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Employee compensation plays

such a key role because of the

following reasons
1. It is at the heart of the employment relationship, being of
critical importance to both employees and employers.

2. Employees typically depend on wages, salaries, and so forth

to provide a large share of their income and on benefits to
provide income and health security.

3. For employers, compensation decisions influence their cost

of doing business and thus, their ability to sell at a
competitive price in the product market.

4. In addition, compensation decisions influence the

employer's ability to compete for employees in the labor
market (attract and retain), as well as their attitudes and
behaviors while with the employer
Motive comes from the Latin for ‘move.’

Motives are a special kind of cause which

energize, direct and sustain a person’s
behaviour (including hunger, thirst, sex
and curiosity). (Rubin and McNeil, 1983)

The degree to which an individual wants

and chooses to engage in certain specific
behaviours. (Mitchell 1982)

Need Drive Goal Satisfaction

A lot of our motives are said to be cyclic.

Motives tend to be divided into two groups.

Primary motives (basic drives) innate/inborn.

 Purpose:- self preservation/species preservation.
Secondary motives:- learned,
 Acquired as part of the socialisation process.

Only consider our secondary motives once our

primary motives have been satisfied.
Primary motives Secondary motives
Hunger Gregariousness
(common social
Thirst motive)
Sleep Curiosity
regulation Aggression
Elimination Interests
Avoidance of pain Attitudes
3 Groups of
Motivational Theories
Suggest that variables within the individual give
rise to motivation and behavior
Example: Maslow’s hierarchy of needs theory
Emphasize the nature of the interaction between
the individual and the environment
Example: Expectancy theory
Focus on environmental elements to explain
Example: Two-factor theory
Content Theory Models
The Hierarchy of Needs Theory (Abraham
Maslow: 1943)

The ERG Theory (Alderfer: 1972)

The Acquired Needs Theory/ Achievement

Motivation Theory (Mc Clelland: 1961)

The Dual Factor Theory (Herzberg: 1968)

Process Theory Models

Theory X and Theory Y (Mc Gregor: 1960)

Expectancy Theory(Vroom: 1964 and Porter &

Lawler: 1968)

Equity Theory(Adams: 1965)

Content Theory Models

Love (Social)

Safety & Security

 Physiological Needs:-
Needs for food, drink, oxygen, sleep,
protection from extreme temperature.

 Safety Needs:-
Ensure a reasonable degree of continuity, order,
structure, and predictability in one’s environment

 Love needs:-
Affectionate relations with Friends,family,and
people in general, and group acceptance.

 Self – esteem Needs:-

Consists of self respect and self
esteem from others. Need for Independence, freedom,
competence personal strength.

 Self – Actualization Needs

The desire to become everything that
one is capable of becoming. To reach the peak of one’s potential
2. Alderfer’s ERG Theory

This a modified need hierarchy model

and it condenses Maslows five levels of
need into only three levels based on the
core of:

Alderfer’s ERG Theory


Love (Social) Relatedness

Safety & Security
Existence Needs are concerned with sustaining human
existence and survival and cover physiological and safety
needs of a material nature.

Relatedness Needs are concerned with relationships to

the social environment and cover love or belonging,
affiliation and meaningful interpersonal relations of a
safety or esteem needs.

Growth Needs are concerned with the development of

potential and cover self-esteem and self-actualization.
3. Herzberg’s Two-Factor Theory
Hygiene Factor - work condition related to
dissatisfaction caused by discomfort or pain
maintenance factor
contributes to employee’s feeling not
contributes to absence of complaints
Motivation Factor - work condition related to
the satisfaction of the need for psychological
job enrichment
leads to superior performance & effort
Theory of Motivation

• Company policy & Motivation factors

administration increase job satisfaction
• Supervision
• Interpersonal relations
• Working conditions • Achievement
• Salary • Achievement recognition
• Status • Work itself
• Security • Responsibility
• Advancement
• Growth
Hygiene factors avoid
job dissatisfaction • Salary?
Motivation-Hygiene Combinations

High M Low M
High H high motivation low motivation
few complaints few complaints
high motivation low motivation
Low H
many complaints many complaints
(Motivation = M, Hygiene = H)
Exchange Relationship
Organization Individual
 Organizational goals  Physiological needs
Contributions Demands

 Departmental objectives  Security needs

 Job tasks  Physical needs

 Company status  Developmental potential

 Benefits  Employee knowledge
 Income  Employee skills and
4. Mc Clelland’s Achievement
Motivation Theory

Mc Clelland identified different

motivational categories of people and if you
could identify which category a person fell
into it would help establish patterns of
motivation would lead to effective
performance and success at work.
McClelland’s Need Theory:
Need for Achievement

Need for Achievement

- a manifest (easily
perceived) need that
concerns individuals’
issues of excellence,
competition, challenging
goals, persistence, and
overcoming difficulties
McClelland’s Need Theory:
Need for Power

Need for Power - a

manifest (easily
perceived) need that
concerns an individual’s
need to make an impact
on others, influence
others, change people or
events, and make a
difference in life
McClelland’s Need Theory:
Need for Affiliation

Need for Affiliation - a

manifest (easily
perceived) need that
concerns an individual’s
need to establish and
maintain warm, close,
intimate relationships with
other people
Maslow Alderfer McClelland
Self-actualization Growth Need for
Higher Esteem Achievement
Order self Need for
Needs interpersonal Power
(social & love) Relatedness Need for

Lower Safety & Security

Needs physical Existence
1. Motivational Theories X &
Y(Mc Clelland)

SA Theory Y - a set of
assumptions of how to
Esteem manage individuals
motivated by higher
Love (Social) order needs
Theory X - a set of
Safety & Security assumptions of how to
manage individuals
Physiological motivated by lower
order needs
McGregor’s Assumptions
About People Based on Theory X

Naturally indolent
Lack ambition, dislike
responsibility, and prefer to be led

Inherently self-centered and

indifferent to organizational needs
Naturally resistant to change
Gullible, not bright, ready dupes
McGregor’s Assumptions
About People Based on Theory Y
Experiences in organizations result in passive and
resistant behaviors; they are not inherent

Motivation, development potential, capacity for

assuming responsibility, readiness to direct
behavior toward organizational goals are present in

Management’s task—arrange conditions and

operational methods so people can achieve their
own goals by directing efforts to organizational
2. Equity Theory
 This theory was developed by J. Stacey Adams

 Adams' equity theory builds on Maslow's Hierarchy of Needs and Herzberg's

Two Factor Theory, and was first presented in 1963

 The essence of Equity theory is that employees make comparisons of their

efforts and rewards with those of others in similar work situations

 Adams describes this comparison in terms of input/outcome ratios

 Adam's Equity Theory also means that employees will become de-motivated
if their perceived input is greater than the output from the company
consider the balance or imbalance that currently exists

between your employee’s inputs and outputs, as follows :

Inputs typically include:
Hard Work
Determination, etc
Outputs typically include
Financial rewards (salary, benefits, perks, etc.)
Intangibles that typically include:
 Recognition
 Reputation
 Responsibility
 Sense of Achievement
 Praise
 Stimulus
 Sense of Advancement/Growth
 Job Security
 Equity is represented schematically as:

Person’s outcomes = Other’s outcomes

Person’s input Other’s inputs

 Inequity is represented as follows:

Person’s outcomes < Other’s outcomes

Person’s input Other’s inputs


Person’s outcomes > Other’s outcomes

Person’s inputs Other’s inputs
3a. Vroom’s Expectancy Theory
of Motivation
Victor Vroom was the first behavioral scientist to
propose an expectancy theory to explain work

According to Vroom, the content theories of work

motivation not provide an adequate explanation
for the complex process of work motivation.

Therefore, as an alternate, he proposed the

explanatory theory of work motivation.
Theory is based on 3 variables :-




Also known as VIE theory

Effort Performance Reward

Perceived effort– Perceived Perceived

performance performance– value of reward
probability reward probability
“If I work hard, “What rewards “What rewards
will I get the job will I get when do I value?”
done?” the job is well
3b. The Porter-Lawler Model
 The Porter-Lawler model was developed by Lyman W.
Porter and Edward E. Lawler 111 as an extension of
Vroom’s expectancy theory.

 They tried to explore the complex relationship

between motivation, satisfaction and performance,
and pointed out that efforts put in by an employee did
not directly result in performance.

 The model is a comprehensive explanation of work

The model is dependent on 3
 An employee should have the desire to perform, i.e. must
feel motivated to accomplish the task.

 Motivation alone cannot ensure successful performance

of a task. The employee should also have the abilities and
skill required to perform the task.

 The employee should have a clear perception of his role

in the organization and an accurate knowledge of the job
requirements. This will ensure him to focus his efforts on
accomplishing the assigned tasks.
Important variables in the Model