Chapter Sixteen

Managing Employee
Motivation and
Performance
Slide content created by Charlie Cook, The University of West Alabama
Copyright Houghton Mifflin Company. All rights reserved.

Learning Objectives
After studying this chapter, you should be able to:
1. Characterize the nature of motivation, including its
importance and basic historical perspectives.
2. Identify and describe the major content perspectives on
motivation.
3. Identify and describe the major process perspectives on
motivation.
4. Describe reinforcement perspectives on motivation.
5. Identify and describe popular motivational strategies.
6. Describe the role of organizational reward systems in
motivation.

The Nature of Motivation

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.

The Importance of Motivation in the Workplace

Determinants of Individual Performance
Motivationthe desire to do the job.
Abilitythe capability to do the job.
Work environmentthe resources to do the job.

Figure 16.1: The

Motivation Framework

Content Perspectives on
Motivation
Content Perspectives
Approaches to motivation that try to answer the
question, What factors in the workplace motivate
people?

Content Perspectives of Motivation

Maslows Hierarchy of Needs

Aldefers ERG Theory
Herzbergs Two-Factor Theory
McClellands Achievement, Power, and Affiliation
Needs

Content Perspectives on
Motivation (contd)
The Need Hierarchy Approach
Maslows Hierarchy of Needs

Physiologicalbasic survival and biological function.

Securitya safe physical and emotional environment.
Belongingnesslove and affection.
Esteempositive self-image/self-respect and recognition and
respect from others.
Self-actualizationrealizing ones potential for personal growth
and development.

Weakness of Maslows theory

Five levels of need are not always present.
Ordering or importance of needs is not always the same.
Cultural differences.

Figure 16.2: Maslows

Hierarchy of Needs

Content Perspectives on
Motivation (contd)
The ERG Theory
Needs are grouped into three overlapping categories:
Existence needsphysiological and security needs.
Relatedness needsbelongingness and esteem by others.
Growth needsself-esteem and self-actualization.

ERG theory assumes that:

Multiple needs can be operative at one time (there is no
absolute hierarchy of needs).
If a need is unsatisfied, a person will regress to a lower-level
need and pursue that need (frustration-regression).

Content Perspectives on
Motivation (contd)
The Two-Factor Theory (Herzberg)
Satisfaction and dissatisfaction are influenced by
two independent sets of 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.

Content Perspectives on
Motivation (contd)
The Two-Factor Theory (contd)
Theory posits that motivation is a two-step
process:
Ensuring that the hygiene factors are not
deficient and not blocking motivation.
Giving employees the opportunity to experience
motivational factors through job enrichment.

Figure 16.3: The Two-Factor

Theory of Motivation

Content Perspectives on
Motivation (contd)
Individual Human Needs (McClelland)
The need for achievement
The desire to accomplish a goal or task more effectively
than in the past.

The need for affiliation

The desire for human companionship and acceptance.

The need for power

The desire to be influential in a group and to be in control
of ones environment.

Implications of the Content Perspectives

Content (what causes motivation) Process (how motivation occurs)

Process Perspectives on
Motivation
Process Perspectives
Approaches to motivation that focus on:
Why people choose certain behavioral options to satisfy
their needs
How they evaluate their satisfaction after they have
attained their goals.

Process Perspectives of Motivation

Expectancy Theory
Porter-Lawler Extension of Expectancy Theory
Equity Theory
Goal-Setting Theory

Process Perspectives on
Motivation (contd)
Expectancy Theory
Motivation depends on how much we want something and how
likely we are to get it.
Assumes that:
Behavior is determined by personal and environmental forces.
People make decisions about their behavior in organizations.
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.
Motivation leads to effort that, when combined with ability and
environmental factors, results in performance which leads to
various outcomes that have value (valence) to employees.

Process Perspectives on
Motivation (contd)
Elements of Expectancy Theory
Effort-to-Performance Expectancy
The employees perception of the
probability that effort will lead to a high
level of performance.

Performance-to-Outcome
Expectancy
The employees perception of the
probability that performance will lead to a
specific outcomethe consequence or
reward
for behaviors in an organizational setting.

Process Perspectives on
Motivation (contd)
Elements of Expectancy Theory (contd)
Valence
An index of how much an individual values a particular
outcome.
It is 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.

For motivated behavior to occur:

Both effort-to-performance expectancy and performance-tooutcome expectancy probabilities must be greater than zero.
The sum of the valences must be greater than zero.

Figure 16.4: The Expectancy

Model of Motivation

Process Perspectives on
Motivation (contd)
The Porter-Lawler Extension of Expectancy
Theory
Assumptions:
If performance 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 are outcomes set and awarded by
external parties (e.g., pay and promotions).
Intrinsic rewards are outcomes internal to the individual
(e.g., self-esteem and feelings of accomplishment).

Figure 16.5: The Porter-Lawler

Extension of Expectancy Theory

Process Perspectives on
Motivation (contd)
Equity Theory
People are motivated to seek social equity in the
rewards they receive for performance.
Equity is an individuals belief that the treatment he or
she receives is 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.
outcomes
(self)
inputs (self)

outcomes (other)
inputs (other)

Process Perspectives on
Motivation (contd)
Equity Theory (contd)
Conditions of and reactions to equity comparisons:
Feeling equitably rewarded.
Maintain performance and accept comparison as fair estimate.

Feeling under-rewardedtry 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.

Feeling over-rewarded.
Increase or decrease inputs.
Distort ratios by rationalizing.
Help the object person gain more outcomes.

Process Perspectives on
Motivation (contd)
Goal-Setting Theory
Assumptions
Behavior is a result of conscious goals and intentions.
Setting goals influence 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.

Goal specificity
Clarity and precision of the goal.
Goals vary in their ability to be stated specifically

Process Perspectives on
Motivation (contd)
Characteristics of Goals (contd)
Goal acceptance
The extent to which persons accept a goal
as their own.

Goal commitment
The extent to which an individual is
personally interested in reaching a goal.

Implications of the Process

Perspectives
If rewards are to motivate employees,
they must be perceived as being
valued, attainable, fair and equitable.

Figure 16.6: The Expanded Goalsetting Theory of Motivation

Reinforcement Perspectives on
Motivation
Reinforcement Theory
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.

Reinforcement Perspectives on
Motivation (contd)
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.

Reinforcement Perspectives on
Motivation (contd)
Providing Reinforcement in Organizations
Reinforcement schedules
Fixed interval schedulereinforcement applied at fixed
time intervals, regardless of behavior.
Variable intervalreinforcement applied at variable time
intervals.
Fixed ratioreinforcement applied after a fixed number
of behaviors, regardless of time.
Variable Ratioreinforcement applied after a variable
number of behaviors, regardless of time.

Table 16.1: Elements of

Reinforcement Theory

Reinforcement Perspectives on
Motivation (contd)
Providing Reinforcement in Organizations (contd)
Behavior modification (OB mod)
A method for applying the basic elements of reinforcement
theory in an organizational setting.
Specific behaviors are tied to specific forms of reinforcement.

Implications of the Reinforcement Perspectives

Consistently applied reinforcement helps maintain
employee motivation by:
encouraging (rewarding) positive behaviors
discouraging (punishing) dysfunctional behaviors in an
organization.

Popular Motivational Strategies

Empowerment and Participation
Empowerment
Enabling workers to set their own work goals, make decisions,
and solve problems within their sphere of influence.

Participation
Giving employees a voice in making decisions about their
work.

Areas of participation for employees:

Making decisions about their jobs.
Decisions about administrative matters (e.g., work schedules).
Participating in decision making about broader issues of
product quality.

Popular Motivational Strategies

(contd)
Techniques and Issues in Empowerment
Using work teams
Collections of employees empowered to plan, organize,
direct, and control their work.

Decentralization
Changing the overall method of organizing the firm

Conditions necessary for empowerment:

Power spread to lower organizational levels

Commitment to empowering workers
Systematic and patient efforts to empower workers.
Increased commitment to training.

Using Reward Systems to

Motivate Performance (contd)
Reward System
The formal and informal mechanisms by which
employee performance is defined, evaluated, and
rewarded.

Effects of Organizational Rewards

Higher-level performance-based rewards motivate
employees to work harder.
Rewards help align employee self-interest with
organizational goals.
Rewards foster increased retention and citizenship

Using Reward Systems to

Motivate Performance (contd)
Merit Reward Systems
Base a meaningful portion of individual compensation
on meritthe relative value of an individuals
contributions to the organization.
Employees who make greater contributions are given higher
pay than those who make lesser contributions.

Incentive Reward Systems

Concept: employee pay is based on employee output.
Assume that:
Performance is under the control of the individual worker.
The employee work at a single task continuously.
Pay is tightly tied to performance (i.e., pay varies with output).

Using Reward Systems to

Motivate Performance (contd)
Incentive Reward Systems (contd)
Incentive pay plans
Piece-rate systems
Sales commissions

Other forms of incentives

Non-monetary incentives (perks)

Team and Group Incentive Reward Systems

Gainsharing programs
Scanlon Plan
Employee stock ownership plans (ESOPs)

Using Reward Systems to

Motivate Performance (contd)
Executive Compensation
Standard forms of executive compensation
Base salary
Incentive pay (bonuses)

Special forms of executive compensation

Stock option plans
Executive perks

Criticism of executive compensation

Excessively large compensation amounts
Compensation not tied to overall performance of the
organization
Earnings gap between executive pay and typical employee pay

Using Reward Systems to

Motivate Performance (contd)
New Approaches to Performance-Based
Rewards
Leveraging the value of incentives
Allowing individuals and groups in the organization to
have a say in how rewards are distributed.

Getting increasingly innovative in incentive

programs:
Offering stock options to all employees
Individualizing the rewards available to individuals in
reward systems

Key Terms

motivation
content perspectives
Maslows hierarchy of needs
ERG theory of motivation
two-factor theory of
motivation
need for affiliation
need for achievement
need for power
process perspectives
expectancy theory

effort-to-performance
expectancy
outcomes
valence
equity theory
avoidance
positive reinforcement
extinction
variable-ratio schedule
variable-interval schedule
participation

Key Terms
behavior modification (OB
Mod)
compressed work
schedule
job sharing
telecommuting
merit pay plan
reward system
piece-rate incentive plan
gainsharing programs
Scanlon plan

stock option plan