MCD2040 Managing People and Organisations

Week 4: Motivation and Leadership

Theme: Managing
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What do the icons mean?

When you see the below icons, do the following:

Pages
6 - 10

Pages in the textbook Complete the question. Watch the video. Complete the quiz. Web link on slide.
where you can read more Make sure to click
about the specific it for more
learning objective. information.

Remember:
• The weekly quizzes are worth 1% (10% in total for the course)
• You cannot do the quizzes if you have NOT watched the videos
• Week 6 lecture will be discussed in Week 7 tutorials

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This week we will learn:
• What is a leader? What is leadership?
• About different approaches to understanding leadership
o Trait Theory and Behavioural Studies
o Different models of Contingency approaches to leadership
o Transformational and Transactional Leadership

• What is Motivation?
• How can we understand how managers can motivate their workers?
o Early theories – Maslow and Herzberg
o Contemporary theories – Equity and Expectancy

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Learning Objectives
Knowledge/Understanding
Learning Objective 1 Define leader and leadership.
Understand early approaches to leadership: - Trait
theory and Behavioural Studies
Understand contingency approaches to leadership:
-- House’s Path-Goal Model
Learning Objective 2 Understand the contemporary view on leadership:
Transformational-transactional leadership
Learning Objective 3 Understand what is Motivation.
Describe the early theories of motivation: Maslow’s
hierarchy of needs and Herzberg’s two-factor theory
Learning Objective 4 Understand contemporary theories of motivation:
- Equity theory
- Expectancy theory
Application and Evaluation Skills
Provide examples of leaders to show how these
principles are applied.
Differentiate between trait, behavioural and
contingency approaches to leadership.
Identify the advantages and disadvantages of
using these leadership models in different
contexts.
Describe the difference between a transactional
and a transformational leader. Provide examples
of how leaders demonstrate transactional and
transformational leadership in organisations
Provide examples of how Maslow’s hierarchy of
needs and Herzberg’s two-factor theory can be
used to understand and improve employee
motivation in organisations
Provide examples of how Equity theory and
Expectancy theory can be used to understand and
improve employee motivation in organisations
Affective
Think about a famous leader you know.
Does the leader fit with our definitions of
leader and leadership? Do they display
any of the traits?
Do they behave in ways that fit the
behavioural models?
Can you relate to these models of
leadership – have you experienced any of
them in your family or friendship groups.
Apply either Maslow’s hierarchy of needs
or Herzberg’s two-factor theory to your
motivation to study.
Think about a time when you were really
motivated to learn something new.
Applying the Expectancy theory, use the
concepts of expectancy, instrumentality,
reward and valence to explain how you
were motivated.
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Learning Objective 1

What is a leader?
What is leadership?
Trait Theory
Behavioural Theories 624-628
What is leadership? Who is a leader?
• A leader is: POLC
o someone who can influence others who may or may not
possess managerial authority
• Leadership is:
o the process of influencing a group to achieve goals
Because leading is one of the four management functions,
ideally all managers should be leaders.

Early Leadership theories

Early leadership theories focused on who the leader is (trait
theories) and what the leader does - how the leader interacted
with their group members (behavioural theories).

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Trait Theory
• The idea that leaders are born and not made
• An early area of leadership research that attempted to identify a set of
traits that would always differentiate leaders from non-leaders
• Traits are characteristics that might be used to differentiate leaders from
non-leaders.
• The intent was to isolate traits that leaders possessed and non-leaders did
not.
• Not possible to consistently identify suitable leaders from personal traits
• 8 traits were successfully identified that focus on the process of
leadership rather than the person
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Trait Theory – The 8 Traits Leaders should have

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Leadership Traits of Modern Leaders
Proneness to guilt
When Elon Musk found that injuries at Tesla
were higher than at other factories he
insisted on meeting every injured worker and
for every injury to be reported directly to
him. He offered to do exactly the same work
his workers were doing when injured to make
sure it was now safe.
Extraversion
Extroverts are leaders who like to be the
centre of attention, like Virgin CEO Sir
Richard Branson who is willing to go on TV,
drive a tank or dress up like an air
stewardess to promote his company.
Job relevant knowledge
Bill Gates was an excellent computer
programmer, this helped him to analyse
and lead Microsoft to develop Windows
software.
Drive
A leader like Jack Ma
shows lots of drive,
building one of the
biggest e-commerce
networks in the
world.
Intelligence
Bill Gates was able to outsmart
computers while he was at university.
Even when surrounded by clever
people he was able to see things that
they had missed.
Desire to lead
More than just a desire to be successful,
Elon Musk wants to lead his companies to
bring life to Mars and end the use of non—
renewable energy on earth.
Honesty and integrity
Tell no lies and keep your promises. Howard
Schultz, Starbucks CEO chose to share how
bad the company’s financial position was
with 11,000 store managers as the company
was at risk of bankruptcy. This transparency
helped to save the business.
Self Confidence
Mark Zuckerberg is an example of a leader
who believes in themselves. He turned
down offers from large established
companies because he thought he could do
better than Microsoft or Yahoo.
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Behavioural Theories
• Trait theories could not provide a basis for selecting the right people to be
chosen as leaders
• Behavioural theories were developed in the hope of discovering what
were the essential behaviours of effective leaders
• These behaviours could then be used as the basis of training leaders
effectively
• Behavioural theories – are leadership theories that identify behaviours
that differentiate effective leaders from ineffective leaders
• 4 different studies developed behavioural ideas of effective leadership,
each building on the research of the previous study

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Behavioural Theories

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Behavioural Theories – University of Iowa

• A leader who tells people what to do and

Autocratic makes decisions without help, like Donald
Trump as Trump CEO.

• A leader who listens to others and asks for

Democratic their ideas and input into decisions like
Google founders Sergey Brin and Larry
Page.

• A leader who lets workers do their work

Laissez- with minimum direction, like billionaire
Faire Warren Buffet – hire good people and let
them do their jobs.

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Behavioural Theories – Ohio State and University of Michigan
Behavioural Theories – Ohio State
• Showing respect for your worker’s ideas and feelings
Consideration • Developing trust and relationships.

Initiating • Organising work, planning goals and strategies

Structure • Focussing on results, like increasing sales or profit.

Behavioural Theories – University of Michigan

• Leaders who care about the needs of their workers

Employee Oriented
• Accepting and understanding individual differences

• Using workers as a tool like any other input to reach goals

Production Oriented • Focussed on tasks and results

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Behavioural Theories – Managerial Grid
• The behavioural dimensions from these early leadership studies were
used to develop a two-dimensional grid for evaluating leadership styles.
• This Managerial Grid, developed by Blake and Mouton, used ‘concern for
people’ and ‘concern for production’ as the axes and considered a leader’s
use of these behaviours, ranking them on a scale from 1 (low) to 9 (high).
• Emphasis was placed on five values, and from these Blake and Mouton
concluded that managers performed best when using a 9,9 style.
• Unfortunately, the grid offers no answers to the question of what makes a
manager an effective leader; it only provides a framework for thinking
about leadership styles.

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Behavioural Theories – Managerial Grid

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Real World Example of Early Leadership Theories
Tesco aims to develop the leadership qualities of its people Suggest how Stephen could use
throughout the organisation, from administrators and the 8 traits associated with
customer assistants to the board of directors. effective leadership to improve
his relationships with his
Stephen is the manager of a medium-sized Tesco store. He
workers.
has been with the company for over 10 years and his first job
was filling shelves in the dairy section. Stephen directly What behavioural theories can
manages a team of around 20 departmental managers, who be applied to this case?
between them are responsible for almost 300 people.
Stephen’s leadership style is usually to allow his managers to
make most operational decisions. However, if, for example, an
accident occurs in the store, Stephen may take control to
ensure a prompt and coordinated response. Stephen’s
preferred leadership style is to take a democratic approach.
He consults widely as he feels that staff respond better to this
approach. Some mistakes may be made, but they are used as
a learning experience.

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Learning Objective 1

Test your knowledge

Watch Video 1 on Complete the quiz

Moodle.

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 Learning Objective 1 cont..

Contingency Leadership Theories

628-633
Contingency Theories of Leadership
• Trait and Behavioural theories could not consistently identify effective leaders
and leadership behavioural styles that would work in different situations, with
different workers and organisations
• Contingency theories of leadership aim to understand the conditions for
leadership success using different behavioural approaches that are adapted to
suit the situation

• Contingency theories attempt to suggest

an appropriate leadership style for a
given situation and recognise that a
single leadership style is not applicable
to all situations

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Contingency Theories of Leadership
There are three types:
• Fielder’s contingency model which proposes that effective group performance
depends on a leader’s style of interacting with the group depending on the situation.
• Hersey-Blanchard’s Situational Leadership Model which argues that successful
leadership is achieved by selecting the right leadership style, which is dependant on
the level of the followers’ readiness.
(You can read more about these in your textbook)

• Path Goal Theory suggests it’s the

leader’s job to assist followers to reach
their goals (by helping them down the
path). Goals also have to be aligned with
that of the organisation.

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Path-Goal Theory
• It’s the leader’s job to assist followers to reach their goals (by helping them
down the path). Goals also have to be aligned with that of the organisation.
• Leaders are flexible and can display any of the following types:
o Directive Leader
o Supportive Leader
o Participative Leader
o Achievement-oriented Leader

• However, the type of leader will depend on the environment (task, organisation
authority system & work group) and the follower (their experienced, ability and
believe of in they are in control of their life).

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Path-Goal Theory

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Path-Goal Theory
• The directive leader lets subordinates know what is expected of them,
schedules work to be done, and gives specific guidance on how to accomplish
tasks. (Best for unclear and stressful tasks)
• The supportive leader is friendly and shows concern for subordinates’ needs.
(Need structured Tasks)
• The participative leader consults with subordinates and uses their suggestions
before making a decision. (Good for followers who believe they control their
own destiny)
• The achievement-oriented leader sets challenging goals and expects
subordinates to perform at their highest levels. (Set challenging goals to enable
followers to know expectations)

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 Learning Objective 2

The contemporary view on leadership:

Transformational and Transactional Leadership

633-636
Leadership theories used Today: Transactional Leadership
Transactional Leaders:
• Lead primarily by using social exchanges (or transactions)
• Practise Management by Exception: Monitoring of the worker’s performance and takes
corrective action if the follower fails to meet standards, and/or uses Contingent Rewards
(rewards with conditions) to motivate and encourage productivity, this includes:
o Setting very clear goals and targets; and
o Monitoring and guiding their followers to work towards established goals by exchanging rewards for their
achievements.
o Rewards can refer to the whole range of non-financial rewards ranging from the more tangible (extra holiday,
preferred work, time off) to the less tangible (praise, visibility, recognition).
o If done successfully, this style will produce performance at the expected levels.

Transactional Leadership video

https://youtu.be/5ht7WGgnxZo

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Leadership theories used Today: Transformational Leadership
• Stimulates and inspires followers to transcend
their own self-interests for the good of the
organisation to achieve extraordinary outcomes
• Strongly correlated with:
o lower turnover rates
o higher levels of productivity, employee satisfaction,
creativity, goal attainment and follower well-being.
Transformational Leadership
https://youtu.be/-aUCY5FfCeo
Workers will follow a Transformational
Leader as they share the same passionate
values, are inspired by that leader, want to
achieve the same goal or believe they are
working towards a bigger, meaningful goal
than themselves. Dame Anita Roddick
who created the Body Shop is an example
of this. Her company is about stopping
animal testing, saving endangered animals
& the environment, using natural
ingredients and helping poor communities
develop.
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Transformational Leadership
The leader practices one or more of these four elements:
Individualised Consideration (IC). Demonstrates concern for their followers, treats them
as individuals, gets to know them well and listens to both their concerns and ideas. Acts
as mentors to those who need help .
Intellectual Stimulation (IS). Stimulate the followers to think through issues and
problems for themselves and thus to develop their own abilities. Leaders are willing and
able to show their followers new ways of looking at old problems
Inspirational Motivation (IM). Able to motivate the followers to superior performance.
Able to articulate, in an exciting and compelling manner, a vision of the future that the
followers are able to accept and strive towards.
Idealised Influence (II). Regarded as a role model either because they exhibit certain
personal characteristics or “charisma” or because they demonstrate certain moral
behaviours. High on morality, trust, integrity, honesty and purpose.
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Transformational vs. Transactional Leadership
Transformational
• Challenge current practices
• Inspire a shared vision
• Enable others to act
• Lead by example
• ‘Encourage the heart’
Transactional
• Set task goals
• Provide appropriate resources
• Reward performance
• Keep operations running smoothly
• Possess behaviours essential for
competent organisational function
which meet people’s leadership needs
without necessarily being inspired
leadership
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Transformational vs. Transactional Leadership
All leaders practice Tranformational
behaviours from Leadership

Transactional to
Transformational
leadership from time to
time. However, the more
Transactional
transformational Leadership
leadership behaviours
are being practiced, the
greater the performance
of the followers and the
organisation.

Image Source: http://4.bp.blogspot.com/-v6qs0YGzW7c/T5dckNKOHTI/AAAAAAAAAMs/5vN5Clh8CPI/s1600/Leader2.png 30

 Activity 1: Transactional vs. Transformational Leadership
Transactional or Transformational?
1. A hotel manager developed a system to reward service staffs for compliments they
receive from guests, and this has resulted in an increase in guest satisfaction
2. A charismatic CEO of a retail chain outlined her vision and strategy of how the company
can overcome the challenges faced, and decided to reduce her salary to $1 for the year
as a gesture of her commitment to the staff.
3. A team leader of a software design company often challenges members to take risks
and think out of the box. Individuals are often given tasks that are stimulating and
developmental. As a result, employee satisfaction for the team has improved by over
50%.
4. A supervisor in a garment factory often leaves the workers to do their work, but steps in
whenever there are any breakdowns in manufacturing or complaints about quality.

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Activity 2: Leadership at Tesla
• Elon Musk is the CEO of Tesla, Inc. Tesla is struggling to produce enough cars to meet the demands of
their customers. Elon Musk must lead his workforce to increase productivity.
• He uses tool such as an annual performance review during which a manager and employee discuss the
results that were achieved, as well as how those results were achieved, during the performance period.
This includes both constructive feedback and recognition of top performers with financial rewards and
promotions.
• When workers at Tesla’s Freemont factory complained about injuries and health and safety issues he
insisted that every injury report would be reported directly to him. He committed to meeting injured
workers and volunteered to go down to the production line and perform the same task that they
perform.
• Musk stated that “At Tesla, we lead from the front line, not from some safe and comfortable ivory
tower. Managers must always put their team's safety above their own.”
What actions does Elon Musk take that could be described
as transactional?
As transformational?

Sources: https://www.inc.com/suzanne-lucas/tesla-fires-hundreds-of-workers-for-poor-performance.html
https://www.inc.com/jeff-haden/this-elon-musk-email-to-tesla-employees-is-a-powerful-lesson-in-authentic-heartfelt-leadership.html 32
Learning Objective 2

Test your knowledge

Please watch Video 2 for Complete the quiz

this week.

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 Learning Objective 3

What is Motivation?
Examine early theories of Motivation:
• Maslow’s hierarchy of needs
• Herzberg’s two-factor theory 582-589
What is motivation?
• Process by which a person’s efforts are energised, directed and sustained
towards attaining a goal.
A good Leader will motivate
o Energy: a measure of intensity or drive their workers/followers to
continuously strive for the goal
o Direction: toward organisational goals while giving them the skills,
o Persistence: effort to achieve those goals drive & knowledge to do so.
This is critical in POLC.
• Workplace motivation
o The willingness to exert high levels of effort to reach organisational goals

• Workers are most motivated when individual needs are compatible with
organisational goals
• Important to note that different workers are motivated in different ways.
• Early theories focus on NEEDS, Contemporary theories focus on BEHAVIOUR

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Motivation Theories
Early (Content) Theories
1. Maslow’s Hierarchy of Needs
2. McGregor’s Theory X and Y
3. Herzberg’s Two-Factor Theory
4. McClelland’s Theory of Needs
• “emphasis on what motivates individuals”
• An employee is motivated when their needs
are satisfied.
• Understand how individuals differ and what
can be offered to satisfy their needs.
Contemporary (Process) Theories
1. Goal Setting Theory
2. Equity Theory
3. Expectancy Theory
• “emphasis on actual process of
motivation”
• Focuses on why people choose to
behave in certain ways and their
reasons for reacting as they do.
• Help understand how motivation is
energised and sustained.
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Early theories of Motivation – content theories
• These theories represent the foundation from which contemporary theories were
developed; and practising managers continue to use these theories to explain
employee motivation.
• Maslow’s hierarchy of needs theory: Probably the best-known theory.
• Abraham Maslow was a psychologist who proposed that within every person is a
hierarchy of five needs:
1. Physiological needs: food, drink, shelter, sexual satisfaction and other physical requirements.
2. Safety needs: security and protection from physical and emotional harm, as well as assurance
that physical needs will continue to be met.
3. Social needs: affection, belongingness, acceptance and friendship.
4. Esteem needs: internal esteem factors such as self-respect, autonomy and achievement, and
external esteem factors such as status, recognition and attention.
5. Self-actualisation needs: growth, achieving one’s potential and self-fulfilment; the drive to
become what one is capable of becoming.

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Maslow’s Hierarchy of Needs Theory
• Lower level needs must be
satisfied before the next
level is activated
• To motivate an individual
managers must
understand where that
individual is in the
hierarchy and focus on
satisfying needs at level or
above
• No empirical support

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Herzberg’s Two-Factor Theory

• Frederick Herzberg’s two-factor theory (also called motivation–hygiene

theory) proposes that intrinsic factors are related to job satisfaction and
motivation, whereas extrinsic factors are associated with job dissatisfaction.
• Because they do not motivate employees, the extrinsic factors that eliminate
job dissatisfaction were called hygiene factors. When these factors are
present, people will not be dissatisfied, but they will not be satisfied (or
motivated) either. They will be neutral.
• To motivate people in their jobs, Herzberg suggested emphasising
motivators - the intrinsic factors having to do with the job itself.

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 Herzberg’s Two-Factor Theory
Extrinsic - given by Intrinsic - (personal satisfaction
another person received in performing an action)

If workers If workers
don’t think think these
these are are good
good then then they
they will be will be
dissatisfied satisfied.

If workers think hygiene and motivator factors are simply okay (so-so) they will be neutral –
NEITHER satisfied or dissatisfied.
Source: Schermerhorn, et al. (2014) Management
http://www.johnwiley.net.au/highered/management/istudy/menu/motivation_and_rewards/content_theories_of_motivation/?page=0007 40
 Learning Objective 4

Understanding contemporary theories of motivation:

• Equity theory; and
• Expectancy theory
596-602
Equity Theory
• States that an employee compares his/her job’s inputs/outcomes ratio to that of a
referent and then corrects any inequity
• A referent can be the persons, systems or selves against which individuals compare
themselves to assess equity
• This is based on an input:output ratio (I:O ratio).
• Basically: if a worker believes others are getting better rewards than them or someone
is being treated unfairly, they will become demotivated.

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Equity Theory

Source: https://le-group-3.wikispaces.com/Adams+equity+theory

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 Input:Output Ratio (I:O Ratio)
Equity Theory
EXAMPLE:
Jack has 10 years
experience, a Masters of
Business Administration
(MBA) & only gets paid
$100,000.

In the lunch room one

day, he hears that Tom
has only a Bachelor of
Business and 5 years
experience and is getting
paid the same amount of
$100,000.

Jack will think it is

UNFAIR! Therefore may
start putting less effort
into his work or resign &
get a job elsewhere.
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Learning Objective 4

Test your knowledge

Please watch Video 3 for Complete the quiz

this week on Moodle

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Vroom’s Expectancy Theory
Individuals act in certain ways based on the expectation that the act will be followed by a
given outcome and that the outcome is attractive to them personally.

Based on three variables:

1. Effort-performance linkage (A): How hard do I have to work to achieve a certain level of performance, can
I actually achieve this?
2. Performance-reward linkage (B): What reward will performing at that level get me?
3. Attractiveness of reward (C): How attractive is that reward to me? Does it help me achieve my own
personal goals?

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Expectancy Theory – how managers can help

(A) Effort-Performance (B) Performance- (C) Attractiveness of

linkage Reward linkage Reward

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Learning Objective 4

Test your knowledge

Please watch Video 4 for Complete the quiz

this week on Moodle

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Improving Staff Motivation: Having the best rewards programs
• Transparent information and communication
o Employees see the impact decisions and actions have on financial results
o They know what they contribute, how it helps and that they all rely on each other
for success
• Pay-for-Performance Programs
o Include wage incentive plans, profit sharing, lump-sum bonuses and piece-rate pay
plans
• Employee recognition programs
o Employee of the month
o Bragging boards
o Monthly awards
o ‘Champ cards’

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Suggestions for motivating employees
• Recognise individual differences & individualise rewards – a working mum may be
motivated through a reward of 2 paid days off work. In comparison, a young graduate
who is saving to go travelling may be more motivated by a $500 bonus.
• Use goals to challenge employees – goals have to be difficult but realistic otherwise staff
can get bored. They want to develop skills & learn new things.
• Ensure that goals are attainable – if you set staff a goal to sell $1 million dollars in a
month and they normally only sell $10 000, they will be demotivated and not bother trying
as they know it is impossible.
• Link rewards to performance – rewards are only given if a set level of performance is
achieved. Give more rewards for even higher performance (have different levels)
• Ensure the system is equitable – if it isn’t fair then staff will become demotivated,
considerleaving their job and/or their performance will be lower
• Don’t ignore money – money isn’t the only motivation but it is still very important.

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This week we have…..
• Discussed what is a leader? What is leadership? Paying attention to it
being a critical part of POLC.
• Examined different approaches to understanding leadership
o Trait Theory and Behavioural Studies
o Different models of Contingency approaches to leadership
o Transformational and Transactional Leadership

• Focused on the importance of motivation and key theories about how to

understand and to motivate workers including:
o Early theories – Maslow and Herzberg
o Contemporary theories – Equity and Expectancy

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 Answers - Activity 1: Transactional vs. Transformational Leadership
Transactional or Transformational?
1. A hotel manager developed a system to reward service staffs for compliments they receive from
guests, and this has resulted in an increase in guest satisfaction
(Transactional – reward for specific goals)
2. A charismatic CEO of a retail chain outlined her vision and strategy of how the company can
overcome the challenges faced, and decided to reduce her salary to $1 for the year as a gesture
of her commitment to the staff.
(Transformational – Inspirational Motivation and Idealised Influence)
3. A team leader of a software design company often challenges members to take risks and think
out of the box. Individuals are often given tasks that are stimulating and developmental. As a
result, employee satisfaction for the team has improved by over 50%.
(Transformational – Intellectual Stimulation)
4. A supervisor in a garment factory often leaves the workers to do their work, but steps in
whenever there are any breakdowns in manufacturing or complaints about quality.
(Transactional – Managing by Exception)
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