COURSE

HND - COURSE NOTES Motivation 1 & 2

COURSE LECTURER Mr. Ngaha Rostant Maxime
DEPARTMENT HRM DEPARTMENT IME
CAMPUS / ACADEMIC YEAR IME, DOUALA, CAMEROON – 2024/2025
Learning Objectives Theories of Motivation
A-Need/Content Theories

NT OF
Introduction
• Maslow’s Hierarchy of Need Theory

T
A Basic Model of Motivation

EN
• Herzberg’s Two Factor Theory

CO LE
• McClelland’s Three Needs Theory
Effort and Performance
• Aldefer’s Erg Theory

B
Case Study: The Case of Zappos: A Motivating Place to Work • McGregor’s Theory X and Y

TA
Case Study: Employee Engagement – ACUITY Four Drive Model
B-The Process Theories
Extrinsic and Intrinsic Rewards
• Equity Theory
INCENTIVES • Expectancy Theory
• Goal-Setting Theory
Need Satisfaction
C-Reinforcement Theory
Job Characteristic Model Conclusion

Job Enrichment Exercises

Ethical Dilemma
Empowerment
Individual Exercise
Need Satisfaction • Group Exercise
• A Reward Allocation Decision
Types, Features and Factors of Motivation
LEARNING OBJECTIVES INTRODUCTION

After going through this course, you should be able to do What makes people happiest and most productive at work? Is it

the following: money, benefits, opportunities for growth, interesting work, or

something else altogether? And if people desire different things, how
• Understand the role of motivation in determining
can a company keep everyone motivated? It takes insight and hard
employee performance. work to motivate workers to join the company, perform well, and
then stay with the company.
• Classify the basic needs of employees.
In fact, a 2013 worldwide study by Gallup found that only 13 percent
• Describe how fairness perceptions are determined and
of employees are “engaged” or motivated at work, whereas 63
consequences of these perceptions.
percent are “not engaged,” meaning they are unmotivated and not
• Understand the importance of rewards and interested in organizational goals or outcomes.Even worse, 24

punishments. percent of employees are “actively disengaged” and are “unhappy,

unproductive, and liable to spread negativity.”
• Apply motivation theories to analyze performance
problems
 A Basic Model of Motivation
So what is motivation?
Motivation is the set of forces that initiates, directs, and makes people persist in their efforts to accomplish a goal.

Initiation of effort is concerned with the choices that people make about how much effort to put forth in their jobs. (“Do I really
knock myself out or just do a decent job?”)
Direction of effort is concerned with the choices that people make in deciding where to put forth effort in their jobs. (“I should
be spending time with my high-dollar accounts instead of learning this new computer system!”)
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. (“I’m only halfway through the project, and I’m exhausted. Do I plow through to the
end, or just call it quits?”) Initiation, direction, and persistence are at the heart of motivation.
 A Basic Model of Motivation
At 37signals, a Chicago software company, co-founder Jason Fried has avoided using promotions to
reward his thirty employees. Says Fried, “We revere ‘horizontal’ ambition—in which employees who
love what they do are encouraged to dig deeper, expand their knowledge, and become better at it. We
always try to hire people who yearn to be master craftspeople, that is, designers who want to be great
designers, not managers of designers; developers who want to master the art of programming, not
management.”
Which would motivate you more, the chance to become a master craftsperson or the opportunity for
promotion and management responsibilities? Or, in Gallup’s terms, are you engaged at work? Are your
co-workers? If you and your co-workers are “disengaged” or “actively disengaged,” why? Are there
parts of the job that interest and energize you? If so, what are they and why? Answering questions like
these is at the heart of figuring out how best to motivate people at work.
What inspires employees to provide excellent service, market a company’s products effectively, or
achieve the goals set for them? Answering this question is of utmost importance if we are to understand
and manage the work behavior of our peers, subordinates, and even supervisors. Put a different way, if
Effort and Performance

Motivation is the set of forces that initiates, directs, Ability—or having the skills and
and makes people persist in their efforts to accomplish knowledge required to perform the job
a goal.
environmental factors such as having the
Motivation is concerned with the strength
resources, information, and support one needs to
and direction of behaviour and the factors perform well are critical to determine
that influence people to behave in certain performance. And situational constraints are
ways. factors beyond the control of individual
Motivation is defined as the desire to employees, such as tools, policies, and resources
achieve a goal or a certain performance that have an effect on job performance
QUESTIONS
 The Case of Zappos: A Motivating Place to
It is unique to hear about a CEO who studies happiness and motivation Work
and builds those principles into the company’s core values or about a company with a
5-week training course and an offer of $2,000 to quit anytime during that 5 weeks if you feel the company is not a good fit. Top that off with an on-site life
coach who also happens to be a chiropractor, and you are really talking about something you don’t hear about every day. Zappos is known as much for its
365-day return policy and free shipping as it is for its innovative corporate culture. Although acquired in 2009 by Amazon (NASDAQ: AMZN), Zappos
managed to move from number 23 in 2009 on Fortune magazine’s “100 Best Companies to Work for” list to 15 in 2010.
Performance is a function of motivation, ability, and the environment in which you work. Zappos seems to be creating an environment that encourages
motivation and builds inclusiveness. The company delivers above and beyond basic workplace needs and addresses the self-actualization needs that most
individuals desire from their work experience. CEO Tony Hsieh believes that the secret to customer loyalty is to make a corporate culture of caring a priority.
This is reflected in the company’s 10 core values and its emphasis on building a team and a family. During the interview process, applicants are asked
questions relating to the company’s values, such as gauging their own weirdness, open-mindedness, and sense of family. Although the offer to be paid to quit
during the training process has increased from its original number of $400, only 1% of trainees take the offer. Work is structured differently at Zappos as
well. For example, there is no limit to the time customer service representatives spend on a phone call, and they are encouraged to make personal
connections with the individuals on the other end rather than try to get rid of them.
Although Zappos has over 1,300 employees, the company has been able to maintain a relatively flat organizational structure and prides itself on its extreme
transparency. In an exceptionally detailed and lengthy letter to employees, Hsieh spelled out what the new partnership with Amazon would mean for the
company, what would change, and more important, what would remain the same. As a result of this type of company structure, individuals have more
freedom, which can lead to greater satisfaction.
Although Zappos pays its employees well and offers attractive benefits such as employees receiving full health-care coverage and a compressed workweek,
the desire to work at Zappos seems to go beyond that. As Hsieh would say, happiness is the driving force behind almost any action an individual takes.
Whether your goals are for achievement, affiliation, or simply to find an enjoyable environment in which to work, Zappos strives to address these needs.
DISCUSSION QUESTIONS
What potential organizational changes might result from the acquisition by Amazon?
Why do you think Zappos’ approach is not utilized more often? In other words, what are the challenges to these techniques?
Why do you think Zappos offers a $2,000 incentive to quit?
Would you be motivated to work at Zappos? Why or why not?
 Case Study: Employee Engagement –
ACUITY
ACUITY developed a highly motivated workforce by creating a more supportive and empowering work environment and by linking rewards to performance.
Courtesy of ACUITY.
A decade ago ACUITY (then known as Heritage Mutual) was not a company that inspired employees. Chimes signaled the workday’s fixed starting and ending times.
Breaks were also fixed and timed. Managers at the Sheboygan, Wisconsin, property and casualty insurer forbade employees from having food or drinks in work areas
and discouraged them from placing photos or other personal objects on their desks. Routine audits made sure that employees followed these regimented practices.
Managers didn’t have much freedom, either, because the CEO was the sole architect of the company’s business strategy. The reward system was equally discouraging.
Supervisors used a subjective system to rate employees, and those results had little or no influence on the salaries employees received. “It was a very rigid, unfriendly
environment,” says Ben Salzmann, who joined the company as a senior manager during those dark days. By the time Salzmann was promoted to CEO, ACUITY was
in deep trouble. Its revenue per employee was well below the industry average. Employee turnover, which exceeded 25 percent in some years, cost the company more
than $10 million annually. But the greatest worry was that ACUITY was losing 17 cents for every dollar it received in insurance premiums. Some of this loss can be
recouped through investment returns, but anything more than a 10-cent loss soon leads an insurance company to bankruptcy. Salzmann and his new management team
had to figure out how to keep ACUITY in business. How could they build a more engaged workforce that would stay with the company and perform their jobs better?
ACUITY’s problems a few years ago were serious, but most companies suffer to some degree from a shortfall of employee engagement. Employee engagement refers
to employees’ emotional and cognitive (rational) motivation, their perceived ability to perform the job, their clear understanding of the organization’s vision
and their specific role in that vision, and their belief that they have been given the resources to get the job done.
Two separate consultant reports estimate that less than a quarter of American employees are highly engaged, approximately 60
percent are disengaged (they are checked out from work—putting in the time but not the energy or passion), and approximately a
fifth are “actively disengaged,” meaning that they act out their disconnection from work through disruptive behaviors.
 Case Study: Employee Engagement –
ACUITY
Employee engagement has become the catchphrase among managers around the world because it encompasses the four main factors that contribute to
employee performance.
British retailer Marks & Spencer claims that a 1 percent improvement in the engagement levels of its workforce produces a 2.9 percent increase in sales per
square foot.
Verizon has estimated that a 1 percent improvement in its employee engagement index produces a 0.5 percent improvement in the telecommunications
company’s customer satisfaction ratings.
Other research estimates that a 5 percent improvement in employee engagement at a 200-person firm will, on average, reduce employee turnover costs by
$240,000 and increase profits by $300,000.
“True employee engagement is the key to a world-class operation,” says Mark Baroni, manager of Owens Corning’s plant in Jackson, Tennessee.
So how can managers increase employee engagement? By applying the practices of motivation. Managers make a huge difference in how much
employees feel engaged or disengaged, as well as their resulting behavior and performance. Effective managers figure out what motivates employees and
align their tasks to those needs. They provide challenging yet fulfilling goals and follow up with constructive, supportive feedback. They align rewards and
recognition with employee performance and ensure that those rewards are allocated fairly. They also design jobs in which employees experience fulfillment
from the work itself. Ben Salzmann and other managers at ACUITY applied these strategies, with the result that the insurer is no longer at risk of bankruptcy.
On the contrary, its productivity (revenue per employee) has doubled, making it one of the most efficiently run companies in the industry. Rather than losing
17 cents for every dollar received in insurance premiums, ACUITY now earns 10 cents before investment returns. Employee engagement levels have soared,
while the turnover rate has plummeted from more than 25 percent to about 2 percent annually. Today ACUITY is not just a survivor; it is a role model as one
of the best-performing insurance companies and one of the best places to work in America. In this chapter we’ll find out how they accomplished this feat.
 Extrinsic and Intrinsic
Extrinsic rewards are tangible and visible to others and are given to employees contingent on the
performance of specific tasks or behaviors.
Rewards An extrinsic reward is anything received from another person that the
recipient values and is contingent on his or her behavior or results.
External agents (managers, for example) determine and control the distribution, frequency, and amount of extrinsic
rewards. Extrinsic rewards don’t occur naturally with the behavior or result; instead someone introduces these
rewards.
They include pay, company stock, benefits, and promotions, performance bonuses, praise, or some other form of
recognition.
For example, eighty percent of 1,000 large- and medium-sized U.S. companies surveyed by
Hewitt Associates, a consulting company based in Lincolnshire, Illinois, offer incentives or
bonuses to reward employees.
 Extrinsic and Intrinsic
Extrinsic rewards
Rewards
Lincoln Electric, a manufacturer of arc welding tools and technology, has paid annual
profit sharing bonuses to its factory workers for eighty straight years. In 2013,
Lincoln paid out one-third of its pre-tax profits, $100.7 million, to employees who
received bonuses of $33,029 each, worth 62 percent of total wages. In the eighty
years in which Lincoln has paid profit-sharing bonuses, the percentage has never
dropped below 25 percent of total wages and has been as high as 120 percent. Over
the past decade, bonuses have averaged 40 percent of total salary. Why do
companies need to offer extrinsic rewards? To get people to do things they wouldn’t
otherwise do. Companies use extrinsic rewards to motivate people to perform four
basic behaviors: join the organization, regularly attend their jobs, perform their jobs
well, and stay with the organization. Think about it. Would you show up at work every
day to do the best possible job that you could just out of the goodness of your heart?
 Extrinsic and Intrinsic
Intrinsic rewards Intrinsic rewards are the natural rewards associated with performing a task or activity for its own sake. An intrinsic reward are
Rewards
positive emotional experience resulting directly and naturally from the individual’s behavior or results. For example, aside from the external
rewards management offers for doing something well, employees often find the activities or tasks they perform interesting and enjoyable.
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.

Each year, 1,300 students enter the U.S. Military Academy at West Point. About 1,000 will graduate, and roughly 40 percent of graduates stay
beyond the Army’s five years of required service. To better understand why some cadets graduate and serve longer than others, a team of
researchers analyzed fourteen years of data on 10,000 cadets. Regardless of race, sex, religion, scholastic achievement, or economic background,
cadets who were motivated by intrinsic rewards, such as wanting to be an Army officer, were 20 percent more likely to make it through West
Point’s rigorous program than those motivated by extrinsic factors, such as attending West Point because their parents wanted them to. Compared
to those with weak internal motivation, internally motivated cadets were also more likely to be considered for early promotion (35% vs. 16%).
Which types of rewards are most important to workers in general? A number of surveys suggest that both extrinsic and intrinsic rewards are
important and that employee preferences for either intrinsic or extrinsic rewards are relatively stable. A 2014 Society for Human Resource
Management national survey found that over the past six years, three extrinsic factors—pay, benefits, and job security/organizational financial
stability—and two intrinsic factors, the work itself and opportunities to use one’s skills and abilities, have consistently been among the top five
factors rated as “very important” by employees
Motivating Employees through Extrinsic Rewards
Extrinsic and Intrinsic
Extrinsic rewards come in many forms, but pay and benefits are clearly at the top of the list. In fact, pay and benefits are ranked as two of the most important features
Rewards
in the employment relationship. The reason for this importance is that a paycheck is more than a form of exchange in the employment relationship. It also
conveys status, accomplishment, self- esteem, and power.
Financial rewards serve four specific objectives: membership and seniority, job status, competencies, and task performance.

MEMBERSHIP- AND SENIORITY- JOB STATUS–BASED REWARDS

BASED REWARDS Almost every organization rewards employees to some extent based on the status of the jobs they
Membership- and seniority-based rewards occupy. Job evaluation is commonly used to rate the worth or status of each job, with higher pay rates going to
(sometimes called “pay for pulse”) represent the
jobs that require more skill and effort, have more responsibility, and have more difficult working conditions.
largest part of most paychecks. Some employee
benefits, such as free or discounted meals in the Organizations that don’t rely on job evaluation indirectly reward job status based on surveys estimating what
company cafeteria, remain the same for everyone, other companies pay specific jobs. A senior engineer typically earns more than, say, a purchasing clerk
whereas others increase with seniority. Many
Asian companies distribute a “13th month” bonus because the work performed by the engineer is worth more to the organization. It has more value (calculated
that every employee expects to receive each year. by a job evaluation system or pay survey), so employees in that job receive more status based rewards in the
These membership- and seniority-based rewards
organization. People in some higher status jobs are also rewarded with larger offices, company-paid vehicles,
potentially attract job applicants (particularly
those who desire predictable income) and reduce and exclusive dining rooms. Job status–based rewards create a reward system that employees believe is fair.
turnover. However, they do not directly motivate They also motivate employees to compete for promotions. However, when companies are trying to be more
job performance; on the contrary, they discourage
poor performers from seeking work better suited cost-efficient and responsive to the external environment, job status–based rewards potentially do the opposite
to their abilities. Instead the good performers are by encouraging bureaucratic hierarchy. These rewards also reinforce a status mentality, whereas Generation-X
lured to better -paying jobs. Some of these
and Generation-Y employees expect a more egalitarian workplace. Furthermore, status based pay potentially
rewards are also “golden handcuffs” that can
undermine job performance because employees motivates employees to compete with each other and to raise the value of their own jobs by exaggerating job
resent being held captive by high pay in a job they duties and hoarding resources.
dislike
 Extrinsic and Intrinsic
Financial rewards serve four specific objectives: membership and seniority, job status, competencies, and task performance.
COMPETENCY-BASED REWARDS
Rewards
Many firms have shifted from job status–based rewards to competency PERFORMANCE-BASED REWARDS
reward systems. The National Health Service (NHS) in the United Kingdom is Piece rate systems reward employees based on the number of units produced.
a recent example. Every job in the NHS is now described in terms of its
required skills and knowledge. Employees receive annual pay increases Many employees receive pay increases or bonuses based on a performance
through a wide pay band (range from lowest to highest pay for that job) based appraisal. Performance appraisal, is a systematic process of evaluating an
on how well they meet the job’s skill and knowledge requirements. Skill-based
pay is a variation of competency-based rewards in which employees are employee’s performance.
rewarded for the number of skill modules mastered and, consequently, on the Rather than calculating bonuses from team sales or profit, gainsharing plans
number of jobs they can perform.
For instance, Marley Cooling Tower Co. in Olathe, Kansas, has about 30 award bonuses based on cost savings and productivity improvement.
skill modules (skills required for specific jobs) in its production operations. Organizational Rewards Along with individual and team-based rewards, many
Employees earn the base pay rate for being able to work in one job, but they
earn more as they learn other skill modules. Two employees performing the firms rely on organizational-level rewards to motivate employees.
same job would receive different pay rates based on ho w many skill modules Profit-sharing plans calculate bonuses from the previous year’s level of
the y have mastered. Those who master all 30 modules earn almost three times
the base rate because they can perform any job in the production area. corporate profits.
Competency-based re wards improve workforce flexibility by motivating stock options that give them the right to purchase stock from the company at a
employees to learn a variety of skills and thereby perform a variety of jobs.
Product or service quality tends to improve because employees with multiple future date at a predetermined price up to a fixed expiration date.
skills are more likely to understand the work process and know how to improve A fourth organizational-level reward strategy, is the balanced scorecard
it.
Competency-based rewards also reward employees who continuously learn (BSC). BSC is a goal-oriented performance measurement system that rewards
skills that will keep them employed. people (typically executives) for improving performance on a composite of
One potential problem is that measuring competencies can be subjective,
particularly when described as personality traits or personal values. Skill-based financial, customer, and internal processes, as well as employee factors. The better
pay systems measure specific skills, so they are usually more objective. the measurement improvements across these dimensions, the larger the bonus
However, they are expensive because employees spend more time learning new
tasks. awarded.
 Extrinsic and Intrinsic
Motivating Employees through Intrinsic Rewards
Rewards
Throughout the first half of the 20th century, industry experts and academics spent a lot of time figuring out how to increase
employee performance by dividing work into narrower and narrower tasks to the point w here employees completed an entire job
cycle in less than one minute. To put this in context, assembly-line employees at Chrysler in the United States current have a job
cycle of about 64.5 seconds, which means they repeat the same set of tasks about 58 times each hour and about 230 times before
they take a meal break.
Why would companies divide work into such tiny bits? One reason is that employees spend less time changing activities because
they have fewer tasks to juggle. They also require fewer physical and mental skills to accomplish the assigned work, so less time
and resources are needed for training. A third reason is that employees practice their tasks more frequently with shorter work
cycles, so jobs are mastered quickly. A fourth reason why work efficiency increases is that employees with specific aptitudes or
skills can be matched more precisely to the jobs for which they are best suited.
Narrowing jobs down to short cycle times does have these advantages, to a degree. But this job design strategy can ultimately
backfire because it ignores another important fact namely that tedious jobs don’t motivate. Specialization might improve
employee ability. Thus managers need to design jobs that provide more intrinsic rewards, which as we described earlier are
positive emotions resulting directly and naturally from the individual’s behavior or results.1
 Extrinsic and Intrinsic
SIMILIARITIES
Rewards
 Table of Contents INCENTIVES
 Definition of Incentive
 Types of Incentives
 Advantages and disadvantages of each type Types of Incentives
 Characteristics of a Good Incentive Plan
Definition of Incentive
Incentive in simple terms is something that encourages a
erson or organization to do or achieve something. It is
omething that incites or has a tendency to incite a
etermination. This is usually given in cash or in kind.

the objective of incentive is to increase employee

productivity, improve industrial and interpersonal
relations, and as result increase the overall profit of the
. Financial (Monetary) Incentives
INCENTIVES
Financial incentive pertains to those
incentives which are in the form of money or
can be measured in monetary terms.
This is sometimes referred to as monetary
benefit offered to consumers, employees, and
organizations to encourage behavior or actions
which otherwise would not take place.
These incentives can be given on an
individual or group basis and satisfy the
monetary and future security needs of
individuals. It lifts the eagerness and self-
confidence of the employees thus, resulting in
better productivity and performance.
 1. Financial (Monetary) Incentives
INCENTIVES
Pay and allowance
Wages
Salary is the basic incentive given to every employee to work efficiently and effectively in an organization. This includes the basic pay,
allowances: clothing allowances, house rent allowances, and other similar allowances. It is paid most commonly monthly. Typically, employees
are given annual increments in their basic pay and allowances depending on the employee’s performance during the year.
Bonus
It is a sum of money added to the basic salary or wages on a seasonal basis, as a reward for a good performance. Many companies offer
bonuses during the festivals of Christmas, New Year, etc.
Productivity linked Wage Incentives
This refers to performance-linked compensation given to increase productivity. Wage incentives are offered to employees to make them
perform beyond the accepted standards. For example, a manufacturing worker is paid 50 dollars per item if he produces 50 items a day but if he
produces more than 50 items a day, he is paid 5 dollars extra per item. Thus, on the 51st item, he will receive 55 dollars.
Profit-Sharing
It is an incentivized compensation program in which an employee receives a direct share of the company’s profits. The amount granted is
normally based on the company’s positive earnings over a set period. This motivates them to perform efficiently and give their best to increase the
company’s profits.
 1. Financial (Monetary) Incentives
INCENTIVES
Retirement benefits
Retirement benefits like gratuity, pension, provident fund, leave encashment, etc. provide financial security to the employees upon retiring
from the company. Hence, they work properly during their term of service.
Commission
Some companies offer a commission on top of the employee’s salary for successfully hitting targets over a set period. This incentive
motivates the employees to increase the client base of the organization.
Perquisites and fringe benefits
Several organizations offer perquisites and fringe benefits such as free accommodation, medical, educational, and recreational facilities, car
allowances, etc. in addition to the salary and allowances to their employees. Sometimes, this incidental payment, benefit, or privilege is enjoyed
as a result of one’s position.

Co-partnership/Stock Option
Under this incentive system, employees are offered shares at a
price that is lower than the market price. This practice helps in creating
a feeling of ownership among employees and motivates them to give
their all-out contribution towards organizational growth and success.
 INCENTIVES
2. NON-FINANCIAL (NON-MONETARY) INCENTIVES

These are types of rewards that

do not form part of an employee’s
pay or cannot be measured in
terms of money.
 INCENTIVES
2. NON-FINANCIAL (NON-MONETARY) INCENTIVES
Status
It is one’s social or professional position. In an organization, this refers to the position
Effective Non-Financial Incentives in the hierarchy of the organizational chart. Management-level employees have more

An effective non-monetary incentive authority, responsibility, recognition, salary, etc., than those of the rank-and-file employees.
The level of authority and responsibility determine the status of an employee in an
for employees directly touches emotions
organization. Status increases the self-esteem, confidence, and psychological needs of an
to make the employee feel good, individual resulting in a motivated attitude at work.
appreciated, and valued. Organizational Climate

Investing in the workforce by Organizational climate refers to the environmental characteristics of an organization as
perceived by its employees. It conveys the impression that people have towards the internal
showing appreciation and recognition in
environment of the company within which they work and have a key influence on their
imaginative ways is one of the best ways performance. This differs from one organization to another. Several factors may influence the
for companies to retain talented organizational climate of a company, such as organizational structure, individual

employees and create a sustainable responsibility, risk and risk-taking, warmth, and support within the company, its tolerance
and conflict, and more. A positive organizational climate tends to increase the efficiency of
culture of success.
employees at work.
 2. NON-FINANCIAL (NON-MONETARY) INCENTIVES INCENTIVES
Career Advancement Opportunity
Organizations have to establish the appropriate skill and career development programs, and even a sound promotion policy for their employees
that serves as a booster for them to perform well and get promoted. Upward progress in one’s career, such as promotion, shows recognition and
appreciation of an employee’s work, motivating him to do better.
Job Enrichment
It refers to the designing of jobs in such a way that it involves challenging and variety of tasks, requiring a higher level of knowledge and skill,
more autonomy and responsibility, and more growth opportunities and thus, could also increase employees’ pay. Sometimes, when the job itself is
interesting, it already serves as a good source of motivation.
Job Security
Job security offers future stability and a sense of security among the employees in an organization. Not having to worry about the future gives
a sense of enthusiasm at work. While there is an undesirable aspect of this incentive, like employees taking their jobs for granted, the increasing rate
of unemployment in our country makes this a great work incentive.
Praise and Recognition
Job Rotation
Better two ways communication
Team Work
Housing Facilities
Educational Facilities
 INCENTIVES
2. NON-FINANCIAL (NON-MONETARY) INCENTIVES

Employee Recognition Programs

The organization adopts this to raise employee morale, attract and retain key employees, elevate productivity
within an organization, and increase competitiveness. This pertains to employers’ initiatives to reward their
employees for achievements, new behaviors, anniversaries, and milestones unlocked during their stay in the
company. For example, rewarding the best performer of the month, and announcing and displaying their names on
the notice boards, are programs for employee recognition.
Employee Participation and Empowerment
This refers to the employee’s involvement in decision making on the matters related to them (participation)
inducing a sense of belongingness and giving them more autonomy and powers to subordinates (empowerment) to
make them feel the importance of their presence and service to the organization.
Cordial human relations
Job Satisfaction
2. NON-FINANCIAL (NON-MONETARY) INCENTIVES INCENTIVES
In a 2009 survey conducted by McKinsey & Company, non-financial incentives were valued as more influential
motivators than financial incentives.
The top three financial rewards were performance-based cash bonuses, an increase in base pay, and stock or
stock options.
The top three non-financial incentives were praise and commendation from an immediate manager, attention
from leaders, and opportunities to lead projects or task forces.
 The most popular incentive – praise from the boss
 The second most popular – attention from leaders
 The least popular – stock or stock options
All three of the non-financial incentives were more popular than the leading financial incentive
According to the survey, the top two incentives are based on getting praise and validation from their immediate
supervisors or management. These two elements are considered vital to all dealings, including employee-employer.
Commendation and validation should be the focus of non-financial incentives for employees.
p 10 Non-Financial Incentives to Motivate Employees INCENTIVES
More Flexibility: Flexibility is the #1 non-monetary incentive employees want (PR Newswire). In some industries, that means working remotely. Others, like
healthcare or manufacturing, depend on in-person labor. But HR can still help! Many employees are happy to come in to work but want more control over their
schedules.
Public Recognition: Just acknowledging an employee’s great work can go a long way. Mention them in an all-hands meeting, send a company-wide email
congratulating them, or name them “employee of the month.” Recognition could come from business leaders, their direct supervisor, or even a peer at the company.
Training Opportunities: Upskilling your team is a win-win. They’ll feel supported and understand you’re investing in their careers. At the same time, your company
will benefit from their new knowledge. Consider sending employees to conferences, investing in a learning management system, or offering annual training stipends.
Mentorship Programs: Encourage junior employees to learn from senior leaders. For example, the prize for great work could be lunch with the CEO, or a seat in a
leadership class. These incentives cost nothing, and they can cement a new hire’s loyalty. And if those employees are already rising stars, this is a great way to retain
institutional knowledge.
Exciting, Challenging Assignments: No one wants to be perpetually bored at work. If an employee always exceeds expectations, they might be ready for more
stimulating assignments. Keep them engaged by offering stretch opportunities outside their normal roles. Just make sure you get their buy-in first – this should feel
like a fun learning experience, not a demoralizing pile of extra work.
Dedicated Time for Innovation: Remember Google’s 20% time? In case you don’t, here’s the idea: employees spend 20% of their time working on personal
projects. It might sound unproductive, but that couldn’t be further from the truth. (Google Maps and Gmail both started as 20% time projects.) Encourage your high
performers to set aside time to think, experiment, and just play around with new ideas. You never know what could come out of it.
Paid Volunteer Time: In one survey, 76% of employees said they’d like to work for “a company that is trying to have a positive impact” ( Forbes). Want to work
toward that goal without adding to HR’s administrative burden? Give employees paid time off to volunteer at an organization of their choice. You could also invite
top talent to suggest non-profits for your company to sponsor.
Sabbaticals: Over 50% of employees have felt burned out at work in the past year (NAMI). Just going by the numbers, that probably includes some of your most
productive employees. Sabbaticals might mean a temporary dip in productivity, but they also improve long-term employee loyalty. Why not offer this perk before
they consider leaving your team?
Experiential Rewards: Fun experiences can be extremely motivating. Depending on your budget, this could mean anything from concert tickets to a stay at a five-
star resort. These incentives could reward measurable success (like the top performance from your Sales team), or you could allow managers to give them out at their
discretion.
Team Celebrations: These non-monetary incentives don’t just reward your employees for a job well done; they also build team spirit! When people go out and have
fun together, they have good memories to fall back on when they face future challenges. Whether you’re taking your team out for pizza or hosting a week-long,
company-wide retreat, fun activities are hugely important for company culture.
 ADVANTAGES AND DISADVANTAGES INCENTIVES
ADVANTAGES OF FINANCIAL INCENTIVES
Aspect Financial Incentives Non-Financial Incentives
•Increased productivity Nature of Reward Monetary (e.g., bonuses, salaries)
Non-monetary (e.g., recognition,
job satisfaction)
• Higher profit margins Extrinsic (external financial Intrinsic (internal satisfaction and
Motivation Type
rewards) personal growth)
•No downtime to worry about Affects income and living Enhances workplace environment
Impact on Employees
standards and engagement
•No issue with supervision Measurability Quantifiable and uniform Subjective and varies individually

•Efficient workers can earn better Examples

Salaries, commissions, stock
options
Flexible hours, professional
development opportunities

• Identifying ineffective employees

• Employee turnover may decline DISADVANTAGES OF FINANCIAL INCENTIVES

• Reduced number of grievances and complaints • Standard of the work may compromise
• Relationships between co-workers may jeopardize
• Higher chances of machine wear and tear in future
• Workers’ health may harm
• Increase in the number of accidents
• Increase in the number of administrative tasks
 ADVANTAGES AND DISADVANTAGES INCENTIVES
ADVANTAGES OF FINANCIAL INCENTIVES DISADVANTAGES OF FINANCIAL INCENTIVES
• show your team that you value them as people, not just
employees. This personalized investment fosters their emotional
connections to your company – and that translates into long-term
loyalty. Of course, this strategy only works if you’re already
paying market salaries.
• allow you to showcase your company’s values. A wellness
company, for instance, could incentivize employees with spa days
or gym memberships. Tech firms can offer cool gadgets. The
possibilities are endless. This is a fun and valuable opportunity to
strengthen your company culture.
• invite employees to connect with your company. When people
feel genuinely cared for, they’re more motivated to go the extra
mile. That drives innovation, retention, productivity, and more.
 INCENTIVES
Characteristics of a Good Incentive Plan
The basics of a good incentive plan are:
a. Simple and easy to understand
b. Lessor is not costly to operate
c. Must be discussed with employees before implementation
d. Assist in supervision
e. Able to evaluate employee’s performance
f. Induce cooperation among the employees
g. Encourage workers to perform better
h. Acceptable to employee and employer
i. Ensure sufficient monetary compensation and recognition to employees
j. Ensure reduction in unit production cost
k. Standardized methods of implementation
l. Eliminate distrust between the employee and employer
JOB CHARACTERISTICS MODEL

The job
characteristics model is
a useful template for
understanding how to
improve employee
motivation through the
job itself. According to
the job characteristics
model, all jobs have
some degree of the five
core job dimensions
shown in Figure 13.7 :
JOB CHARACTERISTICS MODEL
Skill variety: Skill variety refers to the use of different skills and talents to complete a variety of work activities. For example,
sales clerks who normally only serve customers might be assigned the additional duties of stocking inventory and changing
storefront displays.
• Task identity: Task identity is the degree to which a job requires completion of a whole or identifiable piece of work, such as
assembling an entire computer modem rather than just soldering in the circuitry
• Task significance: Task significance is the degree to which the job affects the organization and society.
• Autonomy: Jobs with high levels of autonomy provide freedom, independence, and discretion in scheduling work and
determining the procedures to be used to complete the work. In autonomous jobs, employees make their own decisions rather
than relying on detailed instructions from supervisors or procedure manuals.
• Job feedback: Job feedback is the degree to which employees can tell how well they are doing based on direct sensory
information from the job itself. Airline pilots can feel how smoothly they land their aircraft; road crews can see how well they
have prepared the roadbed and laid the asphalt.

The first three core job dimensions (skill variety, task identity, and task significance) have a combined effect on a psychological state called experienced
meaningfulness —the belief that one’s work is worthwhile or important. Autonomy directly contributes to the feeling of experienced responsibility —feeling
personally accountable for the outcomes of one’s efforts. The third critical psychological state, knowledge of results, is derived from job feedback.
MOTIVATING EMPLOYEES THROUGH JOB ENRICHMENT
The job characteristics model suggests many ways to improve employee motivation, such as by rotating employees
through different jobs each day or adding more tasks to one job. But experts agree that the most effective strategy is job
enrichment: giving employees responsibility for scheduling, coordinating, and planning their own work.
One way to increase job enrichment is by combining highly interdependent tasks into one job. By forming natural work
units, jobholders have stronger feelings of responsibility for an identifiable body of work. They feel a sense of ownership
and therefore tend to increase job quality. Forming natural work units increases task identity and task significance
because employees perform a complete product or service and can more readily see how their work affects others.
A second job enrichment strategy, called establishing client relationships, involves putting employees in direct contact
with their clients rather than using the supervisor as a go-between. By being directly responsible for specific clients,
employees have more information and can make decisions affecting those clients. Establishing client relationships also
increases task significance because employees see a connection between their work and its consequences for customers.
Forming natural task groups and establishing client relationships are common ways to enrich jobs, but the hear t of the
job enrichment philosophy is to give employees more autonomy over their work. This basic idea is at the core of a
popular concept known as empowerment.
 MOTIVATING EMPLOYEES THROUGH EMPOWERMENT
The opening story to this chapter describes the incredible transformation of Wisconsin insurance company ACUITY and the resulting surge in employee motivation.
One reason for the increased motivation is that rigid control systems were removed and employees were invited to actively participate in making decisions that affect
the company’s strategic and operational direction. In particular, frontline employees and middle managers are rotated through committees that have top managers’ full
support to actively set direction for technology, customer services, investments, employee relations, and most other issues. As one employee recently noted, “ACUITY
treats their employees with respect and also empowers their employees.”
ACUITY has created a work environment that makes employees feel empowered. Empowerment is a psychological concept represented by four dimensions: self-
determination, meaning, competence, and impact of the individual’s role in the organization:
• Self-determination: Empowered employees feel that they have freedom, independence, and discretion over their work activities.
• Meaning: Employees who feel empowered care about their work and believe that what they do is important.
• Competence: Empowered people are confident about their ability to perform the work well and have a capacity to grow with new challenges.
• Impact: Empowered employees view themselves as active participants in the organization; that is, their decisions and actions influence the company’s success.
Chances are that you have heard corporate leaders say they are “empowering” the workforce. What these executives really mean is that they are changing the work
environment to support empowerment. To generate beliefs about self-determination, employees must work in jobs with a high degree of autonomy with minimal
bureaucratic control. To maintain a sense of meaningfulness, jobs must have high levels of task identity and task significance. And to maintain a sense of self-
confidence, jobs must provide sufficient feedback.
Employees also experience more empowerment in organizations where information and other resources are easily accessible, where employee learning is valued, and
w here reasonable mistakes are viewed as a natural part of the learning process. Furthermore, empowerment requires corporate leaders who trust employees and are
willing to take the risks that empowerment creates.
MOTIVATING EMPLOYEES THROUGH CREATING A LEARING ORGANIZATION
Revision Questions
 THEORIES OF
MOTIVATION
A)THE CONTENT OR NEED THEORIES
1. Maslow’s Hierarchy of Need Theory LEARNING OBJECTIVES
 Explain how employees are motivated according to
2. Herzberg’s Two Factor Theory
Maslow’s hierarchy of needs.
3. McClelland’s Three Needs Theory  Explain how the ERG (existence, relatedness, growth)
theory addresses the limitations of Maslow’s hierarchy.
4. Aldefer’s ERG Theory  Describe the differences among factors contributing to

5. McGregor’s Theory X and Y employee motivation and how these differ from factors
contributing to dissatisfaction.
 Describe need for achievement, power, and affiliation,
and identify how these acquired needs affect work
behavior.
Need
Satisfaction

We started with a very basic model of motivation in which effort leads to job performance. But managers want to know, “What
leads to effort?” Determining employee needs is the first step to answering that question. Needs are the physical or psychological
requirements that must be met to ensure survival and wellbeing
 Need
As shown on the diagram above, a person’s unmet need creates an uncomfortable, internal state of tension that
Satisfaction
must be resolved. For example, if you normally skip breakfast but then have to work 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 a need no longer motivates once it is met.
For example, when the author of the Mr. Everyday Dollar financial strategies website learned that he had become
a millionaire at 35, he described it as a, “huge letdown,” saying, “You might think when your account rolls over to
seven digits that fireworks light up the sky, confetti falls, and champagne starts flowing. I can tell you that doesn’t
happen, in fact, it’s pretty anticlimactic; I was like, ‘Oh, cool,’ and then went back to work.” In other words, once
obtained, his need for financial independence, no longer motivated him as much. When this occurs, people
become satisfied. Since people are motivated by unmet needs, managers must learn what those unmet needs are
and address them. This is not always a straightforward task, however, because different needs theories suggest
different needs categories.
So, we dive into the theories of motivation
THEORIES OF
MOTIVATION
 THEORIES OF
MOTIVATION
The earliest studies of motivation involved an examination of individual needs.
Specifically, early researchers thought that employees try hard and demonstrate
goal-driven behavior in order to satisfy needs.
For example, an employee who is always walking around the office talking to
people may have a need for companionship, and his behavior may be a way of
satisfying this need.
At the time, researchers developed theories to understand what people need.
Five theories may be placed under this category: Maslow’s hierarchy of needs,
Herzberg’s two-factor theory, and McClelland’s acquired-needs theory, ERG theory,
 THEORIES OF
MOTIVATION
1) Maslow’s Hierarchy of Needs Theory
 THEORIES OF 1) Maslow’s Hierarchy of Needs Theory

The theory is MOTIVATION

based on a simple premise: Human beings have needs that are hierarchically
ranked. There are some needs that are basic to all human beings, and in their absence nothing
else matters. As we satisfy these basic needs, we start looking to satisfy higher order needs. In
other words, once a lower level need is satisfied, it no longer serves as a motivator.
Maslow was a clinical psychologist, and his theory was not originally designed for work settings.
In fact, his theory was based on his observations of individuals in clinical settings; some of the
individual components of the theory found little empirical support. One criticism relates to the
order in which the needs are ranked. It is possible to imagine that individuals who go hungry and
are in fear of their lives might retain strong bonds to others, suggesting a different order of needs.
Moreover, researchers failed to support the arguments that once a need is satisfied it no longer
serves as a motivator and that only one need is dominant at a given time.
 THEORIES OF
1) Maslow’s Hierarchy of Needs Theory
MOTIVATION
Despite the lack of strong research support, Maslow’s theory found obvious applications in business settings. Understanding
what people need gives us clues to understanding them. The hierarchy is a systematic way of thinking about the different needs
employees may have at any given point and explains different reactions they may have to similar treatment. An employee who is
trying to satisfy esteem needs may feel gratified when her supervisor praises an accomplishment. However, another employee who
is trying to satisfy social needs may resent being praised by upper management in front of peers if the praise sets the individual
apart from the rest of the group.
How can an organization satisfy its employees’ various needs? In the long run, physiological needs may be satisfied by the person’s paycheck,
but it is important to remember that pay may satisfy other needs such as safety and esteem as well. Providing generous benefits that include health
insurance and company-sponsored retirement plans, as well as offering a measure of job security, will help satisfy safety needs. Social needs may
be satisfied by having a friendly environment and providing a workplace conducive to collaboration and communication with others. Company
picnics and other social get-togethers may also be helpful if the majority of employees are motivated primarily by social needs (but may cause
resentment if they are not and if they have to sacrifice a Sunday afternoon for a company picnic). Providing promotion opportunities at work,
recognizing a person’s accomplishments verbally or through more formal reward systems, and conferring job titles that communicate to the
employee that one has achieved high status within the organization are among the ways of satisfying esteem needs. Finally, self-actualization needs
may be satisfied by the provision of development and growth opportunities on or off the job, as well as by work that is interesting and challenging.
By making the effort to satisfy the different needs of each employee, organizations may ensure a highly motivated workforce.
 THEORIES OF
1) Maslow’s Hierarchy of Needs Theory
Limitations of Maslow’s Theory MOTIVATION
As we warned earlier, the accuracy of Maslow’s needs hierarchy theory does not live up to its popularity. The
seven categories of needs provide a reasonably good list for most managers to remember, but studies have found that
they don’t capture all needs.
The theory assumes that need priorities shift over months or years, whereas the importance of a particular need
likely changes more quickly with the situation.
But the most serious limitation of Maslow’s needs hierarchy is its assumption that everyone has the same needs
hierarchy. Research has revealed that this is a false assumption. People actually have different needs hierarchies tied
to their personal values.
Needs are conscious deficiencies produced from innate drives but strengthened or weakened through learning
and social forces such as culture and childhood upbringing. As a result, some people place belongingness at the
pinnacle; others view status as the most important.
Furthermore, studies have reported that the general needs hierarchy in some cultures is different from the needs
hierarchy in other cultures.
1) Maslow’s Hierarchy of Needs Theory THEORIES OF

Management Implications of Maslow’s Theory MOTIVATION

Critical parts of Maslow’s model may have failed the reality test, but we can take away the following recommendations from Maslow’s writing as well as subsequent
research on employee needs:
1. Employees have different needs at different times. Everyone has a hierarchy of needs, but each person’s hierarchy is different. The practical implication is that
people value different things at different times. One employee might prefer time off, whereas another might prefer more pay. Managers need to carefully understand
the needs of their employees and adjust rewards and other performance outcomes accordingly.
2. Employees have several interdependent needs, not just one dominant need. One of Maslow’s most important breakthroughs was to emphasize that needs should
be understood holistically, not separately. Managers must therefore remember that employees are motivated by a cluster of needs, not just one need. Thus managers
must consider the whole person rather than simplistically label each person in terms of one need (for example, Julie wants a social environment, Liam is the status
climber).
3. At some point, most employees want to achieve their full potential (self-actualization). Throughout his career, Maslow emphasized that people are naturally
motivated to reach their potential (self-actualization), and that organizations and societies need to be structured to help people continue and develop this motivation.
The recommendation here is that managers must strive for Maslow’s vision of enlightened management because the strongest and most sustained motivation tends to
occur when employees try to fulfill their need for self-actualization.
4. Employee needs are influenced by values and norms. Maslow was one of the first motivation scholars to recognize that higher-order needs are shaped to some
extent by the norms and values of the team, organization, and society in which the individual lives. Consequently, managers can adjust employee motivation and effort
by reshaping these norms and values. For example, by encouraging more performance-oriented team norms, managers can strengthen team members’ self-actualization
needs.
2- Herzberg’s Two-Factor Theory THEORIES OF
MOTIVATION

Frederick Herzberg approached the question of motivation in a

different way. By asking individuals what satisfies them on the job
and what dissatisfies them, Herzberg came to the conclusion that
aspects of the work environment that satisfy employees are very
different from aspects that dissatisfy them.
2- Herzberg’s Two-Factor Theory THEORIES OF
MOTIVATION
Herzberg labeled factors causing dissatisfaction of workers as “hygiene” factors because these
factors were part of the context in which the job was performed, as opposed to the job itself.
Hygiene factors included company policies, supervision, working conditions, salary, safety, and
security on the job.
To illustrate, imagine that you are working in an unpleasant work environment. Your office is too hot in the
summer and too cold in the winter. You are being harassed and mistreated. You would certainly be miserable in
such a work environment. However, if these problems were solved (your office temperature is just right and
you are not harassed at all), would you be motivated? Most likely, you would take the situation for granted. In
fact, many factors in our work environment are things that we miss when they are absent but take for granted if
they are present.
In contrast, motivators are factors that are intrinsic to the job, such as achievement, recognition,
interesting work, increased responsibilities, advancement, and growth opportunities. According to
Herzberg’s research, motivators are the conditions that truly encourage employees to try harder.
2- Herzberg’s Two-Factor Theory THEORIES OF
One criticism relates to the primary research methodology employed when arriving at hygiene versus motivators.
MOTIVATION
When people are asked why they are satisfied, they may attribute the causes of satisfaction to themselves, whereas
when explaining what dissatisfies them, they may blame the situation. The classification of the factors as hygiene or
motivator is not that simple either. For example, the theory views pay as a hygiene factor. However, pay may have
symbolic value by showing employees that they are being recognized for their contributions as well as
communicating that they are advancing within the company. Similarly, the quality of supervision or the types of
relationships employees form with their supervisors may determine whether they are assigned interesting work,
whether they are recognized for their potential, and whether they take on more responsibilities.

Despite its limitations, the theory can be a valuable aid to managers because it points out that improving the
environment in which the job is performed goes only so far in motivating employees. Undoubtedly, contextual
factors matter because their absence causes dissatisfaction. However, solely focusing on hygiene factors will not be
enough, and managers should also enrich jobs by giving employees opportunities for challenging work, greater
responsibilities, advancement opportunities, and a job in which their subordinates can feel successful.
3- McClelland’s Acquired-Needs Theory THEORIES OF
MOTIVATION
 THEORIES OF
3- McClelland’s Acquired-Needs Theory Are individuals who are high in need for achievement effective
MOTIVATION
McClelland used a unique method called the Thematic managers? Because of their success in lower level jobs where their
Apperception Test (TAT) to assess the dominant need. This method individual contributions matter the most, those with high need for
entails presenting research subjects an ambiguous picture asking achievement are often promoted to higher level positions. Leadership
them to write a story based on it. Take a look at the following picture. motive pattern and long-term success in management. However, a high
Who is this person? What is she doing? Why is she doing it? The need for achievement has significant disadvantages in management
story you tell about the woman in the picture would then be analyzed positions. Management involves getting work done by motivating others.
by trained experts. The idea is that the stories the photo evokes would When a salesperson is promoted to be a sales manager, the job description
reflect how the mind works and what motivates the person. changes from actively selling to recruiting, motivating, and training
If the story you come up with contains themes of success, meeting
deadlines, or coming up with brilliant ideas, you may be high in salespeople. Those who are high in need for achievement may view
need for achievement. managerial activities such as coaching, communicating, and meeting with
These individuals are constantly striving to improve their performance. They subordinates as a waste of time and may neglect these aspects of their
relentlessly focus on goals, particularly stretch goals that are challenging in jobs. Moreover, those high in need for achievement enjoy doing things
nature. They are particularly suited to positions such as sales, where there are themselves and may find it difficult to delegate any meaningful authority
explicit goals, feedback is immediately available, and their effort often leads to
to their subordinates. These individuals often micromanage, expecting
success. In fact, they are more attracted to organizations that are merit-based
others to approach tasks a particular way, and may become overbearing
and reward performance rather than seniority. They also do particularly well as
bosses by expecting everyone to display high levels of dedication.
entrepreneurs, scientists, and engineers.
 THEORIES OF
3- McClelland’s Acquired-Needs Theory Finally, if your story contains elements of getting work done by
If the story you created in relation to the picture you are influencing other people MOTIVATION
or desiring to make an impact on the
analyzing contains elements of making plans to be with friends organization, you may have a high need for power.
or family, you may have a high need for affiliation.
Those with a high need for power want to influence others and
Individuals who have a high need for affiliation want to be liked
and accepted by others. When given a choice, they prefer to control their environment. A need for power may in fact be a
interact with others and be with friends. destructive element in relationships with colleagues if it takes
Their emphasis on harmonious interpersonal relationships may
the form of seeking and using power for one’s own good and
be an advantage in jobs and occupations requiring frequent
prestige. However, when it manifests itself in more altruistic
interpersonal interaction, such as a social worker or teacher. In
forms such as changing the way things are done so that the
managerial positions, a high need for affiliation may again serve
work environment is more positive, or negotiating more
as a disadvantage because these individuals tend to be overly
resources for one’s department, it tends to lead to positive
concerned about how they are perceived by others. They may
outcomes. In fact, the need for power is viewed as an important
find it difficult to perform some aspects of a manager’s job such
trait for effectiveness in managerial and leadership positions.
as giving employees critical feedback or disciplining poor
Power is the great motivator. Presidential effectiveness and the
performers. Thus, the work environment may be characterized by
leadership motive profile.
mediocrity and may even lead to high performers leaving the
 THEORIES OF
3- McClelland’s Acquired-Needs Theory
MOTIVATION
McClelland’s theory of acquired needs has important implications for the motivation of
employees. Managers need to understand the dominant needs of their employees to be able to
motivate them. While people who have a high need for achievement may respond to goals, those
with a high need for power may attempt to gain influence over those they work with, and
ndividuals high in their need for affiliation may be motivated to gain the approval of their peers
and supervisors. Finally, those who have a high drive for success may experience difficulties in
managerial positions, and making them aware of common pitfalls may increase their
effectiveness.
 THEORIES OF
4- ALDEFER’S ERG MOTIVATION

Theory
 THEORIES OF
4- ALDEFER’S ERG MOTIVATION
ERG theory’s main contribution to the literature is its relaxation of Maslow’s assumptions. For
Theory
example, ERG theory does not rank needs in any particular order and explicitly recognizes that
more than one need may operate at a given time. Moreover, the theory has a “frustration-
regression” hypothesis suggesting that individuals who are frustrated in their attempts to satisfy
one need may regress to another. For example, someone who is frustrated by the growth
opportunities in his job and progress toward career goals may regress to relatedness need and
start spending more time socializing with coworkers. The implication of this theory is that we
need to recognize the multiple needs that may be driving individuals at a given point to
understand their behavior and properly motivate them.
5. McGregor’s Theory X and Y THEORIES OF MOTIVATION

Theory X is the traditional

view that people must be
coerced into performing;
theory Y is the view that
people will exercise self-
direction and self-direction in
the service of objectives to
which they are committed. It
emphasizes the importance of
commitment, rewards and
integrating individual and
organizational needs.
 THEORIES OF MOTIVATION

Theory X is seen as a set of traditional beliefs that people are

inherently lazy and unambitious, and will avoid responsibility.
The main incentives to work are provided by the carrot or the
stick and constant supervision is necessary. Theory X attitudes,
in McGregor’s view, are the main reasons why workers adopt
defensive postures and group together to beat the system
whenever they can. Management expects them to behave in this
Theory Y, on the other hand, takes a benevolent view of
way and they fulfil the prophecy.
human nature. It assumes that work is a natural human activity,
which is capable of providing enjoyment and self-fulfillment.
According to Theory Y, the chief task of the manager is to
create a favourable climate for growth, for the development of
self-reliance, self-confidence and self-actualization through
trust and by reducing supervision to a minimum.
 THEORIES OF MOTIVATION
EXERCISES
 Many managers assume that if an employee is not performing well, the reason must be a lack of
motivation. Do you think this reasoning is accurate? What is the problem with the assumption?
 Review Maslow’s hierarchy of needs. Do you agree with the particular ranking of employee needs?
 How can an organization satisfy employee needs that are included in Maslow’s hierarchy?
 Which motivation theory have you found to be most useful in explaining why people behave in a certain
way? Why?
 Review the hygiene and motivators in the two-factor theory of motivation. Do you agree with the
distinction between hygiene factors and motivators? Are there any hygiene factors that you would consider
to be motivators?
 A friend of yours demonstrates the traits of achievement motivation: This person is competitive, requires
frequent and immediate feedback, and enjoys accomplishing things and doing things better than she did
before. She has recently been promoted to a managerial position and seeks your advice. What would you
tell her?
 FOUR-DRIVE THEORIES OF MOTIVATION
Motivation experts have mostly abandoned needs hierarchy theories. However, due to recent breakthrough discoveries in brain research, they are paying close
THEORY
attention to the role of innate drives and ho w those drives shape human needs through social influences. Four-drive theory, which was recently introduced by
Harvard Business School professors Paul Lawrence and Nitin Nohria, captures many of these recent discoveries.
 FOUR-DRIVE THEORIES OF MOTIVATION
• Drive to acquire: This is the drive to seek, take, control, and retain objects and personal experiences. The drive to acquire
THEORY
extends beyond basic food and water; it includes the need for relative status and recognition in society. Thus it is the foundation of
competition and the basis of our need for esteem.
• Drive to bond: This is the drive to form social relationships and develop mutual caring commitments with others. Research
indicates that people invest considerable time and effort in forming and maintaining relationships without any special circumstances or
ulterior motives. The drive to bond motivates people to cooperate and consequently is a fundamental ingredient in the success of
organizations and the development of societies.
• Drive to learn: This is the drive to satisfy our curiosity, to know and understand ourselves and the environment around us.
When observing something that is inconsistent with or beyond our current knowledge, we experience a tension that motivates us to
close that information gap. The drive to learn is related to the self-actualization need described earlier.
• Drive to defend: This drive creates a “fight-or-flight” response in the face of personal danger. The drive to defend goes beyond
protecting our physical self. It includes defending our relationships, our acquisitions, and our belief systems. The drive to defend is
always reactive—it is triggered by threat. In contrast, the other three drives are always proactive—we actively seek to improve our
acquisitions, relationships, and knowledge.
All four drives are fixed in our brains through evolution. They are also independent of each other: One drive is not inherently inferior or superior to another
drive. Four-drive theory also states that these four drives are a complete set—no other innate drives are excluded from the model. Another key feature is that all of the
drives except the drive to defend are proactive, meaning that we regularly try to fulfill them. Thus any notion that a drive is fulfilled is temporary at best.
 FOUR-DRIVE THEORIES OF MOTIVATION
How do these four drives motivate us?
THEORY
Basically, our brain uses these four drives to quickly evaluate and assign emotions to information received
through our senses. Suppose you learn that your boss has been promoted and an outsider has been hired to fill the
vacant position. This sort of event likely triggers both the emotions of worry and curiosity. The drive to defend
generates your worry about how the new manager will affect your comfortable work routine, whereas the drive to
learn generates your curiosity about what the new boss looks and acts like. The key point here is that the four
innate drives determine which emotions are triggered in each situation. Four-drive theory states that neither drives
nor the emotions the y produce instinctively determine our motivation or behavior.
Instead, as Figure above illustrates, we use our mental skill set—our logic and intelligence—to consciously
decide how to sort out and act on the emotional signals generated through our drives. This mental skill set relies on
our social norms, personal values, and past experience to decide the best course of action. For instance, you might
be curious about y our new boss, but social norms prevent you from being too snoopy. You might also be worried
about changes the new boss will create, and your past experience motivates you to take specific steps to address
that threat.
 FOUR-DRIVE THEORIES OF MOTIVATION
THEORY
Where do individual needs fit into this model?
Need strength is produced from our drives in the context of our personal values, social norms, and past
experience. A person’s need for status (esteem) is based on the drive to acquire, but the priority that people give to
status depends on their values, as well as the immediate sur rounding culture and norms. Some people have a strong
need for status because the y were raised to value status, and because they currently work in organizations that
reward those with higher status. In other words, the strongest needs are determined from a combination of the
emotions generated and the person’s values, social norms, and past experience. The mental skill set not only
prioritizes needs but also translates and channels the experienced emotions into effort and behavior. People have
unique values, experiences, and awareness of social norms, which shape how they react to their drive-based
emotions. One person might be very forward when curious or defensive, whereas another individual experiencing
the same emotions might be more circumspect and diplomatic. Both employees have the same drives and, in this
example, experience similar emotions and needs. Yet they are motivated to act differently based on their unique
values, experiences, and norm expectations.
 FOUR-DRIVE THEORIES OF MOTIVATION
THEORY
Management Implications of Four-Drive Theory
Lawrence and Nohria offer managers the following advice to apply four-drive theory:
Ensure that individual jobs and workplaces provide a balanced opportunity to fulfill the drives to acquire, bond,
learn, and defend. There are really two key recommendations here.
The first is that everyone in the workplace needs to regularly fulfill all four drives, so companies with highly
motivated employees create a workplace where all four drives can be nourished. These firms provide sufficient
rewards, learning opportunities, social interaction, and so forth for all employees.
ACUITY (the Sheboygan, Wisconsin, insurance firm described at the beginning of this
chapter) developed a more motivated workforce by applying this first recommendation.
Specifically, it increased opportunities for social interaction (drive to bond), expanded
training programs and learning opportunities through employee involvement (drive to learn),
introduced a more performance-oriented reward system (drive to acquire), and minimized
the previous risks of layoffs (drive to defend) through its increased profitability and growth.
 FOUR-DRIVE THEORIES OF MOTIVATION
THEORY
Management Implications of Four-Drive Theory
The second recommendation from four-drive theory is that these four drives must be kept in “balance”; that is, organizations should avoid too
much or too little opportunity to fulfill one drive at the expense of others. The reason for this advice is that the four drives balance each other. An
organization that energizes the drive to acquire (such as through a highly competitive workplace) without the drive to bond may eventually suffer
from organizational politics and dysfunctional conflict. Change and novelty in the workplace will aid the drive to learn, but too much will trigger
the drive to defend to such an extent that employees become territorial and resistant to change. Creating a workplace that supports the drive to
bond can, at extreme levels, undermine the diversity and constructive debate required for effective decision making.

Sony’s recent woes seem to illustrate the challenges that occur when all four drives are not in balance. The Japanese company,
which led the electronics world a decade ago with its Walkman and Playstation innovations, is now struggling to keep up with
competitors. One reason for the current difficulties is Sony’s hypercompetitive culture in which engineers are encouraged to
outdo each other rather than work together. This competitive culture feeds employees’ drive to acquire, but the lack of balance
with the drive to bond leads to infighting and information hoarding. For instance, competitive rivalries within Son y delayed the
company’s launch of a digital music player and online music service to compete against Apple’s iPod and iTunes music Web site.
Overall, four-drive theory offers potentially valuable understanding of employee motivation as w ell as ways to maximize that
motivation.
 THEORIES OF MOTIVATION

The relationship between some need

theories

Herzberg 2 Factors Theory Maslow’s Need Theory ERG Need Theory

Self-
GROWTH NEEDS
Actualization

Esteem Need

RELATEDNESS
Social Needs NEEDS

Safety/ Security Needs

EXISTENCE NEEDS
Physiological Needs
 THEORIES OF MOTIVATION
B)PROCESS-BASED THEORIES

Learning Objectives
 Explain how employees evaluate the fairness of reward distributions.
 Describe the three types of fairness that affect employee attitudes and behaviors.
 List the three questions individuals consider when deciding whether to put forth effort at work.
 Describe how managers can use learning and reinforcement principles to motivate employees.
 THEORIES OF MOTIVATION

B)PROCESS-BASED THEORIES
A separate stream of research views motivation as something more
than action aimed at satisfying a need. Instead, process-based theories
view motivation as a rational process. Individuals analyze their
environment, develop thoughts and feelings, and react in certain ways.
Process theories attempt to explain the thought processes of individuals
who demonstrate motivated behavior. Under this category, we will
review equity theory, expectancy theory, and reinforcement theory.
B)PROCESS-BASED THEORIES THEORIES OF MOTIVATION
1. EQUITY THEORY
According to this theory, individuals are motivated by a sense of fairness in
their interactions. Moreover, our sense of fairness is a result of the social
comparisons we make. Specifically, we compare our inputs and outcomes
with other people’s inputs and outcomes. We perceive fairness if we believe
that the input-to-outcome ratio we are bringing into the situation is
similar to the input-to-outcome ratio of a comparison person, or a
referent. Perceptions of inequity create tension within us and drive us to
action that will reduce perceived inequity.
B)PROCESS-BASED THEORIES THEORIES OF MOTIVATION
1. EQUITY THEORY
Imagine that you are paid $10 an hour working as an office assistant. You have held this job for 6
months. You are very good at what you do, you come up with creative ways to make things easier around
you, and you are a good colleague who is willing to help others. You stay late when necessary and are
flexible if requested to change hours. Now imagine that you found out they are hiring another employee
who is going to work with you, who will hold the same job title, and who will perform the same type of
tasks. This particular person has more advanced computer skills, but it is unclear whether these will be
used on the job. The starting pay for this person will be $14 an hour.
How would you feel? Would you be as motivated as before, going above and beyond your duties? How
would you describe what you would be feeling?
If your reaction to this scenario is along the lines of “this would be unfair,” your behavior may be
explained using equity theory.
B)PROCESS-BASED THEORIES THEORIES OF MOTIVATION

1. EQUITY THEORY
Components of Equity Theory
Equity is determined by comparing one’s input-outcome ratio with the
input-outcome ratio of a referent. When the two ratios are equal, equity
exists.
The basic components of equity theory are
• inputs,
• outcomes, and
• referents
B)PROCESS-BASED THEORIES THEORIES OF MOTIVATION
1. EQUITY THEORY
Components of Equity Theory Outcomes are the perceived rewards someone can

What Are Inputs and Outcomes? receive from the situation. They include pay, fringe
Inputs are the contributions people feel benefits, status symbols, and job titles and assignments.

they are making to the organisation. In For the hourly wage employee in our example, the $10
an hour pay rate was a core outcome. There may also be
the previous example, the person’s hard
other, more peripheral outcomes, such as
work; loyalty to the organization; amount
acknowledgment or preferential treatment from a
of time with the organization; and level of manager. In the prior example, however, the person may
education, training, and skills may have reason as follows: I have been working here for 6 months.

been relevant inputs. I am loyal, and I perform well (inputs). I am paid $10 an
They include education and training, intelligence, hour for this (outcomes). The new person does not have
experience, effort, number of hours worked, and any experience here (referent’s inputs) but will be paid
ability $14 an hour. This situation is unfair.
 B)PROCESS-BASED THEORIES THEORIES OF MOTIVATION
1. EQUITY THEORY
Components of Equity Theory Who Is the Referent?
What Are Inputs and Outcomes? Referents are other people with whom people compare

We should emphasize that equity perceptions themselves to determine if they have been treated fairly.
The referent can be
develop as a result of a subjective process.
 A single person (comparing yourself with a
Different people may look at the same
coworker),
situation and perceive different levels of  A generalized other (comparing yourself with
equity. For example, another person may look “students in general,” for example), or
 Even yourself over time (“I was better off last year
at the same scenario and decide that the
than I am this year”).
situation is fair because the newcomer has
Usually, people choose to compare themselves with
computer skills and the company is paying referents who hold the same or similar jobs or who are
extra for those skills. otherwise similar in gender, race, age, tenure, or other
B)PROCESS-BASED THEORIES THEORIES OF MOTIVATION
1. EQUITY THEORY
Components of Equity Theory
Who Is the Referent?
For example, 1,300 employees at Amazon’s eight German distribution
centers have gone on strike in pursuit of higher pay. The workers want to
be paid 12 euros an hour, similar to employees (that is, their referents) at
German retail and catalog-order companies. Amazon, however, argues that
the employees, who are paid 9.30 euros an hour plus bonuses and shares
of Amazon stock (after two years), are paid at the top end of the range for
logistical employees who work in distribution warehouses. So, with clearly
different referents, it’s no surprise they disagree on what constitutes fair
B)PROCESS-BASED THEORIES THEORIES OF MOTIVATION
1. EQUITY THEORY
Components of Equity Theory
According to equity theory, employees compare their outcomes (the rewards they receive from the organization)
with their inputs (their contributions to the organization). This comparison of outcomes with inputs is called the
outcome/input (O/I) ratio.
After an internal comparison in which they compare their outcomes with 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.
B)PROCESS-BASED THEORIES THEORIES OF MOTIVATION
1. EQUITY THEORY Components of Equity Theory
B)PROCESS-BASED THEORIES THEORIES OF MOTIVATION
1. EQUITY THEORY Components of Equity Theory
Inequity can take two forms, under-reward and over-reward.
B)PROCESS-BASED THEORIES THEORIES OF MOTIVATION
1. EQUITY THEORY Components of Equity Theory
Inequity can take two forms, under-reward and over-reward.
Underreward occurs when a referent’s O/I ratio is better than your O/I ratio. In other words, you are getting fewer
outcomes relative to your inputs than the referent you compare yourself with is getting. When people perceive that they
have been under-rewarded, they tend to experience anger or frustration.
Auto assembly workers at Toyota’s two Indian facilities went on strike out of frustration that they were being paid
unfairly. Toyota is offering 3,050 rupees ($51) a month, but workers want to be paid 4,000 rupees a month ($67) and
have more holidays and company-provided housing. Satish Rangaswamy, the general secretary of the union representing
the workers, said, “Whenever it makes a good profit in a year, it [Toyota] shifts all the profit to the headquarters, that is
[in] Japan. Why can’t they share it with our employees?”32 By contrast, over-reward 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 over-rewarded, they experience guilt. But, not surprisingly, people
have a very high tolerance for over-reward. It takes a tremendous amount of overpayment before people decide that their
pay or benefits are more than they deserve.
B)PROCESS-BASED THEORIES THEORIES OF MOTIVATION
1. EQUITY THEORY
Components of Equity Theory
HOW PEOPLE REACT TO PERCEIVED
So what happens when people perceive that they have been treated inequitably at work?
INEQUITY
Perceived inequity affects
In the case of underreward, this usually translates into frustration or anger; with over-reward, the reaction is
satisfaction.

guilt. These reactions lead 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. If the inequity
continues, or there are multiple inequities, however, tension may build over time until a point of intolerance is
reached and the person is energized to take action.
Revenues at Plum Creek Timber had been flat for two years and net income was dropping when CEO
Rick Holley informed the company’s board of directors that he was returning 44,445 restricted stock
options valued at $1.85 million that the board’s compensation committee had awarded him ten months
earlier. Holley said, “I didn’t feel comfortable taking them . . . This has been a year where total
shareholder returns are down 10 percent or more. It just wasn’t the right thing to do.”
B)PROCESS-BASED THEORIES THEORIES OF MOTIVATION
1. EQUITY THEORY
Components of Equity Theory

HOW PEOPLE REACT TO PERCEIVED

INEQUITY
 B)PROCESS-BASED THEORIES THEORIES OF MOTIVATION
1. EQUITY THEORY Components of Equity Theory
HOW PEOPLE REACT TO PERCEIVED INEQUITY

Reactions to inequity Example

When people perceive Distort perceptions Changing one’s thinking to believe that the referent actually is more skilled
than previously thought
that they have been treated
Increase referent’s Encouraging the referent to work harder
unfairly, they may try to inputs
restore equity by: Reduce own input Deliberately putting forth less effort at work. Reducing the quality of one’s
 Reducing Inputs, work
 Increasing Outcomes,
Increase own outcomes Negotiating a raise for oneself or using unethical ways of increasing rewards
 Rationalizing Inputs Or
such as stealing from the company
Outcomes,
 Changing The Referent, Change referent Comparing oneself to someone who is worse off

Or Leave the situation Quitting one’s job

 Simply Leaving.
Seek legal action Suing the company or filing a complaint if the unfairness in question is under
legal protection
 B)PROCESS-BASED THEORIES THEORIES OF MOTIVATION
1. EQUITY THEORY Components of Equity Theory
HOW PEOPLE REACT TO PERCEIVED INEQUITY

People who perceive that they have been under-rewarded may try to restore equity
When people perceive
by decreasing or withholding their inputs (that is, effort). After filing for
that they have been
bankruptcy and seeking sizable pay and benefits cuts, American Airlines pilots
treated unfairly, they
engaged in a sick-out that cancelled hundreds of flights. Furthermore, pilots who
may try to restore equity
showed for work allegedly delayed flights by filing maintenance requests that
by:

required mechanics to inspect planes before departure. While the pilots’ union denied
Reducing Inputs,
 Increasing Outcomes, the slowdown, its president said, “The pilots of American Airlines are angry. While
 Rationalizing Inputs
AMR management continues paying lip service to needing a consensual agreement
Or Outcomes,
 Changing The with us, their punitive approach of extracting far more value than they need is hardly
Referent, Or conducive to reaching a consensual agreement.”
 Simply Leaving.
 B)PROCESS-BASED THEORIES THEORIES OF MOTIVATION
1. EQUITY THEORY Components of Equity Theory
HOW PEOPLE REACT TO PERCEIVED INEQUITY

Increasing outcomes is another way people try to restore equity. This might include asking
When people perceive for a raise or pointing out the inequity to the boss and hoping that he or she takes care of it.
that they have been treated Sometimes, however, employees may go to external organizations such as labor unions,

unfairly, they may try to federal agencies, or the courts for help in increasing outcomes to restore equity. For instance,
the U.S. Department of Labor estimates that 10 percent of workers are not getting the extra
restore equity by:
 Reducing Inputs, overtime pay they deserve when they work more than forty hours a week. These are known as
 Increasing Outcomes, Fair Labor Standards Act (FLSA) violations. After a U.S. Department of Labor ruling,
 Rationalizing Inputs Or
Walmart paid $5.26 million in back wages to 4,500 security guards who were at first denied
Outcomes,
 Changing The Referent, overtime pay after incorrectly being classified as exempt employees (who are ineligible for
Or overtime). Somewhere between 25,000 and 30,000 FLSA cases are brought each year, and
 Simply Leaving.
employees win two-thirds of them. From 2001 to 2011, the number of FLSA filings in federal
court rose by nearly 500 percent.
 B)PROCESS-BASED THEORIES THEORIES OF MOTIVATION
1. EQUITY THEORY Components of Equity Theory
HOW PEOPLE REACT TO PERCEIVED INEQUITY

When people perceive Another method of restoring equity is to rationalize or distort inputs or outcomes.

that they have been treated Instead of 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. For
unfairly, they may try to
example, suppose that a company downsizes 10 percent of its workforce. It’s likely that the
restore equity by:
 Reducing Inputs, people who still have jobs will be angry or frustrated with company management because of
 Increasing Outcomes, the layoffs. If alternative jobs are difficult to find, however, these survivors may rationalize or
 Rationalizing Inputs Or distort their O/I ratios and conclude, “Well, things could be worse. At least I still have my job.”
Outcomes,
 Changing The Referent, Rationalizing or distorting outcomes may be used when other ways to restore equity aren’t
Or available.
 Simply Leaving.
B)PROCESS-BASED THEORIES
1. EQUITY THEORY THEORIES OF MOTIVATION
Components of Equity Theory
HOW PEOPLE REACT TO PERCEIVED INEQUITY

Changing the referent is another way of restoring equity. In

When people perceive
this case, people compare themselves with someone other than the
that they have been treated
referent they had been using for previous O/I ratio comparisons.
unfairly, they may try to
restore equity by: Because people usually choose to compare themselves with others
 Reducing Inputs,
 Increasing Outcomes, who hold the same or similar jobs or who are otherwise similar
 Rationalizing Inputs Or
Outcomes, (that is, friends, family members, neighbors who work at other
 Changing The Referent,
Or
companies), they may change referents to restore equity when
 Simply Leaving.
their personal situations change, such as a decrease in job status or
pay.
 B)PROCESS-BASED THEORIES THEORIES OF MOTIVATION
1. EQUITY THEORY Components of Equity Theory
HOW PEOPLE REACT TO PERCEIVED INEQUITY

When people perceive

that they have been treated
unfairly, they may try to
restore equity by:
 Reducing Inputs,
 Increasing Outcomes,
 Rationalizing Inputs Or
Outcomes,
 Changing The Referent,
Or
 Simply Leaving.
B)PROCESS-BASED THEORIES THEORIES OF MOTIVATION
1. EQUITY THEORY
Components of Equity Theory
HOW PEOPLE REACT TO PERCEIVED INEQUITY
Reactions to Unfairness - Summary
The theory outlines several potential reactions to perceived inequity.
Oftentimes, the situation may be dealt with perceptually by altering our perceptions of our own or the referent’s inputs and
outcomes. For example, we may justify the situation by downplaying our own inputs (I don’t really work very hard on this job),
valuing our outcomes more highly (I am gaining valuable work experience, so the situation is not that bad), distorting the other
person’s inputs (the new hire really is more competent than I am and deserves to be paid more), or distorting the other person’s
outcomes (she gets $14 an hour but will have to work with a lousy manager, so the situation is not unfair). Another option would
be to have the referent increase inputs. If the other person brings more to the situation, getting more out of the situation would be
fair. If that person can be made to work harder or work on more complicated tasks, equity would be achieved. The person
experiencing a perceived inequity may also reduce inputs or attempt to increase outcomes. If the lower paid person puts forth less
effort, the perceived inequity would be reduced. Research shows that people who perceive inequity reduce their work performance
or reduce the quality of their inputs.
B)PROCESS-BASED THEORIES THEORIES OF MOTIVATION
1. EQUITY THEORY
Components of Equity Theory
HOW PEOPLE REACT TO PERCEIVED INEQUITY
Reactions to Unfairness - Summary
Increasing one’s outcomes can be achieved through legitimate means such as negotiating a pay raise. At
the same time, research shows that those feeling inequity sometimes resort to stealing to balance the scales.
Stealing in the name of justice: Informational and interpersonal moderators of theft reactions to
underpayment inequity. Other options include changing the comparison person (e.g., others doing similar
work in different organizations are paid only minimum wage) and leaving the situation by quitting.
Withdrawal and reward reallocation as responses to inequity. Sometimes it may be necessary to consider
taking legal action as a potential outcome of perceived inequity. For example, if an employee finds out
the main reason behind a pay gap is gender related, the person may react to the situation by taking legal
action because sex discrimination in pay is illegal in the United States.
B)PROCESS-BASED THEORIES THEORIES OF MOTIVATION
1. EQUITY THEORY
Components of Equity Theory HOW PEOPLE REACT TO PERCEIVED INEQUITY

Over-reward/over-payment Iniquity
What would you do if you felt you were over-rewarded? In other words, how would you feel if
you were the new employee in our student-worker scenario?
Originally, equity theory proposed that over-rewarded individuals would experience guilt and
would increase their effort to restore perceptions of equity. However, research does not provide
support for this argument.
Instead, it seems that individuals experience less distress as a result of being over-rewarded. It is
not hard to imagine that individuals find perceptual ways to deal with a situation like this, such as
believing they have more skills and bring more to the situation compared to the referent person.
Therefore, research does not support equity theory’s predictions with respect to people who are
overpaid.
B)PROCESS-BASED THEORIES THEORIES OF MOTIVATION
1. EQUITY THEORY
HOW PEOPLE REACT TO PERCEIVED INEQUITY Components of Equity Theory
Individual Differences in Reactions to Inequity
So far, we have assumed that once people feel a situation is inequitable, they will be motivated
to react. However, does inequity disturb everyone equally? Researchers have identified a
personality trait that explains different reactions to inequity and named this trait as equity
sensitivity. Equity-sensitive individuals expect to maintain equitable relationships, and they
experience distress when they feel they are over-rewarded or under-rewarded. At the same time,
there are some individuals who are benevolents, those who give without waiting to receive much
in return, and entitleds, who expect to receive substantial compensation for relatively little input.
Therefore, the theory is more useful in explaining the behavior of equity-sensitive individuals,
and organizations will need to pay particular attention to how these individuals view their
B)PROCESS-BASED THEORIES THEORIES OF MOTIVATION
1. EQUITY THEORY
Components of Equity Theory
HOW PEOPLE REACT TO PERCEIVED INEQUITY
Fairness beyond Equity: Procedural and Interactional Justice

Equity theory looks at perceived fairness as a motivator.

However, the way equity theory defines fairness is limited to
fairness of rewards. Starting in the 1970s, research on workplace
fairness began taking a broader view of justice. Equity theory
deals with outcome fairness, and therefore it is considered to be a
distributive justice theory. Distributive justice refers to the
degree to which the outcomes received from the organization are
perceived to be fair. Two other types of fairness have been
identified: procedural justice and interactional justice.
Figure: Dimensions of Organizational Justice
B)PROCESS-BASED THEORIES
1. EQUITY THEORY THEORIES OF MOTIVATION
Components of Equity Theory
HOW PEOPLE REACT TO PERCEIVED INEQUITY Fairness beyond Equity: Procedural and Interactional Justice
Let’s assume that you just found out you are getting a promotion. Clearly, this is an exciting outcome and comes with a
pay raise, increased responsibilities, and prestige. If you feel you deserve to be promoted, you would perceive high
distributive justice (your getting the promotion is fair).
However, you later found out upper management picked your name out of a hat! What would you feel? You might still
like the outcome but feel that the decision-making process was unfair. If so, you are describing feelings of procedural
justice.
Procedural justice refers to the degree to which fair decision-making procedures are used to arrive at a decision. People
do not care only about reward fairness. They also expect decision-making processes to be fair. In fact, research shows that
employees care about the procedural justice of many organizational decisions, including layoffs, employee selection,
surveillance of employees, performance appraisals, and pay decisions. People also tend to care more about procedural
justice in situations in which they do not get the outcome they feel they deserve. If you did not get the promotion and later
discovered that management chose the candidate by picking names out of a hat, how would you feel? This may be viewed
as adding insult to injury. When people do not get the rewards they want, they tend to hold management responsible if
procedures are not fair.
 B)PROCESS-BASED THEORIES THEORIES OF MOTIVATION
1. EQUITY THEORY Components of Equity Theory
HOW PEOPLE REACT TO PERCEIVED INEQUITY

Fairness beyond Equity: Procedural Why do employees care about procedural justice?
and Interactional Justice
There are three potential reasons.
First, people tend to believe that fairness is an end in itself and it is the right thing
to do.
Second, fair processes guarantee future rewards. If your name was picked out of
a hat, you have no control over the process, and there is no guarantee that you will
get future promotions. If the procedures are fair, you are more likely to believe that
things will work out in the future.
Third, fairness communicates that the organization values its employees and
cares about their well-being.
B)PROCESS-BASED THEORIES THEORIES OF MOTIVATION
1. EQUITY THEORY
Components of Equity Theory
HOW PEOPLE REACT TO PERCEIVED INEQUITY

Research has identified many ways of achieving procedural justice.

Fairness beyond Equity: Procedural
and Interactional Justice For example, giving employees advance notice before laying them off, firing
them, or disciplining them is perceived as fair. Advance notice helps employees
get ready for the changes facing them or gives them an opportunity to change their
behavior before it is too late.
Allowing employees’ voice in decision making is also important. When
designing a performance-appraisal system or implementing a reorganization, it may
be a good idea to ask people for their input because it increases perceptions of
fairness. Even when it is not possible to have employees participate, providing
explanations to employees is helpful in fostering procedural justice. If one person is
given extra time when taking a test while another is not, individuals would perceive
decision making as unfair.
 B)PROCESS-BASED THEORIES THEORIES OF MOTIVATION
1. EQUITY THEORY Components of Equity Theory
HOW PEOPLE REACT TO PERCEIVED INEQUITY

Now let’s imagine the moment your boss told you that you are getting a
Fairness beyond Equity: Procedural
and Interactional Justice promotion. Your manager’s exact words were, “Yes, we are giving you the
promotion. The job is so simple that we thought even you can handle it.” Now
what is your reaction? The feeling of unfairness you may now feel is explained
by interactional justice. Interactional justice refers to the degree to which
people are treated with respect, kindness, and dignity in interpersonal
interactions. We expect to be treated with dignity by our peers, supervisors,
and customers. When the opposite happens, we feel angry. Even when faced
with negative outcomes such as a pay cut, being treated with dignity and
respect serves as a buffer and alleviates our stress.
 B)PROCESS-BASED THEORIES THEORIES OF MOTIVATION
1. EQUITY THEORY
OB Toolbox: Be a Fair Person!
 When distributing rewards, make sure you pay attention to different contribution levels of employees. Treating everyone equally
could be unfair if they participated and contributed at different levels. People who are more qualified, skilled, or those who did more
than others expect to receive a greater share of rewards.
 Sometimes you may have to disregard people’s contributions to distribute certain rewards. Some rewards or privileges may be better
distributed equally (e.g., health insurance) or based on the particular employee’s needs (such as unpaid leave for health reasons).
 Pay attention to how you make decisions. Before making a decision, ask people to give you their opinions if possible. Explain your
decisions to people who are affected by it. Before implementing a change, give people advance notice. Enforce rules consistently
among employees.
 Pay attention to how you talk to people. Treat others the way you want to be treated. Be kind, courteous, and considerate of their
feelings.
 Remember that justice is in the eye of the beholder. Even when you feel you are being fair, others may not feel the same way, and it
is their perception that counts. Therefore, pay attention to being perceived as fair.
 People do not care only about their own justice level. They also pay attention to how others are treated as well. Therefore, in addition
to paying attention to how specific employees feel, creating a sense of justice in the entire organization is important.
B)PROCESS-BASED THEORIES THEORIES OF MOTIVATION
1. EQUITY THEORY

Employers would benefit from paying attention to all three types of justice perceptions. In
addition to being the right thing to do, paying attention to justice perceptions leads to outcomes
companies care about. Injustice is directly harmful to employees’ psychological health and
well-being and contributes to stress.
High levels of justice create higher levels of employee commitment to organizations, and
they are related to higher job performance, higher levels of organizational citizenship
(behaviors that are not part of one’s job description but help the organization in other
ways, such as speaking positively about the company and helping others), and higher
levels of customer satisfaction. Conversely, low levels of justice lead to retaliation and
support of unionization.
B)PROCESS-BASED THEORIES THEORIES OF MOTIVATION
1. EQUITY THEORY
For example, with Chinese wages rising between 10 and 15 percent per
Motivating with Equity year on average and 30 percent a year where demand is high, the average
Theory factory worker in China, who makes between $317 and $350 a month, is
What practical steps can managers take to use equity
theory to motivate employees? They can start by looking generally underpaid. So for two consecutive years, Lenovo CEO Yang
for and correcting major inequities. Yuanqing has given his annual bonus to Lenovo’s 10,000 employees.
Among other things, equity theory makes us aware that Approximately 90 percent of his 2013 $3.25 million bonus will go to
an employee’s sense of fairness is based on subjective
factory employees in China, each of whom will receive about $325
perceptions. What one employee considers grossly unfair
dollars, roughly a month’s salary. Lenovo spokeswoman Angela Lee said,
may not affect another employee’s perceptions of equity at
“As you can imagine, an extra $300 [or more] in a manufacturing
all. Although these different perceptions make it difficult
for managers to create conditions that satisfy all
environment in China does make an impact, especially to employees

employees, it’s critical that they do their best to take care supporting families.” Lenovo’s communication to employees stated,
of major inequities that can energize employees to take “This payment is personally funded by Yuanqing. He believes that he has
disruptive, costly, or harmful actions such as decreasing the responsibility as an owner of the company, and the opportunity as our
inputs or leaving. So, whenever possible, managers should leader, to ensure all of our employees understand the impact they have on
look for and correct major inequities.
building Lenovo.”
 THEORIES OF MOTIVATION
B)PROCESS-BASED THEORIES
1. EQUITY THEORY
According to Chinese labor laws, employees may not work more
Motivating with Equity
than thirty-six hours of overtime per month, or no more than nine
Theory
Second, managers can reduce employees’
inputs. Increasing outcomes is often the first overtime hours per week. However, after a catastrophic plant
and only strategy that companies use to
restore equity, yet reducing employee inputs explosion and a series of employee suicides disrupted production at a
is just as viable a strategy. In fact, with dual- Foxconn factory in China, factory workers, who assemble everything
career couples working fifty-hour weeks,
more and more employees are looking for from iPads to laptop computers, worked 80 to 100 overtime hours
ways to reduce stress and restore a balance
between work and family. Consequently, it each month on top of their 174 regular hours to make up for the
may make sense to ask employees to do less,
not more; to have them identify and production shortfalls. During this time, employees regularly worked
eliminate the 20 percent of their jobs that twelve hour shifts, six days a week, or sixty hours a month over the
doesn’t increase productivity or add value for
customers; and to eliminate company- legal limit. As a result of pressure from Apple and from international
imposed requirements that really aren’t
critical to the performance of managers, workers’ rights groups, Foxconn has agreed to immediately increase
employees, or the company (for example,
unnecessary meetings and reports). pay as much as 25 percent and limit the number of hours an
employee works to forty-nine per week.
B)PROCESS-BASED THEORIES THEORIES OF MOTIVATION
1. EQUITY THEORY
Motivating with Equity
For example, employees who are laid off tend to be hostile
Theory
Finally, managers should make
sure decision-making toward their employer when they perceive that the procedures
processes are fair. Equity theory leading to the layoffs were unfair. By contrast, employees who
focuses on distributive justice, the
perceived degree to which perceive layoff procedures to be fair tend to continue to support
outcomes and rewards are fairly and trust their employers.45 Also, if employees perceive that
distributed or allocated. However,
procedural justice, the perceived their outcomes are unfair (that is, distributive injustice) but that
fairness of the procedures used to the decisions and procedures leading to those outcomes were
make reward allocation decisions,
is just as important. Procedural fair (that is, procedural justice), they are much more likely to
justice matters because even seek constructive ways of restoring equity, such as discussing
when employees are unhappy with
their outcomes (that is, low pay), these matters with their manager. By contrast, if employees
they’re much less likely to be perceive both distributive and procedural injustice, they may
unhappy with company
management if they believe that resort to more destructive tactics, such as withholding effort,
the procedures used to allocate absenteeism, tardiness, or even sabotage and theft.
outcomes were fair.
B)PROCESS-BASED THEORIES THEORIES OF MOTIVATION
1. EQUITY THEORY
Motivating with Equity
Theory
 2.Equity
THEORIES OF MOTIVATION B)PROCESS-BASED THEORIES
SUMMAR
Theory
1. What is equity. Is the measure of the degree of fairness within a given context.
Y
2. What are the three components of Equity. Inputs, Outcomes and Referent
3. How can we evaluate Equity.
4. What are the three possibilities of the above evaluation.
5. What are the ways people respond to negatives inequity
6. How do people respond to positives inequity
7. How to motivate using EQUITY
8. The Importance of Equity.
9. what is Equity-Sensitivity
10.What are the types of Justices within Equity
11. Why do People care about procedural Justice and how can it be achieved
12.How do become a fair person.
B)PROCESS-BASED THEORIES THEORIES OF MOTIVATION
2. EXPENTANCY THEORY

One of the hardest things about motivating people is Components of Expectancy

that not everyone is attracted to the same rewards.Theory
Expectancy theory says that people will be motivated Expectancy theory holds that people
to the extent to which they believe that their efforts make conscious choices about their
will lead to good performance, that good performance
motivation. The three factors that
will be rewarded, and that they will be offered
affect those choices are valence,
attractive rewards.
According to expectancy theory, individual expectancy, and instrumentality.
motivation to put forth more or less effort is According to this theory, individuals
determined by a rational calculation in which
ask themselves three questions.
individuals evaluate their situation.
 B)PROCESS-BASED THEORIES THEORIES OF MOTIVATION
2. EXPENTANCY THEORY
omponents of Expectancy
eory
Expectancy theory is a well-
accepted theory that has received a
lot of research attention. It is
simple and intuitive
 B)PROCESS-BASED THEORIES THEORIES OF MOTIVATION
2. EXPENTANCY THEORY
omponents of Expectancy
eory
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, so they choose to work harder. When
instrumentality is weak, employees don’t believe that better
performance will result in more or better rewards, so they
Expectancy is the perceived relationship between effort and
choose not to work as hard.
performance. When expectancies are strong, employees believe
that their hard work and efforts will result in good performance,
so they work harder. By contrast, 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.
B)PROCESS-BASED THEORIES THEORIES OF MOTIVATION

2. EXPENTANCY THEORY Valence is simply the attractiveness or desirability of various

rewards or outcomes. Expectancy theory recognizes that the
Components of Expectancy same reward or outcome— say, a promotion—will be highly
Theory attractive to some people, will be highly disliked by others, and
will not make much difference one way or the other to still
others.
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 can be positive, negative, or neutral, the more
effort people will choose to put forth on the job.
 B)PROCESS-BASED THEORIES THEORIES OF MOTIVATION
2. EXPENTANCY THEORY
omponents of Expectancy
eory Consultant Carol Schultz spent nine years working for a company where
the boss rewarded top-performing employees with five-day trips to
expensive resorts, with the company paying for the flight, the hotel, and
one dinner, leaving employees to pay for the rest of their food and all of
their drinks and resort activities. Said Schultz, “It always irked me that
they’d fly us to some expensive resort and expect us to pay for everything
outside of our flight and hotel room. To me, this was no ‘reward.’” In
other words, when Schultz added up all of the valences, the positive
valence of rewarding her with an expensive resort trip could not
overcome the negative valence of getting stuck with large food, drink, and
resort expenses.
 B)PROCESS-BASED THEORIES THEORIES OF MOTIVATION
2. EXPENTANCY THEORY

omponents of Expectancy
eory
 B)PROCESS-BASED THEORIES THEORIES OF MOTIVATION
2. EXPENTANCY THEORY
omponents of Expectancy
eory
 B)PROCESS-BASED THEORIES THEORIES OF MOTIVATION
2. EXPENTANCY THEORY
omponents of Expectancy Finally, individuals are also
The first question is The second question is the degree
eory concerned about the value of the
whether the person believes to which the person believes that
rewards awaiting them as a result of
that high levels of effort will performance is related to subsequent
performance. The anticipated
lead to outcomes of interest, outcomes, such as rewards. This
satisfaction that will result from an
perception is labeled instrumentality.
such as performance or outcome is labeled valence. For
For example, do you believe that
success. This perception is example, do you value getting a better
getting a good grade in the class is
labeled expectancy. For job, or gaining approval from your
related to rewards such as getting a
example, do you believe that instructor, friends, or parents? If these
better job, or gaining approval from
the effort you put forth in a outcomes are desirable to you, your
your instructor, or from your friends
class is related to performing expectancy and instrumentality is high,
or parents? If you do, you are more
and you are more likely to put forth
well in that class?
likely to put forth effort.
effort.
 B)PROCESS-BASED THEORIES THEORIES OF MOTIVATION
2. EXPENTANCY THEORY Valence: How do I feel about the outcomes in
omponents of Expectancy question? Do I feel that a 2% pay raise is
Consider the following Expectancy: Can I do it? If I try desirable? Do I find being named the
eory
example. Let’s assume harder, can I really achieve this salesperson of the month attractive? Do I think
that you are working in
the concession stand of
number? Is there a link between how that being praised by my manager is desirable?

a movie theater. You hard I try and whether I reach this If your answers are yes, valence is positive. In

have been selling an goal or not? If you feel that you can contrast, if you find the outcomes undesirable

average of 100 combos achieve this number if you try, you (you definitely do not want to be named the
of popcorn and soft have high expectancy. salesperson of the month because your friends
drinks a day. Now your would make fun of you), valence is negative.
Instrumentality: What is in it for me? What is
manager asks you to
going to happen if I reach 300? What are the If your answers to all three questions
increase this number to
outcomes that will follow? Are they going to
300 combos a day. give me a 2% pay raise? Am I going to be
are affirmative—you feel that you can do
Would you be named the salesperson of the month? Am I it, you will get an outcome if you do it,
motivated to try to going to receive verbal praise from my and you value the reward—you are more
increase your manager? If you believe that performing well is
numbers? Here is what likely to be motivated to put forth more
related to certain outcomes, instrumentality is
you may be thinking: high. effort toward selling more combos.
B)PROCESS-BASED THEORIES THEORIES OF MOTIVATION
2. EXPENTANCY THEORY
Ways in Which Managers Can Influence Expectancy, Instrumentality, and Valence
 B)PROCESS-BASED THEORIES THEORIES OF MOTIVATION
2. EXPENTANCY THEORY
ow to motivate with Expectancy
eory
 B)PROCESS-BASED THEORIES THEORIES OF MOTIVATION
2. EXPENTANCY THEORY
ow to motivate with Expectancy
By Influencing Expectancy
eory
Employees may not believe that their effort leads to high performance for a multitude of reasons.
Perceptions
They may not have low levels of expectancy may be because employees may perceive little
the skills, employees may feel that something other connection between their effort and
knowledge, or than effort predicts performance, such as
abilities to performance level because they have an
political behaviors on the part of employees.
successfully perform external locus of control, low self-
If employees believe that the work
their jobs. esteem, or other personality traits that
The answer to this environment is not conducive to performing
condition them to believe that their
problem may be well (resources are lacking or roles are
training employees unclear), expectancy will also suffer. effort will not make a difference. In
or hiring people Therefore, clearing the path to performance such cases, providing positive feedback
who are qualified and creating an environment in which and encouragement may help motivate
for the jobs in employees do not feel restricted will be employees.
question.
 B)PROCESS-BASED THEORIES THEORIES OF MOTIVATION
2. EXPENTANCY THEORY
ow to motivate with Expectancy
By Influencing Instrumentality
eory
Showing employees Perceptions
that their performance is rewarded is going to increase
instrumentality perceptions.
However, this is not always sufficient,
because people may not be aware of For example, if a company has an
connect pay some of the rewards awaiting high employee of the month award that
and other is rotated among employees,
rewards to performers. Publicizing any contests employees are unlikely to believe
performance or award programs is needed to bring that performance is being
using bonuses, rewarded. This type of meritless
award rewards to the awareness of reward system may actually
systems, and employees. It is also important to hamper the motivation of the
merit pay. highest performing employees by
highlight that performance, not eroding instrumentality.
something else, is being rewarded.
 B)PROCESS-BASED THEORIES THEORIES OF MOTIVATION
2. EXPENTANCY THEORY

ow to motivate with Expectancy

eory By Influencing
Valence
Employees are more likely to be motivated if they find the reward to be attractive.
This process involves managers finding what their employees value. Desirable
rewards tend to be fair and satisfy different employees’ diverging needs. Ensuring
high valence involves getting to know a company’s employees. Talking to
employees and surveying them about what rewards they find valuable are some
methods to gain understanding. Finally, giving employees a choice between
multiple rewards may be a good idea to increase valence.
 B)PROCESS-BASED THEORIES THEORIES OF MOTIVATION
3- GOAL SETTING THEORY
Regardless of the nature of their
In the The motivational impact of performance goals
specific achievements, successful and goal-based reward plans has been
motivation
people tend to have one thing in recognized for a long time. At the turn of the
context a goal is
common. Their lives are goal-oriented. century, Frederick Taylor attempted to establish
'If you don't know where you're going, defined as 'what scientifically how much work of a specified
any road will take you there.' Goal- an individual is quality an individual should be assigned each
oriented people tend to find the right trying to day. He proposed that bonuses be based on
road because they know where they are accomplish; it is accomplishing those output standards. More
going. The idea that goals matter recently, goal setting has been promoted through
the object or aim
clearly has important implications for a widely used technique called management by
of an action'.
motivation and for management objectives (MBO).

generally.
B)PROCESS-BASED THEORIES THEORIES OF MOTIVATION
3- GOAL SETTING THEORY
B)PROCESS-BASED THEORIES THEORIES OF MOTIVATION
3- GOAL SETTING THEORY
B)PROCESS-BASED THEORIES THEORIES OF MOTIVATION
3- GOAL SETTING THEORY
 B)PROCESS-BASED THEORIES THEORIES OF MOTIVATION
3- GOAL SETTING THEORY The mechanics of goal setting
1. Goals that are personally meaningful 2. Not only do goals make us 3. Within the context of goal setting,
tend to focus one's attention on what is selectively perceptive, they persistence represents the effort
relevant and important. If, for example, also motivate us to act. The expended on a task over an extended
you have a project deadline in a few deadline for submitting your period of time. It takes effort to run 100
days, your thoughts tend to revolve project would prompt you to metres; it takes persistence to run a 42-
around completing that project before the complete it, rather than going
kilometre marathon. Persistent people
deadline. Similarly, the members of a out with friends, endlessly tend to see obstacles as challenges to
home appliance sales force who are told updating your Facebook profile
be overcome rather than as reasons to
that one of them can win a trip to Hawaii or watching television. fail. A difficult goal that is important
for selling the most refrigerators, will Generally, the level of effort
to an individual is a constant reminder
tend to steer customers towards the expended is proportionate to
to keep exerting effort in the
refrigerator display the difficulty of the goal. appropriate direction.
 B)PROCESS-BASED THEORIES THEORIES OF MOTIVATION
3- GOAL SETTING THEORY The mechanics of goal setting
If you are here and your goal is
out there somewhere, you face 4. Feedback plays a key role in all areas of people's
the problem of getting from here lives. Feedback lets people know if they are heading
to there. Goals help because towards their goals or if they are going in the wrong
they encourage people to direction and need to redirect their efforts. Goals plus
develop strategies and action feedback is the recommended approach.' Goals inform
plans that enable them to people about performance standards and expectations
achieve their goals. It is worth so that they can channel their energies accordingly. In
noting that a person who turn, feedback provides the information needed to
publicly commits to a goal has adjust direction, effort and strategies for goal
an even stronger motivation. accomplishment. Feedback enhances the effect of
specific, difficult goals.
B)PROCESS-BASED THEORIES THEORIES OF MOTIVATION
3- GOAL SETTING THEORY
The mechanics of goal setting

How goals are best set remains a puzzle and no single approach seems consistently more
effective than others in increasing performance.' Participative goals, assigned goals
and self-set goals are equally effective. Managers are advised to use a contingency
approach by picking a method that seems best suited to the individual and situation at
hand. For example, employees' preferences for participation should be considered. Some
employees desire to participate in the process of setting goals, but others do not.
Employees are also more likely to respond positively to the opportunity to participate in
goal setting when they have greater task information, higher levels of experience and
training, and greater levels of task involvement. A participative approach may also help
reducing employees' resistance to goal setting
 B)PROCESS-BASED THEORIES THEORIES OF MOTIVATION
3- GOAL SETTING THEORY The mechanics of goal setting

Because of individual differences, it may be necessary to establish different goals for

employees performing the same job. For example, a study of 103 undergraduate business
students revealed that individuals high in conscientiousness had higher motivation, greater goal
commitment and obtained higher grades than students low in conscientiousness.' More generally,
the absence of evidence on how goals are best set in a given organisational situation indicates
that such evidence can be developed through a trial-and-error or experimental approach. This
may allow managers an opportunity to identify which forms of setting goals works best in their
organisation. However, while this is an admirable approach it gets the best results from careful
planning and rigorous analysis of the whole process.
 B)PROCESS-BASED THEORIES THEORIES OF MOTIVATION
3- GOAL SETTING THEORY
Components of Goal-Setting Theory
The basic components of goal-setting theory are goal specificity, goal difficulty, goal acceptance, and performance
feedback.

Difficult goals lead to higher performance. Goal difficulty reflects the amount of effort required to
meet a goal.
Specific, difficult goals lead to higher performance for simple rather than complex tasks. Goal
specificity pertains to the quantifiability of a goal; this means it refers to the extent to which a goal is
specifically stated and specified.
Goal commitment affects goal-setting outcomes. Goal commitment is the extent to which an individual
is personally committed to achieving a goal. Goal commitment implies both the strength of one's
intention to reach a goal and the unwillingness to abandon or lower a goal over time. In general, an
individual is expected to persist in attempts to accomplish a goal when he or she is committed to it.
 B)PROCESS-BASED THEORIES THEORIES OF MOTIVATION
3- GOAL SETTING THEORYApplication of the goal-setting model
There are three general steps to follow when implementing a goal-setting programme, all of which are important. Serious
deficiencies in one step cannot make up for strength in the other two. The three steps need to be implemented in a systematic
fashion.
Goals must first be formulated somehow. A number of sources can be used as input during this goal-setting stage.
• Time and motion studies are one source.
• A second is the average past performance of employees.
• Third, the employee and his or her superior may set the goal participatively, through give-and-take negotiation.
• Fourth, goals can be set by conducting external or internal benchmarking. Benchmarking is used when an organisation wants
to compare its performance or internal work processes with those of other organisations (external benchmarking) or other
internal units, branches, departments or divisions within the organisation (internal benchmarking). For example, a company
might set a goal to surpass the customer service levels or profits of a benchmarked competitor (assuming reliable evidence on
relevant benchmarks can be obtained).
• Finally, the overall strategy of a company (such as becoming the lowest-cost producer) may affect the goals set by employees
at various levels within the organisation.
 B)PROCESS-BASED THEORIES THEORIES OF MOTIVATION
3- GOAL SETTING THEORYApplication of the goal-setting model
In accordance with available research evidence, goals should be 'SMART'.
SMART is an acronym that stands for specific, measurable, attainable, results
oriented and time bound. These goals reflect the evidence presented above
 B)PROCESS-BASED THEORIES THEORIES OF MOTIVATION
3- GOAL SETTING THEORY
When setting goals conflict may be introduced. Goal conflict refers to degree to which people
feel that multiple goals are incompatible.' An externally imposed goal may be in conflict with a
personal goal. Goal conflict may occur when people have to achieve multiple outcomes when
performing a single task, like meeting a quantity quota and not making mistakes. In this case a
trade-off between performance quality and quantity occurs: people make a lot of things with
many mistakes (quantity at the expense of quality) or they make few things with no mistakes
(quality at the expense of quantity). A third type of goal conflict occurs when several tasks or
goals have to be accomplished (for instance, selling two different products, given a limited
amount of time). In this case, people handle the conflict by prioritising one task at the expense of
the other.
 B)PROCESS-BASED THEORIES THEORIES OF MOTIVATION
3- GOAL SETTING THEORY
Goal commitment is important because employees are more motivated to pursue goals they view as
reasonable, obtainable and fair. Goal commitment may be increased by using one or more of the following
techniques:
 Explain why the organisation is implementing a goal-setting programme.
 Present the corporate goals and explain how and why an individual's personal goals support them.
 Have employees establish their own goals and action plans. Encourage them to set challenging, stretching
goals. Goals should not be impossible.
 Train managers in how to conduct participative goal-setting sessions. Train employees in how
 to develop effective action plans.
 Be supportive. Do not use goals to threaten employees.
 Set goals that are under the employees' control and then provide them with the necessary resources.
 Provide monetary incentives or other rewards for accomplishing goals.
B)PROCESS-BASED THEORIES THEORIES OF MOTIVATION
3- GOAL SETTING THEORY
Goal setting will not work when people are not committed to the goals
established. People have a higher goal commitment when they
understand their goals, when they feel pressure from peers to perform
well, when they perceive they can attain their goals and when they
believe they will be recognised for their accomplishments.' One of the
critical factors in cultivating goal commitment is demonstrating the
relevance and importance of goals to individuals and organisations.'
 B)PROCESS-BASED THEORIES THEORIES OF MOTIVATION
3- GOAL SETTING THEORY
Support and feedback in the form of resources and information required to get the job done
must be provided. This includes ensuring that each employee has the necessary abilities and
information to reach his or her goals. Appropriate goals without some degree of knowledge
are not sufficient for successful performance.' Training is required to help employees achieve
difficult goals. Moreover, managers should pay attention to employees' perceptions of effort
—> performance expectancies, self-efficacy and the valence of rewards (recall the
elaboration of expectancy theory). This involves knowing whether employees expect the goal
is attainable through effort, whether they believe they have the capacity and knowledge to
reach the goal and which rewards they find important when reaching the goal.'
B)PROCESS-BASED THEORIES THEORIES OF MOTIVATION
3- GOAL SETTING THEORY
Finally, employees should be provided with timely, specific feedback (knowledge
of results) on how they are doing. Research shows a complicated relationship
between feedback and performance. Feedback did not affect the performance level
of people who were already meeting expectations, but it significantly influenced
performance levels of underachievers.' These findings indicate that feedback is not
directly influencing performance. It rather serves as an essential condition of goal
setting to work." Because of the importance of feedback as a tool for reaching one's
goals and for increasing motivation, we discuss key aspects of the feedback process
in greater detail below.
C - REINFORCEMENT THEORY THEORIES OF MOTIVATION

According to reinforcement theory, behavior is a function of its

outcomes. Reinforcement theory says that behavior is a function of its
consequences, that behaviors followed by positive consequences (that is,
reinforced) will occur more frequently, and that behaviors either
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.
C - REINFORCEMENT THEORY THEORIES OF MOTIVATION
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. For
example, if you get docked an hour’s pay for being late to work, then a
reinforcement contingency exists between a behavior (being late to work) and a
consequence (losing an hour’s pay). 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.
C - REINFORCEMENT THEORY THEORIES OF MOTIVATION
Reinforcement Schedules
In addition to types of reinforcements, researchers have focused their attention on schedules of reinforcement as
well. Reinforcement is presented on a continuous schedule, if reinforcers follow all instances of positive behavior.
An example of a continuous schedule would be giving an employee a sales commission every time he makes a sale.
In many instances, continuous schedules are impractical. For example, it would be difficult to praise an employee
every time he shows up to work on time. Fixed-ratio schedules involve providing rewards every nth time the right
behavior is demonstrated. An example of this would be giving the employee a bonus for every tenth sale he makes.
Variable ratio involves providing the reinforcement on a random pattern, such as praising the employee
occasionally when the person shows up on time.
In the case of continuous schedules, behavioral change is more temporary. Once the reward is withdrawn, the
person may stop performing the desired behavior. The most durable results occur under variable ratios, but there is
also some evidence that continuous schedules produce higher performance than do variable schedules. Employee
reactions to continuous and variable ratio reinforcement schedules involving a monetary incentive.
C - REINFORCEMENT THEORY THEORIES OF MOTIVATION

Reinforcement Schedules
C - REINFORCEMENT THEORY THEORIES OF MOTIVATION
United Airlines employees get a $50 monthly
Imagine that even though no one asked you to, you
bonus if 80 percent of domestic or
stayed late and drafted a report. When the manager
international flights arrive on time. The bonus
found out, she was ecstatic and took you out to lunch
increases to $100 when both domestic and
and thanked you genuinely. The consequences
international flights arrive on time 80 percent
following your good deed were favorable, and therefore
of the time. Motivated by the bonuses, United
you are more likely to demonstrate similar behaviors in
employees achieved on-time rates of 85.5
the future. In other words, your taking initiative was
percent for domestic flights and 81.2 percent
reinforced. Instead, if your manager had said nothing
for international flights in November 2012, the
about it and everyone ignored the sacrifice you made,
second-best performance in five years. And
you are less likely to demonstrate similar behaviors in
during the Thanksgiving holiday, arguably the
the future.
busiest travel season, United averaged 88.3
percent on-time arrival.
 C - REINFORCEMENT THEORY THEORIES OF MOTIVATION
Reinforcement theory is based on a simple idea that may be
viewed as common sense. Beginning at infancy we learn For example, a company may make public
through reinforcement. If you have observed a small child
discovering the environment, you will see reinforcement statements about the importance of quality. Yet,
theory in action. When the child discovers manipulating a if they choose to reward shipments on time
faucet leads to water coming out and finds this outcome
pleasant, he is more likely to repeat the behavior. If he burns regardless of the amount of defects contained in
his hand while playing with hot water, the child is likely to
stay away from the faucet in the future. the shipments, employees are more likely to
Despite the simplicity of reinforcement, how many times have
ignore quality and focus on hurrying the
you seen positive behavior ignored, or worse, negative
behavior rewarded? In many organizations, this is a familiar delivery process. Because people learn to repeat
scenario. People go above and beyond the call of duty, yet
their actions are ignored or criticized. People with disruptive their behaviors based on the consequences
habits may receive no punishments because the manager is
following their prior activities, managers will
afraid of the reaction the person will give when confronted.
Problem employees may even receive rewards such as need to systematically examine the
promotions so they will be transferred to a different location
and become someone else’s problem. Moreover, it is common consequences of employee behavior and make
for people to be rewarded for the wrong kind of behavior. interventions when needed
 C - REINFORCEMENT THEORY THEORIES OF MOTIVATION
Reinforcement Interventions
Reinforcement theory describes four interventions to modify employee behavior. Two of these are methods of
increasing the frequency of desired behaviors, while the remaining two are methods of reducing the frequency of
undesired behaviors.
 C - REINFORCEMENT THEORY THEORIES OF MOTIVATION
Reinforcement Interventions
Reinforcement theory describes four interventions to modify employee behavior. Two of these are methods of
increasing the frequency of desired behaviors, while the remaining two are methods of reducing the frequency of
undesired behaviors.
C - REINFORCEMENT THEORY THEORIES OF MOTIVATION
Negative reinforcement is also used to increase the
Positive reinforcement is a method of
desired behavior. Negative reinforcement involves
increasing the desired behavior. Positive
removal of unpleasant outcomes once desired behavior
reinforcement involves making sure that
is demonstrated. Nagging an employee to complete a
behavior is met with positive consequences.
report is an example of negative reinforcement. The
For example, praising an employee for
negative stimulus in the environment will remain
treating a customer respectfully is an
present until positive behavior is demonstrated. The
example of positive reinforcement. If the
problem with negative reinforcement is that the
praise immediately follows the positive
negative stimulus may lead to unexpected behaviors
behavior, the employee will see a link
and may fail to stimulate the desired behavior. For
between the behavior and positive
example, the person may start avoiding the manager to
consequences and will be motivated to repeat
avoid being nagged.
similar behaviors.
 C - REINFORCEMENT THEORY THEORIES OF MOTIVATION
Extinction is used to decrease the frequency of negative behaviors.
Punishment is another method
Extinction is the removal of rewards following negative behavior.
of reducing the frequency of
Sometimes, negative behaviors are demonstrated because they are
being inadvertently rewarded. For example, it has been shown that
undesirable behaviors.

when people are rewarded for their unethical behaviors, they tend Punishment involves presenting
to demonstrate higher levels of unethical behaviors. Thus, when the negative consequences
rewards following unwanted behaviors are removed, the frequency following unwanted behaviors.
of future negative behaviors may be reduced. For example, if a Giving an employee a warning
coworker is forwarding unsolicited e-mail messages containing for consistently being late to
jokes, commenting and laughing at these jokes may be encouraging work is an example of
the person to keep forwarding these messages. Completely
punishment.
ignoring such messages may reduce their frequency.
C - REINFORCEMENT THEORY THEORIES OF MOTIVATION
 C - REINFORCEMENT THEORY THEORIES OF MOTIVATION

OB Toolbox: Be Effective in Your Use of Discipline

As a manager, sometimes you may have to discipline an employee to eliminate unwanted behavior. Here are some tips to make
this process more effective.
• Consider whether punishment is the most effective way to modify behavior. Sometimes catching people in the act of doing
good things and praising or rewarding them is preferable to punishing negative behavior. Instead of criticizing them for being
late, consider praising them when they are on time. Carrots may be more effective than sticks. You can also make the behavior
extinct by removing any rewards that follow undesirable behavior.
• Be sure that the punishment fits the crime. If a punishment is too harsh, both the employee in question and coworkers who will
learn about the punishment will feel it is unfair. Unfair punishment may not change unwanted behavior.
• Be consistent in your treatment of employees. Have disciplinary procedures and apply them in the same way to everyone. It is
unfair to enforce a rule for one particular employee but then give others a free pass.
• Document the behavior in question. If an employee is going to be disciplined, the evidence must go beyond hearsay.
• Be timely with discipline. When a long period of time passes between behavior and punishment, it is less effective in reducing
undesired behavior because the connection between the behavior and punishment is weaker.
C - REINFORCEMENT THEORY THEORIES OF MOTIVATION

A systematic way in which reinforcement theory principles are applied is called

Organizational Behavior Modification (or OB Mod). This is a systematic application of
reinforcement theory to modify employee behaviors in the workplace. The model consists of five
stages. The process starts with identifying the behavior that will be modified.
C - REINFORCEMENT THEORY THEORIES OF MOTIVATION

Let’s assume that we are interested in reducing absenteeism among employees.

In step 2, we need to measure the baseline level of absenteeism. How many times a month is a particular employee absent?
In step 3, the behavior’s antecedents and consequences are determined. Why is this employee absent? More importantly,
what is happening when the employee is absent? If the behavior is being unintentionally rewarded (e.g., the person is still
getting paid or is able to avoid unpleasant assignments because someone else is doing them), we may expect these positive
consequences to reinforce the absenteeism. Instead, to reduce the frequency of absenteeism, it will be necessary to think of
financial or social incentives to follow positive behavior and negative consequences to follow negative behavior.
In step 4, an intervention is implemented. Removing the positive consequences of negative behavior may be an effective
way of dealing with the situation, or, in persistent situations, punishments may be used.
Finally, in step 5 the behavior is measured periodically and maintained.
C - REINFORCEMENT THEORY THEORIES OF MOTIVATION

Studies examining the effectiveness of OB Mod have been supportive

of the model in general. A review of the literature found that OB Mod
interventions resulted in 17% improvement in performance.
Particularly in manufacturing settings, OB Mod was an effective way
of increasing performance, although positive effects were observed in
service organizations as well.
 THEORIES OF MOTIVATION
EXERCISES
1. Your manager tells you that the best way of ensuring fairness in reward distribution is to
keep the pay a secret. How would you respond to this assertion?
2. When distributing bonuses or pay, how would you ensure perceptions of fairness?
3. What are the differences between procedural, interactional, and distributive justice? List
ways in which you could increase each of these justice perceptions.
4. Using examples, explain the concepts of expectancy, instrumentality, and valence.
5. Some practitioners and researchers consider OB Mod unethical because it may be viewed
as a way of manipulation. What would be your reaction to such a criticism?
 THEORIES OF MOTIVATION

The Role of Ethics and National Culture

Learning Objectives
For example, in an experiment simulating the job of a sales
 Consider the role of motivation for ethical behavior.
manager, participants made a series of decisions using a
 Consider the role of national culture on motivation theories. computer. Partway through the simulation, subjects were
informed that salespeople reporting to them were giving
Motivation and Ethics kickbacks to customers. Subjects in this experiment were more
likely to cut the kickbacks if there was a threat of punishment to
What motivates individuals to behave unethically?
the manager. On the other hand, subjects playing the sales
Motivation theories have been applied to explain this manager were more likely to continue giving away the
kickbacks if they made a profit after providing the kickbacks. In
interesting and important question.
a separate study highlighting the importance of rewards and
One theory that has been particularly successful in explaining punishments, researchers found that the severity of expected
punishment was the primary predictor of whether subjects
ethical behavior is reinforcement theory. Just like any other
reported inclination to behave unethically. In addition to the
behavior such as performance or cooperation, ethical behavior severity of the punishment, the perceived likelihood of
punishment was also a major influence of ethical behavior.
is one that is learned as a result of the consequences following
These findings highlight the importance of rewards and
one’s actions. punishments for motivating unethical behaviors.
 THEORIES OF MOTIVATION
The Role of Ethics and National Culture
Motivation and Ethics
There are many organizational situations in which individuals may do unethical things but then
experience positive consequences such as being awarded promotions for meeting their sales quotas. For
example, in many hotels, staff members routinely receive kickbacks from restaurants or bars if they refer
customers to those locations. Similarly, sales staff rewarded with spiffs (product-specific sales
incentives) may give customers advice that goes against their own personal beliefs and in this sense act
unethically. As long as unethical behavior is followed by positive consequences for the person in
question, we would expect unethical behavior to continue. Thus, in order to minimize the occurrence of
unethical behavior (and in some instances legal problems), it seems important to examine the rewards
and punishments that follow unethical behavior and remove rewards following unethical behavior while
increasing the severity and likelihood of punishment.
 THEORIES OF MOTIVATION
The Role of Ethics and National Culture
Motivation Around the Globe

Motivation is a culturally bound topic. In other words, the factors that motivate employees in different cultures may
not be equivalent. The motivation theories we cover in this chapter are likely to be culturally bound because they
were developed by Western researchers and the majority of the research supporting each theory was conducted on
Western subjects. Based on the cultural context, Maslow’s hierarchy of needs may require modification because the
ranking of the needs may differ across cultures.

For example, a study conducted in 39 countries showed that financial satisfaction was a stronger predictor of
overall life satisfaction in developing nations compared to industrialized nations.

In industrialized nations, satisfaction with esteem needs was a more powerful motivator than it was in developing nations.
People around the world value justice and fairness. However, what is perceived as fair may be culturally dependent.
Moreover, people in different cultures may react differently to perceived unfairness.
 THEORIES OF MOTIVATION
The Role of Ethics and National Culture
Motivation Around the Globe

The degree to which justice is valued in the workplace.

Social Justice Research. For example, in cross-cultural studies, it was found that participants in low power distance
cultures such as the United States and Germany valued voice into the process (the opportunities for explanation and
appealing a decision) more than those in high power distance cultures such as China and Mexico. At the same time,
interactional justice was valued more by the Chinese subjects.

There is also some evidence indicating that equity (rewarding employees based on their contributions to a group)
may be a culture-specific method of achieving fairness. One study shows that Japanese subjects viewed equity as less
fair and equality-based distributions as more fair than did Australian subjects.

Similarly, subjects in different cultures varied in their inclination to distribute rewards based
on subjects’ need or age, and in cultures such as Japan and India, a person’s need may be a
 THEORIES OF MOTIVATION
IMPORTANCE OF MOTIVATION
 THEORIES OF MOTIVATION

EXERCISES

1. What is the connection between a company’s reward system and the level of

ethical behaviors?

2. Which of the motivation theories do you think would be more applicable to

many different cultures?

Motivation in Action: The Case of Trader Joe’s
THEORIES OF MOTIVATION

People in Hawaiian T-shirts. Delicious fresh fruits and vegetables. A place where parking is tight and aisles are tiny.
A place where you will be unable to find half the things on your list but will go home satisfied. We are, of course,
talking about Trader Joe’s (a privately held company), a unique grocery store headquartered in California and located
in 22 states. By selling store-brand and gourmet foods at affordable prices, this chain created a special niche for
itself. Yet the helpful employees who stock the shelves and answer questions are definitely key to what makes this
store unique and helps it achieve twice the sales of traditional supermarkets.

Shopping here is fun, and chatting with employees is a routine part of this experience. Employees are upbeat and
friendly to each other and to customers. If you look lost, there is the definite offer of help. But somehow the
friendliness does not seem scripted. Instead, if they see you shopping for big trays of cheese, they might casually
inquire if you are having a party and then point to other selections. If they see you chasing your toddler, they are
quick to tie a balloon to his wrist. When you ask them if they have any cumin, they get down on their knees to
check the back of the aisle, with the attitude of helping a guest that is visiting their home. How does a company
make sure its employees look like they enjoy being there to help others?
 THEORIES OF MOTIVATION
Motivation in Action: The Case of Trader Joe’s
One of the keys to this puzzle is pay. Trader Joe’s sells cheap organic food, but they are not “cheap” when it comes to paying their
employees. Employees, including part-timers, are among the best paid in the retail industry. Full-time employees earn an average
of $40,150 in their first year and also earn average annual bonuses of $950 with $6,300 in retirement contributions. Store
managers’ average compensation is $132,000. With these generous benefits and above-market wages and salaries, the company
has no difficulty attracting qualified candidates.
Employees are also given autonomy on the job. They can open a product to have the customers try it and can be honest about
their feelings toward different products. They receive on- and off-the-job training and are intimately familiar with the products,
which enables them to come up with ideas that are taken seriously by upper management. In short, employees love what they do,
work with nice people who treat each other well, and are respected by the company. When employees are treated well, it is no
wonder they treat their customers well daily.
But money only partially explains what energizes Trader Joe’s employees. They work with people who are friendly and upbeat.
The environment is collaborative, so that people fill in for each other and managers pick up the slack when the need arises,
including tasks like sweeping the floors. Plus, the company promotes solely from within, making Trader Joe’s one of few places
in the retail industry where employees can satisfy their career aspirations. Employees are evaluated every 3 months and receive
feedback about their performance.
 THEORIES OF MOTIVATION
Motivation in Action: The Case of Trader Joe’s

DISCUSSION QUESTIONS
1. How much of Trader Joe’s success can be attributed to the fact that most larger chain
grocery stores do not sell the type of food available at Trader Joe’s?
2. Is pay enough of an incentive to continue at a job you do not enjoy?
3. Trader Joe’s promotes entirely from within the organization. This means that if you are a
good, dedicated worker, you can rise up within the company. Do you feel employees
would be as dedicated to the company if this were not the case? Would high pay be
enough to keep employees? What if the company only promoted from within but pay were
not as good?
 EXERCISES THEORIES OF MOTIVATION
ETHICAL DILEMMA
Companies are interested in motivating employees: Work hard, be productive, behave ethically—and
stay healthy. Health care costs are rising, and employers are finding that unhealthy habits such as
smoking or being overweight are costing companies big bucks.
Your company is concerned about the rising health care costs and decides to motivate employees to
adopt healthy habits. Therefore, employees are given a year to quit smoking. If they do not quit by then,
they are going to lose their jobs. New employees will be given nicotine tests, and the company will
avoid hiring new smokers in the future. The company also wants to encourage employees to stay
healthy. For this purpose, employees will get cash incentives for weight loss. If they do not meet the
weight, cholesterol, and blood pressure standards to be issued by the company, they will be charged
extra fees for health insurance.
Is this plan ethical? Why or why not? Can you think of alternative ways to motivate employees to
adopt healthy habits?
 THEORIES OF MOTIVATION
INDIVIDUAL EXERCISE
Your company provides diversity training programs to ensure that employees realize the importance of working
with a diverse workforce, are aware of the equal employment opportunity legislation, and are capable of
addressing the challenges of working in a multicultural workforce. Participation in these programs is mandatory,
and employees are required to take the training as many times as needed until they pass. The training program lasts
one day and is usually conducted in a nice hotel outside the workplace. Employees are paid for the time they spend
in the training program.
You realize that employees are not really motivated to perform well in this program. During the training, they put
in the minimum level of effort, and most participants fail the exam given at the conclusion of the training program
and then have to retake the training.
Using expectancy and reinforcement theories, explain why they may not be motivated to perform well in the
training program. Then suggest improvements in the program so that employees are motivated to understand the
material, pass the exam, and apply the material in the workplace.
 THEORIES OF MOTIVATION
GROUP EXERCISE
A Reward Allocation Decision
You are in charge of allocating a $12,000 bonus to a team that recently met an important deadline. The team was in charge of
designing a Web-based product for a client. The project lasted a year. There were five people in the team. Your job is to determine each
person’s share from the bonus.
Devin: Project manager. He was instrumental in securing the client, coordinating everyone’s effort, and managing relationships with the
client. He put in a lot of extra hours for this project. His annual salary is $80,000. He is independently wealthy, drives an expensive car, and does
not have any debt. He has worked for the company for 5 years and worked for the project from the beginning.
Alice: Technical lead. She oversaw the technical aspects of the project. She resolved many important technical issues. During the project,
while some members worked extra hours, she refused to stay at the office outside regular hours. However, she was productive during regular work
hours, and she was accessible via e-mail in the evenings. Her salary is $50,000. She is a single mother and has a lot of debt. She has worked for
the company for 4 years and worked for the project for 8 months.
Erin: Graphic designer. She was in charge of the creative aspects of the project. She experimented with many looks, and while doing that she
slowed down the entire team. Brice and Carrie were mad at her because of the many mistakes she made during the project, but the look and feel of
the project eventually appealed to the client, which resulted in repeat business. Her salary is $30,000. She is single and lives to party. She has
worked for the company for 2 years and worked for this project from the beginning.
Brice: Tester. He was in charge of finding the bugs in the project and ensuring that it worked. He found many bugs, but he was not very
aggressive in his testing. He misunderstood many things, and many of the bugs he found were not really bugs but his misuse of the system. He
had a negative attitude toward the whole project, acted very pessimistically regarding the likelihood of success, and demoralized the team. His
salary is $40,000. He has accumulated a large credit card debt. He has worked for the company for 3 years and worked for the project in the last 6
months.
Carrie: Web developer. She was in charge of writing the code. She was frustrated when Erin slowed down the entire project because of her
experimentation. Carrie was primarily responsible for meeting the project deadline because she put in a lot of extra work hours. Her salary is
$50,000. Her mother has ongoing health issues, and Carrie needs money to help her. She worked for the company for the past year and was
involved in this project for 6 months.