1. Public Management Incentives and Motivations Sunday, April 23, 2017
Hun Myoung Park, Ph.D.
Public Management & Policy Analysis Program Graduate School of International Relations

2. Big Question (Behn 1995) Micromanagement
Motivation: How can public managers motivate public employees to work energetically and intelligently towards achieving public purposes? How can the legislature control the executive, and how can political managers control civil servants (principal-agent problem)?
Measurement 2

3. Basic Questions
What do employees want to get from organizations and society?
Why do people want to work for government? 3

4. How To Motivate?
Organizations and their employees exchange (contribution and rewards)
Reward (carrot) and penalty (stick) based on fair and accurate performance appraisal
Need-incentive fit: What does he/she want to get?
Provide proper incentives/disincentives. 4

5. Need, Motive, and Value
Need is a resource or condition required for the well-being of an individual
Motive is a force acting within an individual that causes him to see to obtain or avoid some external object
Value is an enduring belief that a specific mode of conduct or end-state of existence is personally or socially preferable to an opposite or converse mode of conduct or end-state of existence.

6. Employees’ Needs Murray’s List of Basic Needs (1938)
Maslow’s Need Hierarchy (1954)
Alderfer’s ERG Model (1972)
Abasement
Achievement
Affiliation
Aggression
Autonomy
Counteraction
Defendance
Dominance
Exhibition
Harm avoidance
Nurturance
Order
Play
Rejection
Sentience
Sex
Succorance
Understanding
Self-actualization needs
Esteem needs
Belongingness social needs
Safety needs
Physiological needs
Growth needs
Relatedness needs
Existence needs 6

7. Incentive for Employees
Which incentives do organizations provide to their employees? 7

8. Types of Incentives 1 Incentive Type Definitions and Examples
Barnard (1938)
Specific Incentives
Material inducements
Personal, nonmaterialistic inducements
Desirable physical conditions of work
Ideal benefactions
General incentives
Associational attractiveness
Customary working conditions
Opportunity for feeling of enlarged participation in course of events
Condition of communion
Incentives “specifically offered to an individual”
Money, things, physical conditions
Distinction, prestige, personal power, dominating position
“Satisfaction of ideals about nonmaterial future or altruistic relations” (pride of workmanship, sense of adequacy, altruistic service for family or others, loyalty to organization, esthetic and religious feeling, satisfaction of hate and revenge)
Incentives that “cannot be specifically offered to an individual”
Social compatibility, freedom from hostility due to racial, religious differences
Conformity to habitual practices, avoidance of strange methods and conditions
Association with large, useful, effective organization
Personal comfort in social relations 8

9. Types of Incentives 2 Incentive Type Definitions and Examples
Simon (1948)
Incentives for employee participation
Incentives for elites or controlling groups
Clark and Wilson (1961) and Wilson (1973)
Material incentives
Solidary incentives
Specific solidary incentives
Collective solidary incentives
Purposive incentives
Salary or wage, status and prestige, relations with working group, promotion opportunities
Prestige and power
Tangible rewards that can be easily priced (wages and salaries, fringe benefits, tax reductions, changes in tariff levels, improvement in property values, discounts, services, gifts)
Intangible incentives without monetary value and not easily translated into one, deriving primarily from the act of associating
Incentives that can be given to or withheld from a specific individual (offices, honors, deference)
Rewards created by act of associating and enjoyed by all members if enjoyed at all (fun, conviviality, sense of membership or exclusive-collective status or esteem)
Intangible rewards that derive from satisfaction of contributing to worthwhile cause (enactment of a law, elimination of government corruption)

10. Incentive & Organization Type 1
Clark and Wilson (1961)
Material incentives: tangible rewards, often monetary – wages, fringe benefits, patronage
Solidary incentives: intangible rewards from the act of association – sociability, status
Purposive incentives: intangible rewards related to the goals of the organization – e.g., working on an election of a supported candidate 10

11. Incentive & Organization Type 2
Utilitarian organizations rely primarily on material incentives (business firms, labor unions).
Clark and Wilson predict they will have fairly precise-cost accounting machinery (Scott p. 172).
Managers will focus on obtaining necessary material incentives.
Conflicts will be about distribution.
Organizational goals will be secondary to incentives. 11

12. Incentive & Organization Type 3
Solidary organizations (service-oriented voluntary organizations and social clubs) are places where people make contributions in return for sociability and status.
Executive efforts at securing prestige, good fellowship
Organizational goals are non-controversial and socially acceptable.
These organizations tend to be less flexible and more public in actions and decisions. 12

13. Incentive & Organization Type 4
Purposive organizations rely on their stated goals to attract and retain people (Clark and Wilson, 1961).
Executives need to maintain inducements, but when goals are lofty this is difficult to sustain.
Often their efforts fail initially or intermittently (don't elect candidate, don't stop hunger, etc.).
Sometimes the goals are too vague or only support a minority of interests.

14. Motivation
Psychological forces that determine the direction of behavior, level of effort, level of persistence.
Motivation is NOT unchangeable
Preferences are not exogenous (given by outside) but endogenous (socialization) 14

15. Intrinsic vs. Extrinsic Motivation
Intrinsic motivation
Comes from doing the work itself
Extrinsic motivation
To acquire materials or social rewards
To avoid punishment
Workers’ own personal characteristics;
Nature of their job
Nature of organizations 15

16. Work Motivations 1
A person’s desire to work hard and work well--to the arousal, direction, and persistence of effort in work settings.
Motivation alone does not determine performance. 16

17. Work Motivations 2
A general idea (umbrella concept) rather than a precisely defined research target.
Organizational commitment
Job involvement
Organizational climate
Leadership practices 17

18. Motives 1
Perry & Wise (1990)
Rational (instrumental) motives are grounded in enlightened self-interest and are present in individuals who believe that their interests coincide with those of the larger community. They personally identify with some programs and express a commitment to public policy or special interest advocacy. 18

19. Motives 2
Norm-based motives describe a desire to serve the public interest, a duty and loyalty to the government, and a concern for social equity.
Affective motives, such as altruism, are characterized by a willingness or desire to help others. 19

20. Content vs. Process Theory
Content theories of motivation are concerned with analyzing the particular needs, motives and rewards that affect motivation.
Process theories of motivation concentrate on psychological and behavioral processes behind motivation.
Distinctions can overlap and need not be taken as confining.

21. Content Theories Maslow’s hierarchy of needs (1954)
McGregor’s Theory X and Y (1960)
Herzberg’s two factor theory (1968)
McClelland’s 3 motivational needs (1961)
Alderfer (1972): growth, relatedness, and existence needs.
J. Stacy Adams’ equity theory (1965)

22. Maslow: Hierarchy of Needs
A theory in psychology proposed in his 1943 paper A Theory of Human Motivation.
Often depicted as a pyramid consisting of five levels. The first lower level is associated with the most basic needs, physiological needs.
Higher needs only motivate behavior when the lower needs in the pyramid are met.
Once an individual has moved upwards to the next level, needs in the lower level will no longer be prioritized and no longer motivate behavior. 22

23. Maslow: Hierarchy of Needs
Safety Needs
Belongingness & Love Needs
Physiological Needs
Esteem Needs
Self-
Actualization
In later work, Maslow emphasized that the levels of need are not separate steps from which one successively departs; they are cumulative phases of growth toward self actualization.
The theory has shortcomings:
No confirmation of 5 steps
Some research points to fewer categories (1-material and security 2- achievement and challenge).
Relative importance and sequence varies from individual to individual.
Locke and Henne (1986) take exception with the idea that unsatisfied needs dominate behavior.
Even if the hierarchy is not an adequate theory of motivation,
it has contributed concepts that are now regarded as classic
and which continue to influence important intellectual
developments (e.g., emphasis on the motivating potential of
higher order needs).
 Maslow influenced the work of many later scholars, including
McGregor and Burns (1978) work on transformational leaders
(transformational leaders appeal to higher order motives,
including motives for self actualization peptide to societal
ends). 23

24. McGregor: Theory X and Y
Theory X assumes workers lacking capacity for self-motivation and self-direction and calls for control
Theory Y assumes workers having high-order needs (growth, development, interesting work and self-actualization)
In theory Y, managers need participative management techniques, decentralized decision making, performance evaluation procedures, job enrichment program.

25. McGregor: Theory X and Y
Theory Y
supervisor
employee
supervisor
employee
1960- The Human Side of the Enterprise
McGregor proposed that all management practices stem from managers’ personal “theories” regarding the basic nature of people.
McGregor maintained that there are two fundamental approaches to managing people.
Theory X- controlling, authoritative
Theory Y-participatory, enabling
Theory X
This style of management assumes that workers are not self- motivated and lack capacity for self-direction.
Theory X manager then enacts strict controls and close supervision which seem appropriate based on these negative assumptions about human behavior.
Management is top down.
Theory Y
McGregor recommended a style that recognizes workers have higher-order needs for growth and development.
Theory Y manager then entrusts employees with more responsibility, enacts job enrichment programs, and encourages participation in decision making.
Decision making is decentralized and bottom-up. Employees are involved in setting objectives and in self-evaluation.
Theory X – Top down; manager is dictatorial, controlling
Theory Y – Bottom up; manager enables, gives responsibility 25

26. Herzberg: Two-Factor Theory
Hygiene needs (physical and psychological context--pay, job security, etc.)
Hygiene needs cause job dissatisfaction when not satisfied, but they does not stimulate job satisfaction.
Motivator needs (work itself; intrinsic needs) will result in high motivation once satisfied.

27. Herzberg: Two-Factor Theory
Hygiene Factors
Motivators
Company policy and administration
Supervision
Relationship with supervisor
Working conditions
Salary
Relations with peers
Personal life
Relations with subordinates
Status
Security
Achievement
Recognition
The work itself
Responsibility
Growth
Advancement
Introduced in his 1959 book Theories to Work
Herzberg was the first to show that satisfaction and dissatisfaction typically arise from different factors, and not simply opposing attitudes/reactions based on the same factors.
The theory emphasizes higher order needs and intrinsic incentives.
According to Herzberg’s logic, we have two primary needs:
to avoid pain
to grow and develop
The need to grow and develop is a higher order need.
According to the theory, there are 2 factors which drive behavior:
MOTIVATORS are intrinsic (e.g. job is interesting, challenging, provides sense of accomplishment, etc.).
HYGIENE FACTORS are extrinsic (pay, benefits, flexible work hours) . Hygiene factors do not stimulate high levels of satisfaction even when they are abundant. In other words, a good pay check is not enough. The job has to be fulfilling in some other way, some reward from within. 27

28. Herzberg: Two-Factor Theory
high 10 9 8 7 6 5 4 3 2 1
high on motivator scale, low on hygiene scale
Employees are motivated. Job fulfills higher order needs; but extrinsic factors, such as pay, are low so employee is dissatisfied.
high on motivator scale, high on hygiene scale
Best Case: Employees are motivated and satisfied, find job fulfilling; extrinsic factors are satisfactory (e.g. pay, work conditions)
low on motivator scale, low on hygiene scale
Worst Case: Employees are unmotivated, extrinsic factors (e.g. pay and work conditions) also unsatisfactory
low on motivator scale high on hygiene scale
Employees are not highly motivated but are satisfied with other factors of job (e.g. pay, flexible hours, etc.).
motivators
Implications for managers
Workers are not motivated by addressing hygiene (maintenance) needs.
True motivation can only be achieved by addressing higher order needs (e.g. job enrichment programs).
Just because there are no complaints does not mean that workers are motivated to work.
Remedying the causes of dissatisfaction will not create satisfaction, nor will adding the factors of job satisfaction eliminate job dissatisfaction.
Herzberg’s work has been debated among experts.
Subsequent studies did not obtain same results (Pinder, 1998).
People may hesitate to provide truthful answers (social desirability effect).
Researchers lost interest in the study (Rainey, 2001).
One report in 1994 quotes Herzberg as commenting on his own work. “The original study has produced more replications than any other research in the history of industrial and organizational psychology.” (not confirmed)
You can placate employees by eliminating factors that lead to dissatisfaction, but this will not enhance motivation and performance.
low
high
hygiene factors 28

29. Adams: Equity theory
Perception of fairness of their work outcomes relative to work inputs
Compare his own outcome-input ratio (outcome/income) with others’ (referents) ratios
Equity, underpayment, overpayment
Barnard’s exchange of incentives and contributions in organizations

30. Equity Theory Scale
Job Inputs
Job Outputs
Job, time, effort, ability flexible, commitment honest, collegiality, heart, integrity, respecting
Pay check, benefits, vacation time, security, recognition, responsibility, respect, sense of purpose, sense of achievement
Workers’ behavior is affected by 2 perceptions:
their personal outcome to input ratio
others’ outcome to input ratio
People seek to reduce inequity by making the two ratios equal. People need to maintain an equitable or fair balance between one's contributions to an organization and one's returns to compensations from it (determined by comparing the balance maintained by others to one's own). 
A person is motivated in proportion to the perceived fairness of the rewards received for a given level of effort. 
This can go both ways.
Workers are motivated to produce more if they “feel” overcompensated.
Workers are motivated to produce less if they “feel” undercompensated.
perceived balance
Input and motivation are reduced when perception of fairness/ equity (outputs) is tipped, i.e. when employee perceives effort is greater than reward 30

31. Process Theories Vroom: Expectancy Theory
Expectancies and dependent variables
Expectancy theory in public organizations
Skinner: Operant Conditioning and Reinforcement
Bandura: Social Learning (cognitive) Theory
Locke: Goal-Setting Theory 31

32. Vroom: Expectancy Theory 1
An individual considering an outcome sums up the values of all outcomes that will result from the action, with each outcome weighted by the probability of its occurrence.
Theory draws on the classic utilitarian ideas (maximizing pleasure and minimizing pain)
Integrates elements of needs, equity and reinforcement theories
Individual workers differ in their preferences for outcomes ire materials or social rewards 32

33. Vroom: Expectancy Theory 2
F= ∑(E ij Vj)
F= The force acting under individual to perform act i.
Eij=The expectancy or perceived probability of any effort will lead to an outcome (act i will lead to outcome j)
V j = ∑(V k I jk )
Vj= Valence of the outcome j
I= The instrumentality of the outcome j for attainment of outcome k
V= The valence of outcome k
Individuals have different goals and skill sets but can be motivated if they believe:
Effort will produce results.
Favorable outcomes will be rewarded.
The reward will satisfy a need.
More recent work has split the concepts of expectancy into two related concepts.
Expectancy 1 (E1): The perceived probability of any given level of effort will result any given level of performance.
Expectancy 2 (E2) : The perceived probability that the level of performance will lead to the attainment of an outcome or reward.
 Newer versions consider self-esteem and other variables that might affect perceptions
Newer versions incorporate concepts of goal-setting control theory, social learning. (to be discussed)
Although researchers hoped that this approach would improve predictions of motivational levels, the research has been mixed. Theory has lacked predictive power.
May not accurately portray human mental processes; humans do not always act rationally or systematically.
May help understand why PMRS (Federal Pay-for-Performance Plan) failed – E2 was low, i.e. employees were not rewarded for achieving a certain level of performance 33

34. Vroom: Expectancy Theory 3
Valence refers to the emotional orientations people hold with respect to outcomes/rewards. How desirable each of the outcomes available from a job is to a person
Expectancy: Employees have different expectations and levels of confidence about their capabilities. Perception that high levels of effort lead to high performance.
Instrumentality refers to the perception of employees with respect to whether outcomes/rewards will actually result. High performance leads to the attainment of desired outcome.

35. Vroom: Expectancy Theory 4
Expectancies as Dependent Variables
Expectancy type questions about relationships between performance and pay, job security, promotion, and incentives often show association with reported work satisfaction and effort.
Use in Public Organizations
The underlying principles still underpin many civil service reforms and government pay systems.

36. Operant Conditional Theory 1
Operant conditional theory by Skinner (1953)
Operant conditioning, i.e. the use of consequences to modify the occurrence and form of behavior
Relationship between observable behavior and contingencies of reinforcements
To link the performance of specific behavior to the attainment of specific outcomes
Punishment is less efficient and effective in shaping behavior.

37. Operant Conditional Theory 2
Positive reinforcement (give desired outcome); negative reinforcement (give undesired outcome)
Operant extinction (curtail the performance of dysfunctional behaviors)
Punishment (dangerous, illegal or unethical behaviors to be eliminated immediately)
Positive reinforcement provides the most efficient means of influencing behavior.

38. Operant Conditional Theory 3
Low ratio reinforcement schedule produces rapid acquisition of the behavior but more rapid extinction when the reinforcement stops.
Intermittent reinforcement, especially in highly variable intervals or according to a variable ratio schedule (reinforcement after long varying periods or after varying numbers of occurrences), requires more time for behavior acquisition, but extinction occurs more slowly when the reinforcement seasons.

39. Social Learning Theory 1
Developed by Albert Bandura (1978) et al.
Reflects value and limitations of operant conditioning and behavior modification.
Draws from behavior modification, but puts greater emphasis on internal cognitive processes, like goals and a sense of self efficacy.
Gives attention to forms of learning and behavior change that may not be tied to external environment

40. Social Learning Theory 2
Individuals learn in ways other than through extra reinforcement, including:
modeling the behavior of others
vicarious experiences
mental rehearsal and imagery
self-management through setting goals for oneself

41. Goal-setting Theory 1
Theory simply states that difficult goals lead to higher performance than easy goals, no goals, or vague goals.
Goals focus behavior and motivate individuals to achieve desired and states.
Goals may direct attention, intensify effort, intensify persistence, spark creativity in problem solving
As the value of a goal increases, the commitment to the goal increases.

42. Goal-setting Theory 2
Commitment to the goals and feedback are also necessary to performance.
Assignment of difficult (challenging; hard but not impossible to attain) goals enhances performance because goals appeal to motive and desire to achieve (Locke and Latham, 1990).
Goals provide a sense of purpose and create standards for evaluating performance .
Participation in goal setting is not clearly linked to higher levels of motivation.

43. Goal-setting Theory 3
Goal setting works best with management support and requires effective leadership.
People should be committed to goals. The manager should stress that the goals are important (have personal value) and are attainable.
Empower employees to develop strategies and tactics for achieving goals
Beware of goal overload 
Mix qualitative and quantitative goals

44. Goal-setting Theory 4 Assign responsibility for achievement of goals
Feedback stimulates the accomplishment of goals.
The greater the success, the greater the satisfaction.
Paradox: More difficult goals are less likely to be achieved, leaving people unsatisfied; this, in turn, fosters ambition, pushing people to strive to achieve further.

45. Lessons from Motivation Study
Given diversity of individual preferences, there is no one best incentive that fits all cases
Examine individual preferences and find out more salient ones in an institutional setting
Try to measure performance although acknowledging its difficulty and danger
Try to link performance and incentives
As individual preferences change (country, generation…), incentives need to change as well