Chapter-6:

Managing Employee Motivation and Performance

Motivation

 Motivation is the set of forces that cause people to behave in certain ways.

 Motivation is the willingness to do something and is conditioned by this action’s ability to

satisfy some need for the individual.

 So, Motivation implies the process of encouraging people to act in order to attain the
desired objectives.

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

behaviors.

 Motivation is the psychological feature that arouses an organism to action toward a

desired goal and elicits (causes), controls, and sustains certain goal directed behaviors.

The Importance of Motivation in the Workplace

 Determinants of Individual Performance

Usually, performance is determined by;

 Motivation—the desire to do the job.

 Ability—the capability to do the job.
 Work environment—the resources needed to do the job.

If any of these three factors is missing or deficient, effective performance is impossible.

A manager may have the most highly qualified employees under him and provide them
with the best possible environment, but effective performance will not result unless the
subordinates are motivated to perform well.

 Motivation improves performance level of employees

 Motivation helps change negative attitude to positive attitude

 Motivation creates Supportive Work Environment

 Leads to stability of work force

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The Motivation Framework

Need or Search for ways Choice of behavior

deficiency to satisfy need to satisfy need

Determination of Evaluation of need

future needs and satisfaction
search/choice for
satisfaction

Figure-The Motivation Framework

The motivation process progresses through a series of discrete steps. Content, process, and
reinforcement perspectives on motivation address different parts of this process.

- The motivation process begins with a need deficiency. Needs are felt deprivations which the
individual experiences at a given time and act as energizers. Needs is difference between
desired situation and expected situation.
- An unsatisfied need creates tension, which stimulates drives within the individual. These
drives generate a search for particular goals that, if attained, will satisfy the need and lead to
the reduction of tension.
- Next step is finding the different alternatives that can be used to satisfy the needs, which
were felt in first stage. These needs lead to thought processes that guide an employee's
decision to satisfy them and to follow a particular course of action. Action to satisfy needs
and motives accomplishes goals. It can be achieved through reward and punishment.
- Then depending on how well the goal is accomplished their needs and motives are modified.
If an employee’s chosen course of action results in the anticipated out come and reward, that
person is likely to be motivated by the prospect of a similar reward to act the same way in
the future. However, if the employee’s action does not result in the expected reward, he or
she is unlikely to repeat the behavior.

For example, when a worker feels that she is underpaid, she experiences a need for more income.
In response, the worker searches for ways to satisfy the need, such as working harder to try to
earn a raise or seeking a new job. Next, she chooses an option to pursue. After carrying out the
chosen option—working harder and putting in more hours for a reasonable period of time, for
example—she then evaluates her success. If her hard work resulted in a pay raise, she probably
feels good about things and will continue to work hard. But, if no raise has been provided, she is
likely to try another option.

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Theories of Motivation

1. Content Perspectives of Motivation

- Focus on needs and deficiencies of individuals.
- Approaches to motivation that try to answer the question, “What factors in the workplace
motivate people?”
- It includes following theories-
i) Maslow’s Hierarchy of Needs
ii) Herzberg’s Two-Factor Theory
iii) McClelland’s Achievement, Power, and Affiliation Needs

2. Process Perspectives
- Focus on why people choose certain behavioral options to satisfy their needs and how
they evaluate their satisfaction after they have attained their goals.
- Process Perspectives of Motivation includes-
i) Expectancy Theory
ii) Porter-Lawler Extension of Expectancy Theory
iii) Equity Theory
iv) Goal-Setting Theory

Maslow’s Hierarchy of Needs Theory

Abraham Maslow proposed the hierarchy of needs theory in 1943. He hypothesized that every
human being has an internal hierarchy of five needs.
These needs are:
 Physiological needs for basic survival and biological function. e.g., hunger, thirst, shelter,
sex, and other bodily needs.
 Security needs for a safe physical and emotional environment. For instance- Job security,
financial security, family security, health security etc.
 Belongingness needs relate to social processes. They include the need 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 separated the five needs into higher and lower orders. Physiological and safety needs
were lower order and Social, esteem, and self-actualization were categorized as higher-order
needs. Higher order needs are satisfied internally, whereas lower order needs are predominately
satisfied externally.

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 General Example Needs Organizational Examples

Achievement Self- Challenging Job

Actualization

Status Job Title

Esteem
Friendship
Friends at Work
Belongingness
Stability
Security Pension plan

Food Physiological Basic Salary

Figure-2: Abraham Maslow's hierarchy of needs theory

Weakness of Need Hierarchy Approach: Weaknesses of Maslow’s theory are-

 Five levels of need are not always present.

 Ordering or importance of needs is not always the same.
 Cultural differences- people from different cultures are likely to have different need
categories and hierarchies.

Herzberg Two-Factor Theory

 Frederick Herzberg developed his theory by interviewing a group of accountants and
engineers in 1959.
 The interviews focused on satisfactory and dissatisfactory feelings about the job
(experiences). The interviewees were asked two questions:
 When did you feel particular good about your job – what turned you on?
 When did you feel exceptionally bad about your job – what turned you off?
 Two-factor theory of motivation suggests that people’s satisfaction and dissatisfaction
are influenced by two independent sets of factors—motivation factors and hygiene
factors.

Assumptions:
This 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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Motivation Factors Hygiene Factors
• Achievement • Supervisors
• Recognition • Working conditions
• The work itself • Interpersonal relations
• Responsibility • Pay and security
• Advancement and growth • Company policies and administration

Satisfaction No satisfaction Dissatisfaction No dissatisfaction

Figure-3: The Two-Factor Theory of Motivation

According to this theory, Motivation is 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.

Manager who tries to motivate an employee using only hygiene factors, such as pay and good
working conditions, will likely not succeed. To motivate employees and produce a high level of
satisfaction, managers must also offer factors such as responsibility and the opportunity for
advancement (motivation factors).

Criticisms of the Two-Factor Theory:

 Interview findings are subject to different explanations.

 Sample population was not representative.
 The theory ignores blue-collar workers
 Subsequent research has not upheld theory.

Comparison of Maslow and Herzberg Theory of Motivation

Similarity of Maslow and Herzberg Theory of Motivation

There are several similarities between Maslow and Herzberg’s theories. We can see that
motivator factors and hygiene factors in Herzberg’s theory are a collection of higher and lower
order needs respectively in Maslow’s theory. Lower order needs such as needs for
belongingness, security, water, food, etc. could be seen as hygiene factors. Similarly, needs for
recognition, promotion, responsibility, etc. could be seen as motivators of Herzberg’s two-factor
theory. Moreover, both models assume that specific needs energize behavior.

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 Motivator
Factors

Hygiene
Factors

Figure-4 Maslow’s Need Theory & Herzberg’s Two Factor theory of motivation

Difference between Maslow and Herzberg’s Theories of Motivation

Basis for Maslow’s Need Hierarchy Theory Herzberg’s Two-factor Theory

Comparison
Meaning Maslow's Theory is a general theory on Herzberg's Theory on motivation says that
motivation which states that the urge to there are various factors existing at the
satisfy needs is the most important factor workplace that causes job satisfaction or
in motivation. dissatisfaction.
Views on Maslow separated motivation into five Herzberg’s theory states that motivation is
Motivation different levels of needs-Physiological divided into two dimensional (e.g.
needs, Safety needs Love, Esteem and Motivators and hygiene); each dimensional
ego, self-actualization. is consisted of different factors.
Nature Descriptive Prescriptive
Relies on Needs and their satisfaction Reward and Recognition
Order of needs Hierarchical arrangement of needs. No sequence
Core concept Unsatisfied needs stimulate individuals. Gratified needs regulate behavior and
performance.
Division Growth and deficiency needs. Hygiene and motivator factors.
Motivator Unsatisfied needs Only higher order needs
Applicability of It has wide applicability. It is mostly Its applicability is narrow. It is applicable to
Theory applicable to poor and developing rich and developed countries where money is
countries where money is still a big less important motivating factor.
motivating factor.
Basis of the Maslow’s hierarchy was written with This theory based on interviews with 200
theory 3,000 unemployed people involved e.g. employees, specially a group of accountant
college students. and engineers.

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Theory X and Theory Y

- Theory X and Theory Y are theories of human motivation created and developed by
Douglas McGregor at the MIT Sloan School of Management in the 1960s that have been
used in human resource management, organizational behavior, organizational
communication and organizational development.
- They describe two contrasting models of workforce motivation. Theory X and Theory Y
has to do with the perceptions Managers hold on their employees, not the way they
generally behave.

Assumption:
Douglas McGregor concluded that a manager’s view of human nature is based on one of two sets
of assumptions about people. The first set of assumptions, basically negative, and McGregor
labeled Theory X; a second, basically positive, labeled Theory Y.

Theory X assumptions-
1. Employees inherently dislike work and, whenever possible, will attempt to avoid it.
2. Since employees dislike work, they must be coerced, controlled, or threatened with
punishment to achieve desired goals.
3. Employees will avoid responsibilities and seek formal direction whenever possible.
4. Most workers place security above all other factors associated with work and will display
little ambition.

Theory Y has four contrasting assumptions.

1. Employees can view work as being as natural as rest or play.
2. A person who is committed to the objectives will exercise self-direction and self-control.
3. The average person can learn to accept, and even seek responsibility.
4. The ability to make innovative decisions is widely dispersed throughout the population and is
not necessarily the sole province of those in management positions.

Theory X assumes that lower-order needs dominate individuals; Theory Y assumes that higher-
order needs dominate individuals. Unfortunately, no evidence confirms that either set of
assumptions is valid. Mcgregor, himself held the belief that Theory Y assumptions are more
valid than theory X. therefore he proposed ideas like perception in decision making,
opportunities for responsible and challenging jobs and good group relations that would maximize
employee’s job motivation.
If correlate it with Maslow’s theory, we can say that Theory X is based on the assumption that
the employees emphasize on the physiological needs and the safety needs; while Theory X is
based on the assumption that the social needs, esteem needs and the self-actualization needs
dominate the employees.

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McClelland’s Theory of Needs

Psychologist David McClelland advocated Need theory, also popular as Three Needs Theory. This
motivational theory states that the needs for achievement, power, and affiliation significantly influence
the behavior of an individual.
 The need for achievement (nAch) is the desire to accomplish a goal or task more
effectively than in the past.
 The need for affiliation (nAff) is the desire for human companionship and acceptance.
 The need for power (nPow): The desire to be influential in a group and to be in control of
one’s environment.
McClelland stated that we all have these three types of motivation regardless of age, sex, race or
culture.

The need for achievement:

It is the need that drives a person to work and even struggle for the objective that he wants to
achieve.
The individuals with high achievement needs-
 Has a strong need to set and accomplish challenging goals.
 Takes calculated risks to accomplish their goals.
 Likes to receive regular feedback on their progress and achievements.
 Often likes to work alone.
 Such individuals try to get satisfaction in performing things better.
 Such individuals look for innovative ways of performing job. They perceive achievement of
goals as a reward, and value it more than a financial reward.

The need for affiliation

The need for affiliation is urge of a person to have interpersonal and social relationships with
others or a particular set of people. They seek to work in groups by creating friendly and lasting
relationships and has the urge to be liked by others. They tend to like collaborating with others to
competing with them and usually avoids high risk situations and uncertainty.
The individuals motivated by needs for affiliation-
 Wants to belong to the group.
 Wants to be liked, and will often go along with whatever the rest of the group wants to
do.
 Favors collaboration over competition.
 Doesn't like high risk or uncertainty.

The need for power

The need for power is the desire within a person to hold control and authority over another
person and influence and change their decision in accordance with his own needs or desires. The
need to enhance their self-esteem and reputation drives these people and they desire their views
and ideas to be accepted and implemented over the views and ideas over others. These people are

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strong leaders and can be best suited to leading positions. They either belong to Personal or
Institutional power motivator groups. If they are a personal power motivator they would have the
need to control others and an institutional power motivator seeks to lead and coordinate a team
towards an end.
The individuals motivated by needs for power-
 Wants to control and influence others.
 Likes to win arguments.
 Enjoys competition and winning.
 Enjoys status and recognition.

Compare and Contrast Theories: Maslow, McClelland and Herzberg

Similarities:
 All are theories of motivation – outlines how to best understand and motivate employees.
 They all believe that workers have needs and when these needs are not met, they cause
demotivation.
 All indicate that workers have some form of ego (the need for recognition and respect for
the work they’re doing)
 They suggest specific things that management can do to help their employees become
self-actualized.
 They believe that there is a reason for human specific behavior.

Summary of Content Theories of Motivation

Maslow McClelland Herzberg

Physiological Hygiene
Safety and security • Supervisors
Belongingness and love Need for Affiliation • Working conditions
• Interpersonal relations
• Pay and security
• Company policies and administration
Self-esteem Need for power Motivators
Self-actualization Need for achievement Achievement
• Recognition
• The work itself
• Responsibility
• Advancement and growth

Process Perspectives on Motivation

Process perspectives are concerned with how motivation occurs. Rather than attempting to
identify motivational stimuli, process perspectives focus on why people choose certain
behavioral options to satisfy their needs and how they evaluate their satisfaction after they have
attained those goals.

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Expectancy Theory
- In 1964, Victor H. Vroom developed the Expectancy theory through his study of the
motivations behind decision making.
- Motivation depends on
 how much we want something and
 how likely we are to get it.

Assumption: Expectancy theory rests on four basic assumptions

i) Behavior is determined by a combination of personal and environmental forces.
ii) People make decisions about their own behavior in organizations.
iii) Different people have different types of needs, desires, and goals.
iv) People choose among alternatives of behaviors in selecting one that leads to a desired
outcome.

The basic expectancy model.

- Suggests that motivation leads to effort, when combined with ability and environmental
factors, that results in performance which, in turn, leads to various outcomes that have
value (valence) to employees.
- The expectancy model of motivation is a complex but relatively accurate portrayal of
how motivation occurs. According to this model, a manager must understand what
employees want (such as pay, promotions, or status) to begin to motivate them.

Outcome Valence
Environment
Outcome Valence

Motivation Effort Performance Outcome Valence

Outcome Valence
Ability

Outcome Valence

Figure-The Expectancy Model of Motivation

Elements of Expectancy Theory

 Effort-to-Performance Expectancy
- The individual’s perception of the probability that effort will lead to a high
performance.

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 - When the individual believes that effort will lead directly to high performance,
expectancy will be quite strong (close to 1.00).
- When the individual believes that effort and performance are unrelated, expectancy
is very weak (close to 0).
- The belief that effort is somewhat but not strongly related to performance carries
with it a moderate expectancy (somewhere between 0 and 1.00).
 Performance-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.
- Example: if the individual believes that high performance will result in a pay rise,
the performance-to-outcome expectancy is high (approaching 1.00).
- The individual who believes that high performance may lead to a pay raise has a
moderate expectancy (between 1.00 and 0).
- The individual who believes that performance has no relationship to rewards has a
low expectancy (close to 0).
 Outcomes (Consequences) and Valences
- Expectancy theory recognizes that an individual’s behavior results in a variety of
outcomes, or consequences, in an organizational setting.
- 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.

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.

Porter-Lawler Extension of Expectancy Theory

Assumptions:
i) If performance in an organization results in equitable and fair rewards, people will be
more satisfied.
ii) High performance can lead to rewards and high satisfaction.

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Types of rewards:
 Extrinsic rewards—outcomes set and awarded by external parties (e.g., pay and
promotions).
 Intrinsic rewards—outcomes that are internal to the individual (e.g., self-esteem and
feelings of accomplishment).

The Porter–Lawler extension of expectancy theory suggests that if performance results in

equitable rewards, people will be more satisfied. Thus, performance can lead to satisfaction.
Managers must therefore be sure that any system of motivation includes rewards that are fair, or
equitable, for all.

Figure: The Porter–Lawler Extension of Expectancy Theory

Equity Theory
- In 1963, John Stacey Adams introduced the idea that fairness and equity are key
components of a motivated individual. Equity theory is based in the idea that individuals
are motivated by fairness, and if they identify inequities in the input or output ratios of
themselves and their referent group, they will seek to adjust their input to reach their
perceived equity.
- Equity theory contends that 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.
- According to equity theory, outcomes from a job include pay, recognition, promotions,
social relationships, and intrinsic rewards. To get these rewards, the individual makes
inputs to the job, such as time, experience, effort, education, and loyalty.
- 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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 - The individual may feel equitably rewarded, under-rewarded, or over-rewarded. A
feeling of equity will result when the two ratios are equal.

This theory is based on the following two assumptions about human behavior:
1. Individuals make contributions (inputs) for which they expect certain outcomes
(rewards).
2. Individuals decide whether or not a particular exchange is satisfactory, by comparing
their inputs and outcomes to those of others, in the form of a ratio. Equity exists when an
individual concludes that his/her own outcome/input ratio is equal to that of other people.

Figure: The Equity Process

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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What is the difference between Expectancy Theory and Equity Theory?

Point of Expectancy Theory Equity Theory

Difference
Definition People perform actions in exchange for
rewards based on their conscious
expectations. If the reward is fair with
their expectation, they are motivated.
Motivation In expectancy theory, motivation is
said to occur due to the personal effort
and reward system. If the reward is
sufficient as per the perception of the
employee, he / she is motivated.
External In expectancy theory, external forces
Influence: (third party) do not affect motivation.
Components The components of the expectancy
theory are valence, expectancy, and
instrumentality.
People derive job satisfaction by
comparing their effort and reward
ratio with others. If the ratio is fair
or equitable, they feel satisfied.
In equity theory, employees
compare the effort and reward ratio
with others (peers, friends,
neighbors, etc.). If they feel the ratio
is fair in line with others, only they
are motivated. If not, they will face
distress.
In equity theory, external forces
play a crucial role as individuals are
said to compare their rewards with
others in the society.
The components of the equity theory
are inputs, outcomes, and referents.

Goal-Setting Theory

- This motivation theory was developed primarily by Edwin Locke and Gary
Latham in 1960.
- It emphasizes that setting specific, challenging performance goals and the
commitment to these goals are key determinants of motivation. Goals describe a
desired future, and these established goals can drive the behavior.

Assumptions
i) Behavior is a result of conscious goals and intentions.
ii) 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.
- Goal specificity
- Clarity and precision of the goal.
- Goals vary in their ability to be stated specifically.

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 - Acceptance
- Goal acceptance is the extent to which a person accepts a goal as his or her own.
- Commitment
- Goal commitment is the extent to which an individual is personally interested in
reaching a goal.

Using Reward Systems to Motivate Performance

An organizational reward system is the formal and informal mechanisms by which employee
performance is defined, evaluated, and rewarded. Rewards that are tied specifically to
performance, of course, have the greatest impact on enhancing both motivation and actual
performance.

Rewards are positive outcomes that are earned as a result of an employee's performance. These
rewards are aligned with organizational goals. When an employee helps an organization in the
achievement of one of its goals, a reward often follows. There are two general types of rewards
that motivate people: intrinsic and extrinsic.

Effect of Rewards on Attitudes

- Satisfaction is influenced by how much is received and how much the person thinks
should have been received.
- Satisfaction is affected by comparison with others.
- The rewards of others are often misperceived.
- Overall job satisfaction is affected by employee satisfaction with intrinsic and extrinsic
rewards.

Effect of Rewards on Behaviors

 Extrinsic rewards affect employee satisfaction and reduce turnover.
 Rewards influence patterns of attendance and absenteeism.
 Employees tend to work harder for rewards based on performance.

Effect of Rewards on Motivation

 Employees will work harder when performance will be measured.
 Employees will work harder if performance is closely followed by rewards.

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.
Popular Approaches to Rewarding Employees

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  Traditional systems
- Fixed hourly or monthly rate or an incentive system.
 Merit systems
- Employees get different pay raises at the end of the year depending on their overall
job performance.
-
Merit pay generally refers to pay awarded to employees on the basis of the relative
value of their contributions to the organization. Employees who make greater
contributions are given higher pay than those who make lesser contributions.
 Incentive systems
- Employees get different pay amounts at each pay period in proportion to what they
do (e.g., piece-rate pay plans).
 Profit sharing plans
- Provides an annual bonus based to corporate profits.
 Gain sharing
- All group members get bonuses when performance targets are exceeded.
 Lump sum bonuses
- One-time reward, not an increase in base salary.
 Pay-for-knowledge
- Pay the individual rather than the job.

Questions:

1 a) Define Motivation? Explain Motivation framework.

b) Identify and describe the major content perspectives on motivation.
c) Compare and Contrast Theories: Maslow, McClelland and Herzberg theory of
motivation.
2 a) Identify and describe the major process perspectives on motivation.
b) Explain Expectancy theory motivation. Describe the Expectancy Model of motivation.
c) Describe the approaches to Rewarding the Employees.
3 a) Describe the effects of rewarding systems.
b) What factors are to be considered in designing of effective rewarding system
c) Explain Herzberg two factor theory of motivation with criticism.
4 a) Describe Maslow’s theory of hierarchical Needs with its limitation. Compare the
Maslow’s theory of motivation with Herzberg Two factor theory of motivation.
b) Write down the assumptions of Theory X and Theory Y?
c) Describe “Equity” theory of motivation. What are the potential outcomes of the situation of
inequity?

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