Chapter 10

Managing Employee Motivation and Performance

The Nature of Motivation

• Motivation - The set of forces that cause people to behave in certain ways.
• 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

• Focus on needs and deficiencies of individuals
• Approach to motivation that tries to answer the question “What factors motivate people?”
• Content Perspectives of Motivation
Maslow’s Hierarchy of Needs
Herzberg’s Two-Factor Theory
McClelland’s Achievement, Power, and Affiliation Needs

Maslow’s Hierarchy of Needs

Suggests that people must satisfy five groups of needs in order— physiological, security, belongingness, esteem, and self-actualization
1. Physiological - things such as food, sex, and air, which represent basic issues of survival and biological function.
2. Security - for a secure physical and emotional environment
3. Belongingness - relate to social processes. They include the need for love and companionship and the need to be accepted by one’s peers.
4. Esteem - relate to social processes. They include the need for love and companionship and the need to be accepted by one’s peers.
5. Self actualization - the top of the hierarchy are the self-actualization needs. These involve realizing one’s potential for continued growth and
individual development. The self-actualization needs are perhaps the most difficult for a manager to address.

The Two-Factor Theory (Herzberg)

Suggests that people’s satisfaction and dissatisfaction are influenced by two independent sets of factors—motivation factors and hygiene factors
 Motivational factors (work content) range from satisfaction to no satisfaction.
 Hygiene factors (work environment) range from dissatisfaction to no dissatisfaction.

Individual Human Needs (McClelland)

1. Need for achievement - The desire to accomplish a goal or task more effectively than in the past.
2. Need for affiliation - The desire for human companionship and acceptance
3. Need for power - The desire to be influential in a group and to control one’s environment
Process Perspectives on Motivation
- Focus on why people choose certain behaviors to satisfy needs and how they evaluate satisfaction after they have attained goals.
• Process Perspectives of Motivation
Expectancy Theory
Porter-Lawler Extension of Expectancy Theory
Equity Theory
Goal-Setting Theory

Expectancy Theory

• Model of Motivation
- 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 model suggests that motivation leads to effort and that effort, combined with employee ability and environmental factors, results in
performance. Performance, in turn, leads to various outcomes, each of which has an associated value, called its valence.
Effort-to-performance expectancy - the individual’s perception of the probability that effort will lead to high performance.
Performance-to-outcome expectancy - the individual’s perception that performance will lead to a specific outcome.
Outcomes and Valence
Outcomes consequences of behaviors in an organizational setting, usually rewards.
Valence an index of how much an individual values a particular outcome; the attractiveness of the outcome to the individual

Equity Theory

- Contends that people are motivated to seek social equity in the rewards they receive for performance.
Outcomes (self )= outcomes (other)
Inputs (self) = inputs (other)

Goal-Setting Theory

• Theory’s Assumptions
-Behavior is a result of conscious goals and intentions.
-Setting goals influences behavior in organizations.

• Characteristics of Goals

Goal difficulty - is the extent to which a goal is challenging and requires effort. If people work to achieve
goals, it is reasonable to assume that they will work harder to achieve more difficult goals
Goal specificity - is the clarity and precision of the goal. A goal of “increasing productivity” is not very
specific; a goal of “increasing productivity by 3 percent in the next six months” is quite specific.
Goal acceptance - is the extent to which a person accepts a goal as his or her own.
Goal commitment - is the extent to which he or she is personally interested in reaching the goal.

Reinforcement Perspectives on 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 is rewarded is likely to be repeated.
Behavior that is punished is less likely to be repeated.

Kinds of Reinforcement
• 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.

Schedules for Applying Reinforcement

• Fixed interval- Reinforcement applied at fixed time intervals, regardless of behavior, such as regular weekly paychecks,
• Variable interval- Reinforcement applied at variable time intervals, such as occasional visits by the supervisor.
• Fixed ratio- Provides reinforcement after a fixed number of behaviors regardless of the time interval involved, such as a bonus for every
fifth sale.
• Variable ratio- Provides reinforcement after varying numbers of behaviors are performed, such as the use of compliments by a supervisor
on an irregular basis.

Using Reinforcement in Organizations

• Organizational Behavior Modification (OB Mod)
A method for applying the basic elements of reinforcement theory in an organizational setting.
An OB Mod program starts by specifying behaviors that are to be increased (such as producing more units) or decreased (such as
coming to work late). These target behaviors are then tied to specific forms or kinds of reinforcement.

Popular Motivational Strategies

Empowerment
Enabling workers to set own work goals, make decisions, and solve problems within their sphere of influence.
 Participation
Giving employees a voice in making decisions about 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.

Alternative Work Arrangements

• Compressed work Schedule
Working a full forty-hour week in less than the traditional five days.
• Flexible work schedules (flextime)
Allowing employees to select, within broad parameters, hours they will work.
• Job sharing
When two part-time employees share one full-time job.
• Telecommuting
Allowing employees to spend part of their time working off-site, usually at home, by using e-mail, the Internet, and other forms of
information technology

Using Reward Systems to Motivate Performance

• Reward Systems
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.

Merit Reward Systems

• Merit pay –pay awarded to employees on the basis of the relative value of their contributions to the organization.
• Merit pay plan – compensation plan that formally bases a some at least some meaningful portion of compensation on merit.

Incentive Reward Systems

• Monetary Incentives

Piece-rate incentive plan

Employee is paid a certain amount of money for every unit the employee produces.
Sales commissions plan
Employee is paid a percentage of the employee’s sales to customers for selling the firm’s products or services.

• Nonmonetary Incentives

-Immediate, and one-time rewards

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

Common Team and Group Reward Systems

• Gainsharing
Sharing cost savings that result from productivity improvements.
• Scanlon Plan
Distribution of gains is tilted toward the employees and is spread across the organization.
• Profit Sharing Plans
Provide an annual bonus to all employees based on corporate profits.

Executive Compensation
• Standard Forms of Executive Compensation
Base salary
Incentive pay (bonuses)
• Special Forms of Executive Compensation
Stock option plans - Established to give senior managers the option to buy company stock in the future at a predetermined fixed
price
Executive perks

New Approaches to Performance-Based Rewards

• Employee Participation
Allowing employee participation in the deciding the 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.