Mgmt 371
Chapter Sixteen
Managing Employee Motivation and
Performance
Much of the slide content was created by Dr, Charlie Cook, Houghton Mifflin, Co.©
1
The Nature of Motivation
 Motivation
The set of forces that cause people to
behave in certain ways.
 The goal of managers is to maximize
desired behaviors and minimize
undesirable behaviors.

2
The Nature of Motivation
 The Importance of Motivation in the
Workplace
 Determinants of Individual Performance
 Motivation—the desire to do the job.
 Ability—the capability to do the job.
 Organizational Support—the
resources to do the job.
3
The Motivation Framework
4
Content Perspectives on
Motivation
 Content Theories (Perspectives)
Approaches to motivation that try to
answer the question, “What factors in the
workplace motivate people?”
 Defines what causes motivation.
 Content Perspectives of Motivation
 Maslow’s Hierarchy of Needs
 Aldefer’s ERG Theory
 Herzberg’s Two-Factor Theory
 McClelland’s Achievement, Power, and
Affiliation Needs

5
Content Perspectives on
Motivation (Maslow’s Hierarchy)
 The Need Hierarchy Approach
 Maslow’s Hierarchy of Needs





Physiological—basic survival and biological
function.
Security—a safe physical and emotional
environment.
Belongingness—love and affection.
Esteem—positive self-image/self-respect and
recognition and respect from others.
Self-actualization—realizing one’s potential for
personal growth and development
6
Content Perspectives on
Motivation (Maslow’s Hierarchy)
 Weakness of Maslow’s theory



Five levels of need are not always present.
Ordering or importance of needs is not always the
same.
Cultural differences.
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Maslow’s Hierarchy of Needs
Extrinsically
Determined
Belonging
Stable work
Safety/Security group
Job security
Interaction
Physiological Handbooks
Friendship
Salary
Rules/policies
Stability
Intrinsically
Determined
Esteem
Salary
Status
Office
Personnel
Plaques
Awards
Titles
SelfActualization
Freedom to
fulfill one’s self
Challenging job
8
Content Perspectives on
Motivation (Aldefer’s)
 The ERG Theory

Needs are grouped into three overlapping
categories:

Existence needs—physiological and
security needs.

Relatedness needs—belongingness
and esteem by others.

Growth needs—self-esteem and selfactualization.
9
Content Perspectives on
Motivation (Aldefer’s)
 ERG theory assumes that:

Multiple needs can be operative at one time (there
is no absolute hierarchy of needs).

If a need is unsatisfied, a person will regress to a
lower-level need and pursue that need (frustrationregression).
10
Content Perspectives on
Motivation (Herzberg)
 Satisfaction and dissatisfaction are influenced
by two independent sets of factors.


Maintenance (Hygiene) Factors - cause
dissatisfaction.
Motivational (Motivators) Factors - cause job
satisfaction.
 Job satisfaction and dissatisfaction are two separate
phenomena.
 Hygiene factors (work environment) are on a
separate continuum that ranges from dissatisfaction
to no dissatisfaction.
 Motivational factors (mostly work content) are on
a continuum that ranges from satisfaction to no
satisfaction.
11
Content Perspectives on
Motivation (Herzberg)
 The Two-Factor Theory posits that motivation
is a two-step process:


Ensuring that the hygiene factors are not
deficient and not blocking motivation.
Giving employees the opportunity to
experience motivational factors through job
enrichment.
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Herzberg’s Two- Factor Theory






Hygiene Factors
Status
Salary
Work Conditions
Relations with Peers
Relations with
Superiors
Relations with
Subordinates
Dissatisfaction
No Dissatisfaction






Motivators
Autonomy
Recognition
Achievement
Responsibility
Interesting Work
Advancement
Opportunities
No Satisfaction
Satisfaction
13
Content Perspectives on
Motivation (McClelland)
 Individual Human Needs (David McClelland)
 The need for achievement
 The desire to accomplish a goal or task more
effectively than in the past.
 The need for affiliation
 The desire for human companionship and acceptance.
 The need for power
 The desire to be influential in a group and to be in
control of one’s environment.
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Process Perspectives on
Motivation
 Process Theories (Perspectives)
 Approaches to motivation that focus on:
Why people choose certain behavioral options to
satisfy their needs
 How they evaluate their satisfaction after they
have attained their goals.
 Describe how motivation occurs.
 Process Perspectives of Motivation
 Victor Vroom’s Expectancy Theory
 Porter-Lawler Extension of Expectancy Theory
 J. Stacy Adam’s Equity Theory
 Goal-Setting Theory

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Process Perspectives on
Motivation (Vroom)
 Victor Vroom’s Expectancy Theory


Motivation depends on how much we want something and
how likely we are to get it.
Assumes that:

Behavior is determined by personal and
environmental forces.

People make decisions about their behavior in
organizations.

People have different types of needs, desires,
and goals.

People choose among alternatives of behaviors
in selecting
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Process Perspectives on
Motivation (Vroom)

People choose among alternatives of
behaviors in selecting one that that leads to a
desired outcome.

Motivation leads to effort that, when
combined with ability and environmental
factors, results in performance which leads to
various outcomes that have value (valence)
to employees.
17
Process Perspectives on
Motivation (Vroom)
n
Vj =ƒj [Σ(VkIjk)] (j =1…n)
k=1
ƒj’ > 0; i Ijj = 0
Where: Vj = the valence of outcome j
Ijk = the cognized instrumentality of j for
the attainment of outcome k
n
Fi = fi [Σ(EijVj)] (i = n + 1…m)
j=1
ƒj’ > 0; i  j = Φ, Φ is the null set
Where: Fi = the force to perform act i
Eij = the strength of the expectancy that
act i will be followed by outcome j
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Vj = the valence of outcome j
Process Perspectives on
Motivation (Vroom)

P=ExIxV
Where:
P = Performance
E = Expectancy
I = Instrumentality
V = Valence
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Process Perspectives on
Motivation (Vroom)
 Expectancy - the belief that you can achieve
the level of performance expected in order to
be eligible for a reward.
 Instrumentality - the belief that the level of
expected performance will be rewarded.
 Valence - how much importance you attach
to the reward.
20
Process Perspectives on
Motivation (Vroom)
 Elements of Expectancy Theory
 Effort-to-Performance Expectancy
 The employee’s perception of the
probability that effort will lead to a high
level of performance.
 Performance-to-Outcome Expectancy
 The employee’s perception of the
probability that performance will lead
to a specific outcome—the
consequence or reward
for behaviors in an organizational
setting.
21
Process Perspectives on
Motivation (Porter-Lawler)
 The Porter-Lawler Extension of Expectancy Theory
 Assumptions:
If performance results in equitable and fair
rewards, people will be more satisfied.
 High performance can lead to rewards and high
satisfaction.
Types of rewards:
 Extrinsic rewards are outcomes set and
awarded by external parties (e.g., pay and
promotions).
 Intrinsic rewards are outcomes internal to the
individual (e.g., self-esteem and feelings of
accomplishment).


22
The Porter-Lawler Extension of
Expectancy Theory
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Process Perspectives on
Motivation (Adams)
 Equity Theory

People are motivated to seek social equity in the
rewards they receive for performance.


Equity is an individual’s belief that the treatment he or
she receives is fair relative to the treatment received
by others.
Individuals view the value of rewards (outcomes) and
inputs of effort as ratios and make subjective
comparisons of themselves to other people.
outcomes
(self)
inputs (self)
=
outcomes (other)
inputs (other)
24
Process Perspectives on
Motivation
 Equity Theory (cont’d)
 Conditions of and reactions to equity comparisons:
 Feeling equitably rewarded (equilibrium)
 Maintain performance and accept comparison as fair
estimate.

Feeling under-rewarded—try to reduce inequity.






Change inputs by trying harder or slacking off.
Change outcomes by demanding a raise.
Distort the ratios by altering perceptions of self or of others.
Leave situation by quitting the job.
Change comparisons by choosing another object person.
Feeling over-rewarded.
 Increase or decrease inputs.
 Distort ratios by rationalizing.
 Help the object person gain more outcomes.
25
Process Perspectives on
Motivation (Goal-Setting)
 Goal-Setting Theory
 Assumptions
 Behavior is a result of conscious goals and intentions.
 Setting goals influence the behavior of people in
organizations.
 Characteristics of Goals
 Goal difficulty
 Extent to which a goal is challenging and requires
effort.
 People work harder to achieve more difficult goals.
 Goals should be difficult but attainable.
 Goal specificity
 Clarity and precision of the goal.
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 Goals vary in their ability to be stated specifically
Process Perspectives on
Motivation
 Characteristics of Goals


Goal acceptance
 The extent to which persons
accept a goal as their own.
Goal commitment
 The extent to which an
individual is personally
interested in reaching a goal.
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The Expanded Goal-setting Theory of
Motivation
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Implications of Process
Perspectives on Motivation
 Implications of the Process Perspectives

If rewards are to motivate employees, they
must be perceived as being valued,
attainable, fair and equitable
29
Reinforcement Perspectives on
Motivation (Skinner)
 Reinforcement Theory (B.F. Skinner)


The role of rewards as they cause behavior to
change or remain the same over time.
Assumes that:

Behavior that results in rewarding
consequences is likely to be repeated, whereas
behavior that results in punishing
consequences is less likely to be repeated.
30
Reinforcement Perspectives on
Motivation (Skinner)
 Kinds of Reinforcement in Organizations

Positive reinforcement


Strengthens behavior with rewards or positive
outcomes after a desired behavior is
performed.
Avoidance

Strengthens behavior by avoiding unpleasant
consequences that would result if the behavior
is not performed.
31
Reinforcement Perspectives on
Motivation (Skinner)
 Kinds of Reinforcement in Organizations

Punishment


Weakens undesired behavior by using negative
outcomes or unpleasant consequences when
the behavior is performed.
Extinction


Weakens undesired behavior by simply
ignoring or not reinforcing that behavior.
Withholds a reward.
32
Reinforcement Perspectives on
Motivation (Reinforcement)
 Reinforcement schedules

Fixed interval schedule—reinforcement
applied at fixed time intervals, regardless of
behavior.

Variable interval—reinforcement applied at
variable time intervals.

Fixed ratio—reinforcement applied after a
fixed number of behaviors, regardless of time.

Variable Ratio—reinforcement applied after a
variable number of behaviors, regardless of
time.
33
Reinforcement Perspectives on
Motivation (OB mod)
 Behavior modification (OB mod)
A method for applying the basic elements of
reinforcement theory in an organizational setting.
 Specific behaviors are tied to specific forms of
reinforcement.
 Implications of the Reinforcement Perspectives
 Consistently applied reinforcement helps maintain
employee motivation by:
 Encouraging (rewarding) positive behaviors
 Discouraging (punishing) dysfunctional behaviors
in an organization.

34
Popular Motivational Strategies
(Empowerment & Participation)
 Empowerment and Participation
 Empowerment
 Enabling workers to set their own work goals, make
decisions, and solve problems within their sphere of
influence.
 Participation
 Giving employees a voice in making decisions about
their work.
 Areas of participation for employees:
 Making decisions about their jobs.
 Decisions about administrative matters (e.g., work
schedules).
 Participating in decision making about broader issues of
product quality.
35
Popular Motivational Strategies
(Empowerment & Participation)
 Techniques and Issues in Empowerment
 Using work teams
 Collections of employees empowered to plan,
organize, direct, and control their work.
 Decentralization
 Changing the overall method of organizing the firm
 Conditions necessary for empowerment:
 Power spread to lower organizational levels
 Commitment to empowering workers
 Systematic and patient efforts to empower workers.
 Increased commitment to training.
36
Using Reward Systems to Motivate
Performance (Applications)
 Reward System
 The formal and informal mechanisms by which
employee performance is defined, evaluated, and
rewarded.
 Effects of Organizational Rewards
 Higher-level performance-based rewards motivate
employees to work harder.
 Rewards help align employee self-interest with
organizational goals.
 Rewards foster increased retention and citizenship
37
Using Reward Systems to Motivate
Performance (Applications)
 Merit Reward Systems
 Base a meaningful portion of individual compensation
on merit—the relative value of an individual’s
contributions to the organization.
 Employees who make greater contributions are given
higher pay than those who make lesser contributions.
 Incentive Reward Systems
 Concept: employee pay is based on employee output.
 Assume that:
 Performance is under the control of the individual
worker.
 The employee work at a single task continuously.
 Pay is tightly tied to performance (i.e., pay varies with
output).
38
Using Reward Systems to Motivate
Performance (Applications)
 Incentive Reward Systems (cont’d)
Incentive pay plans
 Piece-rate systems
 Sales commissions
 Other forms of incentives
 Non-monetary incentives (perks)
 Team and Group Incentive Reward Systems
 Gainsharing programs
 Scanlon Plan
 Employee stock ownership plans (ESOPs)

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Using Reward Systems to Motivate
Performance (Applications)
 Executive Compensation
 Standard forms of executive compensation
 Base salary
 Incentive pay (bonuses)
 Special forms of executive compensation
 Stock option plans
 Executive perks
 Criticism of executive compensation
 Excessively large compensation amounts
 Compensation not tied to overall performance of the
organization
 Earnings gap between executive pay and typical
employee pay
40
Using Reward Systems to Motivate
Performance (Applications)
 New Approaches to Performance-Based Rewards

Leveraging the value of incentives


Allowing individuals and groups in the
organization to have a say in how rewards are
distributed.
Getting increasingly innovative in incentive
programs:

Offering stock options to all employees

Individualizing the rewards available to
individuals in reward systems
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