motivational

strategies.6. Describe the role of organizational reward

systems in motivation.

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.

Determinants of Individual Performance Motivation

The desire to do the job. Ability

The capability to do the job. Work environment

The resources needed to do the job.

Content Perspectives on Motivation

Content Perspectives Focus on needs and deficiencies of

individuals Are 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 Herzberg’s Two-Factor Theory McClelland’s Achievement, Power, and

Affiliation Needs

The Need Hierarchy Approach (Maslow)

People must, in a hierarchical order, satisfy five needs: Physiological needs for basic survival and

biological function. Security needs for a safe physical and

emotional environment. Belongingness needs for love and affection. Esteem needs for positive self-image/self-

respect and recognition and respect from others. Self-actualization needs for realizing one’s

potential for personal growth and development.

Maslow’sHierarchy of Needs

The Need Hierarchy Approach

Weaknesses of Maslow’s Theory Five levels of need are not always

present. Ordering or importance of needs is not

always the same. Cultural differences produce

differences in need categories and hierarchical orderings.

The Two-Factor Theory (Herzberg)

An individual’s satisfaction and dissatisfaction is influenced by two independent sets of factors— motivation factors and hygiene 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.

The Two-FactorTheory of Motivation

The Two-FactorTheory (Herzberg) (cont’d)

Motivation becomes a two-stage process: Ensuring that the hygiene factors are not

deficient and not blocking motivation. Providing employees the opportunity to

experience increase motivational factors through the use of job enrichment and the redesign of jobs.

Criticisms of the Two-Factor Theory Interview findings are subject to different

explanations. Sample population was not representative. Subsequent research has not upheld theory.

Process Perspectives on Motivation

Process Perspectives Focus on why people choose certain

behavioral options to satisfy their needs and how they evaluate their satisfaction after they have achieved their goals.

Process Perspectives of Motivation Expectancy Theory Porter-Lawler Extension of Expectancy

Theory Equity Theory Goal-Setting Theory

Expectancy Theory

Motivation depends on how much we want something and how likely we are to get it.Theory assumes that: Behavior is determined by a combination of

personal and environmental forces. People make decisions about their own behavior in

organizations. Different 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.

Expectancy Theory (cont’d)

Model of Motivation Suggests that motivation leads to

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

Elements of Expectancy Theory

Effort-to-PerformanceEffort-to-Performance Expectancy The individual’s perception of the

probability that effort will lead to a high level of performance.

Performance-to-OutcomePerformance-to-Outcome Expectancy The individual’s perception of the

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

Elements of Expectancy Theory (cont’d)

Outcomes (Consequences) and ValencesOutcomes (Consequences) and Valences Valence is an index of how much an individual

values a particular outcome. It is also 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.

Elements of Expectancy Theory (cont’d)

For individual motivated behavior (effort) to occur: Effort-to-performance expectancy (the

belief that effort will lead to high performance) must be greater than zero.

Performance-to-outcome expectancy (performance will result in certain outcomes) must be greater than zero.

The sum of the valences must be greater than zero—the outcome/reward must have value to the individual.

Equity TheoryAssumptions: 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 should be 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:Outcomes (self)

Inputs (self)=

Outcomes (other)

Inputs (other)

Outcomes (self)

Inputs (self)=

Outcomes (other)

Inputs (other)

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.

Goal-Setting Theory

Assumptions Behavior is a result of conscious

goals and intentions. Setting goals influences 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.

Reinforcement Perspectiveson Motivation

Reinforcement Theory Focuses on 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.

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.

Popular Motivational StrategiesEmpowerment and Participation

Empowerment The process of enabling workers to set their

own work goals, make decisions, and solve problems within their sphere of influence.

Participation The process of giving employees a voice in

making decisions about their work. Areas of Participation for Employees

Making decisions about their jobs. Making decisions about administrative matters. Participating in decision making about broader

issues of product quality.

New Forms of Working Arrangements

Variable Work Schedules

Compressed work schedule

Working a full forty-hour week in less than the traditional five days.

“Nine-eighty” schedule

Working one full week (five days) and one compressed week (four days), yielding one off-work day every other week.

Flexible work Schedules (flextime)

Allowing employees to select, within broad parameters, the hours they will work.

Job sharing When two part-time employees share one full-time job.

Using Reward Systemsto Motivate Performance

Organizational Reward System The formal and informal mechanisms by

which employee performance is defined, evaluated, and rewarded.

Performance-based rewards have the greatest impact on motivation and higher-levels of performance.

Rewards align employee self-interests with the organization’s interests.

Rewards foster behaviors desired by organizations.

Designing Effective Reward Systems

Reward system must meet an individual’s needs.Rewards should compare favorably with other organizations.Distribution of rewards must be perceived to be equitable.Reward system must recognize different needs.

Merit Reward Systems

Merit Pay Concept Pay is awarded to employees on the basis of

the relative value of their contributions to the organization.

Merit Pay Plans Compensation plans that formally base at

least some portion of compensation on merit. Provide employees with annual salary

increases depending on their overall job performance.

Incentive Reward SystemsMonetary Incentives Piece-rate incentive plan

A reward system wherein the organization pays an employee a certain amount of money for every unit she or he produces.

Sales commissions plan The percentage of an employee’s sales to

customers that is paid to an employee as a reward for selling the firm’s products or services.

Nonmonetary Incentives Immediate and one-time rewards

Days off, additional paid vacation time, and special perks.

Team and GroupIncentive Reward SystemsGainsharing Sharing the cost savings that result from

productivity improvements.

Scanlon Plan Similar to gainsharing, but the distribution of

gains is tilted toward the employees and is spread across the organization.

Profit Sharing Plans Provide an organization-wide incentive in the

form of an annual bonus to all employees based on corporate profits.

Executive Compensation

Standard Forms of Executive Compensation Base salary is the guaranteed portion of an

executive’s compensation. Bonuses paid for performance of the organization.

Special Forms of Executive Compensation Stock options allow executives to purchase company

stock at a predetermined price. If the current stock price is above the

predetermined price, the executive profits from exercising the option.

If the current stock price is below the predetermined price, the option has no value.

Criticisms of Executive Compensation

Levels of executive compensation are perceived as extremely large.Compensation levels for executives do not reflect the performance of their firms.The earnings gap between the typical employee and the CEO is enormous.Executive stock options represent potentially huge liabilities for companies, yet do not appear on their financial statements as such.

New Approaches toPerformance-Based RewardsEmployee Participation Allowing employee participation in the

deciding of distribution of rewards.

Innovation in Incentive Programs Offering stock options to all employees. Individualizing reward systems such that

different employees can be offered different incentives.

More Effective Communication Sharing information about how awards are

earned and distributed.

T H E E N D !T H E E N D !