FOUNDATIONS OF MANAGEMENT Fall 2008

FOUNDATIONS OF MANAGEMENT Fall 2008
Reading Assignment Chapter Nine Unit Ten Copyright © 2008 by Dr. Eliot S. Elfner, St. Norbert College

Individual Differences in Motivation
Copyright © 2008 by Dr. Eliot S. Elfner, St. Norbert College

Motivation = a force which impels one to put forth effort
Definition Motivation = a force which impels one to put forth effort Managers must assure that the force directs subordinate’s efforts toward organizational purposes - Internally derived? - simply hire motivated people - Externally imposed? - becomes a process of one person influencing another Manipulation = external force which directs behavior toward manager’s goals against individual’s will Copyright © 2008 by Dr. Eliot S. Elfner, St. Norbert College

The Nature of Motivation
UNIT 10 - Motivation BUAD 230 C, Fall 2008 The Nature of Motivation Motivation The psychological forces that determine the direction of a person’s behavior in an organization, a person’s level of effort, and a person’s level of persistence Copyright © 2008 by Dr. Eliot S. Elfner, St. Norbert College

Direction—possible behaviors the individual could engage in Effort—how hard the individual will work Persistence—whether the individual will keep trying or give up Copyright © 2008 by Dr. Eliot S. Elfner, St. Norbert College

Motivation Motivation Direction Persistence Effort
UNIT 10 - Motivation BUAD 230 C, Fall 2008 Motivation Effort Persistence Direction Motivation Motivation is the set of forces that initiates, directs, and makes people persist in their efforts to accomplish a goal. In terms of this definition, initiation of effort is concerned with the choices that people make about how much effort to put forth in their jobs. ("Gosh, I hate writing performance appraisals, so maybe I’ll just add a paragraph to last year’s appraisals," versus "Performance feedback is important. I'm going to schedule an hour to review each file and an hour to write each appraisal.") Direction of effort is concerned with the choices that people make in deciding where to put forth effort in their jobs. ("I'm really excited about the new computer system and can't wait to get started," versus "Yeah, yeah, another new computer system. I'll do what I need to get by with it, but I think my time is better spent working directly with employees and customers.") Persistence of effort is concerned with the choices that people make about how long they will put forth effort in their jobs before reducing or eliminating those efforts. ("We're only halfway to our goal with three months to get it done. We'll never make it, so I'm not going to work at this anymore," versus "We're only halfway to our goal with three months to go, but if we all keep working hard, we can do it.") Copyright © 2008 by Dr. Eliot S. Elfner, St. Norbert College

What prompts people to initiate action
UNIT 10 - Motivation BUAD 230 C, Fall 2008 Motivation Concerns What prompts people to initiate action What influences their choice of action Why they persist in doing it over time. Copyright © 2008 by Dr. Eliot S. Elfner, St. Norbert College 3

Effort and Performance Extrinsic and Intrinsic
UNIT 10 - Motivation BUAD 230 C, Fall 2008 Basics of Motivation Effort and Performance Need Satisfaction Extrinsic and Intrinsic Rewards Motivating People 1 Copyright © 2008 by Dr. Eliot S. Elfner, St. Norbert College

Effort and Performance
UNIT 10 - Motivation BUAD 230 C, Fall 2008 Effort and Performance Performance Effort Initiation Direction Persistence When most people think of work motivation, they think that working hard (effort) should lead to doing a good job (performance). Figure 16.2 shows a basic model of work motivation and performance, displaying this process. The first thing to notice about Figure 16.2 is that this is a basic model of work motivation and performance. In practice, it's almost impossible to talk about one without mentioning the other. Not surprisingly, managers often confuse the two, saying things such as "Your performance was really terrible last quarter. What's the matter? Aren't you as motivated as you used to be?" In fact, motivation is just one of three primary determinants of job performance. Copyright © 2008 by Dr. Eliot S. Elfner, St. Norbert College

Effort and Performance
UNIT 10 - Motivation BUAD 230 C, Fall 2008 Effort and Performance Job Performance = Motivation X Ability X Situational Constraints Job performance how well someone performs the job Motivation effort put forth on the job Ability capability to do the job Situational Constraints external factors affecting performance Job Performance = Motivation x Ability x Situational Constraints In this formula, job performance is how well someone performs the requirements of the job. Motivation, as defined above, is effort, the degree to which someone works hard to do the job well. Ability is the degree to which workers possess the knowledge, skills, and talent needed to do a job well. And, situational constraints are factors beyond the control of individual employees, such as tools, policies, and resources that have an effect on job performance. Since job performance is a multiplicative function of motivation times ability times situational constraints, job performance will suffer if any one of these components is weak. All the motivation in the world won't translate into high performance when you have little ability and high situational constraints. Motivation is just one of the influences on performance and it is important to remember that it is not the only influence. Copyright © 2008 by Dr. Eliot S. Elfner, St. Norbert College

The Motivation Equation
Figure 9.1 Copyright © 2008 by Dr. Eliot S. Elfner, St. Norbert College

Contemporary Approaches
UNIT 10 - Motivation BUAD 230 C, Fall 2008 Contemporary Approaches Content theories stress the analysis of human needs Process theories concern the thought processes that influence behavior Reinforcement theories focus on employee learning desired work behaviors. Copyright © 2008 by Dr. Eliot S. Elfner, St. Norbert College 12

UNIT 10 - Motivation Emphasize the needs that motivate people.
BUAD 230 C, Fall 2008 Content Theories Emphasize the needs that motivate people. Copyright © 2008 by Dr. Eliot S. Elfner, St. Norbert College 13

Need Theories Need Need Theories
UNIT 10 - Motivation BUAD 230 C, Fall 2008 Need Theories Need A requirement for survival and well-being. Need Theories Theories of motivation that focus on what needs people are trying to satisfy at work and what outcomes will satisfy those needs. Basic 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. Copyright © 2008 by Dr. Eliot S. Elfner, St. Norbert College

Unmet needs motivate people Three approaches:
UNIT 10 - Motivation BUAD 230 C, Fall 2008 Need Satisfaction Needs physical or psychological requirements must be met to ensure survival and well being Unmet needs motivate people Three approaches: Maslow’s Hierarchy of Needs McClelland’s Learned Needs Theory Needs are the physical or psychological requirements that must be met to ensure survival and well being. As shown in the left side of Figure 16.3, a person's unmet need creates an uncomfortable, internal state of tension that must be resolved. For example, if you normally skip breakfast, but then get stuck working through lunch, chances are you'll be so hungry by late afternoon that the only thing you'll be motivated to do is find something to eat. So, according to needs theories, people are motivated by unmet needs. But once a need is met, it no longer motivates. When this occurs, people become satisfied. Copyright © 2008 by Dr. Eliot S. Elfner, St. Norbert College

Maslow’s Hierarchy of Needs
Self- actualization Realize one’s full potential Use abilities to the fullest Esteem Feel good about oneself Promotions and recognition Belongingness Social interaction, love Interpersonal relations, parties Safety Security, stability Job security, health insurance Physiological Food, water, shelter Basic pay level to buy items Needs Description Examples Lower-level needs must be satisfied before higher-level needs are addressed. Highest-level needs Lowest-level needs Copyright © 2008 by Dr. Eliot S. Elfner, St. Norbert College Table 9.1

Maslow’s Hierarchy of Needs
UNIT 10 - Motivation BUAD 230 C, Fall 2008 Maslow’s Hierarchy of Needs Esteem Belongingness Safety Physiological Self-Actualization Maslow’s Hierarchy of needs suggests that people are motivated by these factors. Copyright © 2008 by Dr. Eliot S. Elfner, St. Norbert College 1.2

McClelland’s Learned Needs Theory
McClelland’s Needs for Achievement, Affiliation, and Power Need for Achievement A strong desire to perform challenging tasks well and meet personal standards for excellence Need for Affiliation Extent to which an individual is concerned about establishing and maintaining good interpersonal relations, being liked, and having the people around him get along with each other Need for Power Extent to which an individual desires to control or influence others Copyright © 2008 by Dr. Eliot S. Elfner, St. Norbert College

McClelland’s Learned Needs Theory
UNIT 10 - Motivation BUAD 230 C, Fall 2008 McClelland’s Learned Needs Theory Affiliation Achievement Power McClelland’s Learned Needs Theory suggests that people are motivated by the need for affiliation, the need for achievement, or the need for power. Copyright © 2008 by Dr. Eliot S. Elfner, St. Norbert College 1.2

Needs Classification Maslow’s Hierarchy McClelland’s Learned Needs
UNIT 10 - Motivation BUAD 230 C, Fall 2008 Needs Classification Maslow’s Hierarchy McClelland’s Learned Needs Higher-Order Needs Self-Actualization Esteem Belongingness Safety Physiological Power Achievement Affiliation Lower-Order Needs Things become even more complicated when we consider the different predictions made by these theories. According to Maslow, needs are arranged in a hierarchy from low (physiological) to high (self-actualization). Within this hierarchy, people are motivated by their lowest unsatisfied need. And, as needs are met, they work their way up the hierarchy from physiological to self-actualization needs. By contrast, Alderfer says that people can be motivated by more than one need at a time. Furthermore, he suggests that people are just as likely to move down the needs hierarchy as up, particularly when unable to achieve satisfaction at the next higher need level. McClelland, on the other hand, argues that the degree to which particular needs motivate varies tremendously from person to person, with some people being motivated primarily by achievement, and others by power or affiliation. Moreover, McClelland says that needs are learned, not innate. Lower order needs are concerned with safety and with physiological and existence requirements. However, higher order needs are concerned with relationships (belongingness, relatedness, and affiliation); challenges and accomplishments (esteem, self-actualization, growth, and achievement); and influence (power). Studies generally show that higher order needs will not motivate people as long as lower order needs remain unsatisfied. Copyright © 2008 by Dr. Eliot S. Elfner, St. Norbert College

Adding Need Satisfaction to the Model
UNIT 10 - Motivation BUAD 230 C, Fall 2008 Adding Need Satisfaction to the Model Performance Effort Initiation Direction Persistence Unsatisfied need Tension Energized to take action Satisfaction Copyright © 2008 by Dr. Eliot S. Elfner, St. Norbert College

Answer These Questions:
UNIT 10 - Motivation BUAD 230 C, Fall 2008 Answer These Questions: Describe a time when you were extremely dissatisfied or turned off by your job Describe a time when you were extremely satisfied or turned on by your job. Copyright © 2008 by Dr. Eliot S. Elfner, St. Norbert College 21

UNIT 10 - Motivation BUAD 230 C, Fall 2008 The Nature of Motivation Extrinsically Motivated Behavior Behavior that is performed to acquire material or social rewards or to avoid punishment. Intrinsically Motivated Behavior Behavior that is performed for its own sake. Intrinsically Motivated Behavior Behavior that is performed for its own sake. The source of the motivation that comes from actually engaging in the behavior. The sense of accomplishment and achievement derived from doing the work itself Extrinsically Motivated Behavior 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. Copyright © 2008 by Dr. Eliot S. Elfner, St. Norbert College

Extrinsic and Intrinsic Rewards
UNIT 10 - Motivation BUAD 230 C, Fall 2008 Extrinsic and Intrinsic Rewards Extrinsic Rewards are given by another person, often a manager. tangible and visible to others given contingent on performance Intrinsic Rewards are received as a direct consequence of a person's actions natural rewards associated with performing the task for its own sake Extrinsic rewards are tangible and visible to others and are given to employees contingent on the performance of specific tasks or behaviors. External agents (managers, for example) determine and control the distribution, frequency, and amount of extrinsic rewards, such as pay, company stock, benefits, and promotions. Why do companies need extrinsic rewards? To get people to do things they wouldn't otherwise do. Companies use rewards to motivate people to perform three basic behaviors: joining the organization, regularly attending their jobs, and performing their jobs well. By contrast, intrinsic rewards are the natural rewards associated with performing a task or activity for its own sake. For example, aside from the external rewards management offers for doing something well, employees often experience a sense of interest and enjoyment from the activities or tasks they perform. Examples of intrinsic rewards include a sense of accomplishment or achievement, a feeling of responsibility, the chance to learn something new or interact with others, or simply the fun that comes from performing an interesting, challenging, and engaging task. Which types of rewards are most important to workers in general? A number of surveys suggest that both extrinsic and intrinsic rewards are important. One survey found that the most important rewards were good benefits and health insurance, job security, having a week or more of vacation (all extrinsic rewards) and interesting work, the opportunity to learn new skills, and being able to work independently (all intrinsic rewards). And, employee preferences for intrinsic and extrinsic rewards appear to be relatively stable. Copyright © 2008 by Dr. Eliot S. Elfner, St. Norbert College

Herzberg’s Motivation-Hygiene Theory
UNIT 10 - Motivation BUAD 230 C, Fall 2008 Herzberg’s Motivation-Hygiene Theory 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 and how challenging it is Hygiene needs are related to the physical and psychological context in which the work is performed Unsatisfied hygiene needs create dissatisfaction; satisfaction of hygiene needs does not lead to motivation or job satisfaction. Copyright © 2008 by Dr. Eliot S. Elfner, St. Norbert College

Herzberg’s Two Factors
UNIT 10 - Motivation BUAD 230 C, Fall 2008 Herzberg’s Two Factors Hygiene Factors Company policy and administration Supervision Interpersonal relationships Working conditions Salary Job status and security. Motivating Factors Achievement Recognition Work itself Responsibility Advancement Growth. Copyright © 2008 by Dr. Eliot S. Elfner, St. Norbert College 22

Herzberg’s Findings 10 20 30 40 50 Achievement Recognition Work itself
UNIT 10 - Motivation BUAD 230 C, Fall 2008 Herzberg’s Findings 10 20 30 40 50 Achievement Recognition Work itself Responsibility Advancement Growth Company Policy & Administration Supervision Relationship with supervisor Work conditions Salary Copyright © 2008 by Dr. Eliot S. Elfner, St. Norbert College 24

Adding Rewards to the Model
Unsatisfied need Tension Energized to take action Effort Initiation Direction Persistence Extrinsic Rewards Satisfaction Performance Intrinsic Rewards Copyright © 2008 by Dr. Eliot S. Elfner, St. Norbert College

Motivating with the Basics
UNIT 10 - Motivation BUAD 230 C, Fall 2008 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 Start by asking people what their needs are. If managers don't know what workers’ needs are, they won't be able to provide them the opportunities and rewards that can satisfy those needs. Next, satisfy lower order needs first. Since, higher order needs will not motivate people as long as lower order needs remain unsatisfied, companies should satisfy lower order needs first. In practice, this means providing the equipment, training, and knowledge to create a safe workplace free of physical risks, paying employees well enough to provide financial security, and offering a benefits package that will protect employees and their families through good medical coverage and health and disability insurance. Expect people's needs to change. As other needs are satisfied, or situations change, managers should expect that employees' needs will change. In other words, what motivated people before may not motivate them again. Likewise, what motivates people to accept a job may not necessarily motivate them once they have a job. Finally, as needs change and lower order needs are satisfied, satisfy higher order needs by looking for ways to allow employees to experience intrinsic rewards. Recall that intrinsic rewards, such as accomplishment, achievement, learning something new, and interacting with others, are the natural rewards associated with performing a task or activity for its own sake. And with the exception of influence (power), intrinsic rewards correspond very closely to higher order needs that are concerned with relationships (belongingness, relatedness, and affiliation) and challenges and accomplishments (esteem, self-actualization, growth, and achievement). Copyright © 2008 by Dr. Eliot S. Elfner, St. Norbert College

Process Theories Explain the steps and procedures employees use to select behaviors with which to meet their needs and determine if their choices were successful. Copyright © 2008 by Dr. Eliot S. Elfner, St. Norbert College

Equity Theory Components of Equity Theory
UNIT 10 - Motivation BUAD 230 C, Fall 2008 Equity Theory Components of Equity Theory Reaction to Perceived Inequity Motivating People Using Equity Theory Equity theory says that people will be motivated when they perceive that they are being treated fairly. In particular, equity theory stresses the importance of perceptions. So, regardless of the actual level of rewards people receive, they must also perceive that, relative to others, they are being treated fairly. For example, the average CEO makes 200 times more than the average blue-collar worker. Many people believe that CEO pay is high and unfair; others believe that CEO pay is fair because the supply and demand determine what CEOs are paid. Equity theory says that equity, like beauty, is in the eye of the beholder. Copyright © 2008 by Dr. Eliot S. Elfner, St. Norbert College

UNIT 10 - Motivation BUAD 230 C, Fall 2008 Equity Theory 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. Copyright © 2008 by Dr. Eliot S. Elfner, St. Norbert College

Equity Inequity Equity Theory
Justice, impartiality, and fairness to which all organizational members are entitled Inequity Lack of fairness Copyright © 2008 by Dr. Eliot S. Elfner, St. Norbert College

Outcome/input (O/I) ratio
UNIT 10 - Motivation BUAD 230 C, Fall 2008 Equity Theory Inputs employee contributions to the organization Outcomes rewards employees receive from the organization Referents comparison others Outcome/input (O/I) ratio The basic components of equity theory are inputs, outcomes, and referents. Inputs are the contributions employees make to the organization. Inputs include education and training, intelligence, experience, effort, number of hours worked, and ability. Outcomes are the rewards employees receive in exchange for their contributions to the organization. Outcomes include pay, fringe benefits, status symbols, job titles and assignments, and even the leadership style of their superiors. And since perceptions of equity depend on how you are being treated compared to others, referents are others with whom people compare themselves to determine if they have been treated fairly. Usually, people choose to compare themselves to referents who hold the same or similar jobs, or are otherwise similar to themselves in some way, such as in gender, race, age, or tenure. According to the equity theory process shown in Exhibit 16.7, employees compare inputs, their contributions to the organization, to outcomes, the rewards they received from the organization in exchange for those inputs. This comparison of outcomes to inputs is called the outcome/input (O/I) ratio. After an internal comparison in which they compare their outcomes to their inputs, employees then make an external comparison in which they compare their O/I ratio with the O/I ratio of a referent. When people perceive that their O/I ratio is equal to the referent's O/I ratio, they conclude that they are being treated fairly. But when people perceive that their O/I ratio is different from their referent's O/I ratio, they conclude that they have been treated inequitably or unfairly. Outcomesself Inputsself Outcomesother Inputsother = Copyright © 2008 by Dr. Eliot S. Elfner, St. Norbert College

When a person’s O/I ratio differs from their referent’s O/I ratio
UNIT 10 - Motivation BUAD 230 C, Fall 2008 Inequity When a person’s O/I ratio differs from their referent’s O/I ratio Underreward referent’s O/I ratio is greater than yours experience anger or frustration Overreward referent’s O/I ratio is less than yours experience guilt There are two kinds of inequity, underreward and overreward. Underreward occurs when a referent's O/I ratio is better than your O/I ratio. In other words, the referent you compare yourself to is getting more outcomes relative to his or her inputs than you are. When people perceive that they have been underrewarded, they tend to experience anger or frustration. For example, when a manufacturing company received notice that some important contracts had been canceled, management cut employees’ pay by 15 percent in one plant but not in another. Just as equity theory predicts, theft doubled in the plant that received the pay cut. Likewise, employee turnover increased from 5 percent to 23 percent. By contrast, overreward occurs when a referent's O/I ratio is worse than your O/I ratio. In this case, you are getting more outcomes relative to your inputs than your referent is. In theory, when people perceive that they have been overrewarded, they experience guilt. Not surprisingly, people have a very high tolerance for overreward. It takes a tremendous amount of overpayment before people decide that their pay or benefits are more than they deserve. Copyright © 2008 by Dr. Eliot S. Elfner, St. Norbert College

How People React to Perceived Inequity
UNIT 10 - Motivation BUAD 230 C, Fall 2008 How People React to Perceived Inequity Reduce inputs Increase outcomes Rationalize inputs or outcomes Change the referent Leave In the case of underreward, this usually translates into frustration or anger, while with overreward the reaction is guilt. In turn, these reactions leads to tension and a strong need to take action to restore equity in some way. At first, a slight inequity may not be strong enough to motivate an employee to take immediate action. However, if the inequity continues or there are multiple inequities, tension may build over time until a point of intolerance is reached, and the person is energized to take action. There are five ways in which people try to restore equity when they perceive that they have been treated unfairly: reducing inputs, increasing outcomes, rationalizing inputs or outcomes, changing the referent, or simply leaving. These will be discussed in terms of the inequity associated with underreward, which is much more common than the inequity associated with overreward. People who perceive that they have been underrewarded may try to restore equity by decreasing or withholding their inputs (i.e., effort). Increasing outcomes is another way in which people try to restore equity. This might include asking for a raise or pointing out the inequity to the boss and hoping that she takes care of it. Another method of restoring equity is to rationalize or distort inputs or outcomes. So instead of actually decreasing inputs or increasing outcomes, employees restore equity by making mental or emotional "adjustments" in their O/I ratios or the O/I ratios of their referents. Changing the referent is another way of restoring equity. In this case, people compare themselves to someone other than the referent they had been using for previous O/I ratio comparisons. Since people usually choose to compare themselves to others who hold the same or similar jobs or are otherwise similar, they may change referents to restore equity when their personal situations change, such as a decrease in job status or pay. Finally, when reducing inputs, increasing outcomes, rationalizing inputs or outcomes, or changing referents doesn't restore equity, employees may leave by quitting their jobs, transferring, or increasing absenteeism. Copyright © 2008 by Dr. Eliot S. Elfner, St. Norbert College

Adding Equity Theory to the Model
Effort Unsatisfied need Tension Energized to take action Initiation Direction Persistence Restoring Equity Decrease inputs Increase outcomes Rationalize inputs or outcomes Change the referent Leave Perceived Equity/Inequity Extrinsic Rewards Satisfaction Performance Perceived Equity/Inequity Intrinsic Rewards Copyright © 2008 by Dr. Eliot S. Elfner, St. Norbert College

Motivating with Equity Theory
UNIT 10 - Motivation BUAD 230 C, Fall 2008 Motivating with Equity Theory Look for and correct major inequities Reduce employees’ inputs Make sure decision-making processes are fair distributive justice procedural justice What practical things can managers do to use equity theory to motivate employees? Start by looking for and correcting major inequities. One of the difficulties that equity theory makes us aware of is that an employee's sense of fairness is based on subjective perceptions. So what one employee considers grossly unfair may not affect another employee's perceptions of equity at all. While this makes it difficult for managers to create conditions that satisfy all employees, it's critical that they do their best to take care of major inequities that can energize employees to take actions, such as decreasing inputs or leaving, that can be extremely disruptive, costly, and harmful. So, whenever possible, managers should look for and correct major inequities. Reduce employees' inputs. Increasing outcomes is often the first and only strategy that companies use to restore equity. This approach is unfortunate, because reducing employee inputs is just as viable a strategy. Make sure decision-making processes are fair. Equity theory focuses on distributive justice, the degree to which outcomes and rewards are fairly distributed or allocated. However, procedural justice, the fairness of the process used to make reward allocation decisions, is just as important. Procedural justice matters because even when employees are unhappy with their outcomes (i.e., low pay), they're much less likely to be unhappy with company management if they believe that the procedures used to allocate outcomes were fair. Copyright © 2008 by Dr. Eliot S. Elfner, St. Norbert College

Motivating with Expectancy Theory Components of Expectancy
UNIT 10 - Motivation BUAD 230 C, Fall 2008 Expectancy Theory Motivating with Expectancy Theory Components of Expectancy Theory Expectancy theory says that people will be motivated to the extent to which they believe that their efforts will lead to good performance, that good performance will be rewarded, and that they are offered attractive rewards. Copyright © 2008 by Dr. Eliot S. Elfner, St. Norbert College

Components of Expectancy Theory
UNIT 10 - Motivation BUAD 230 C, Fall 2008 Components of Expectancy Theory Valence Expectancy Instrumentality Valence is simply the attractiveness or desirability of various rewards or outcomes. Expectancy theory recognizes that the same reward or outcome, say, a promotion, will be highly attractive to some people, highly disliked by others, and for some, may not make much difference one way or the other. Accordingly, when people are deciding how much effort to put forth, expectancy theory says that they will consider the valence of all possible rewards and outcomes that they can receive from their jobs. The greater the sum of those valences, each of which could be positive, negative, or neutral, the more effort people will choose to put forth on the job. Expectancy is the perceived relationship between effort and performance. When expectancies are strong, employees believe that their hard work and efforts will result in good performance, so they work harder. By contrast, when expectancies are weak, employees figure that no matter what they do or how hard they work, they won't be able to perform their jobs successfully, so they don't work as hard. Instrumentality is the perceived relationship between performance and rewards. When instrumentality is strong, employees believe that improved performance will lead to better and more rewards, and they will choose to work harder. When instrumentality is weak, employees don't believe that better performance will result in more or better rewards, so they will choose not to work as hard. Expectancy theory holds that for people to be highly motivated, all three variables—valence, expectancy, and instrumentality—must be high. Thus, expectancy theory can be represented by the following simple equation: Motivation = Valence x Instrumentality x Expectancy Copyright © 2008 by Dr. Eliot S. Elfner, St. Norbert College

UNIT 10 - Motivation BUAD 230 C, Fall 2008 Expectancy Theory Motivation depends on individuals’ expectations about their ability to perform tasks and receive desired rewards. Copyright © 2008 by Dr. Eliot S. Elfner, St. Norbert College 33

Expectancy, Instrumentality, and Valence

Victor Vroom’s Expectancy Theory
UNIT 10 - Motivation BUAD 230 C, Fall 2008 Victor Vroom’s Expectancy Theory M = (E P) x (P O) x V Copyright © 2008 by Dr. Eliot S. Elfner, St. Norbert College 34

UNIT 10 - Motivation BUAD 230 C, Fall 2008 Victor Vroom’s Expectancy Theory M = (E P) x (P O) x V M = Motivation (force to put forth effort) Copyright © 2008 by Dr. Eliot S. Elfner, St. Norbert College 35

UNIT 10 - Motivation BUAD 230 C, Fall 2008 Victor Vroom’s Expectancy Theory M = (E P) x (P O) x V M = Motivation (force to put forth effort) E P means effort leads to performance (Expectancy) Copyright © 2008 by Dr. Eliot S. Elfner, St. Norbert College 36

UNIT 10 - Motivation BUAD 230 C, Fall 2008 Victor Vroom’s Expectancy Theory M = (E P) x (P O) x V M = Motivation (force to put forth effort) E P means effort leads to performance (Expectancy) P O means performance leads to outcomes (Instrumentality) Copyright © 2008 by Dr. Eliot S. Elfner, St. Norbert College 37

UNIT 10 - Motivation BUAD 230 C, Fall 2008 Victor Vroom’s Expectancy Theory M = (E P) x (P O) x V M = Motivation (force to put forth effort) E P means effort leads to performance (Expectancy) P O means performance leads to outcomes (Instrumentality) V = Valence - the value placed on the outcome. Copyright © 2008 by Dr. Eliot S. Elfner, St. Norbert College 38

Adding Expectancy Theory to the Model
Effort Unsatisfied need Tension Energized to take action Initiation Direction Persistence Instrumentality Restoring Equity Decrease inputs Increase outcomes Rationalize inputs or outcomes Change the referent Leave Valence Perceived Equity/Inequity Extrinsic Rewards Satisfaction Performance Expectancy Perceived Equity/Inequity Intrinsic Rewards Copyright © 2008 by Dr. Eliot S. Elfner, St. Norbert College

Motivation will be high when workers believe:
UNIT 10 - Motivation BUAD 230 C, Fall 2008 Expectancy Theory 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. Copyright © 2008 by Dr. Eliot S. Elfner, St. Norbert College

Clearly link rewards to individual performance
UNIT 10 - Motivation BUAD 230 C, Fall 2008 Expectancy Theory Systematically gather information to find out what employees want from their jobs Clearly link rewards to individual performance Empower employees to make decisions which enhance expectancy perceptions Systematically gather information to find out what employees want from their jobs. In addition to individual managers’ directly asking employees what they want from their jobs (see "Motivating with Equity Theory"), companies still need to survey their employees regularly to determine their wants, needs, and dissatisfactions. Since people consider the valence of all the possible rewards and outcomes that they can receive from their jobs, regular identification of wants, needs, and dissatisfaction gives companies the chance to turn negatively valent rewards and outcomes into positively valent rewards and outcomes, thus raising overall motivation and effort. Take clear steps to link rewards to individual performance in a way that is clear and understandable to employees. Unfortunately, most employees are extremely dissatisfied with the link between pay and performance in their organizations. Other than making sure there is a connection between pay and performance in their companies (See Chapter 14 for a discussion of compensation strategies), another way for managers to establish a clearer link between pay and performance is to publicize the way in which pay decisions are made. Empower employees to make decisions if you really want them to believe that their hard work and efforts will lead to good performance. If valent rewards are linked to good performance, people should be energized to take action. However, this works only if they also believe that their efforts will lead to good performance. One of the ways in which managers destroy the expectancy that hard work and effort will lead to good performance is by restricting what employees can do or by ignoring employees' ideas. Copyright © 2008 by Dr. Eliot S. Elfner, St. Norbert College

UNIT 10 - Motivation BUAD 230 C, Fall 2008 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. Considers how managers can ensure that workers focus their inputs in the direction of high performance and the achievement of organizational goals. Copyright © 2008 by Dr. Eliot S. Elfner, St. Norbert College

Motivating with Goal-Setting Theory Components of Goal-Setting
UNIT 10 - Motivation BUAD 230 C, Fall 2008 Goal-Setting Theory Motivating with Goal-Setting Theory Components of Goal-Setting Theory The basic model of motivation with which we began this chapter showed that individuals feel tension after becoming aware of an unfulfilled need. Once they experience tension, they search for and select courses of action that they believe will eliminate this tension. In other words, they direct their behavior toward something. This something is a goal. A goal is a target, objective, or result that someone tries to accomplish. Goal-setting theory says that people will be motivated to the extent to which they accept specific, challenging goals and receive feedback that indicates their progress toward goal achievement. Copyright © 2008 by Dr. Eliot S. Elfner, St. Norbert College

Goal Specificity Goal Difficulty Goal Acceptance Performance Feedback
UNIT 10 - Motivation BUAD 230 C, Fall 2008 Goal-Setting Theory Goal Specificity the clarity of goals Goal Difficulty how challenging goals are Goal Acceptance how well goals are agreed to or understood Performance Feedback information on goal progress Goal specificity is the extent to which goals are detailed, exact, and unambiguous. Specific goals, such as "I'm going to have a 3.0 average this semester," are more motivating than general goals, such as "I'm going to get better grades this semester." Goal difficulty is the extent to which a goal is hard or challenging to accomplish. Difficult goals, such as "I'm going to have a 3.5 average and make Dean's List this semester," are more motivating than easy goals, such as "I'm going to have a 2.0 average this semester.” Goal acceptance is the extent to which people consciously understand and agree to goals. Accepted goals, such as "I really want to get a 3.5 average this semester to show my parents how much I've improved," are more motivating than unaccepted goals, such as "My parents really want me to get a 3.5 this semester, but there's so much more I’d rather do on campus than study!" Performance feedback is information about the quality or quantity of past performance and indicates whether progress is being made toward the accomplishment of a goal. Performance feedback, such as "My prof said I need a 92 on the final to get an A in the class," is more motivating than no feedback, "I have no idea what my grade is in that class." In short, goal-setting theory says that people will be motivated to the extent to which they accept specific, challenging goals and receive feedback that indicates their progress toward goal achievement. Copyright © 2008 by Dr. Eliot S. Elfner, St. Norbert College

Adding GOAL Theory to the Model
Effort Initiation Direction Persistence Unsatisfied need Tension Energized to take action Instrumentality Valence Restoring Equity Decrease inputs Increase outcomes Rationalize inputs or outcomes Change the referent Leave Goals Extrinsic Rewards Perceived Equity/Inequity Satisfaction Performance Expectancy Perceived Equity/Inequity Intrinsic Rewards Copyright © 2008 by Dr. Eliot S. Elfner, St. Norbert College

Motivating with Goal-Setting Theory
UNIT 10 - Motivation BUAD 230 C, Fall 2008 Motivating with Goal-Setting Theory Assign specific, challenging goals Make sure workers truly accept organizational goals Provide frequent, specific performance-related feedback Assign specific, challenging goals. One of the simplest, most effective ways to motivate workers is to give them specific, challenging goals. However, an amazing number of managers never do this with their employees. Make sure workers truly accept organizational goals. Specific, challenging goals won't motivate workers unless they really accept, understand, and agree to the organization's goals. For this to occur, people must see the goals as fair and reasonable. Plus, they must trust management and believe that managers are using goals to clarify what is expected from them rather than to exploit or threaten them ("If you don't achieve these goals…"). However, participative goal-setting, in which managers and employees generate goals together, can help increase trust and understanding and thus acceptance of goals. Provide frequent, specific performance-related feedback. In addition to accepting specific, challenging goals, goal-setting theory also specifies that employees should receive frequent performance-related feedback so they can track progress toward goal completion. Feedback leads to stronger motivation and effort in three ways. First, receiving specific performance feedback that indicates how well you're performing can encourage employees who don't have specific, challenging goals to actually set goals to improve their performance. Second, once people meet goals, performance feedback often encourages them to set higher, more difficult goals. Third, feedback lets people know whether they need to increase their efforts or change strategies in order to accomplish their goals. Copyright © 2008 by Dr. Eliot S. Elfner, St. Norbert College

Operant Conditioning Learning Theory

Based on Thorndike’s Law of Effect
UNIT 10 - Motivation BUAD 230 C, Fall 2008 Learning Theories Theories that focus on increasing employee motivation and performance by linking outcomes that employees receive to the performance of desired behaviors and the attainment of goals Based on Thorndike’s Law of Effect Behavior that is rewarded tends to be repeated; Behavior that is ignored or punished tends not to be repeated Copyright © 2008 by Dr. Eliot S. Elfner, St. Norbert College

Learning Learning Theories
UNIT 10 - Motivation BUAD 230 C, Fall 2008 Learning Theories Learning A relatively permanent change in person’s knowledge or behavior that results from practice or experience. Copyright © 2008 by Dr. Eliot S. Elfner, St. Norbert College

Operant Conditioning Theory
UNIT 10 - Motivation BUAD 230 C, Fall 2008 Operant Conditioning Theory Operant 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. Copyright © 2008 by Dr. Eliot S. Elfner, St. Norbert College

LEARNING Theory Components of Learning Theory Schedules for
UNIT 10 - Motivation BUAD 230 C, Fall 2008 LEARNING Theory Components of Learning Theory Schedules for Delivering Reinforcement Motivating with Learning Theory Reinforcement theory says that behavior is a function of its consequences, that behaviors followed by positive consequences (i.e., reinforced) will occur more frequently, and that behaviors followed by negative consequences, or not followed by positive consequences, will occur less frequently. More specifically, reinforcement is the process of changing behavior by changing the consequences that follow behavior. Reinforcement has two parts: reinforcement contingencies and schedules of reinforcement. Reinforcement contingencies are the cause-and-effect relationships between the performance of specific behaviors and specific consequences. A schedule of reinforcement is the set of rules regarding reinforcement contingencies, such as which behaviors will be reinforced, which consequences will follow those behaviors, and the schedule by which those consequences will be delivered. Copyright © 2008 by Dr. Eliot S. Elfner, St. Norbert College

Relationship between behavior and its consequences
UNIT 10 - Motivation BUAD 230 C, Fall 2008 Reinforcement Relationship between behavior and its consequences Reinforcement = anything that increases the relationship between a given stimulus and a particular response Leads to the modification of employees' on-the-job behaviors through the appropriate use of immediate rewards and punishments. Copyright © 2008 by Dr. Eliot S. Elfner, St. Norbert College 40

UNIT 10 - Motivation BUAD 230 C, Fall 2008 Reinforcement Tools Behavior modification = reinforcement techniques to modify behavior Positive reinforcement = pleasant consequence following a desired behavior Negative reinforcement = withholding unpleasant consequence strengthens behavior Avoidance learning = removal of an unpleasant consequence following a desired behavior (also called a negative reward). Punishment = unpleasant outcomes Extinction = withdrawal of positive reward. Copyright © 2008 by Dr. Eliot S. Elfner, St. Norbert College 41

Schedules of Reinforcement
Continuous Reinforcement - Schedule reinforces every occurrence of the desired behavior. Fixed-Interval Schedule - Rewards employees at specified time intervals. (regular paycheck). Fixed-Ratio Schedule - Reinforcement occurs after a specified number of desired responses, such as after every fifth event. (piece-rate pay systems) Variable-Interval Schedule - Reinforcement is administered at random times that cannot be predicted by the employee. (Random inspection followed by praise) Variable-Ratio Schedule - Random number of desired behaviors rather than on variable time periods. (Slot machine) Copyright © 2008 by Dr. Eliot S. Elfner, St. Norbert College

Adding Reinforcement Theory to the Model
Effort Unsatisfied need Tension Energized to take action Initiation Direction Persistence Instrumentality Valence Restoring Equity Decrease inputs Increase outcomes Rationalize inputs or outcomes Change the referent Leave Reinforcement Contingencies Schedules of Reinforcement Goals Extrinsic Rewards Perceived Equity/Inequity Satisfaction Performance Expectancy Perceived Equity/Inequity Intrinsic Rewards Copyright © 2008 by Dr. Eliot S. Elfner, St. Norbert College

Motivating with Reinforcement Theory
UNIT 10 - Motivation BUAD 230 C, Fall 2008 Motivating with Reinforcement Theory Identify, measure, analyze, intervene, and evaluate Don’t reinforce the wrong behavior Correctly administer punishment at the appropriate time Choose the simplest and most effective schedule of reinforcement Identify means identifying critical, observable, performance-related behaviors. Measure means measuring the baseline frequencies of these behaviors. Analyze means analyzing the causes and consequences of these behaviors. Intervene means changing the organization by using positive and negative reinforcement to increase the frequency of these critical behaviors. Evaluate means evaluating the extent to which the intervention actually changed workers' behavior. Don't reinforce the wrong behaviors. While reinforcement theory sounds simple, it's actually very difficult to put into practice. One of the most common mistakes is accidentally reinforcing the wrong behaviors. Correctly administer punishment at the appropriate time. Most managers believe that punishment can change workers' behavior and help them improve their job performance. Furthermore, managers believe that fairly punishing workers also lets other workers know what is or isn't acceptable. However, one of the dangers of using punishment is that it can produce a backlash against managers and companies. However, if it is administered properly, punishment can weaken the frequency of undesirable behaviors without creating a backlash. Choose the simplest and most effective schedule of reinforcement. When choosing a schedule of reinforcement, managers need to balance effectiveness against simplicity. In fact, the more complex the schedule of reinforcement, the more likely it is to be misunderstood and resisted by managers and employees. Copyright © 2008 by Dr. Eliot S. Elfner, St. Norbert College

Pay and Motivation Pay as a Motivator
UNIT 10 - Motivation BUAD 230 C, Fall 2008 Pay and Motivation Pay as a Motivator Expectancy: Instrumentality, the association between performance and outcomes, 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. Copyright © 2008 by Dr. Eliot S. Elfner, St. Norbert College

Social Learning Theory
UNIT 10 - Motivation BUAD 230 C, Fall 2008 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. Copyright © 2008 by Dr. Eliot S. Elfner, St. Norbert College

Social Learning Theory
UNIT 10 - Motivation BUAD 230 C, Fall 2008 Social Learning Theory Vicarious Learning (Observational Learning) Learning that occurs when a learner is motivated to perform a behavior by watching another person perform and be reinforced for doing so People are motivated to imitate models who are highly competent, expert, receive attractive reinforcers, and are friendly or approachable. Copyright © 2008 by Dr. Eliot S. Elfner, St. Norbert College

Motivating with the Integrated Model
UNIT 10 - Motivation BUAD 230 C, Fall 2008 Motivating with the Integrated Model Motivating with the Basics Equity Theory Expectancy Theory Reinforcement Theory Goal-Setting Theory By using all the approaches, managers can more completely meet the diverse motivational concerns of their employees. No one theory or approach works with every employee or in every situation. Exhibit summarizes the major “lessons” of the theories presented in the text. Copyright © 2008 by Dr. Eliot S. Elfner, St. Norbert College

FOUNDATIONS OF MANAGEMENT Fall 2008 - The End
UNIT 10 - Motivation BUAD 230 C, Fall 2008 FOUNDATIONS OF MANAGEMENT Fall The End Dr. Eliot S. Elfner Professor of Business Administration St. Norbert College Copyright © 2008 by Dr. Eliot S. Elfner, St. Norbert College

FOUNDATIONS OF MANAGEMENT Fall 2008

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