Essentials of Contemporary Management

Chapter

Motivation

Learning Objectives
After studying the chapter, you should be able to:
Explain what motivation is and why managers need to be concerned about it.
Describe from the perspectives of expectancy theory and equity theory what managers should do to have a highly motivated workforce. Explain how goals and needs motivate people and what kinds of goals are especially likely to result in high performance.

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Learning Objectives (contd)

Identify the motivation lessons that managers can learn from operant conditioning theory and social learning theory. Explain why and how managers can use pay as a major motivation tool.

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The Nature of Motivation

Motivation
The psychological forces acting on an individual that determine: Directionpossible behaviors the individual could engage in. Efforthow hard the individual will work. Persistencewhether the individual will keep trying or give up. Explains why people behave the way they do in organizations.
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The Nature of Motivation (contd)

Intrinsically Motivated Behavior
Behavior that is performed for its own sake. The source of the motivation that comes from actually engaging in the behavior. The sense of accomplishment and achievement derived from doing the work itself

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The Nature of Motivation (contd)

Extrinsically Motivated Behavior
Behavior that is performed to acquire material or social rewards or to avoid punishment. The source of the motivation is the consequences of the behavior and not the behavior itself.

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Sources of Motivation

Personal Characteristics

Nature of the Job

Individual Motivation

Nature of the Organization

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Outcomes and Inputs

Outcome
Anything a person gets from a job or an organization: Pay, job security, autonomy, accomplishment.

Input
Anything a person contributes to his or her job or organization: Time, effort, skills, knowledge, work behaviors.
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The Motivation Equation

Figure 9.1

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Expectancy Theory
Motivation will be high when workers believe:
High levels of effort will lead to high performance. High performance will lead to the attainment of desired outcomes.

Major Factors of Motivation

Expectancythe belief that effort (input) will result in a certain level of performance. Instrumentalitythe belief that performance results in the attainment of outcomes. Valencehow desirable each of the available outcomes from the job is to a person.

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Expectancy, Instrumentality, and Valence

Figure 9.2

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Expectancy Theory in Practice

Expectancy: Effort will result in a level of performance.

Employees will work work hard if they believe they can attain high performanceorganizations must provide the resources that support performance.
Instrumentality: Performance leads to outcomes. Workers are only motivated if they think performance leads to an outcomemanagers must link performance to outcomes.

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Expectancy Theory in Practice

Valence: How desirable an outcome is to a person. Workers have preferences for outcomes managers must determine which outcomes are valued.

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Expectancy and Motivation

Motivation is highest when expectancy, instrumentality, and valence levels are high.
If one of the values is low, motivation will be low: Workers do not believe they can perform well. Workers do not believe that performance and rewards are closely linked. Workers do not value the rewards offered for performance.

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Expectancy Theory

Figure 9.3

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Need Theories
Need
A requirement for survival and well-being.

Need Theories

Theories of motivation that focus on what needs people are trying to satisfy at work and what outcomes will satisfy those needs.
Basis premise is that people are motivated to obtain outcomes at work to satisfy their needs. Managers must determine what needs a worker wants satisfied and ensure that a person receives the outcomes when performing well.
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Maslows Hierarchy of Needs

Needs
Highest-level needs Selfactualization

Description
Realize ones full potential Feel good about oneself Social interaction, love Security, stability Food, water, shelter

Examples
Use abilities to the fullest Promotions and recognition Interpersonal relations, parties Job security, health insurance Basic pay level to buy items

Esteem

Belongingness

Safety

Lowest-level needs

Physiological

Lower-level needs must be satisfied before higher-level needs are addressed.

Table 9.1
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Herzbergs Motivation-Hygiene Theory

( )( )

Focuses on outcomes that lead to higher motivation and job satisfaction, and those outcomes that can prevent dissatisfaction.
Motivator needs relate to the nature of the work itself autonomy, responsibility, interesting work. Hygiene needs are related to the physical and psychological context of the workcomfortable work environment, pay, job security. Unsatisfied hygiene needs create dissatisfaction; satisfaction of hygiene needs does not lead to motivation or job satisfaction.
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McClellands Needs for Achievement, Affiliation, and Power

Need for Achievement
A strong need to perform challenging tasks well and meet personal standards for excellence.

Need for Affiliation

A concern for good interpersonal relations, being liked, and getting along.

Need for Power

A desire to control or influence others.

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Adams Equity Theory

Focuses on peoples perceptions of the fairness (or lack of fairness) of their work outcomes in proportion to their work inputs.
A relative outcome to input ratio comparison to oneself or to another person (referent) perceived as similar to oneself. Equity exists when a person perceives that their outcome/input ratio to be equal to the referents ratio. If the referent receives more outcomes, they should also give more inputs to achieve equity.

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Equity Theory
Condition Person Referent Example
Worker contributes more inputs but also gets more outputs than referent

Equity

Outcomes Inputs

= Outcomes Inputs

Underpayment Equity

Outcomes Inputs

< Outcomes Inputs

Worker contributes more inputs but also gets the same outputs as referent

Overpayment Equity

Outcomes Inputs

> Outcomes Inputs

Worker contributes same inputs but also gets more outputs than referent

Table 9.2

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Equity Theory (contd)

Inequity exists when workers outcome/input ratio is not equal to referent.
Underpayment inequity: ratio is less than the referent. Workers feel they are not getting the outcomes they should for their inputs. Overpayment inequity: ratio is higher than the referent.

Workers feel they are getting more outcomes than they should for their inputs.

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Equity Theory (contd)

Restoring Equity: Inequity creates tension in workers causing them to attempt to restore equity.
In underpayment, workers may reduce input levels to correct (rebalance) the ratio or seek a raise.

In overpayment, workers may change the referent person and readjust their ratio perception.
If inequity persists, workers will often choose leave the organization.

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Goal Setting Theory

Focuses on identifying the types of goals that are effective in producing high levels of motivation and explaining why goals have these effects. Considers how managers can ensure that workers focus their inputs (efforts) in the direction of high performance and the achievement of organizational goals.
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Goal Setting Theory (contd)

Goal
What a person is trying to accomplish.

Characteristics of Motivating Goals

Specific and not vague in providing direction

Difficult but not impossible to attain

Accepted and committed to by workers Feedback on goal attainment is important.

Goals point out what is important to the firm.

Workers should be encouraged to develop action plans to attain goals.
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Learning Theories

Theories that focus on increasing motivation and performance by linking outcomes to performance and the attainment of goals. Learning
A relatively permanent change in persons knowledge or behavior that results from practice or experience.
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Operant Conditioning Theory

Operant Conditioning
People learn to perform behaviors that lead to desired consequences and learn not to perform behaviors that lead to undesired consequences. Linking specific behaviors to the attainment of specific outcomes can motivate high performance and prevent behaviors that detract from organizational effectiveness.

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Operant Conditioning Tools

Positive Reinforcement
Getting desired outcomes for performing needed work behaviors. Positive reinforcers: pay, praises, or promotions.

Negative Reinforcement
Eliminating undesired outcomes once the desired behavior occurs. Negative reinforcers: criticisms, pay cuts, suspension. Is not the same as punishment.

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Operant Conditioning Tools (contd)

Extinction
Curtailing the performance of a dysfunctional behavior by eliminating whatever is reinforcing it. Behavior is not rewarded and over time, the worker stops performing it.

Punishment
Administering an undesired/negative consequence to immediately stop a dysfunctional behavior. Manager administers an undesired consequence to worker (verbal reprimand, demotion, pay cut).
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Guidelines for Administering Punishment

Downplay the emotional element involved in punishment.
Punish the behavior, not the person.

Punish behaviors as soon as possible after they occur.

Swift punishment increases the connection between punishment and behavior.

Avoid punishing someone in front of others.

Punish the behavior, not the person. People learn for punishment of others.
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Social Learning Theory

A theory that takes into account how learning and motivation are influenced by peoples thoughts and beliefs and their observations of other peoples behavior. Vicarious Learning (Observational Learning )
When a learner is motivated to perform a behavior by watching another person perform and be rewarded. People are motivated to imitate models who are highly competent, expert, receive attractive reinforcers, and are friendly or approachable.
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Social Learning Theory (contd)

Conditions for Social Learning
The learner observes the model performing the behavior. The learner accurately perceives the models behavior.

The learner remembers the behavior.

The learner has the skills and abilities needed to perform the behavior.

The learner sees or knows that the model is positively reinforced for the behavior.

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Social Learning Theory (contd)

Self-Reinforcement
Any desired or attractive outcome or award that a person can give himself or herself for good performance. The self-management of behavior

Self-efficacy
A persons belief about his or her ability to perform a behavior successfully. Influences motivation both when managers provide reinforcement and when workers themselves provide it.

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Pay and Motivation

Pay as a Motivator
Expectancy Pay is an instrumentality (and outcome) Expectancy must be high for motivation to be high. Need Theory Pay is used to satisfy many needs. Equity Theory Pay is given in proportion to inputs.

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Pay and Motivation

Pay as a Motivator (contd)
Goal Setting Theory Pay is linked to attainment of goals. Learning Theory The distribution of outcomes (pay) is contingent upon the performance of functional behaviors.

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Merit Pay and Performance

Merit Pay Plan
A compensation plan that bases pay on individual, group and/or organization performance. Individual plan: when individual performance (sales) can accurately measured. Group plan: when group that works closely together is measured and rewarded as a group.

Organization plan: when group or individual outcomes are not easily measured.

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Salary Increase or Bonus?

Motivational Value of a Bonus Is Higher When:
Salary levels are unrelated to current performance. Changes in other compensation items (cost of living, seniority) are not having a large effect in increasing compensation.

Salaries rarely change and performance does.

Benefits of Using Bonuses

Do not become permanent part of compensation.

Are more directly tied to current performance.

Provide more flexibility in distributing rewards.
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Salary Increase or Bonus? (contd)

Employee Stock Option
A financial instrument that entitles the bearer to buy shares of an organizations stock at a certain price during a certain period of time or under certain conditions.

Uses:
To attract high-level managers. To motivate employee performance through ownership in the firm.

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Examples of Merit Pay Plans

Piece-rate Pay
Employees pay is based on the number of units that the employee produces.

Commission Pay
Employees pay is based on a percentage of sales that an employee makes personally.

Organization-based Merit Plans

Scanlon plan focuses on reduced expenses or cutting costs.
Profit sharing employees receive a share of an organizations profits. 944