The passage underscores the importance of goal setting in organizations, highlighting its

role in motivating employees and improving performance. Goals serve as targets that create
a sense of tension, which employees are driven to reduce by achieving them. Setting and
achieving goals not only enhances performance but also satisfies the need for achievement,
competence, and personal growth. Self-efficacy, the belief in one's capabilities, is crucial in
setting higher, attainable goals. Successful goal setting typically includes goals that are
specific, measurable, achievable, relevant, and time-bound (SMART). Overall, goal setting is
a powerful tool for focusing employee efforts and achieving organizational success.
Elements of Goal Setting
Goal setting, as a motivational tool, is most effective when all its major elements are present.
These are goal acceptance, specificity, challenge, and performance monitoring and
feedback. Each is discussed briefly in the following sections.
Goal Acceptance Effective goals need to be not only understood but also accepted. Simply
assigning goals to employees may not result in their commitment to those goals, especially if
the goal will be difficult to accomplish. Minimally, supervisors need to explain the purpose
behind goals and the necessity for them. A more powerful method of obtaining acceptance is
to allow the employees to participate in the goal-setting process. A public statement of
performance intentions also contributes to the commitment of employees to their
achievement.
Specificity Goals need to be as specific, clear, and measurable as possible so that
employees will know when a goal is reached. Asking employees to improve, to work harder,
or to do better is not very helpful, because that kind of goal does not give them a focused
target to seek. Specific goals (often quantified) let them know what to reach for and allow
them to measure their own progress.
Challenge Perhaps surprisingly, most employees work harder when they have difficult goals
to accomplish rather than easy ones. Hard goals present a challenge that appeals to the
achievement drive within many employees. These goals must, however, still be achievable,
given the experience of the individual and the resources available.
Performance Monitoring and Feedback Even after employees have participated in setting
well-defined and challenging goals, two other closely related steps are important to complete
the process. Performance monitoring—observing behavior, inspecting output, or studying
documents of performance indicators—provides at least subtle cues to employees that their
tasks are important, their effort is needed, and their contributions are valued. This monitoring
heightens their awareness of the role they play in contributing to organizational
effectiveness. Simply monitoring results, however, may not be enough. Many employees are
hungry for information about how well they are performing. Without performance feedback—
the timely provision of data or judgment regarding task-related results—employees will be
Employee Self efficacy working in the dark and have no true idea how successful they are. A
ball team needs to know the score of the game; a trapshooter needs to see the clay pigeons
break into pieces; and the woodchopper needs to see the chips fly and the pile of firewood
grow. The same can be said for a team on the production line or a retail salesclerk.
Performance feedback tends to encourage better job performance, and self-generated
feedback is an especially powerful motivational tool.
THE EXPECTANCY MODEL
A widely accepted approach to motivation is the expectancy model, also known as
expectancy theory, developed by Victor H. Vroom and expanded and refined by Porter and
Lawler and others.16 Vroom explains that motivation is a product of three factors: how much
one wants a reward (valence), one’s estimate of the probability that effort will result in
successful performance (expectancy), and one’s estimate that performance will result in
receiving the reward (instrumentality). This relationship is stated in the following formula:

The Three Factors

Valence refers to the strength of a person’s preference for receiving a reward. It is an

expression of the amount of one’s desire to reach a goal. For example, if an employee
strongly wants a promotion, then promotion has high valence for that employee. Valence for
a reward is unique to each employee and thus is a reflection of the concept of individual
differences an individual’s valence for a reward is conditioned by experience, and it may vary
substantially over a period of time as old needs become satisfied and new ones emerge. It is
important to understand the difference between the implications of need-based models of
motivation and the idea of valence in the expectancy model. In the need-based models,
broad generalizations are used to predict where a group of employees may have the
strongest drives or the greatest unsatisfied needs. In the expectancy model, managers need
to gather specific information about an individual employee’s preferences among a set of
rewards and then continue to monitor changes in those preferences. Since people may have
positive or negative preferences for an outcome, valence may be negative as well as
positive. When a person prefers not attaining an outcome, as compared with attaining it,
valence is a negative figure. If a person is indifferent to an outcome, the valence is 0. The
total range is from 1 to +1, as shown in Figure 5.8. Some employees will find intrinsic
valence in the work itself, particularly if they have a strong work ethic or competence
motivation. They derive satisfaction directly from their work through a sense of completion, of
doing a task right, or of creating something. In this instance, outcomes are largely within the
employee’s own control and less subject to management’s reward system. These employees
are self-motivated.

Expectancy is the strength of belief that one’s work-related effort will result in completion of
a task. For example, a person selling magazine subscriptions door-todoor may know from
experience that volume of sales is directly related to the number of sales calls made.
Expectancies are stated as probabilities—the employee’s estimate of the degree to which
performance will be determined by the amount of effort expended. Since expectancy is the
probability of a connection between effort and performance, its value may range from 0 to 1.
If an employee sees no chance that effort will lead to the desired performance, the
expectancy is 0. At the other extreme, if the employee is totally confident that the task will be
completed, the expectancy has a value of 1. Normally, employee estimates of expectancy lie
somewhere between the two extremes. One of the forces contributing to effort-performance
expectancies is the individual’s self-efficacy. Employees with high levels of self-efficacy are
more likely to believe that exerting effort will result in satisfactory performance. High self-
efficacy creates a high expectancy assessment.

Instrumentality represents the employee’s belief that a reward will be received once the
task is accomplished. Here the employee makes another subjective judgment about the
probability that the organization values the employee’s performance and will administer
rewards on a contingent basis. The value of instrumentality effectively ranges from 0 to 1.17
For example, if an employee sees that promotions are usually based on performance data,
instrumentality will be rated high. However, if the basis for such decisions is unclear or
managerial favoritism is suspected, a low instrumentality estimate will be made.
How the Model Works

The product of valence, expectancy, and instrumentality is motivation. It is defined as the

strength of the drive toward an action. Below is an example of the expectancy model in
operation.

The three factors in the expectancy model may exist in an infinite number of combinations.
The multiplicative combination that produces the strongest motivation is high positive
valence, high expectancy, and high instrumentality. If desire for a reward is high, but either of
the probability estimates is low, then motivation will likely be moderate, at best. If both
expectancy and instrumentality are low, then motivation will be weak even if the reward has
high valence.

A special case occurs when valence is negative. For example, some employees would
prefer not to be promoted into management because of the stress, loss of overtime pay, or
additional responsibilities they would bear. In particular, the widespread corporate
downsizings of the past decade clearly targeted middle managers and produced insecurity in
those who remained. In situations like these, where promotion has a negative valence, the
employee will try to avoid earning the promotion. The strength of avoidance behaviour
depends not only on the negative valence but on the expectancy and instrumentality factors
as well.

Through experience, people learn to place a different value on the rewards available to them
and also on the varying levels of rewards offered. They also develop expectancy and
instrumentality estimates through both their direct experiences and their observations of
what happens to others. As a consequence, employees perform a type of cost-benefit
analysis, often implicit, for their own behaviour at work. If the estimated benefit is worth the
cost, then employees are likely to apply more effort.

Interpreting the Expectancy Model

Advantages The expectancy model is a valuable tool for helping managers think about the
mental processes through which motivation occurs. In this model, employees do not act
simply because of strong internal drives, unmet needs, or the application of rewards and
punishments. Instead, they are thinking individuals whose beliefs, perceptions, and
probability
estimates powerfully influence their behavior. The model reflects Theory Y assumptions
about people as capable individuals and in this way values human dignity.

Limitations Despite its general appeal, the expectancy model has some problems. It needs
further testing to build a broad base of research evidence for support. Its multiplicative
combination of the three elements needs further substantiation. Both intrinsic and extrinsic
rewards need to be considered. The predicted effects of multiple outcomes from the same
effort must be built into the model. In addition, reliable measures of valence, expectancy, and
instrumentality need to be developed. There is a special need to develop measures that
managers can use in actual work settings. When possible, managers need to learn both
what employees perceive and why they hold those valence, expectancy, and instrumentality
beliefs.
The previous discussions of motivational models viewed the employee as an individual,
virtually independent of other employees. however, employees work in a social system in
which each is dependent to some degree on the others. Employees interact with one
another on tasks and on social occasions. They observe one another, judge one another,
and make comparisons. The next model to be discussed builds on this notion of comparison
to add new dimensions to our overall understanding of employee motivation.

Most employees are concerned about more than just having their needs satisfied; they also
want their reward system to be fair. This issue of fairness applies to all types of rewards
psychological, social, and economic—and it makes the managerial job of motivation much
more complex. J. Stacy Adams’s equity theory states that employees tend to judge fairness
by comparing the outcomes they receive with their relevant inputs and also by comparing
this ratio (not always the absolute level of rewards) with the ratios of other people.

Inputs include all the rich and diverse elements that employees believe they bring, or
contribute, to the job—their education, seniority, prior work experiences, loyalty and
commitment, time and effort, creativity, and job performance. Outcomes are the rewards
they
perceive they get from their jobs and employers; outcomes include direct pay and bonuses,
fringe benefits, job security, social rewards, and psychological rewards. Employees analyze
the fairness of their own outcome/input “contract,” and then compare their contract with
contracts of other workers in similar jobs and even with those outside of their job. Fairness of
rewards (equity) may even be judged in comparison with relatively arbitrary criteria like age,
as the following example shows:

Irene Nickerson is a supervisor in a large public utility. For several years her friends told
her
she could consider herself successful when her salary (in thousands of dollars) surpassed her
age. One year, at age 34, she received a substantial salary increase that placed her income
at
$33,865. She was frustrated, incensed, and demoralized for weeks afterwards, for she did not
receive what she dearly wanted! For an extra $135, the company could have matched her
equity expectations and continued to have a motivated employee.

THE EQUITY MODEL

Pay was a symbolic scorecard by which Nickerson compared her outcomes with her
inputs (since she included age with her other inputs of education, experience, and
effort). Her reaction is only one of the three combinations that can occur from social
comparisons—equity, over reward, and under reward. If employees perceive equity,
they will be motivated to continue to contribute at about the same level. Otherwise,
under conditions of inequity, they will experience tension that will create the
motivation to reduce the inequity. The resulting actions can be either physical or
psychological, and internal or external.

Over reward
If employees feel overrewarded, equity theory predicts that they will feel an
imbalance in their relationship with their employer and seek to restore that balance.
They might work harder, they might discount the value of the rewards received
(internal and psychological), they could try to convince other employees to ask for
more rewards (external and physical), or they might simply choose someone else for
comparison purposes (external and psychological).
Under reward

Workers who feel they have been under rewarded seek to reduce their feelings of
inequity through the same types of strategies, but some of their specific actions are
now reversed. They might lower the quantity or quality of their productivity, they
could inflate the perceived value of the rewards received, or they could bargain for
more actual rewards. Again, they could find someone else to compare themselves
(more favorably) with, or they might simply quit. In any event, they are reacting to
inequity by bringing their inputs into balance with their outcomes. Knowledge of
outcome/input ratios allows managers to predict part of their employees’ behaviour
through understanding when, and under what conditions, workers will experience
inequity.

An example of employee reaction to underpayment occurred in a manufacturing plant that

made small mechanical parts for the aerospace and automotive industries.19 Some important
contracts were cancelled, and the company was forced to announce a 15 percent cut in pay
for all employees. Compared with a control group in another plant whose pay was not cut,
the affected employees reacted by doubling their normal theft rate (tools and supplies stolen
from the company). Turnover also jumped to 23 percent, compared with a normal rate of 5
percent. Apparently, the employees experienced a change from relative equity to
underpayment inequity. They reacted to their perceived mistreatment by making unofficial
transfers of organizational resources to themselves. When the pay cut ended after 10 weeks,
the theft rate returned to normal levels.

Interpreting the Equity Model

An understanding of equity should remind managers that employees work within

several social systems. Employees may actually select a number of reference
groups both inside and outside the organization. Employees are also inclined to shift
the basis for their comparisons to the standard that is most favourable to them.
Educated people often inflate the value of their education, while employees with
longer service emphasize seniority as the dominant criterion. Other employees
choose somewhat higher (economic) groups as their reference. Many employees
have strong egos and even inflated opinions of themselves. Consequently, all these
factors (multiple reference groups, shifting standards, upward orientation, and
personal egos) make the task of predicting when inequity will occur somewhat
complex.

Equity theory has generated extensive research, with many of the results being
supportive. In particular, under reward seems to produce motivational tension with
predictable (negative) consequences; less consistent results are found for the over
reward condition. The different research results may be reconciled by the idea of
equity sensitivity, which suggests that individuals have different preferences for
equity. Some people seem to prefer over reward, some conform to the traditional
equity model, and others prefer to be underrewarded.20 Identifying which employees
fall into each class would help managers predict who would experience inequity and
how important it would be in affecting their behaviour. Similar elements—effort
(inputs) and rewards (outcomes)—can be seen when comparing the equity and
expectancy models. In both approaches, perception plays a key role, again
suggesting how valuable it is for a manager to gather information from employees
instead of trying to impose one’s own perceptions onto them. The major challenges
for a manager using the equity model lie in measuring employee assessments of
their inputs and outcomes, identifying their choice of references, and evaluating
employee perceptions of inputs and outcomes. Fairness, from an employee’s equity
perspective, applies not only to the actual size of rewards and their relation to inputs
provided, but also to the process by which they are administered. This is the
essence of the procedural justice approach to motivation, which focuses on two
elements—interpersonal treatment and clarity of explanations. Interpersonal
treatment encompasses both managerial respect for employee inputs and
managerial behaviour that exhibits clear levels of respect, esteem, consideration,
and courtesy. Clarity of expectations is enhanced by managers making the reward
process more transparent, so that employees can discover and understand how their
inputs were assessed and how the reward system is administered. Procedural
justice is especially important when organizational resources are tight and lesser
levels of valued outcomes are provided to employees.

INTERPRETING MOTIVATIONAL MODELS

Several motivational models are presented. All the models have strengths and weaknesses,
advocates and critics. No model is perfect, but all of them add something to our
understanding of the motivational process. Other models are being developed, and attempts
are being made to integrate existing approaches.

The cognitive (process) models are likely to continue dominating organizational practice for
some time. They are most consistent with our supportive and holistic view of people as
thinking individuals who make somewhat conscious decisions about their behaviour.
However, behaviour modification also has some usefulness, especially in stable situations
with minimum complexity, where there appears to be a direct connection between behaviour
and its consequences. In more complex, dynamic situations, cognitive models will be used
more often. In other words, the motivational model used must be adapted to the situation as
well as blended with other models.