1. Expectancy Theory Individual Effort Individual Performance
Organizational
Rewards 1 2 3
3. Are the rewards personally desirable?
1. If I try hard, can I do it?
2. Do I need to perform at a high level to
receive rewards?
Expectancy theory argues that an employee will be motivated to produce more when he or she believes that the effort will lead to a good performance appraisal; that a good appraisal will lead to organizational rewards; and that the rewards will satisfy the employee’s personal goals. This theory focuses on three relationships.
1. The effort-performance relationship is the probability perceived by the individual that exerting a given amount of effort will lead to performance.
2. The performance-rewards relationship is the degree to which an individual believes that performing at a particular level will lead to the attainment of a desired outcome.
3. The rewards-personal goals relationship is the degree to which the rewards of an organization satisfy an individual’s personal goals or needs and the attractiveness of those rewards.
Personal
Goals
Prentice Hall, 2001
Chapter 6

2. Expectancy Theory & Performance Issues
Effort – performance relationship
Training & education
Performance – rewards relationship
Will my performance be recognized & rewarded?
How are rewards allocated?
Seniority versus merit
Is the evaluation process fair?
Rewards – personal goals
Is the reward personally desirable?
“If you perform well, we will put you in charge of our overseas office”
Use expectancy theory to diagnose performance issues
Courses & grades

3. Open Book Management Background at SRC Employees wanted more challenge
Extreme financial difficulties
High level of distrust
Employees wanted more challenge
High in growth need strength (Job characteristics)

4. Changes Implemented at SRC
Sharing financial information
Principle of job enrichment
Trust
Soliciting employee input
Recognition
Ideas are valued
Bonus plans & employee stock ownership plan
Financial incentives (short-term and long-term)

5. Outcomes at SRC Employees
“When I first came here, I didn’t realize that as a worker on the floor you could have a direct impact on the profit.”
Task significance (JCM)
Pay attention to costs, quality, and time to complete work
Responsibility (Herzberg)

6. Employee Outcomes (cont.)
Ideas are valued
Recognition (Herzberg)
New product
Reading and understanding financial information
Skill variety (JCM)
Growth (Herzberg)

7. SRC’s Financial Performance
Growth
Stock price
From 10 cents to $18.60
Employees
Profitability
Accuracy
Inventory counts