Discuss the role of perceived inequity in employee motivation. Describe the practical lessons derived from equity theory. Explain Vroom’s expectancy theory. Describe the practical implications of expectancy theory. Identify five practical lessons to be learned from goal-setting research. Specify issues that should be addressed before implementing a motivational program. Motivation II: Equity, Expectancy, and Goal Setting Learning Objectives Chapter Seven

7-1 Figure 7-1 Negative and Positive Inequity McGraw-Hill © 2005 The McGraw-Hill Companies, Inc. All rights reserved. A. An Equitable Situation Self Other$2 1 hour = $2 per hour $4 2 hours = $2 per hour McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved.

7-2 Figure 7-1 Negative and Positive Inequity (Cont.) McGraw-Hill © 2005 The McGraw-Hill Companies, Inc. All rights reserved. $2 1 hour = $2 per hour $3 1 hour = $3 per hour B. Negative Inequity Self Other McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved.

7-3 Figure 7-1 Negative and Positive Inequity (Cont.) McGraw-Hill © 2005 The McGraw-Hill Companies, Inc. All rights reserved. $2 1 hour = $1 per hour C. Positive Inequity $3 1 hour = $3 per hour Self Other McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved.

7-4 McGraw-Hill © 2005 The McGraw-Hill Companies, Inc. All rights reserved. Equity Sensitivity Equity Sensitivity is an individual’s tolerance for negative and positive equity. Benevolents Sensitives Entitleds McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved.

7-5 McGraw-Hill © 2005 The McGraw-Hill Companies, Inc. All rights reserved. Organizational Justice Distributive Justice: the perceived fairness of how resources and rewards are distributed. Procedural Justice: the perceived fairness of the processes and procedures used to make allocation decisions. Interactional Justice: extent to which people feel fairly treated when procedures are implemented. McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved.

7-6 McGraw-Hill © 2005 The McGraw-Hill Companies, Inc. All rights reserved. Vroom’s Expectancy Theory Concepts Expectancy: Belief that effort leads to a specific level of performance Instrumentality: A performance  outcome perception. Valence: The Value of a reward or outcome McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved.

7-7 Table 7-1 Managerial Implications of Expectancy Theory Determine the outcomes employees value Identify good performance so appropriate behavior can be rewarded Make sure employees can achieve targeted levels of performance Link desired outcomes to targeted performance levels Make sure changes in outcomes are large enough to motivate high effort Monitor the reward system for inequalities McGraw-Hill © 2005 The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved.

7-8 Table 7-1 Organizational Implications of Expectancy Theory Reward people for desired performance and do not keep pay decisions secret Design challenging jobs Tie some rewards to group accomplishments to build teamwork and encourage cooperation Reward managers for creating, monitoring, and maintaining expectancies, instrumentalities, and outcomes that lead to high effort and goal attainment Monitor employee motivation through interviews or anonymous questionnaires Accommodate individual differences by building flexibility into the motivation program McGraw-Hill © 2005 The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved.

7-9 McGraw-Hill © 2005 The McGraw-Hill Companies, Inc. All rights reserved. Four Prerequisites to Linking Performances and Rewards 1. Managers need to develop and communicate performance standards to employees. 2. Managers need valid and accurate performance ratings with which to compare employees. 3. Managers need to determine the relative mix of individual versus team contribution to performance and then reward accordingly. 4. Managers should use the performance ratings to differentially allocate rewards among employees. McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved.

7-10 McGraw-Hill © 2005 The McGraw-Hill Companies, Inc. All rights reserved. How Does Goal Setting Work? 1. Goals direct attention. 2. Goals regulate effort. 3. Goals increase persistence. 4. Goals foster the development and application of task strategies and action plans. McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved.

7-11 McGraw-Hill © 2005 The McGraw-Hill Companies, Inc. All rights reserved. Insights from Goal Setting Research 1. Difficult goals lead to higher performance 2. Specific, difficult goals lead to higher performance for simple rather than complex tasks. 3. Feedback enhances the effect of specific, difficult goals. 4. Participative goals, assigned goals, and self-set goals are equally effective. 5. Goal commitment and monetary incentives affect goal-setting outcomes. McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved.

7-12 Figure 7-2 Relationship Between Goal Difficulty and Performance McGraw-Hill © 2005 The McGraw-Hill Companies, Inc. All rights reserved. Performance A)Committed individuals with adequate ability B)Committed individuals who are working at capacity C)Individuals who lack commitment to high goals Performance High Low LowModerate Impossible Challenging A B C McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved.

7-13 Table 7-2 McGraw-Hill © 2005 The McGraw-Hill Companies, Inc. All rights reserved. Guidelines for Writing SMART Goals S pecific M easurable A ttainable R esults oriented T ime bound McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved.

7-14 McGraw-Hill © 2005 The McGraw-Hill Companies, Inc. All rights reserved. Skills & Best Practices: Managerial Actions for Enhancing Goal Commitment 1. Provide valued outcomes for goal accomplishment. 2. Raise employees’ self-efficacy about meeting goals by: 1. Providing adequate training 2. Role modeling desired behaviors and actions 3. Persuasively communicating confidence in the employees ability to attain the goal 3. Have employees make a public commitment to the goal. 4. Communicate an inspiring vision and explain how individual goals relate to accomplishing the vision. McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved.

7-15 McGraw-Hill © 2005 The McGraw-Hill Companies, Inc. All rights reserved. Skills & Best Practices: Managerial Actions for Enhancing Goal Commitment (Cont.) 5. Allow employees to participate in setting the goals. 6. Behave supportively rather than punitively. 7. Break a long-term goal (i.e., a yearly goal) into short-term sub-goals. 8. Ensure that employees have the resources required to accomplish the goal. McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved.