1. Managing Employee Motivation and Performance
Chapter 10
Managing Employee Motivation and Performance

2. Learning Objectives
After studying this chapter, you should be able to:
Characterize the nature of motivation.
Identify & 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.

3. 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.
Determinants of Individual Performance
The desire to do the job.
Ability
The capability to do the job.
Work environment
The resources needed to do the job.

4. The Motivation Framework

5. Content Perspectives on Motivation
Focus on needs and deficiencies of individuals
Are 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
Herzberg’s Two-Factor Theory
McClelland’s Achievement, Power, and Affiliation Needs

6. The Need Hierarchy Approach (Maslow)
People must, in a hierarchical order, satisfy five needs:
Physiological needs for basic survival and biological function.
Security needs for a safe physical and emotional environment.
Belongingness needs for love and affection.
Esteem needs for positive self-image/self-respect and recognition and respect from others.
Self-actualization needs for realizing one’s potential for personal growth and development.

7. Maslow’s Hierarchy of Needs

8. The Need Hierarchy Approach
Weaknesses of Maslow’s Theory
Five levels of need are not always present.
Ordering or importance of needs is not always the same.
Cultural differences produce differences in need categories and hierarchical orderings.

9. The Two-Factor Theory (Herzberg)
An individual’s satisfaction and dissatisfaction is influenced by two independent sets of factors— motivation factors and hygiene 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.

10. The Two-Factor Theory of Motivation

11. The Two-Factor Theory (Herzberg) (cont’d)
Motivation becomes a two-stage process:
Ensuring that the hygiene factors are not deficient and not blocking motivation.
Providing employees the opportunity to experience increase motivational factors through the use of job enrichment and the redesign of jobs.
Criticisms of the Two-Factor Theory
Interview findings are subject to different explanations.
Sample population was not representative.
Subsequent research has not upheld theory.

12. Process Perspectives on Motivation
Focus on why people choose certain behavioral options to satisfy their needs and how they evaluate their satisfaction after they have achieved their goals.
Process Perspectives of Motivation
Expectancy Theory
Porter-Lawler Extension of Expectancy Theory
Equity Theory
Goal-Setting Theory

13. Expectancy Theory
Motivation depends on how much we want something and how likely we are to get it.
Theory assumes that:
Behavior is determined by a combination of personal and environmental forces.
People make decisions about their own behavior in organizations.
Different 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.

14. Expectancy Theory (cont’d)
Model of Motivation
Suggests that motivation leads to effort when combined with ability and environmental factors; effort results in performance; performance, in turn, leads to various outcomes that have value (valence) to employees.

15. The Expectancy Model of Motivation

16. Elements of Expectancy Theory
Effort-to-Performance Expectancy
The individual’s perception of the probability that effort will lead to a high level of performance.
Performance-to-Outcome Expectancy
The individual’s perception of the probability that performance will lead to a specific outcome or consequence or reward in an organizational setting.

17. Elements of Expectancy Theory (cont’d)
Outcomes (Consequences) and Valences
Valence is an index of how much an individual values a particular outcome. It is also 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.

18. Elements of Expectancy Theory (cont’d)
For individual motivated behavior (effort) to occur:
Effort-to-performance expectancy (the belief that effort will lead to high performance) must be greater than zero.
Performance-to-outcome expectancy (performance will result in certain outcomes) must be greater than zero.
The sum of the valences must be greater than zero—the outcome/reward must have value to the individual.

19. Porter-Lawler Extension of Expectancy Theory
Assumptions:
If performance in an organization 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
Outcomes set and awarded by external parties (e.g., pay and promotions).
Intrinsic rewards
Outcomes that are internal to the individual (e.g., self-esteem and feelings of accomplishment).

20. Porter-Lawler Extension of Expectancy Theory

21. Equity Theory Assumptions:
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 should be 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:

22. 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.

23. Goal-Setting Theory Assumptions Characteristics of Goals
Behavior is a result of conscious goals and intentions.
Setting goals influences 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.

24. The Expanded Goal-Setting Theory of Motivation

25. Reinforcement Perspectives on Motivation
Reinforcement Theory
Focuses on 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.

26. 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.

27. Providing Reinforcement in Organizations
Schedules for Applying Reinforcement
Fixed interval
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.

28. Providing Reinforcement in Organizations (cont’d)
Behavior Modification
A method for applying the basic elements of reinforcement theory in an organizational setting.
Specific behaviors are tied to specific forms of reinforcement.
Specific Behavior
Specific Reinforcement

29. Popular Motivational Strategies
Empowerment and Participation
Empowerment
The process of enabling workers to set their own work goals, make decisions, and solve problems within their sphere of influence.
Participation
The process of giving employees a voice in making decisions about their work.
Areas of Participation for Employees
Making decisions about their jobs.
Making decisions about administrative matters.
Participating in decision making about broader issues of product quality.

30. New Forms of Working Arrangements
Variable Work Schedules
Compressed work schedule
Working a full forty-hour week in less than the traditional five days.
“Nine-eighty” schedule
Working one full week (five days) and one compressed week (four days), yielding one off-work day every other week.
Flexible work Schedules (flextime)
Allowing employees to select, within broad parameters, the hours they will work.
Job sharing
When two part-time employees share one full-time job.

31. Using Reward Systems to Motivate Performance
Organizational Reward System
The formal and informal mechanisms by which employee performance is defined, evaluated, and rewarded.
Performance-based rewards have the greatest impact on motivation and higher-levels of performance.
Rewards align employee self-interests with the organization’s interests.
Rewards foster behaviors desired by organizations.

32. Effects of Organizational Rewards on Employees
Attitudes
Behaviors
Motivation
Satisfaction is influenced by how much is received and how much the person thinks should have been received.
Satisfaction is affected by comparison with others.
The rewards of others are often misperceived.
Overall job satisfaction is affected by employee satisfaction with intrinsic and extrinsic rewards.
Extrinsic rewards affect employee satisfaction and reduce turnover.
Rewards influence patterns of attendance and absenteeism.
Employees tend to work harder for rewards based on performance.
Employees will work harder when performance will be measured.
Employees will work harder if performance is closely followed by rewards.

33. Designing Effective Reward Systems
Reward system must meet an individual’s needs.
Rewards should compare favorably with other organizations.
Distribution of rewards must be perceived to be equitable.
Reward system must recognize different needs.

34. Merit Reward Systems Merit Pay Concept Merit Pay Plans
Pay is awarded to employees on the basis of the relative value of their contributions to the organization.
Merit Pay Plans
Compensation plans that formally base at least some portion of compensation on merit.
Provide employees with annual salary increases depending on their overall job performance.

35. Incentive Reward Systems
Monetary Incentives
Piece-rate incentive plan
A reward system wherein the organization pays an employee a certain amount of money for every unit she or he produces.
Sales commissions plan
The percentage of an employee’s sales to customers that is paid to an employee as a reward for selling the firm’s products or services.
Nonmonetary Incentives
Immediate and one-time rewards
Days off, additional paid vacation time, and special perks.

36. Team and Group Incentive Reward Systems
Gainsharing
Sharing the cost savings that result from productivity improvements.
Scanlon Plan
Similar to gainsharing, but the distribution of gains is tilted toward the employees and is spread across the organization.
Profit Sharing Plans
Provide an organization-wide incentive in the form of an annual bonus to all employees based on corporate profits.

37. Executive Compensation
Standard Forms of Executive Compensation
Base salary is the guaranteed portion of an executive’s compensation.
Bonuses paid for performance of the organization.
Special Forms of Executive Compensation
Stock options allow executives to purchase company stock at a predetermined price.
If the current stock price is above the predetermined price, the executive profits from exercising the option.
If the current stock price is below the predetermined price, the option has no value.

38. Criticisms of Executive Compensation
Levels of executive compensation are perceived as extremely large.
Compensation levels for executives do not reflect the performance of their firms.
The earnings gap between the typical employee and the CEO is enormous.
Executive stock options represent potentially huge liabilities for companies, yet do not appear on their financial statements as such.

39. New Approaches to Performance-Based Rewards
Employee Participation
Allowing employee participation in the deciding of distribution of rewards.
Innovation in Incentive Programs
Offering stock options to all employees.
Individualizing reward systems such that different employees can be offered different incentives.
More Effective Communication
Sharing information about how awards are earned and distributed.

40. T H E E N D !