2. Motivation and Performance McGraw-Hill/Irwin Contemporary Management, 5/e Copyright © 2008 The McGraw-Hill Companies, Inc. All rights reserved. chapter thirteen

3. 13-3 Learning Objectives 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.

4. 13-4 Learning Objectives Identify the motivation lessons that managers can learn from operant conditioning theory and social learning theory. Explain why and how managers can use pay as a major motivation tool.

5. 13-5 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 –Explains why people behave the way they do in organizations

6. 13-6 The Nature of Motivation 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

7. 13-7 The Nature of Motivation Intrinsically Motivated Behavior –Behavior that is performed for its own sake. The source of the motivation that comes from actually performing the behavior. The sense of accomplishment and achievement derived from doing the work itself

8. 13-8 The Nature of Motivation 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.

9. 13-9 Outcomes and Inputs Outcome –Anything a person gets from a job or an organization Pay, job security, autonomy, accomplishment Input –Anything a person contributes to his or her job or organization Time, effort, skills, knowledge, work behaviors

10. 13-10 The Motivation Equation Figure 13.1

11. 13-11 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.

12. 13-12 Expectancy Theory Major 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. 13-13 Expectancy, Instrumentality, and Valence Figure 13.2

14. 13-14 Expectancy Theory Figure 13.3

15. 13-15 Need Theories Need –A requirement or necessity for survival and well- being. Need Theories –People are motivated to obtain outcomes at work that will satisfy their needs

16. 13-16 Maslow’s Hierarchy of Needs Table 13.1 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

17. 13-17 Alderfer’s ERG Theory Table 13.2 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

18. 13-18 Alderfer’s ERG Theory As lower level needs become satisfied, a person seeks to satisfy higher-level needs A person can be motivated by needs at more than one level at the same time When people experience need frustration they will focus on satisfying the needs at the next-lowest level

19. 13-19 Herzberg’s Motivation-Hygiene Theory Focuses on outcomes that lead to higher motivation and job satisfaction, and those outcomes that can prevent dissatisfaction. Unsatisfied hygiene needs create dissatisfaction; satisfaction of hygiene needs does not lead to motivation or job satisfaction.

20. 13-20 Herzberg’s Motivation-Hygiene Theory 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.

21. 13-21 McClelland’s Needs for Achievement, Affiliation, and Power Need for Achievement –A strong need to perform challenging tasks well and meet personal standards for excellence

22. 13-22 McClelland’s Needs for Achievement, Affiliation, and Power Need for Affiliation –Concerned about establishing and maintaining good interpersonal relations, being liked, and having the people around him get along with each other Need for Power –A desire to control or influence others

23. 13-23 Equity Theory –Focuses on people’s perceptions of the fairness (or lack of fairness) of their work outcomes in proportion to their work inputs.

24. 13-24 Equity Theory 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.

25. 13-25 Equity Theory Table 13.3 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

26. 13-26 Equity Theory 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. –Overpayment inequity: ratio is higher than the referent. Workers feel they are getting more outcomes than they should for their inputs.

27. 13-27 Equity Theory 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 to leave the organization.

28. 13-28 Goal Setting Theory Focuses on motivating workers to contribute their inputs to their jobs and organizations Considers how managers can ensure that workers focus their inputs in the direction of high performance and the achievement of organizational goals.

29. 13-29 Goal Setting Theory Goal –What a person is trying to accomplish through his efforts and behaviors –Must be specific and difficult Goals point out what is important to the firm. –Workers should be encouraged to develop action plans to attain goals.

30. 13-30 Goal Setting Theory Goals motivate people to contribute more inputs to their jobs Goals help people focus their inputs in the right direction

31. 13-31 Learning Theories Managers can increase employee motivation and performance by the ways they link the outcomes that employees receive to the performance of desired behaviors in an organization and the attainment of goals

32. 13-32 Learning Theories Learning –A relatively permanent change in person’s knowledge or behavior that results from practice or experience.

33. 13-33 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.

34. 13-34 Operant Conditioning Tools Positive Reinforcement –Gives people outcomes they desire when they perform organizationally functionally behaviors Positive reinforcers: Pay, praises, or promotions

35. 13-35 Operant Conditioning Tools Negative Reinforcement –Eliminating undesired outcomes once the functional behavior occurs Negative reinforcers: criticisms, pay cuts, suspension

36. 13-36 Operant Conditioning Tools Extinction –Curtailing the performance of a dysfunctional behavior by eliminating whatever is reinforcing it. Punishment –Administering an undesired/negative consequence to immediately stop a dysfunctional behavior. Manager administers an undesired consequence to worker (verbal reprimand, demotion, pay cut).

37. 13-37 Avoiding Side Effects of Punishment Downplay the emotional element involved Try to punish dysfunctional behaviors as soon as they occur Try to avoid punishing someone in front of others

38. 13-38 Organizational Behavior Modification –Managers systematically apply operant conditioning techniques to promote the performance of organizationally functional behaviors and discourage the performance of dysfunctional behaviors

39. 13-39 Organizational Behavior Modification Used to improve productivity, efficiency, attendance, punctuality, safe work practices, and customer service Sometimes questioned because of lack of relevance to certain work behaviors To critics it is overly controlling and robs workers of their dignity, individuality, freedom of choice and creativity

40. 13-40 Figure 13.4 Steps in Organizational Behavior Modification

41. 13-41 Social Learning Theory –Proposes that motivation results not only from direct experience of rewards and punishments but also from a person’s thoughts and beliefs

42. 13-42 Social Learning Theory Vicarious Learning (Observational Learning) –Occurs when a person becomes motivated to perform a behavior by watching another person perform the behavior and be positively reinforced for doing so

43. 13-43 Social Learning Theory Self-Reinforcement –Any desired or attractive outcome or award that a person can give himself or herself for good performance. Self-efficacy –A person’s belief about his or her ability to perform a behavior successfully.

44. 13-44 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.

45. 13-45 Pay and Motivation Pay as a Motivator –Goal Setting Theory: pay is linked to attainment of goals. –Learning Theory: outcomes (pay), is distributed upon performance of functional behaviors.

46. 13-46 Merit Pay and Performance Merit 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.

47. 13-47 Merit Pay and Performance Merit Pay Plan –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.

48. 13-48 Salary Increase or Bonus? 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.

49. 13-49 Salary Increase or Bonus? Benefits of Using Bonuses –Do not become permanent part of compensation –Are more directly tied to current performance –Provide more flexibility in distributing rewards

50. 13-50 Salary Increase or Bonus? Employee 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.

51. 13-51 Examples of Merit Pay Plans Piece-rate Pay –Employee’s pay is based on the number of units that the employee produces. Commission Pay –Employee’s pay is based on a percentage of sales that the employee makes. Organization-based Merit Plans –Scanlon plan—focuses on reduced expenses or cutting costs –Profit sharing—employees receive a share of an organization’s profits