Management Employee Motivation Employee Motivation Definition of Motivation: Factors which energize, direct and sustain employee behavior. Motivation is goal directed behavior. Motivation is NOT the same as Performance. Performance = Motivation X Ability Dimensions of Motivation –Form - Duration –Direction - Intensity

Management Employee Motivation Theories of Motivation Cognitive Theories; POV = The Employee –Expectancy Theory –Equity Theory Behavior Theory; POV = The Manager –Reinforcement theory Financial Theory; POV = The Business Owner –Agency Theory

Management Employee Motivation Expectancy Theory (Vroom, 1964) People’s Behavior results from conscious choices among alternatives. Valence - A person’s preference among various outcomes or rewards. Ex. Do I prefer to achieve a higher performance goal or more leisure time? Instrumentality - A person’s belief that a certain level of performance will lead to certain desirable consequences. Ex. If I study 2 hours every day for my finance class, will I earn an A grade?

Management Employee Motivation Expectancy Theory (Cont’d) Expectancy - A person’s belief about whether a certain performance outcome is possible. Ex. Can I sell 12 houses this year? Will my team achieve “excellence” in the customer satisfaction survey? Assumption - People select to pursue the level of performance they believe will maximize their utility (happiness). Motivation = f (V, I, E) where V, I, E > 0

Management Employee Motivation Expectancy Theory Applications for Managers Managing Valence –Rewards must be attractive to each employee Managing Instrumentality –High performance levels must result in attractive rewards (do I want to become a partner in the accounting firm?) –Performance levels must be set at a reasonable level of difficulty (ex. Sales incentives) Managing Expectancy –Coaching and frequent feedback increase expectancies. –Train employees for skill gaps so abilities are good.