Theories of Employee Motivation
1.0 Need Theory
1.1 Introduction
Need theories see motivation arising from individual needs or desires for things. These needs
and desires can change over time and are different across individuals.
There are three popular perspectives on Need theory:
 Maslow’s Hierarchy of Needs
 Alderfer’s ERG Theory
 Herzberg’s Two-Factor Theory
This lesson briefly highlights the distinctions of each perspective.
1.2 Hierarchy of Needs
Abraham Maslow proposes that motivation can be represented as a hierarchy of needs. As
lower-level needs are satisfied, workers are likely to be motivated by higher-level needs. Maslow
argues that there are five categories of needs: physiological, safety, love, esteem, and
actualization.

Physiological needs - basic biological needs for things such as food, water, and sex

Safety needs - need for safety and a safe physical environment (e.g., shelter, a safe workplace)

Love needs - need for friendship and partnership

Esteem needs - need for self-respect and for the respect of others

Self-actualization needs - need for self-improvement, fulfillment of personal life goals and of one’_
potential
Tension-reduction - According to Maslow’s tension-reduction hypothesis, an unmet need
creates a tension to meet that need. For example, if you need food, you feel tension until the
need is met. Maslow believed that needs were arranged hierarchically such that lower, more
basic needs must be met before higher needs become the point of focus.
1.3 ERG Theory
Alderfer’s ERG Theory suggests that there are three classes of needs, not five as Maslow
suggests: existence, relatedness, and growth. Another distinction is that Alderfer proposes that
when low-level (existence) needs are not met, they grow. For example, when you are hungry and
do not eat, your hunger grows. On the other hand, higher-level (relatedness and growth) needs
grow when they are met. For example, as you become more productive, your need to be
productive may grow.

Existence needs - need for concrete, tangible things like food, water, and material
possessions

Relatedness needs - social needs and the need to have relationships with other people
(e.g., family, co-workers, and supervisors)

Growth needs - need for self-improvement or personal growth, expression of creativity
and productivity
Frustration-regression - According to Alderfer’s frustration-regression hypothesis, when we
have trouble meeting a particular need, we regress to meet needs at a lower level. When we are
having trouble meeting growth needs, we are more motivated by relatedness needs. When we
are having trouble meeting relatedness needs, we are motivated by existence needs.
1.4 Two-Factor Theory
In his Two-Factor Theory of motivation, Frederick Herzberg argues that there are two types of
factors involved in motivation: extrinsic and intrinsic.

Extrinsic (or hygiene) factors include tangible outcomes and things that focus on
workers’ physical well-being such as pay and benefits, organizational policies, quality of
supervision, job security, job safety, administrative practices, and physical work
conditions.

Intrinsic factors include intangible outcomes such as recognition, responsibility, and
respect.
1.5 Motivator factors
Motivator factors - Workers are satisfied and motivated when they are happy with the intrinsic
factors (e.g., levels of responsibility and respect at work), which is why intrinsic factors are also
called motivator factors. When workers are not happy with intrinsic factors, argues Herzberg, they
are not satisfied. However, when they feel respected and enjoy the responsibility, they are more
likely to be truly satisfied with their jobs. This suggests that we should focus our attention on
intrinsic factors if we want to motivate employees.
Non-motivator factors - Herzberg argues that workers will be dissatisfied with their job when
they are not happy with the job’_ extrinsic factors (e.g., pay). An appropriate level of extrinsic
factors is necessary to avoid job dissatisfaction, but even when employees are happy with their
salary, bonus, vacation, and health benefits, they will not necessarily feel satisfied or motivated.
With extrinsic factors, Herzberg argues, the best you can hope for is to keep your employees
from feeling dissatisfied.
The following chart summarizes these points:
Extrinsic
Factors
Intrinsic
Factors




Dissatisfied
Not
Dissatisfied
Not
Satisfied
Satisfied
1.6 Summary
Need theory was once very popular, but none of the perspectives discussed have shown much
relation to on-the-job performance. One possible reason is that these theories are too general.
The needs they describe could be satisfied in many different ways, and so are not necessarily
associated with job behavior.
On the other hand, Maslow’s Hierarchy of Needs, Alderfer’s ERG Theory, and Herzberg’s TwoFactor Theory have contributed to our understanding of motivation by showing how people can
vary in the rewards they want from work.
2.0 Behavioral Theories
2.1 Introduction
Two important motivation theories that stem from behavioral psychology are reinforcement and
expectancy theories. Both emphasize that behavior is shaped by rewards and punishment.
Behavioral theories of motivation advocate the use of behavior reinforcement schedules to shape
on-the-job performance.
2.2 Reinforcement theory
The central premise of reinforcement theory is that the consequences (or outcomes) of behavior
influence the likelihood that people will behave the same way again.
For example, let’s say you make a suggestion in a committee meeting. If people respond
positively, you are more likely to make other suggestions in other meetings. If people respond
negatively, you are less likely to make other suggestions in other meetings.
2.3 Reward and Punishment
Behavior can be motivated in four ways: through positive or negative reinforcement and by
inflicting or removing a punishment.
Positive reinforcement is a form of reward that involves giving the person something that is
liked or wanted as a consequence of some behavior. For example, organizations give workers
bonuses and bosses give praise for jobs well done.
Negative reinforcement is a form of reward that involves taking away something that is disliked
as a consequence of some behavior. For example, the removal of the sound of an alarm is a
reward for waking up enough to turn off the alarm.
Something
Liked
Something
Disliked


Give
+ Reinforcement
(bonus)
Punishment
(spank, KP duty)
Take
away
Punishment
(ground, demote)
- Reinforcement
(turn off alarm)
Punishment - People can be punished for doing something inappropriate by the removal of
something they like or by the addition of something they dislike. For example, in response to bad
behavior, some parents may take away things that their children like (e.g., the ability to use the
car, talk on the phone, or watch TV). Other parents may instead give their children something
they do not like to receive (e.g., a spanking, a lecture, or additional chores).
2.4 Reinforcement Schedules
Behaviorists have recognized that rewards can be given in different ways: through continuous,
partial-ratio, and partial-interval schedules.
Continuous reinforcement occurs when people are reinforced or rewarded after every correct
behavior. For example, fur trappers are rewarded after each successful trap; people who work on
commission are rewarded after each successful sale.
Partial reinforcement occurs when people are reinforced or rewarded after certain correct
behaviors. Partial reinforcement can take two general forms: ratio and interval schedules.

Ratio schedules reward people after some number of correct behaviors. People who are
paid on piece-rate pay schedules get paid for every number of items they make, sell, and so
on. This type of reinforcement schedule rewards the quality or amount of work without
considering the time spent to meet the pay quota. This can cause problems. Workers can
spend a lot of time performing well, without a reward.

Interval schedules reward correct behaviors after some time interval. Organizations often
adopt a regular pay schedule (e.g., every Friday, every other Friday), and set up rewards
based on seniority (e.g., three-year bonus, promotion opportunities). Although this system
rewards people for the time they spend working, it does not capture the quality of the work
performance. In the worst scenarios, lazy workers are rewarded for their ability to avoid
termination rather than perform successfully.
Since both ratio and interval schedules have their strengths and weaknesses,
most standard compensation systems provide both time-based and performancebased rewards.
2.5 Expectancy Theory
Whereas Reinforcement Theory explains how different types of reinforcement shape behavior,
Expectancy Theory explains when and why reinforcement impacts behavior.
The Motivation Formula - According to Expectancy Theory, motivation is a function of an
individual’_ confidence that he/she can perform a behavior successfully (expectancy) and that
performing successfully will lead to a desirable outcome (valence and instrumentality). Motivation
can be expressed as a mathematical equation:
Force = Expectancy x (Valences x Instrumentalities)
Force is the amount of motivation a person has to engage in a particular behavior (e.g.,
motivation to be highly productive at work).
Expectancy is the confidence an individual feels that he/she can perform the behavior
successfully. This is normally stated as a probability (e.g., 80% confident that I can be highly
productive).
Instrumentality is the confidence an individual feels that performing the behavior will result in a
particular outcome. Again this is expressed as a probability (e.g., 80% sure that high productivity
will lead to a raise or promotion).
Valance is the value a person assigns to that outcome (e.g., a raise would be highly desirable but
a promotion would be even more desirable).
This formula suggests that motivation (force) cannot exist unless the individual possesses at
least some expectancy, instrumentality, and valance.
2.6 Summary
An overwhelming amount of research has shown two reliable trends.
(1) When people are rewarded, they are more likely to repeat the behavior that resulted in the
reward.
(2) When people are punished they are less likely to behave in the same way again.
This suggests that organizations can use reinforcements or rewards to promote desired
behaviors... and they do. For example, the Emery Freight Company used reinforcements to
speed up employee's responses to customer requests and to improve the quality of item
packaging. These improvements saved the company 3 million dollars over 3 years.
3.0 Self-efficacy Theory
3.1 Introduction
Albert Bandura’s (1982) Self-efficacy Theory asserts that motivation and performance are in part
dependent on the degree to which the individual believes he/she can accomplish the task.
3.2 Defining self-efficacy
Self-efficacy refers to a person’_ belief in his/her ability to perform a given task. The term is
similar in meaning to self-confidence and expectancy, though some argue that there are
differences among these terms. Self-efficacy is sometimes confused with self-esteem also.

Self-efficacy and self-esteem - Self-efficacy is like self-esteem in the sense that it is related
to a person’s feelings of self-worth. Self-efficacy, however, refers to one’s ability to perform a
certain task, whereas self-esteem reflects a more general belief about one’s self-worth. You
can have strong feelings of self-worth while still recognizing that you are not good at a
particular task (e.g., crossword puzzles). On the other hand, having low self-esteem may
cause you to undervalue your ability to perform a particular task.
3.3 Self-efficacy and motivation
Research has found that self-efficacy does predict performance.

Self-efficacy and the self-fulfilling prophecy - Those who have high self-efficacy are more
likely to try hard and exhibit high levels of commitment (persistence) on a given task. They
are more likely to succeed as a result. Those who have low levels of self-efficacy feel that
they are not good at the task and may not try very hard at all. They are less likely to
succeed.

Self-efficacy and success - Self-efficacy may develop from prior good performance.
Similarly, previous failures can lead to low self-efficacy.

Self-efficacy and goal-difficulty - Self-efficacy interacts with goal setting insofar as people
with higher self-efficacy tend to set more challenging goals.

Self-efficacy and goal-commitment –_Commitment (or persistence) refers to one‘_ ability
to overcome obstacles in the pursuit of a goal. With more demanding goals and higher levels
of commitment, people with high self-efficacy put forth greater effort in performing the task
(accomplishing the goal).
3.4 Empowerment Theory
Empowerment theory is an extension or application of self-efficacy theory. It has been used
widely in organizational settings.
According to empowerment theory, motivation will increase when one’_ feelings of competence
and self-determination increase. When people have high self-efficacy, they feel more competent
and more capable of self-determination. Therefore, improving self-efficacy is a critical component
of empowerment efforts.
3.5 Empowerment Strategies
Common examples of empowerment strategies are participatory management practices and
flextime.
Participatory decision-making - Sometimes organizations empower employees by asking them
to participate in making organizational decisions (e.g., What can we do to cut down on the
number of accidents?).
Flextime - Flextime is a program that allows workers to design their own work schedule, within
certain constraints. People can choose to work a 9 to 5 day, or an 8 to 4 day, or sometimes a 10
to 6 day. Flextime allows the worker to structure the workday, but usually requires workers to be
at work during core hours (e.g., 10 to 11 and 1 to 4) so that committees can meet and group work
can be completed.
Research has shown that participatory decision-making can increase commitment to the decision
that is made and improve motivation.
The research on flextime has shown that job performance and job satisfaction do benefit from
flextime programs, but only sometimes. The most reliable benefit seems to be reduced
absenteeism. Flextime allows time for doctor’s and dentist’s visits, late mornings, early days, and
midday engagements, and reduces work-family conflicts.
3.6 Summary
Self-efficacy can be useful in improving motivation to perform. Gradually increasing task (or goal)
difficulty enables the learner to improve while experiencing success, which in turn should improve
self-efficacy. Providing training and performance supports (job aids, quick reference guides, etc.)
may also improve self-efficacy.
Empowering people, by increasing their levels of decision-making and control, can also motivate
people to perform, assuming their self-efficacy is high enough to support feelings of competence
and self-determination.
Limitation - One possible limitation of self-efficacy theory is individual ability. People sometimes
don’_ believe in their ability to perform a task because they really may not be good at the task
and know this from previous experience. Training, performance support, and graduated task
difficulty strategies may not always be able to overcome a lack of ability.
4.0 Equity Theory
4.1 Introduction
J. Stacey Adams’ (1965) Equity Theory (a.k.a., Social Exchange Theory) suggests that effort
depends on one’s perceptions of fairness. According to this theory, people compare their
input/output ratio to those of similar others. When the ratio reflects an inequity, tension is created
and so people work to reduce that tension.
4.2 Input/Output Ratio
The critical element in this theory is the perceived ratio of one’s inputs (what I give) to outputs
(what I get in return) with respect to other’s ratios (what they receive and what they give).

Inputs include what the person contributes - their qualifications, their past experiences,
seniority, their effort, the time they spend on the job, and so on.

Outputs include what the person is given in return - for example, pay, benefits, appreciation,
respect.
Our notion of "equity" is closely linked with our perceptions of justice and fairness. Adams
asserts that as we act to satisfy our needs, we each assess the fairness of the outcome. Each of
us asks, “Am I getting what I deserve in this exchange?”
4.3 Inequity tension
According to equity theory, when people feel that they give more and get less in return than their
co-workers, they feel tension (resentment). Also, when people feel that they get more than their
peers, they feel tension (guilt). To reduce this tension people are motivated to:




Adjust their inputs (e.g., work harder or slack off)
Sabotage an “overpaid” worker or the organization
Find ways to make up for the inequity (e.g., theft)
Avoid the inequity by quitting
Research has shown that people are motivated to act when they feel cheated. Less research
supports the idea that people are motivated to act when they are overpaid in some way.
4.4 Procedural justice
Equity Theory was popular among industrial/organizational psychologists at one time, but interest
in it began to decline in the mid 1980s. While research has found that employee perceptions of
inequity correlates with intentions to quit and job search behavior, it is often difficult to tell what
workers will perceive as inequitable and how they will respond to inequities. It may vary by
individual even within a given context.
Lacking the ability to use it to predict motivation and performance, Equity Theory has fallen out of
favor. However, in the 1990s, fairness research began to focus on the idea of procedural justice,
which deals with the perceived fairness of the distribution process. It may be more important to
know if employees perceive the reward distribution process as fair than whether or not they
perceive the reward itself as equitable.
4.5 Summary
Equity Theory emphasizes the importance of employee perceptions about input/output ratios.
When employees believe that they are over or underpaid, the resulting tension motivates them to
eliminate the inequity.
Limitation - While this is helpful to know, in that it focuses our attention on potential inequities, it
is not does not necessarily help managers predict when individuals will feel cheated. Without this
predictive capability, the theory has limited application.
Procedural justice theories focus on reward processes, rather than the rewards themselves.
Future equity research is likely to focus on both the equity of the reward distributions and the
fairness of the distribution process.
5.0 Goal-Setting Theory
5.1 Introduction
Building on Bandura’s self-efficacy research, Edwin Locke and Gary Latham (1990) proposed
Goal-setting Theory. According to Goal-setting Theory, goals direct our mental and physical
actions. Goals serve two functions:

Goals serve as performance targets that we strive to reach.

Goals serve as standards against which we measure our own performance.
Locke and Latham argue that the outcome of your performance can affect your future effort. In
this way, goals provide us with a means of regulating our effort.
5.2 Goal specificity
Specific goals benefit motivation and performance more so than vague goals. Specific goals
provide people with a sharper point of focus. For example, the goal “raise profitability 10% this
year” is likely to be more effective than “Let’s be more profitable.”

Research has shown that people who have vague goals are more likely to be satisfied with
good performance even though they are capable of better performance.

People also tend to give more effort when they are trying to reach harder goals. One might
think that people would prefer jobs with easy goals, but they usually do not…jobs with easy
goals are usually boring. Also, many organizations provide better rewards for meeting difficult
goals than they do for meeting easier goals.

Performance feedback impacts future effort. By measuring performance against goals,
organizations are able to provide workers with feedback that enables them to regulate their
efforts. Given the right circumstances, failure to meet a goal can motivate an individual to
work harder.
5.3 Circumstance
Research has shown that specific and difficult goals do motivate people toward their best
performance. However, this happens only when the proper circumstances exist:

Workers have the necessary qualifications to meet the goal

Feedback is provided to assist the effort-regulation process

Workers believe that they can meet the goal (i.e., have high self-efficacy)

Workers are committed to the goal

The goal is obtainable…wasted effort on an unrealistic goal is a demotivator
5.4 Management by objectives (MBO)
Goal-setting theory has emerged as one of the top motivational theories for two reasons. First,
the research suggests that it is very effective. Second, there has been an increase in the use of
the Management by Objectives (MBO) strategy, which is a practical extension of goal-setting
theory.
With MBO, the manager and the individual employee meet and agree on performance goals,
which are then used to evaluate the employee's performance later.
MBO performance goals typically have the following characteristics:








Are aligned with higher level goals (e.g., business unit, divisional, and organizational
goals)
Are mutually agreed-upon (so there is buy-in from the employee)
Specify behavior (e.g., reduce data entry errors for a particular department)
Specify measurable evaluation criteria (e.g., reduce errors by 20%)
Specify when the goal will be achieved (e.g., by the end of the first quarter)
Specify who is responsible (e.g., names of task force members)
Often identify resources that will be needed (e.g., training, materials, job aids, etc.)
Sometimes identify interim performance checks (e.g., weekly progress reports)
5.5 Summary
Since the 1990s, Goal-setting Theory has become the predominant achievement motivation
theory in industrial/organizational psychology and has demonstrated its effectiveness in
organizational settings. According to Locke and Latham, people are motivated by the prospects
of meeting specific, difficult goals.
Limitation - In response to goal-setting theory, other researchers have argued that setting
specific, difficult goals is not always beneficial. It places the focus on performance, which is not
beneficial to novice workers who are still trying to learn job tasks and duties. Placing the focus on
performance can disrupt the novice’s ability to develop useful strategies. Consequently, setting
specific, difficult goals can benefit performance, but only after the worker has had some time to
learn and explore aspects of the job.