1. 12Chapter PowerPoint Presentation by Charlie Cook © Copyright The McGraw-Hill Companies, Inc., 2003. All rights reserved. MotivationMotivation

2. © Copyright McGraw-Hill. All rights reserved.12–2 Learning Objectives After studying the chapter, you should be able to:After studying the chapter, you should be able to:  Explain what motivation is and why managers need to be concerned about it.  Describe from the perspectives of expectancy theory and equity theory what managers should do to have a highly motivated workforce.  Explain how goals and needs motivate people and what kinds of goals are especially likely to result in high performance.  Identify the motivation lessons that managers can learn from operant conditioning theory and social learning theory.

3. © Copyright McGraw-Hill. All rights reserved.12–3 Learning Objectives (cont’d)  Explain why and how managers can use pay as a major motivation tool.

4. © Copyright McGraw-Hill. All rights reserved.12–4 Chapter Outline The Nature of MotivationThe Nature of Motivation Expectancy TheoryExpectancy Theory  Expectancy  Instrumentality  Valence  Bringing It All Together Need TheoriesNeed Theories  Maslow’s Hierarchy of Needs  Alderfer’s ERG Theory  Herzberg’s Motivator-Hygiene Theory

5. © Copyright McGraw-Hill. All rights reserved.12–5 Chapter Outline (cont’d) Need Theories (cont’d)Need Theories (cont’d)  McClelland’s Needs for Achievement, Affiliation, and Power  Other Needs Equity TheoryEquity Theory  Equity  Inequity  Ways to Restore Equity Goal-Setting TheoryGoal-Setting Theory

6. © Copyright McGraw-Hill. All rights reserved.12–6 Chapter Outline (cont’d) Learning TheoryLearning Theory  Operant Conditioning Theory Social Learning TheorySocial Learning Theory Pay and MotivationPay and Motivation  Basing Merit Pay on Individual, Group, or Organizational Performance  Salary Increase or Bonus?  Examples of Merit Pay Plans

7. © Copyright McGraw-Hill. All rights reserved.12–7 The Nature of Motivation MotivationMotivation  The psychological forces acting on an individual that determine: Direction—possible behaviors the individual could engage inDirection—possible behaviors the individual could engage in Effort—how hard the individual will workEffort—how hard the individual will work Persistence—whether the individual will keep trying or give upPersistence—whether the individual will keep trying or give up  Explains why people behave the way they do in organizations

8. © Copyright McGraw-Hill. All rights reserved.12–8 The Nature of Motivation (cont’d) Intrinsic MotivationIntrinsic Motivation  Behavior that is performed for its own sake. The source of the motivation that comes from actually engaging in the behavior.The source of the motivation that comes from actually engaging in the behavior. The sense of accomplishment and achievement derived from doing the work itselfThe sense of accomplishment and achievement derived from doing the work itself Extrinsic MotivationExtrinsic Motivation  Behavior that is performed to acquire material or social rewards or to avoid punishment. The source of the motivation is the consequences of the behavior and not the behavior itself.The source of the motivation is the consequences of the behavior and not the behavior itself.

9. © Copyright McGraw-Hill. All rights reserved.12–9 Sources of Motivation Nature of the Organization Personal Characteristics Nature of the Job Individual Motivation

10. © Copyright McGraw-Hill. All rights reserved.12–10 Outcomes and Inputs OutcomeOutcome  Anything a person gets from a job or an organization Pay, job security, autonomy, accomplishmentPay, job security, autonomy, accomplishment InputInput  Anything a person contributes to his or her job or organization Time, effort, skills, knowledge, work behaviorsTime, effort, skills, knowledge, work behaviors

11. © Copyright McGraw-Hill. All rights reserved.12–11 The Motivation Equation Figure 12.1

12. © Copyright McGraw-Hill. All rights reserved.12–12 Expectancy Theory Motivation will be high when workers believe:Motivation will be high when workers believe:  High levels of effort will lead to high performance.  High performance will lead to the attainment of desired outcomes. Major Factors of MotivationMajor Factors of Motivation  Expectancy—the belief that effort (input) will result in a certain level of performance  Instrumentality—the belief that performance results in the attainment of outcomes  Valence—how desirable each of the available outcomes from the job is to a person

13. © Copyright McGraw-Hill. All rights reserved.12–13 Expectancy, Instrumentality, and Valence Figure 12.2 Source:

14. © Copyright McGraw-Hill. All rights reserved.12–14 Expectancy Theory in Practice  Expectancy: Effort will result in a level of performance. Employees will work work hard if they believe they can attain high performance—organizations must provide the resources that support performance.Employees will work work hard if they believe they can attain high performance—organizations must provide the resources that support performance.  Instrumentality: Performance leads to outcomes. Workers are only motivated if they think performance leads to an outcome—managers must link performance to outcomes.Workers are only motivated if they think performance leads to an outcome—managers must link performance to outcomes.  Valence: How desirable an outcome is to a person. Workers have preferences for outcomes—managers must determine which outcomes are valued.Workers have preferences for outcomes—managers must determine which outcomes are valued.

15. © Copyright McGraw-Hill. All rights reserved.12–15 Expectancy and Motivation Motivation is highest when expectancy, instrumentality, and valence levels are high.Motivation is highest when expectancy, instrumentality, and valence levels are high.  If one of the values is low, motivation will be low. Workers do not believe they can perform well.Workers do not believe they can perform well. Workers do not believe that performance and rewards are closely linked.Workers do not believe that performance and rewards are closely linked. Workers do not value the rewards offered for performance.Workers do not value the rewards offered for performance.

16. © Copyright McGraw-Hill. All rights reserved.12–16 Expectancy Theory Figure 12.3 Source:

17. © Copyright McGraw-Hill. All rights reserved.12–17 Need Theories NeedNeed  A requirement for survival and well-being. Need TheoriesNeed Theories  Theories of motivation that focus on what needs people are trying to satisfy at work and what outcomes will satisfy those needs.  Basis premise is that people are motivated to obtain outcomes at work to satisfy their needs. Managers must determine what needs a worker wants satisfied and ensure that a person receives the outcomes when performing well.Managers must determine what needs a worker wants satisfied and ensure that a person receives the outcomes when performing well.

18. © Copyright McGraw-Hill. All rights reserved.12–18 Maslow’s Hierarchy of Needs Table 12.1 Self-actualizationSelf-actualization Realize one’s full potential full potential Realize one’s full potential full potential Use abilities to the fullest Use abilities to the fullest EsteemEsteem Feel good about oneself Feel good about oneself Promotions and recognition and recognitionPromotions BelongingnessBelongingnessSocial interaction, love Social Interpersonal relations, parties Interpersonal SafetySafety Security, stability Job security, health insurance Job security, health insurance PhysiologicalPhysiological Food, water, shelter shelter Basic pay level to buy items Basic pay level to buy items NeedsDescriptionExamples Lower-level needs must be satisfied before higher-level needs are addressed. Highest-level needs Lowest-level needs

19. © Copyright McGraw-Hill. All rights reserved.12–19 Alderfer’s ERG Theory Table 12.2 Source: After lower level needs satisfied, person seeks higher needs. When unable to satisfy higher needs, lower needs motivation is raised. GrowthGrowthSelf-development, creative work Self-development, Continually improve skills Continually RelatednessRelatednessInterpersonal relations, feelings Interpersonal Good relations, accurate feedback Good relations, accurate feedback ExistenceExistence Food, water, clothing, and shelter Food, water, clothing, and shelter Adequate pay for necessities NeedsDescriptionExamples Highest-level needs Lowest-level needs

20. © Copyright McGraw-Hill. All rights reserved.12–20 Herzberg’s Motivation-Hygiene Theory Focuses on outcomes that lead to higher motivation and job satisfaction, and those outcomes that can prevent dissatisfaction.Focuses on outcomes that lead to higher motivation and job satisfaction, and those outcomes that can prevent dissatisfaction.  Motivator needs relate to the nature of the work itself—autonomy, responsibility, interesting work.  Hygiene needs are related to the physical and psychological context of the work—comfortable work environment, pay, job security. Unsatisfied hygiene needs create dissatisfaction; satisfaction of hygiene needs does not lead to motivation or job satisfaction.Unsatisfied hygiene needs create dissatisfaction; satisfaction of hygiene needs does not lead to motivation or job satisfaction.

21. © Copyright McGraw-Hill. All rights reserved.12–21 McClelland’s Needs for Achievement, Affiliation, and Power Need for AchievementNeed for Achievement  A strong need to perform challenging tasks well and meet personal standards for excellence Need for AffiliationNeed for Affiliation  A concern for good interpersonal relations, being liked, and getting along Need for PowerNeed for Power  A desire to control or influence others

22. © Copyright McGraw-Hill. All rights reserved.12–22 Adam’s Equity Theory Focuses on people’s perceptions of the fairness (or lack of fairness) of their work outcomes in proportion to their work inputs.Focuses on people’s perceptions of the fairness (or lack of fairness) of their work outcomes in proportion to their work inputs.  A relative outcome to input ratio comparison to oneself or to another person (referent) perceived as similar to oneself.  Equity exists when a person perceives that their outcome/input ratio to be equal to the referent’s ratio. If the referent receives more outcomes, they should also give more inputs to achieve equity.If the referent receives more outcomes, they should also give more inputs to achieve equity.

23. © Copyright McGraw-Hill. All rights reserved.12–23 Equity Theory Table 12.3 Condition Person ReferentExample EquityEquity Outcomes = Outcomes Inputs Inputs Outcomes = Outcomes Inputs Inputs Worker contributes more inputs but also gets more outputs than referent Worker contributes more inputs but also gets more outputs than referent Underpayment Equity Underpayment Equity Outcomes < Outcomes Inputs Outcomes < Outcomes Inputs Worker contributes more inputs but also gets the same outputs as referent Worker contributes more inputs but also gets the same outputs as referent OverpaymentEquityOverpaymentEquity Outcomes > Outcomes Inputs Inputs Outcomes > Outcomes Inputs Inputs Worker contributes same inputs but also gets more outputs than referent Worker contributes same inputs but also gets more outputs than referent

24. © Copyright McGraw-Hill. All rights reserved.12–24 Equity Theory (cont’d) Inequity exists when worker’s outcome/input ratio is not equal to referent.Inequity exists when worker’s outcome/input ratio is not equal to referent.  Underpayment inequity: ratio is less than the referent. Workers feel they are not getting the outcomes they should for their inputs.Workers feel they are not getting the outcomes they should for their inputs.  Overpayment inequity: ratio is higher than the referent. Workers feel they are getting more outcomes than they should for their inputs.Workers feel they are getting more outcomes than they should for their inputs.

25. © Copyright McGraw-Hill. All rights reserved.12–25 Equity Theory (cont’d) Restoring Equity: Inequity creates tension in workers causing them to attempt to restore equity.Restoring Equity: Inequity creates tension in workers causing them to attempt to restore equity.  In underpayment, workers may reduce input levels to correct (rebalance) the ratio or seek a raise.  In overpayment, workers may change the referent person and readjust their ratio perception.  If inequity persists, workers will often choose leave the organization.

26. © Copyright McGraw-Hill. All rights reserved.12–26 Goal Setting Theory Focuses on identifying the types of goals that are effective in producing high levels of motivation and explaining why goals have these effects.Focuses on identifying the types of goals that are effective in producing high levels of motivation and explaining why goals have these effects. Considers how managers can ensure that workers focus their inputs in the direction of high performance and the achievement of organizational goals.Considers how managers can ensure that workers focus their inputs in the direction of high performance and the achievement of organizational goals.

27. © Copyright McGraw-Hill. All rights reserved.12–27 Goal Setting Theory (cont’d) GoalGoal  What a person is trying to accomplish. Characteristics of Motivating GoalsCharacteristics of Motivating Goals  Specific and not vague in providing direction  Difficult but not impossible to attain  Accepted and committed to by workers  Feedback on goal attainment is important. Goals point out what is important to the firm.Goals point out what is important to the firm.  Workers should be encouraged to develop action plans to attain goals.

28. © Copyright McGraw-Hill. All rights reserved.12–28 Learning Theories Theories that focus on increasing motivation and performance by linking outcomes to performance and the attainment of goals.Theories that focus on increasing motivation and performance by linking outcomes to performance and the attainment of goals. LearningLearning  A relatively permanent change in person’s knowledge or behavior that results from practice or experience.

29. © Copyright McGraw-Hill. All rights reserved.12–29 Operant Conditioning Theory Operant ConditioningOperant Conditioning  People learn to perform behaviors that lead to desired consequences and learn not to perform behaviors that lead to undesired consequences.  Linking specific behaviors to the attainment of specific outcomes can motivate high performance and prevent behaviors that detract from organizational effectiveness.

30. © Copyright McGraw-Hill. All rights reserved.12–30 Operant Conditioning Tools Positive ReinforcementPositive Reinforcement  Getting desired outcomes for performing needed work behaviors Positive reinforcers: Pay, praises, or promotionsPositive reinforcers: Pay, praises, or promotions Negative ReinforcementNegative Reinforcement  Eliminating undesired outcomes once the desired behavior occurs Negative reinforcers: criticisms, pay cuts, suspensionNegative reinforcers: criticisms, pay cuts, suspension

31. © Copyright McGraw-Hill. All rights reserved.12–31 Operant Conditioning Tools (cont’d) ExtinctionExtinction  Curtailing the performance of a dysfunctional behavior by eliminating whatever is reinforcing it. Behavior is not rewarded and over time, the worker stops performing it.Behavior is not rewarded and over time, the worker stops performing it. PunishmentPunishment  Administering an undesired/negative consequence to immediately stop a dysfunctional behavior. Manager administers an undesired consequence to worker (verbal reprimand, demotion, pay cut).Manager administers an undesired consequence to worker (verbal reprimand, demotion, pay cut).

32. © Copyright McGraw-Hill. All rights reserved.12–32 Organizational Behavior Modification Organizational Behavior Modification (OB MOD)Organizational Behavior Modification (OB MOD)  The systematic application of operant conditioning techniques to organizationally functional behaviors and discourage dysfunctional behaviors.  Improves productivity, attendance, punctuality and other behaviors that are specific, objective and countable.  Has Criticized for ethicality of application and effects on workers.  Appears to be effective in promoting organizational efficiency.

33. © Copyright McGraw-Hill. All rights reserved.12–33 Steps in Organizational Behavior Modification Figure 12.4 Source: Adapted from Organizational Behavior Modification and Beyond by F. Luthans and R. Kreitner (Scott, Foresman, 1985). With permission of the authors.

34. © Copyright McGraw-Hill. All rights reserved.12–34 Social Learning Theory A theory that takes into account how learning and motivation are influenced by people’s thoughts and beliefs and their observations of other people’s behavior.A theory that takes into account how learning and motivation are influenced by people’s thoughts and beliefs and their observations of other people’s behavior. Vicarious Learning (Observational Learning)Vicarious Learning (Observational Learning)  Learning that occurs when a learner is motivated to perform a behavior by watching another person perform and be rewarded. People are motivated to imitate models who are highly competent, expert, receive attractive reinforcers, and are friendly or approachable.People are motivated to imitate models who are highly competent, expert, receive attractive reinforcers, and are friendly or approachable.

35. © Copyright McGraw-Hill. All rights reserved.12–35 Social Learning Theory (cont’d) Conditions for Social LearningConditions for Social Learning  The learner observes the model performing the behavior.  The learner accurately perceives the model’s behavior.  The learner remembers the behavior.  The learner has the skills and abilities needed to perform the behavior.  The learner sees or knows that the model is positively reinforced for the behavior.

36. © Copyright McGraw-Hill. All rights reserved.12–36 Social Learning Theory (cont’d) Self-ReinforcementSelf-Reinforcement  Any desired or attractive outcome or award that a person can give himself or herself for good performance. “The self-management of behavior”“The self-management of behavior” Self-efficacySelf-efficacy  A person’s belief about his or her ability to perform a behavior successfully. Influences motivation both when managers provide reinforcement and when workers themselves provide it.Influences motivation both when managers provide reinforcement and when workers themselves provide it.

37. © Copyright McGraw-Hill. All rights reserved.12–37 Pay and Motivation Pay as a MotivatorPay as a Motivator  Expectancy: pay is an instrumentality (and outcome), must be high for motivation to be high.  Need Theory: pay is used to satisfy many needs.  Equity Theory: pay is given in relation to inputs.  Goal Setting Theory: pay is linked to attainment of goals.  Learning Theory: outcomes (pay), is distributed upon performance of functional behaviors.

38. © Copyright McGraw-Hill. All rights reserved.12–38 Merit Pay and Performance Merit Pay PlanMerit Pay Plan  A compensation plan that bases pay on based on individual, group and/or organization performance.  Individual plan: when individual performance (sales) can accurately measured.  Group plan: when group that works closely together is measured and rewarded as a group.  Organization plan: when group or individual outcomes not easily measured.

39. © Copyright McGraw-Hill. All rights reserved.12–39 Salary Increase or Bonus? Motivational Value of a Bonus Is Higher When:Motivational Value of a Bonus Is Higher When:  Salary levels are unrelated to current performance.  Changes in other compensation items (cost of living, seniority) are not having a large effect in increasing compensation.  Salaries rarely change and performance does. Benefits of Using BonusesBenefits of Using Bonuses  Do not become permanent part of compensation  Are more directly tied to current performance  Provide more flexibility in distributing rewards

40. © Copyright McGraw-Hill. All rights reserved.12–40 Salary Increase or Bonus? (cont’d) Employee Stock OptionEmployee Stock Option  A financial instrument that entitles the bearer to buy shares of an organization’s stock at a certain price during a certain period of time or under certain conditions.  Uses To attract high-level managersTo attract high-level managers To motivate employee performance through ownership in the firmTo motivate employee performance through ownership in the firm

41. © Copyright McGraw-Hill. All rights reserved.12–41 Examples of Merit Pay Plans Piece-rate PayPiece-rate Pay  Employee’s pay is based on the number of units that the employee produces. Commission PayCommission Pay  Employee’s pay is based on a percentage of sales that the employee makes. Organization-based Merit PlansOrganization-based Merit Plans  Scanlon plan—focuses on reduced expenses or cutting costs  Profit sharing—employees receive a share of an organization’s profits