1. Motivation I
BA 105
Section 10

2. Agenda Review theories of motivation Implications for Managers
Discuss motivation at People Express
Video of Lincoln Electric

3. A Definition of Motivation
Motivation is an internal state that energizes, directs and maintains human action.
Greenberg, Jerald (2002) Managing Behavior in Organizations
Energy is like drive: from the fuel system of a car Amount of energy comes from the level of tension in unmet needs.
Direction is like steering
Maintenance is determination to stay on the course
Note we are not talking about performance, but one component of performance.
Why isn’t it easy to motivate people?
Why is this not straighforward: Many different needs that people have, many different ways to be satisfied
Over what period of time???
Performance =  (Motivation x Ability)

4. Earlier Theories of Motivation
The learning (Skinnerian) approach to motivation:
if you do _____, I’ll give you ______.
Homo economicus (e.g.Theory X) suggests: the greater the promised reward, the greater the motivation.
These ideas are really out of favor in terms od being empirically sound. However, many managers and managerisal books still rely upon these concepts.
Skinnerian tradition suggests there is no thinking, just trial and error until the reward appears and then a repeat of that behavior. Think Pigeons
Homo economicus suggests more strategic thinking about maximizing the reward and that managers can use reward as a control mechanism. -But as a manager, you’ve got to watch them carefully!
Maslow…needs arrive in a particular order
Seems that motivation is more complicated

5. Dilbert on Motivation
Managers with Theory X views: its all about monitoring and consequences!!!

6. Motivation is complicated: Expectancy Theory
Edward Lawler, Motivation in Work Organizations, Brooks/Cole, 1973.
Motivation is complicated: Expectancy Theory
Motivation determines the level of employee effort.
Performance depends on motivation and ability.
Motivation is partly determined by perceptions of linkages from effort to performance to outcomes.
The environment (incentive system) partly determines the strength of the linkage from effort to performance, and from performance to outcomes.
Ability
Environment
Motivation
Effort
Performance
Outcomes

7. Tightening E P O Linkages
Motivation
Effort
Performance
Outcomes
If I put forth the
effort, will it fulfill the
organization’s
performance goals?
Will meeting the
organization’s
performance goals
earn me the promised
rewards?
Do I value this
reward?
EXPECTANCY
INSTRUMENTALITY
VALENCE

8. Equity and Motivation MY OUTCOMES MY INPUTS = OTHER’S OUTCOMES
M. Patchen, The Choice of Wage Comparisons, Prentice-Hall, 1961.
J. Adams, “Toward an understanding of inequity,” Journal of Abnormal & Social Psychology, 1963.
Equity and Motivation
MY OUTCOMES
MY INPUTS =
OTHER’S OUTCOMES
OTHER’S INPUTS ?
If I perceive these as unequal I may:
• reduce my effort (my input)
• increase my outcomes in other ways
• change my referent other
• change my perception of my input
Equity Theory emphasises the relative amount of rewards are just as important as the absolute amount of reward.
To determine valence, people compare their input/output ratios to those of people around them.

9. Motivation and Money: It DOES Matter

10. The Problem With Strong Monetary Incentives
… is that they work TOO well
Sears Auto Centers
1989 – Unveiled a new incentive system that based compensation on the average revenue per customer visit.
1999 – A class-action lawsuit claimed Sears had defrauded $400M from its customers nationwide by selling them unnecessary services.
Nortel Networks
After the 2000/01 dot-com crash, the Board of Directors offered top executives $13.6M in incentive compensation if the firm broke even for one quarter; $30M more if the firm broke even for three consecutive quarters.
The firm massively under-reported income in 2002 to make sure 2003 was a break-even year bonuses: CEO Frank Dunn $2.15M; CFO $831K. The firm’s performance crashed in 2004.

11. Alternatives to Strong Monetary Incentives:The Importance of Context
Customer Satisfaction
“We [at Nordstrom] remain committed to the simple idea our company was founded on, earning the trust of our customers, one at a time.”
Technological Innovation
The mission of Cray Research (founded 1972 by Seymour Cray, designer of the world’s first supercomputer) is “to design and build a larger, more powerful computer than anyone has now.”
“Google’s mission is to organize the world's information and make it universally accessible and useful.”
What other overarching goals do firms use to keep monetary incentives in context?

12. Extrinsic and Intrinsic rewards
Extrinsic come as a result of doing the job. Intrinsic come while doing the job.
Variety
Identity
Challenge & risk
Significance
Feedback
Contextual information (other processes; company finances)
Discretion
Responsibility
Personal growth
Social integration
Let’s name some:
Think here about both environment in which you perform the job and attributes of the job itself.

13. Lessons Learned: Implications of Motivation Theories for Managers
Figure out what outcomes each employee values.
Determine what kinds of behavior you desire.
Make sure desired levels of performance are reachable.
Link desired outcomes to desired performance.
Analyze the total situation for conflicting expectancies.
Create opportunity for intrinsic and extrinsic rewards.
Check the system for its equity.

14. Motivation at People Express
Describe the reward system at PE?
What were its strengths? Weaknesses?
What recommendations would you suggest to improve the long term success of People Express?

15. Lincoln Electric
Video
Next Time more on Lincoln Electric