Motivation II: Equity, Expectancy, and Goal Setting Chapter Seven Copyright © 2008 The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin Organizational Behavior: Key Concepts, Skills & Best Practices, 3/e

7-3 After reading the material in this chapter, you should be able to: 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.

7-4 Equity Theory Equity theory - Holds that motivation is a function of fairness in social exchanges

7-5 The Individual-Organization Exchange Relationship An employee’s inputs, for which he expects a just return, include education/training, skills, creativity, seniority, age, personality traits, effort expended, and personal appearance.

7-6 The Individual-Organization Exchange Relationship On the outcome side,the organization provides such things as pay/bonuses, fringe benefits, challenging assignments, job security, promotions, status symbols, recognition, and participation in important decisions.

7-7 Negative and Positive Inequity Negative inequity - Comparison in which another person receives greater outcomes for similar inputs. Positive inequity - Comparison in which another person receives lesser outcomes for similar inputs.

7-8 Dynamics of Perceived Inequity 1.People have varying sensitivities to perceived equity and inequity 2.Inequity can be reduced in a variety of ways

7-9 Negative and Positive Inequity Figure 7-1

7-10 Thresholds of Equity and Inequity Equity sensitivity - An individual’s tolerance for negative and positive equity

7-11 Thresholds of Equity and Inequity Benevolents have a higher tolerance for negative inequity. Sensitives adhere to a strict norm of reciprocity and are quickly motivated to resolve both negative and positive inequity

7-12 Thresholds of Equity and Inequity Entitleds have no tolerance for negative inequity -expect to obtain greater output/input ratios than comparison others and become upset when this is not the case.

7-13 Organizational Justice Distributive justice - The perceived fairness of how resources and rewards are distributed. Procedural justice - The perceived fairness of the process and procedures used to make allocation decisions. Interactional justice - Extent to which people feel fairly treated when procedures are implemented.

7-14 Practical Lessons from Equity Theory Equity theory provides managers with yet another explanation of how beliefs and attitudes affect job performance. Research emphasizes the need for managers to pay attention to employees’ perceptions of what is fair and equitable.

7-15 Practical Lessons from Equity Theory Managers benefit by allowing employees to participate in making decisions about important work outcomes. Employees should be given the opportunity to appeal decisions that affect their welfare.

7-16 Practical Lessons from Equity Theory Employees are more likely to accept and support organizational change when they believe it is implemented fairly and when it produces equitable outcomes. Managers can promote cooperation and teamwork among group members by treating them equitably.

7-17 Practical Lessons from Equity Theory Treating employees inequitably can lead to litigation and costly court settlements. Employees’ perceptions of justice are strongly influenced by the leadership behavior exhibited by their managers Managers should pay attention to the organization’s climate for justice

7-18 Expectancy Theory of Motivation Expectancy theory - Holds that people are motivated to behave in ways that produce valued outcomes.

7-19 Vroom’s Expectancy Theory Motivation boils down to the decision of how much effort to exert in a specific task situation. Expectancy - Belief that effort leads to a specific level of performance.

7-20 Expectancy The following factors influence an employee’s expectancy perceptions: -Self-esteem. -Self-efficacy. -Previous success at the task. -Help received from others. -Information necessary to complete the task. -Good materials and equipment to work with

7-21 Question? In Vroom’s expectancy theory what is the value of a reward? A.Instrumentality B.Valence C.Outcome D.Input

7-22 Vroom’s Expectancy Theory Instrumentality - A performance  outcome perception Valence - The value of a reward or outcome Outcomes - refer to different consequences that are contingent on performance

7-23 Research on Expectancy Theory and Managerial Implications Managers are advised to enhance effort  performance expectancies by helping employees accomplish their performance goals. Important for managers to influence employees’ instrumentalities and to monitor valences for various rewards.

7-24 Managerial and Organizational Implications of Expectancy Theory

7-25 Managerial and Organizational Implications of Expectancy Theory Some workers value interesting work and recognition more than money Extrinsic rewards can lose their motivating properties over time and may undermine intrinsic motivation

7-26 Expectancy Theory Read an article from Management and Organization Review on “Expectancy Theory-Based Performance Management

7-27 Prerequisites to Linking Performance 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

7-28 Prerequisites to Linking Performance and Rewards 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

7-29 Question? What system incorporates participation in decision making? A.TQM B.Management by Objectives C.Expectancy D.Equity

7-30 Goals: Definition and Background Goal – what an individual is trying to accomplish Management by objectives – management system incorporating participation in decision making, goal setting, and feedback

7-31 How Does Goal Setting Work Goals direct attention Goals regulate effort Goals increase persistence Goals foster the development and application of task strategies and action plans

7-32 Insights from Goal-Setting Research 1.Difficult goals lead to higher performance 2.Specific, difficult goals lead to higher performance for simple rather complex tasks Goal specificity – quantifiability of a goal 3.Feedback enhances the effect of specific, difficult goals

7-33 Relationship between Goal Difficulty and Performance Figure 7-2

7-34 Insights from Goal-Setting Research 4.Participative goals, assigned goals, and self-set goals are equally effective 5.Goal commitment and monetary incentives affect goal-setting outcomes Goal commitment – extent to which an individual is personally committed to achieving a goal

7-35 Practical Application of Goal Setting Step 1: Set goals Step 2: Promote goal commitment Step 3: Provide support and feedback

7-36 Types of goal orientation 1.Learning goal orientation 2.Performance-prove goal orientation 3.Performance-avoid goal orientation

7-37 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.

7-38 Managerial Actions for Enhancing Goal Commitment 4.Communicate an inspiring vision and explain how individual goals relate to accomplishing the vision. 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.

7-39 Video: Financial Troubles at GM See PBS correspondent Paul Solman discuss the financial problems at GM. (12:57)