01 The nature of motivation

CHAPTER 7 02 Expectancy theory

MOTIVATING 03 Need theories
AND 04 Equity theory
REWARDING 05 Goat-setting theory
EMPLOYEES 06 Pay and Motivation
 Motivation
ü The psychological forces that
determine the direction of a person’s
THE NATURE
behavior in an organization, a
OF person’s level of effort, and a
MOTIVATION person’s level of persistence
ü Explains why people behave the way
they do in organizations
 Motivation
ü Direction - possible behaviors the
individual could engage in
THE NATURE
ü Effort - how hard the individual
OF
will work
MOTIVATION ü Persistence - whether the
individual will keep trying or give
up
THE NATURE OF
MOTIVATION
Intrinsically Motivated
Behavior
Behavior that is performed for
its own sake.
ü The source of the motivation
that comes from actually
performing the behavior.
ü The sense of
accomplishment and
achievement derived from
doing the work itself
THE NATURE OF
MOTIVATION
Extrinsically Motivated
Behavior
Behavior that is performed to
acquire material or social
rewards or to avoid
punishment.
ü The source of the motivation
is the consequences of the
behavior and not the
behavior itself.
 Outcome
Anything a person gets from a
job or an organization
ü Pay, job security, autonomy,
OUTCOMES AND accomplishment

INPUTS Input
Anything a person contributes to
his or her job or organization
ü Time, effort, skills, knowledge,
work behaviors
THE MOTIVATION EQUATION
EXPECTANCY
THEORY
Motivation will be high
when workers believe:
ü High levels of effort
will lead to high
performance.
ü High performance will
lead to the attainment
of desired outcomes.
 Major Factors of Motivation
ü Expectancy - the belief that
effort (input) will result in a
certain level of performance
EXPECTANCY ü Instrumentality - the belief
that performance results in the
THEORY attainment of outcomes
ü Valence - how desirable each
of the available outcomes from
the job is to a person
EXPECTANCY, INSTRUMENTALITY, AND VALENCE
EXPECTANCY THEORY
 Need
A requirement or necessity
for survival and well-being.

NEED THEORIES
Need Theories
People are motivated to
obtain outcomes at work
that will satisfy their needs
 MASLOW’S HIERARCHY OF NEEDS
Needs Description Examples
Highest-level
needs Self- Realize one’s Use abilities
actualization full potential to the fullest

Feel good Promotions

Esteem
about oneself and recognition

Social Interpersonal
Belongingness
interaction, love relations, parties

Job security,
Safety Security, stability
health insurance

Lowest-level Food, water, Basic pay level

Physiological
needs shelter to buy items

Lower-level needs must be satisfied before

higher-level needs are addressed.
 ALDERFER’S ERG THEORY
Needs Description Examples

Highest-level
needs
Self-development, Continually
Growth
creative work improve skills

Interpersonal Good relations,

Relatedness
relations, feelings accurate feedback

Food, water, Adequate pay

Lowest-level Existence
clothing, and shelter for necessities
needs

After lower level needs satisfied, person seeks higher needs. When
unable to satisfy higher needs, lower needs motivation is raised.
 ü As lower level needs become
satisfied, a person seeks to
satisfy higher-level needs
ü A person can be motivated by
ALDERFER’S needs at more than one level

ERG THEORY at the same time

ü When people experience need
frustration they will focus on
satisfying the needs at the
next-lowest level
 ü Focuses on outcomes that lead
to higher motivation and job

HERZBERG’S satisfaction, and those

outcomes that can prevent
MOTIVATION- dissatisfaction.

HYGIENE ü Unsatisfied hygiene needs

create dissatisfaction;
THEORY satisfaction of hygiene needs
does not lead to motivation or
job satisfaction.
 ü Motivator needs relate to
the nature of the work itself—
HERZBERG’S autonomy, responsibility,
interesting work.
MOTIVATION- ü Hygiene needs are related
HYGIENE to the physical and
psychological context of the
THEORY work—comfortable work
environment, pay, job
security.
 Need for Achievement
ü A strong need to perform
challenging tasks well and meet
personal standards for excellence
MCCLELLAND’S Need for Affiliation
ü Concerned about establishing and
THREE NEEDS maintaining good interpersonal
relations, being liked, and having
THEORY the people around him get along
with each other
Need for Power
ü A desire to control or influence
others
EQUITY THEORY
Equity Theory
Focuses on people’s
perceptions of the
fairness (or lack of
fairness) of their work
outcomes in
proportion to their
work inputs.
 ü A relative outcome to input ratio
comparison to oneself or to
another person (referent)
perceived as similar to oneself.
ü Equity exists when a person
EQUITY THEORY perceives that their
outcome/input ratio to be equal
to the referent’s ratio.
ü If the referent receives more
outcomes, they should also give
more inputs to achieve equity.
 EQUITY THEORY
Condition Person Referent Example

Worker contributes
Outcomes = Outcomes more inputs but also
Equity
Inputs Inputs gets more outputs
than referent

Worker contributes
Underpayment Outcomes < Outcomes more inputs but also
Equity Inputs Inputs gets the same outputs
as referent

Worker contributes
Overpayment Outcomes > Outcomes same inputs but also
Equity Inputs Inputs gets more outputs
than referent
 Inequity exists when worker’s
outcome/input ratio is not equal to
referent.
ü Underpayment inequity: ratio
is less than the referent.
EQUITY THEORY Ø Workers feel they are not getting the
outcomes they should for their inputs.
ü Overpayment inequity: ratio
is higher than the referent.
Ø Workers feel they are getting more
outcomes than they should for their
inputs.
 Restoring Equity: Inequity creates
tension in workers causing them to
attempt to restore equity.
ü In underpayment, workers may
reduce input levels to correct
(rebalance) the ratio or seek a raise.
EQUITY THEORY ü In overpayment, workers may
change the referent person and
readjust their ratio perception.
ü If inequity persists, workers will
often choose to leave the
organization.
 üFocuses on motivating
workers to contribute their
inputs to their jobs and
organizations
GOAL SETTING üConsiders how managers
can ensure that workers
THEORY focus their inputs in the
direction of high
performance and the
achievement of
organizational goals.
 Goal
üWhat a person is trying to
accomplish through his
efforts and behaviors
GOAL SETTING üMust be specific and difficult
Goals point out what is
THEORY important to the firm.
üWorkers should be
encouraged to develop
action plans to attain goals.
GOAL SETTING
THEORY
ü Goals motivate
people to contribute
more inputs to their
jobs
ü Goals help people
focus their inputs in
the right direction
 ü Managers can increase employee
motivation and performance by the
ways they link the outcomes that
employees receive to the

LEARNING performance of desired behaviors

in an organization and the
THEORIES attainment of goals
ü Learning – A relatively permanent
change in person’s knowledge or
behavior that results from practice
or experience.
 Operant Conditioning
üPeople learn to perform
behaviors that lead to desired
consequences and learn not to
perform behaviors that lead to
OPERANT undesired consequences.

CONDITIONING üLinking specific behaviors to the

attainment of specific outcomes
THEORY can motivate high performance
and prevent behaviors that
detract from organizational
effectiveness.
 Positive Reinforcement
üGives people outcomes they desire
when they perform organizationally
functionally behaviors
OPERANT üPositive reinforcers: Pay, praises,
or promotions
CONDITIONING Negative Reinforcement

TOOLS üEliminating undesired outcomes

once the functional behavior occurs
üNegative reinforcers: criticisms, pay
cuts, suspension
 Extinction
üCurtailing the performance of a
dysfunctional behavior by eliminating
whatever is reinforcing it.
OPERANT Punishment
üAdministering an undesired/negative
CONDITIONING consequence to immediately stop a

TOOLS dysfunctional behavior.

üManager administers an undesired
consequence to worker (verbal
reprimand, demotion, pay cut).
 üDownplay the
emotional element
involved
AVOIDING SIDE üTry to punish
EFFECTS OF dysfunctional behaviors
PUNISHMENT as soon as they occur
üTry to avoid punishing
someone in front of
others
 Organizational Behavior
Modification
üManagers systematically
ORGANIZATIONAL apply operant conditioning
techniques to promote the
BEHAVIOR performance of
MODIFICATION organizationally functional
behaviors and discourage
the performance of
dysfunctional behaviors
 ü Used to improve productivity,
efficiency, attendance,
punctuality, safe work
ORGANIZATIONAL practices, and customer service
ü Sometimes questioned because
BEHAVIOR of lack of relevance to certain

MODIFICATION work behaviors

ü To critics it is overly controlling
and robs workers of their
dignity, individuality, freedom
of choice and creativity
 STEPS IN
ORGANIZATIONAL
BEHAVIOR
MODIFICATION
 Social Learning Theory
üProposes that motivation results not
only from direct experience of
rewards and punishments but also
SOCIAL from a person’s thoughts and beliefs
Vicarious Learning
LEARNING (Observational Learning)

THEORY üOccurs when a person becomes

motivated to perform a behavior by
watching another person perform
the behavior and be positively
reinforced for doing so
 Self-Reinforcement
üAny desired or attractive
outcome or award that a
SOCIAL person can give himself or
LEARNING herself for good performance.
Self-efficacy
THEORY üA person’s belief about his or
her ability to perform a
behavior successfully.
 Pay as a Motivator
üExpectancy Theory:
Instrumentality, the
association between

PAY AND performance and

outcomes, must be high for
MOTIVATION motivation to be high.
üNeed Theory: pay is used
to satisfy many needs.
üEquity Theory: pay is
given in relation to inputs.
 Pay as a Motivator
üGoal Setting Theory:
pay is linked to
attainment of goals.
PAY AND üLearning Theory:
MOTIVATION outcomes (pay), is
distributed upon
performance of functional
behaviors.
 Merit Pay Plan
üA compensation plan that
bases pay on based on
MERIT PAY individual, group and/or
AND organization performance.
üIndividual plan: when
PERFORMANCE individual performance
(sales) can accurately
measured.
 Merit Pay Plan
üGroup plan: when group
that works closely
MERIT PAY together is measured and
AND rewarded as a group.
üOrganization plan: when
PERFORMANCE group or individual
outcomes not easily
measured.
 Motivational Value of a Bonus Is
Higher When:
ü Salary levels are unrelated to current
performance.
SALARY
ü Changes in other compensation items
INCREASE OR (cost of living, seniority) are not having
BONUS? a large effect in increasing
compensation.
ü Salaries rarely change and performance
does.
 Benefits of Using Bonuses
ü Do not become permanent part of
SALARY compensation
INCREASE OR ü Are more directly tied to current
BONUS? performance
ü Provide more flexibility in
distributing rewards
SALARY INCREASE
OR BONUS?
Employee Stock Option
ü A financial instrument
that entitles the bearer
to buy shares of an
organization’s stock at a
certain price during a
certain period of time or
under certain conditions.
 Piece-rate Pay
ü Employee’s pay is based on the number of
units that the employee produces.
Commission Pay
EXAMPLES OF ü Employee’s pay is based on a percentage of

MERIT PAY sales that the employee makes.

PLANS Organization-based Merit Plans

ü Scanlon plan—focuses on reduced expenses
or cutting costs
ü Profit sharing—employees receive a share of
an organization’s profits