Managing Employee Motivation and Performance Chapter Sixteen Managing Employee Motivation and Performance

Learning Objectives After studying this chapter, you should be able to: Characterize the nature of motivation, including its importance and basic 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. Copyright © Houghton Mifflin Company. 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. Copyright © Houghton Mifflin Company. All rights reserved.

Figure 16.1: The Motivation Framework Copyright © Houghton Mifflin Company. All rights reserved.

Content Perspectives on Motivation Approaches to motivation that try to answer the question, “What factors in the workplace motivate people?” Content Perspectives of Motivation Maslow’s Hierarchy of Needs Aldefer’s ERG Theory Herzberg’s Two-Factor Theory McClelland’s Achievement, Power, and Affiliation Needs Copyright © Houghton Mifflin Company. All rights reserved.

Content Perspectives on Motivation (cont’d) The Need Hierarchy Approach Maslow’s Hierarchy of Needs Physiological—basic survival and biological function. Security—a safe physical and emotional environment. Belongingness—love and affection. Esteem—positive self-image/self-respect and recognition and respect from others. Self-actualization—realizing one’s potential for personal growth and development. Weakness of Maslow’s theory Five levels of need are not always present. Ordering or importance of needs is not always the same. Cultural differences. Copyright © Houghton Mifflin Company. All rights reserved.

Figure 16.2: Maslow’s Hierarchy of Needs Copyright © Houghton Mifflin Company. All rights reserved.

Content Perspectives on Motivation (cont’d) The ERG Theory Needs are grouped into three overlapping categories: Existence needs—physiological and security needs. Relatedness needs—belongingness and esteem by others. Growth needs—self-esteem and 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). Copyright © Houghton Mifflin Company. All rights reserved.

Content Perspectives on Motivation (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. Copyright © Houghton Mifflin Company. All rights reserved.

Content Perspectives on Motivation (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. Copyright © Houghton Mifflin Company. All rights reserved.

Figure 16.3: The Two-Factor Theory of Motivation Copyright © Houghton Mifflin Company. All rights reserved.

Content Perspectives on Motivation (cont’d) Individual Human Needs (McClelland) The need for achievement The desire to accomplish a goal or task more effectively than in the past. The need for affiliation The desire for human companionship and acceptance. The need for power The desire to be influential in a group and to be in control of one’s environment. Implications of the Content Perspectives Content (what causes motivation) → Process (how motivation occurs) Copyright © Houghton Mifflin Company. All rights reserved.

Process Perspectives on Motivation Approaches to motivation that focus on: Why people choose certain behavioral options to satisfy their needs How they evaluate their satisfaction after they have attained their goals. Process Perspectives of Motivation Expectancy Theory Porter-Lawler Extension of Expectancy Theory Equity Theory Goal-Setting Theory Copyright © Houghton Mifflin Company. All rights reserved.

Process Perspectives on Motivation (cont’d) Expectancy Theory Motivation depends on how much we want something and how likely we are to get it. Assumes that: Behavior is determined by personal and environmental forces. People make decisions about their behavior in organizations. People have different types of needs, desires, and goals. People choose among alternatives of behaviors in selecting one that that leads to a desired outcome. Motivation leads to effort that, when combined with ability and environmental factors, results in performance which leads to various outcomes that have value (valence) to employees. Copyright © Houghton Mifflin Company. All rights reserved.

Process Perspectives on Motivation (cont’d) Elements of Expectancy Theory Effort-to-Performance Expectancy The employee’s perception of the probability that effort will lead to a high level of performance. Performance-to-Outcome Expectancy The employee’s perception of the probability that performance will lead to a specific outcome—the consequence or reward for behaviors in an organizational setting. Copyright © Houghton Mifflin Company. All rights reserved.

Process Perspectives on Motivation (cont’d) Elements of Expectancy Theory (cont’d) Valence An index of how much an individual values a particular outcome. It 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. 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. Copyright © Houghton Mifflin Company. All rights reserved.

Figure 16.4: The Expectancy Model of Motivation Copyright © Houghton Mifflin Company. All rights reserved.

Process Perspectives on Motivation (cont’d) 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). Copyright © Houghton Mifflin Company. All rights reserved.

Figure 16.5: The Porter-Lawler Extension of Expectancy Theory Copyright © Houghton Mifflin Company. All rights reserved.

Process Perspectives on Motivation (cont’d) Equity Theory People are motivated to seek social equity in the rewards they receive for performance. Equity is an individual’s belief that the treatment he or she receives is fair relative to the treatment received by others. Individuals view the value of rewards (outcomes) and inputs of effort as ratios and make subjective comparisons of themselves to other people. outcomes (self) inputs (self) = outcomes (other) inputs (other) Copyright © Houghton Mifflin Company. All rights reserved.

Process Perspectives on Motivation (cont’d) Equity Theory (cont’d) Conditions of and reactions to equity comparisons: 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. Copyright © Houghton Mifflin Company. All rights reserved.

Process Perspectives on Motivation (cont’d) Goal-Setting Theory Assumptions Behavior is a result of conscious goals and intentions. Setting goals influence the behavior of people in organizations. Characteristics of Goals Goal difficulty Extent to which a goal is challenging and requires effort. People work harder to achieve more difficult goals. Goals should be difficult but attainable. Goal specificity Clarity and precision of the goal. Goals vary in their ability to be stated specifically Copyright © Houghton Mifflin Company. All rights reserved.

Process Perspectives on Motivation (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. Implications of the Process Perspectives If rewards are to motivate employees, they must be perceived as being valued, attainable, fair and equitable. Copyright © Houghton Mifflin Company. All rights reserved.

Figure 16.6: The Expanded Goal-setting Theory of Motivation Copyright © Houghton Mifflin Company. All rights reserved.

Reinforcement Perspectives on Motivation 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, whereas behavior that results in punishing consequences is less likely to be repeated. Copyright © Houghton Mifflin Company. All rights reserved.

Reinforcement Perspectives on Motivation (cont’d) Kinds of Reinforcement in Organizations Positive reinforcement Strengthens behavior with rewards or positive outcomes after a desired behavior is performed. Avoidance Strengthens behavior by avoiding unpleasant consequences that would result if the behavior is not performed. Punishment Weakens undesired behavior by using negative outcomes or unpleasant consequences when the behavior is performed. Extinction Weakens undesired behavior by simply ignoring or not reinforcing that behavior. Copyright © Houghton Mifflin Company. All rights reserved.

Reinforcement Perspectives on Motivation (cont’d) Providing Reinforcement in Organizations Reinforcement schedules Fixed interval schedule—reinforcement applied at fixed time intervals, regardless of behavior. Variable interval—reinforcement applied at variable time intervals. Fixed ratio—reinforcement applied after a fixed number of behaviors, regardless of time. Variable Ratio—reinforcement applied after a variable number of behaviors, regardless of time. Copyright © Houghton Mifflin Company. All rights reserved.

Table 16.1: Elements of Reinforcement Theory Copyright © Houghton Mifflin Company. All rights reserved.

Reinforcement Perspectives on Motivation (cont’d) Providing Reinforcement in Organizations (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 in an organization. Copyright © Houghton Mifflin Company. All rights reserved.

Popular Motivational Strategies Empowerment and Participation Empowerment Enabling workers to set their own work goals, make decisions, and solve problems within their sphere of influence. Participation Giving employees a voice in making decisions about their work. Areas of participation for employees: Making decisions about their jobs. Decisions about administrative matters (e.g., work schedules). Participating in decision making about broader issues of product quality. Copyright © Houghton Mifflin Company. 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. Copyright © Houghton Mifflin Company. All rights reserved.

Using Reward Systems to Motivate Performance (cont’d) The formal and informal mechanisms by which employee performance is defined, evaluated, and rewarded. Effects of Organizational Rewards Higher-level performance-based rewards motivate employees to work harder. Rewards help align employee self-interest with organizational goals. Rewards foster increased retention and citizenship Copyright © Houghton Mifflin Company. 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. Incentive Reward Systems Concept: employee pay is based on employee output. Assume that: Performance is under the control of the individual worker. The employee work at a single task continuously. Pay is tightly tied to performance (i.e., pay varies with output). Copyright © Houghton Mifflin Company. All rights reserved.

Using Reward Systems to Motivate Performance (cont’d) Incentive Reward Systems (cont’d) Incentive pay plans Piece-rate systems Sales commissions Other forms of incentives Non-monetary incentives (perks) Team and Group Incentive Reward Systems Gainsharing programs Scanlon Plan Employee stock ownership plans (ESOPs) Copyright © Houghton Mifflin Company. All rights reserved.

Using Reward Systems to Motivate Performance (cont’d) Executive Compensation Standard forms of executive compensation Base salary Incentive pay (bonuses) Special forms of executive compensation Stock option plans Executive perks Criticism of executive compensation Excessively large compensation amounts Compensation not tied to overall performance of the organization Earnings gap between executive pay and typical employee pay Copyright © Houghton Mifflin Company. All rights reserved.

Using Reward Systems to Motivate Performance (cont’d) New Approaches to Performance-Based Rewards Leveraging the value of incentives Allowing individuals and groups in the organization to have a say in how rewards are distributed. Getting increasingly innovative in incentive programs: Offering stock options to all employees Individualizing the rewards available to individuals in reward systems Copyright © Houghton Mifflin Company. 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 Copyright © Houghton Mifflin Company. All rights reserved.

Key Terms stock option plan 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 Copyright © Houghton Mifflin Company. All rights reserved.