© 2010 South-Western, Cengage Learning, Inc. All rights reserved.

Learning Objectives After studying this chapter, you should be able to: Characterize the nature of motivation, including its importance and historical perspectives. Identify and describe the major content perspectives on motivation. Identify and describe the major process perspectives on motivation. Describe reinforcement perspectives on motivation. Identify and describe popular motivational strategies. Describe the role of organizational reward systems in motivation. © 2010 South-Western, Cengage Learning, Inc. All rights reserved.

The Nature of Motivation The set of forces that cause people to behave in certain ways. The goal of managers is to maximize desired behaviors and minimize undesirable behaviors. The Importance of Motivation in the Workplace Determinants of Individual Performance Motivation—the desire to do the job. Ability—the capability to do the job. Work environment—the resources to do the job. © 2010 South-Western, Cengage Learning, Inc. All rights reserved.

16.1 The Motivation Framework Content Perspectives Process Perspectives Search for ways to satisfy need Choice of behavior to satisfy need Need or deficiency Determination of future needs and search/choice for satisfaction Evaluation of need satisfaction The motivation processes through a series of discreet steps. Content, process, and reinforcement perspectives on motivation address different parts of this process. © 2010 South-Western, Cengage Learning, Inc. All rights reserved.

Historical Perspectives on Motivation The Traditional Approach Workers are interchangeable tools of production. Frederick Taylor (Scientific Management) Assumptions: Managers know more than workers. Economic gain (money) is the primary motivation for performance. Work is inherently unpleasant. © 2010 South-Western, Cengage Learning, Inc. All rights reserved.

Historical Perspectives on Motivation (cont’d) The Human Relations Approach Emphasized role of social processes in workplace. Assumptions: Employees want to feel useful and and important. Employees have strong social needs, more important than money. Maintaining the appearance of employee participation is important. © 2010 South-Western, Cengage Learning, Inc. All rights reserved.

Historical Perspectives on Motivation (cont’d) The Human Resource Approach Emphasized value of employees to organization Assumptions: Employee contributions are important and valuable to the employee and the organization. Employees want to and are able to make genuine contributions. Management’s job is to encourage participation and create a work environment that motivates employees. © 2010 South-Western, Cengage Learning, Inc. All rights reserved.

Content Perspectives on Motivation Try to answer the question, “What factors in the workplace motivate people?” Content Perspective Theories Maslow’s Hierarchy of Needs Aldefer’s ERG Theory Herzberg’s Two-Factor Theory McClelland’s Achievement, Power, and Affiliation Needs © 2010 South-Western, Cengage Learning, Inc. All rights reserved.

Maslow’s Hierarchy of Needs Physiological Attending to basic survival and biological functions. Security Seeking a safe physical and emotional environment. Belongingness Experiencing love and affection. Esteem Having a positive self-image/self-respect and recognition and respect from others. Self-actualization Realizing one’s potential for personal growth and development. © 2010 South-Western, Cengage Learning, Inc. All rights reserved.

16.2 Maslow’s Hierarchy of Needs Self- actualization Esteem Belongingness Security Physiology Food Achievement Status Friendship Stability Job Friends Pension Base NEEDS General Examples Organizational Examples job Challenging title at work plan salary © 2010 South-Western, Cengage Learning, Inc. All rights reserved.

The Needs Hierarchy Approach Contributions of Maslow’s Theory Identified and categorized individual needs. Emphasized importance of needs to motivation. Weaknesses of Maslow’s Theory All levels of need are not always present. Ordering or importance of needs is not always the same. Cultural differences can impact the ordering and salience of needs. © 2010 South-Western, Cengage Learning, Inc. All rights reserved.

Content Perspectives… (cont’d) Relatedness Needs Growth Needs Existence Needs The ERG Theory © 2010 South-Western, Cengage Learning, Inc. All rights reserved.

Content Perspectives… (cont’d) The ERG Theory (Aldefer) Needs are grouped into overlapping categories: Existence needs—physiological and security needs. Relatedness needs—belongingness and esteem by others. Growth needs—self-esteem and self-actualization. ERG theory assumes that: Multiple needs can be operative at one time (there is no absolute hierarchy of needs). If a need is unsatisfied, a person will regress to a lower-level need and pursue that need (frustration-regression). © 2010 South-Western, Cengage Learning, Inc. All rights reserved.

Content Perspectives… (cont’d) The Two-Factor Theory (Herzberg) Satisfaction and dissatisfaction are influenced by two independent sets of factors. Theory assumes that job satisfaction and job dissatisfaction are on two distinct continuums: Motivational factors (work content) are on a continuum that ranges from satisfaction to no satisfaction. Hygiene factors (work environment) are on a separate continuum that ranges from dissatisfaction to no dissatisfaction. © 2010 South-Western, Cengage Learning, Inc. All rights reserved.

Content Perspectives… (cont’d) The Two-Factor Theory (cont’d) Theory posits that motivation is a two-step process: Ensuring that the hygiene factors are not deficient and not blocking motivation. Giving employees the opportunity to experience motivational factors through job enrichment. © 2010 South-Western, Cengage Learning, Inc. All rights reserved.

16.3 The Two-Factor Theory of Motivation Work Content Motivation Factors • Achievement Recognition The work itself Responsibility Advancement and growth Satisfaction No satisfaction Work Environment Hygiene Factors • Supervisors Working conditions Interpersonal relations Pay and security Company policies and administration Dissatisfaction No dissatisfaction © 2010 South-Western, Cengage Learning, Inc. All rights reserved.

Management Challenge Despite considerable criticism, Herzberg’s Two-Factor theory continues to be studied in management classes. Why? © 2010 South-Western, Cengage Learning, Inc. All rights reserved.

Content Perspectives… (cont’d) Individual Human Needs (McClelland) Need for Achievement The desire to accomplish a goal or task more effectively than in the past. Need for Affiliation The desire for human companionship and acceptance. Need for Power The desire to be influential in a group and to be in control of one’s environment. © 2010 South-Western, Cengage Learning, Inc. All rights reserved.

Content Perspectives… (cont’d) Implications of the Content Perspectives Content Perspectives (what causes motivation) Process Perspectives (how motivation occurs) © 2010 South-Western, Cengage Learning, Inc. All rights reserved.

Motivation Process Perspectives Approaches to motivation that focus on: Search for behavioral options and alternatives Choice of behavioral options to satisfy needs Rewards and evaluation of satisfaction after goals are attained. Process Perspective Theories Expectancy Theory Porter-Lawler Extension of Expectancy Theory Equity Theory Goal-Setting Theory © 2010 South-Western, Cengage Learning, Inc. All rights reserved.

Motivation Process Perspectives (cont’d) Expectancy Theory Motivation depends on how much we want something and how likely we are to get it. Assumes that: Personal and environmental forces determine behavior People make decisions about their behavior in organizations. People have different types of needs, desires, and goals. People choose among alternatives of behaviors in selecting one that that leads to a desired outcome. Motivation leads to effort that, when combined with ability and environmental factors, results in performance which leads to outcomes having value (valence) to employees. © 2010 South-Western, Cengage Learning, Inc. All rights reserved.

Elements of Expectancy Theory Effort-to-Performance Expectancy Employee’s perception of the probability that effort will lead to a high level of performance. Performance-to-Outcome Expectancy Employee’s perception of the probability that performance will lead to a specific outcome—the consequence or reward for behaviors in an organizational setting. © 2010 South-Western, Cengage Learning, Inc. All rights reserved.

Elements of Expectancy Theory (cont’d) Valence Is an index of how much an individual values a particular outcome (reward). Is the attractiveness of the outcome to the individual. Attractive outcomes have positive valences and unattractive outcomes have negative valences. Outcomes to which an individual is indifferent have zero valences. © 2010 South-Western, Cengage Learning, Inc. All rights reserved.

Elements of Expectancy Theory (cont’d) What is required for motivated behavior to occur: Both effort-to-performance expectancy and performance-to-outcome expectancy probabilities must be greater than zero. The sum of the valences must be greater than zero. © 2010 South-Western, Cengage Learning, Inc. All rights reserved.

16.4 The Expectancy Model of Motivation © 2010 South-Western, Cengage Learning, Inc. All rights reserved.

The Porter-Lawler Extension of Expectancy Theory Assumptions: If performance results in equitable and fair rewards, people will be more satisfied. High performance can lead to rewards and high satisfaction. Types of Rewards: Extrinsic rewards are outcomes set and awarded by external parties (e.g., pay and promotions). Intrinsic rewards are outcomes internal to the individual (e.g., self-esteem and feelings of accomplishment). © 2010 South-Western, Cengage Learning, Inc. All rights reserved.

Equity Theory Equity Theory’s Assumptions outcomes (self) An individual’s belief that the treatment the individual receives is fair relative to the treatment received by others. Theory’s Assumptions People are motivated to seek social equity in the rewards they receive for performance. Individuals view the value of rewards (outcomes) and inputs of effort as ratios and make subjective comparisons of themselves to other people. outcomes (self) inputs (self) = outcomes (other) inputs (other) © 2010 South-Western, Cengage Learning, Inc. All rights reserved.

Equity Theory (cont’d) Equity Comparisons of Individuals: Feeling equitably rewarded. Maintain performance and accept comparison as fair estimate. Feeling under-rewarded—try to reduce inequity. Change inputs by trying harder or slacking off. Change outcomes by demanding a raise. Distort the ratios by altering perceptions of self or of others. Leave situation by quitting the job. Change comparisons by choosing another object person. Feeling over-rewarded. Increase or decrease inputs. Distort ratios by rationalizing. Help the object person gain more outcomes. © 2010 South-Western, Cengage Learning, Inc. All rights reserved.

Goal-Setting Theory Theory’s Assumptions Characteristics of Goals Behavior is a result of conscious goals and intentions. Setting goals influences behavior in organizations. Characteristics of Goals Goal difficulty Extent to which a goal is challenging and requires effort. People work harder to achieve more difficult goals. Goals should be difficult but attainable. Goal specificity Clarity and precision of the goal. Goals vary in their ability to be stated specifically © 2010 South-Western, Cengage Learning, Inc. All rights reserved.

Goal Setting Theory (cont’d) Characteristics of Goals (cont’d) Goal acceptance The extent to which persons accept a goal as their own. Goal commitment The extent to which an individual is personally interested in reaching a goal. © 2010 South-Western, Cengage Learning, Inc. All rights reserved.

Implications of the Process Perspectives If rewards are to motivate employees, they must be perceived as being valued, attainable, fair and equitable. © 2010 South-Western, Cengage Learning, Inc. All rights reserved.

16.6 The Expanded Goal-setting Theory of Motivation © 2010 South-Western, Cengage Learning, Inc. All rights reserved.

Reinforcement Perspectives Reinforcement Theory The role of rewards as they cause behavior to change or remain the same over time. Assumes that: Behavior that results in rewarding consequences is likely to be repeated. Behavior that results in punishing consequences is less likely to be repeated. © 2010 South-Western, Cengage Learning, Inc. All rights reserved.

Reinforcement in Organizations Kinds of Reinforcement Positive Reinforcement Avoidance Punishment Extinction © 2010 South-Western, Cengage Learning, Inc. All rights reserved.

Reinforcement Perspectives (cont’d) Fixed Interval Variable Interval Fixed Ratio Variable Ratio Reinforcement Schedules Time Frequency © 2010 South-Western, Cengage Learning, Inc. All rights reserved.

16.1 Elements of Reinforcement Theory Arrangement of the Reinforcement Contingencies Positive reinforcement Strengthens behavior by providing a desirable consequence Avoidance Strengthens behavior by allowing escape from an undesirable consequence Punishment Weakens behavior by providing an undesirable consequence Extinction Weakens behavior by ignoring it Schedules for Applying Reinforcement Fixed-interval Reinforcement is applied at fixed time intervals, regardless of behavior Variable-interval Reinforcement is applied at variable time intervals Fixed-ratio Reinforcement is applied after a fixed number of behaviors, regardless of time Variable-ratio Reinforcement is applied after a variable number of behaviors © 2010 South-Western, Cengage Learning, Inc. All rights reserved.

Reinforcement Perspectives (cont’d) Behavior Modification (OB mod) A method for applying the basic elements of reinforcement theory in an organizational setting. Specific behaviors are tied to specific forms of reinforcement. Implications of the Reinforcement Perspectives Consistently applied reinforcement helps maintain employee motivation by: encouraging (rewarding) positive behaviors. discouraging (punishing) dysfunctional behaviors. © 2010 South-Western, Cengage Learning, Inc. All rights reserved.

Popular Motivational Strategies Empowerment and Participation Empowerment Enabling workers to set their work goals, make decisions, and solve problems within their sphere of influence. Participation Giving employees a voice in making decisions about their work. Areas of participation for employees: Making decisions about their jobs. Decisions about administrative matters Participating in decision making about broader issues of product quality. © 2010 South-Western, Cengage Learning, Inc. All rights reserved.

Popular Motivational Strategies (cont’d) Techniques and Issues in Empowerment Using work teams Collections of employees empowered to plan, organize, direct, and control their work Decentralization Changing the overall method of organizing the firm Conditions necessary for empowerment: Power spread to lower organizational levels Commitment to empowering workers Systematic and patient efforts to empower workers Increased commitment to training © 2010 South-Western, Cengage Learning, Inc. All rights reserved.

Popular Motivational Strategies (cont’d) Alternative Forms of Working Arrangements Compressed work schedule Flexible work schedules (flextime) Job sharing Telecommuting Variable Work Schedules © 2010 South-Western, Cengage Learning, Inc. All rights reserved.

Using Reward Systems to Motivate Performance Formal and informal mechanisms by which employee performance is defined, evaluated, and rewarded. Effects of Organizational Rewards Higher-level performance-based rewards motivate employees to work harder. Rewards help align employee self-interest with organizational goals. Rewards foster increased retention and citizenship. © 2010 South-Western, Cengage Learning, Inc. All rights reserved.

Reward Systems and Performance Individual Incentive Rewards Systems Group and Team Incentive Rewards Systems Individual Merit Rewards Systems Types of Reward Systems © 2010 South-Western, Cengage Learning, Inc. All rights reserved.

Using Reward Systems to Motivate Performance (cont’d) Merit Reward Systems Base a meaningful portion of individual compensation on merit—the relative value of an individual’s contributions to the organization. Employees who make greater contributions are given higher pay than those who make lesser contributions. © 2010 South-Western, Cengage Learning, Inc. All rights reserved.

Using Reward Systems to Motivate Performance (cont’d) Incentive Reward Systems Concept: Employee pay is based on employee output. Assume that: Performance is under control of individual worker. Employee works at a single task continuously. Pay is tightly tied to performance (i.e., pay varies with output). © 2010 South-Western, Cengage Learning, Inc. All rights reserved.

Using Reward Systems to Motivate Performance (cont’d) Incentive Reward Systems (cont’d) Incentive pay plans Piece-rate systems Sales commissions Non-monetary incentives (perks) Team and Group Incentive Reward Systems Gainsharing programs Scanlon Plan Employee stock ownership plans (ESOPs) © 2010 South-Western, Cengage Learning, Inc. All rights reserved.

Executive Compensation Standard Forms of Executive Compensation Base salary Incentive pay (bonuses) Special Forms of Executive Compensation Stock option plans Executive perks Criticism of Executive Compensation Excessively large compensation amounts Compensation not tied to overall and long-term performance of the organization Earnings gap between executive pay and typical employee pay © 2010 South-Western, Cengage Learning, Inc. All rights reserved.

New Approaches to Performance-Based Rewards Leveraging the Value of Incentives Allowing individuals and groups in the organization to have a say in how rewards are distributed. Innovative Incentive Programs: Offering stock options to all employees. Individualizing the rewards available to individuals in reward systems. © 2010 South-Western, Cengage Learning, Inc. All rights reserved.

Management Challenge Question How are expectancy theory, performance appraisal systems, and reward systems linked? © 2010 South-Western, Cengage Learning, Inc. All rights reserved.

Key Terms motivation content perspectives Maslow’s hierarchy of needs ERG theory of motivation two-factor theory of motivation need for affiliation need for achievement need for power process perspectives expectancy theory effort-to-performance expectancy outcomes valence equity theory avoidance positive reinforcement extinction variable-ratio schedule variable-interval schedule participation © 2010 South-Western, Cengage Learning, Inc. All rights reserved.

Key Terms behavior modification (OB Mod) compressed work schedule job sharing telecommuting merit pay plan reward system piece-rate incentive plan gainsharing programs Scanlon plan stock option plan © 2010 South-Western, Cengage Learning, Inc. All rights reserved.