©2004 by Nelson, a division of Thomson Canada Limited 1 Chapter 15 Motivation and Leadership

©2004 by Nelson, a division of Thomson Canada Limited 2 What Would You Do? Leadership: Dealing with tragedy Sandler O’Neill is an investment banking firm located in the World Trade Center on September 11 Top leaders are lost in tragedy Can new leadership help the firm survive this catastrophic event?

©2004 by Nelson, a division of Thomson Canada Limited 3 Learning Objectives: What is Motivation? After reading the next section, you should be able to: 1. explain the basics of motivation

©2004 by Nelson, a division of Thomson Canada Limited 4 Basics of Motivation Exhibit 15.1

©2004 by Nelson, a division of Thomson Canada Limited 5 Basics of Motivation Effort and performance Need satisfaction Extrinsic and intrinsic motivation Motivating with the basics

©2004 by Nelson, a division of Thomson Canada Limited 6 Work Performance and Motivation Exhibit 15.2

©2004 by Nelson, a division of Thomson Canada Limited 7 Effort and Performance Job performance = Motivation x Ability x Situational constraints Job performance how well someone performs a job Motivation effort put forth on the job Ability knowledge, skills, and talent of job incumbent Situational constraints factors beyond individual’s control impacting performance

©2004 by Nelson, a division of Thomson Canada Limited 8 Need Satisfaction Needs physical or psychological requirements that must be met Unmet needs motivate people Four approaches Maslow Alderfer McClelland Herzberg

©2004 by Nelson, a division of Thomson Canada Limited 9 Need Satisfaction and Motivation Exhibit 15.3

©2004 by Nelson, a division of Thomson Canada Limited 10 Extrinsic and Intrinsic Rewards Extrinsic rewards tangible and visible to others contingent on performance Intrinsic rewards natural rewards associated with performing a task for its own sake

©2004 by Nelson, a division of Thomson Canada Limited 11 Rewards and Motivation Exhibit 15.5

©2004 by Nelson, a division of Thomson Canada Limited 12 Motivating with the Basics Ask people what their needs are Satisfy lower-order needs first Expect people’s needs to change Satisfy higher-order needs by looking for ways to allow employees to experience intrinsic rewards

©2004 by Nelson, a division of Thomson Canada Limited 13 Learning Objectives: How Perceptions and Expectations Affect Motivation After reading the next two sections, you should be able to: 2. use equity theory to explain how employees’ perceptions of fairness affect motivation 3. use expectancy theory to describe how workers’ expectations about rewards, effort, and the link between rewards and performance influence motivation

©2004 by Nelson, a division of Thomson Canada Limited 14 Equity Theory Components of equity theory How people react to perceived inequity Motivating with equity theory

©2004 by Nelson, a division of Thomson Canada Limited 15 Components of Equity Theory Inputs employee contributions to the organization Outcomes rewards employees receive from the organization Referents others with whom people compare themselves Outcome/Input ratio comparison of outcomes to inputs

©2004 by Nelson, a division of Thomson Canada Limited 16 Outcome/Input Ratios Exhibit 15.6

©2004 by Nelson, a division of Thomson Canada Limited 17 Inequity When people perceive that their O/I ratio is different from their referent’s. Underreward referent’s O/I ratio is greater than yours experience anger or frustration Overreward referent’s O/I is less than yours possibly experience guilt

©2004 by Nelson, a division of Thomson Canada Limited 18 How People React to Perceived Inequity (Underreward) Reduce inputs Increase outcomes Rationalize inputs or outcomes Change the referent Leave

©2004 by Nelson, a division of Thomson Canada Limited 19 Equity and Motivation Exhibit 15.7

©2004 by Nelson, a division of Thomson Canada Limited 20 Motivating with Equity Theory Look for and correct major inequities Reduce employees’ inputs Make sure decision-making processes are fair distributive justice procedural justice

©2004 by Nelson, a division of Thomson Canada Limited 21 Expectancy Theory Components of expectancy theory Motivating with expectancy theory

©2004 by Nelson, a division of Thomson Canada Limited 22 Components of Expectancy Theory Valence the attractiveness or desirability of a reward Expectancy perceived relationship between effort and performance Instrumentality perceived relationship between performance and rewards Motivation = Valence x Instrumentality x Expectancy

©2004 by Nelson, a division of Thomson Canada Limited 23 Expectancy and Motivation Exhibit 15.8

©2004 by Nelson, a division of Thomson Canada Limited 24 Motivating with Expectancy Theory Systematically gather information to find out what employees want from their jobs Clearly link rewards to performance Empower employees to make decisions that enhance expectancy perceptions

©2004 by Nelson, a division of Thomson Canada Limited 25 Learning Objectives: What is Leadership? After reading the next two sections, you should be able to: 4. explain what leadership is 5. describe who leaders are and what effective leaders do

©2004 by Nelson, a division of Thomson Canada Limited 26 Leadership Leaders versus managers Substitutes for leadership: Do leaders always matter?

©2004 by Nelson, a division of Thomson Canada Limited 27 Managers versus Leaders Exhibit 15.9

©2004 by Nelson, a division of Thomson Canada Limited 28 Substitutes for Leadership: Do Leaders Always Matter Leadership substitutes subordinate, task, or organizational characteristics that make leaders redundant or unnecessary professional orientation, intrinsically satisfying work, cohesive work groups Leadership neutralizers subordinate, task, or organizational characteristics that interfere with a leader’s actions subordinate’s ability, intrinsically satisfying work, organizational rewards beyond leader’s control

©2004 by Nelson, a division of Thomson Canada Limited 29 Who Leaders Are and What Leaders Do Leadership traits Leadership behaviours

©2004 by Nelson, a division of Thomson Canada Limited 30 Leadership Traits Drive Desire to lead Honesty/integrity Self-confidence Emotional stability Cognitive ability Knowledge of the business

©2004 by Nelson, a division of Thomson Canada Limited 31 What Really Works Intelligence Dominance Extroversion Leadership Traits Do Make a Difference

©2004 by Nelson, a division of Thomson Canada Limited 32 What Really Works Performance and Charisma Charisma and Perceived Leader Effectiveness Charisma and Leader Satisfaction

©2004 by Nelson, a division of Thomson Canada Limited 33 Leadership Behaviours Initiating structure degree to which leader structures followers’ roles by setting goals, giving directions, setting deadlines, and assigning tasks Consideration extent to which a leader is friendly, approachable, supportive, and shows concern for employees

©2004 by Nelson, a division of Thomson Canada Limited 34 Learning Objectives: Situational Leadership After reading the next two sections, you should be able to: 6. explain Fiedler’s contingency theory 7. discuss Hersey & Blanchard’s situational theory

©2004 by Nelson, a division of Thomson Canada Limited 35 Putting Leaders in the Right Situation: Fiedler’s Contingency Theory Leadership style: Least preferred co- worker Situational favourableness Matching leadership styles to situations

©2004 by Nelson, a division of Thomson Canada Limited 36 Fiedler’s Contingency Theory Exhibit 15.12

©2004 by Nelson, a division of Thomson Canada Limited 37 Leadership Style: Least Preferred Co-worker Leadership style is the way a leader generally behaves toward followers leaders are generally incapable of changing their leadership styles Style is measured by the Least Preferred Co-worker scale (LPC) relationship-oriented task-oriented

©2004 by Nelson, a division of Thomson Canada Limited 38 Situational Favourableness How a particular situation either permits or denies the leader’s ability to lead Three factors leader-member relations task structure position power

©2004 by Nelson, a division of Thomson Canada Limited 39 Situational Favourableness Exhibit 15.14

©2004 by Nelson, a division of Thomson Canada Limited 40 Matching Leadership Styles to Situations Exhibit 15.15

©2004 by Nelson, a division of Thomson Canada Limited 41 Adapting Leader Behaviour: Hersey & Blanchard’s Situational Theory Situational leadership leaders need to adjust their leadership styles to match followers’ maturity Worker maturity ability and willingness of worker to take responsibility for directing one’s own work four levels of maturity: M1 – neither willing nor able M2 – willing but not able M3 – able but not willing M4 – able and willing

©2004 by Nelson, a division of Thomson Canada Limited 42 Leadership Styles Leader chooses style based on worker’s maturity for a specific task Four styles: telling — high task/low relationship selling — high task and relationship participating — low task/high relationship delegating — low task and relationship

©2004 by Nelson, a division of Thomson Canada Limited 43 Strategic Leadership After reading this next section, you should be able to: 8. explain how visionary leadership (i.e., charismatic and transformational leadership) helps leaders achieve strategic leadership

©2004 by Nelson, a division of Thomson Canada Limited 44 Visionary Leadership Charismatic leadership Transformationa l leadership

©2004 by Nelson, a division of Thomson Canada Limited 45 Charismatic Leadership Creates an exceptionally strong relationship between leader and followers Charismatic leaders: articulate a clear vision based on strong values model those values communicate high expectations to followers display confidence in followers’ abilities

©2004 by Nelson, a division of Thomson Canada Limited 46 Types of Charismatic Leaders Ethical charismatics provide development opportunities for followers open to positive and negative feedback recognize others’ contributions share information emphasize interests of the group Unethical charismatics control and manipulate followers do what is best for themselves not the organization only want positive feedback only share information beneficial to themselves

©2004 by Nelson, a division of Thomson Canada Limited 47 Transformational Leadership Generates awareness and acceptance of group’s purpose and mission Gets employees to see beyond their own needs and self-interest Goes beyond charismatic leadership Different from transactional leadership

©2004 by Nelson, a division of Thomson Canada Limited 48 Transformational Leadership Transformational leaders are visionary and they use: Inspirational motivation Intellectual stimulation Individualized consideration

©2004 by Nelson, a division of Thomson Canada Limited 49 What Really Happened? Leadership: Dealing with Tragedy Deceased employees’ families given pay check for the rest of the year insurance coverage for five years Jimmy Dunne became manager and provided strong leadership developed skills in negotiation, calmness, patience, support, while maintaining strong business focus