Management a practical introduction 7th edition ebook

Motivating Employees Achieving Superior Performance in the Workplace

Major Questions You Should Be Able to Answer

12.1 Motivating for Performance Major Question: What’s the motivation for studying motivation?

12.2 Content Perspectives on Employee Motivation Major Question: What kinds of needs motivate employees?

12.3 Process Perspectives on Employee Motivation Major Question: Is a good reward good enough? How do other factors affect motivation?

12.4 Job Design Perspectives on Motivation Major Question: What’s the best way to design jobs—adapt people to work or work to people?

12.5 Reinforcement Perspectives on Motivation Major Question: What are the types of incentives I might use to influence employee behavior?

12.6 Using Compensation & Other Rewards to Motivate Major Question: How can I use compensation and other rewards to motivate people?

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“Get a life!” everyone says. But what, exactly, is a “life,” anyway?

As more and more people have begun asking this question, it has spilled over into organizational life. The result has been a new category of work rewards and incentives called work–life benefits.

Balancing Work & Personal Lives As one definition has it, work–life benefits are programs “used by employers to increase productivity and com- mitment by removing certain barriers that make it hard for people to strike a balance between their work and personal lives.”1 Examples are nonsalary incentives such as flexible work arrangements, tuition assistance, and paid time off for education and community service.

In managing for motivation, the subject of this chapter, you need to be thinking about employees not as “human capital” or “capital assets” but as people who are investors: they are investing their time, energy, and intelligence—their lives—in your organization, for which they deserve a return that makes sense to them.

What Workers Want—Yes! To keep your employees invested in their jobs and performing well, it helps to know what the Gallup Organization discovered in surveying 80,000 managers and 1 million workers over 25 years.2 Gallup found that in the best workplaces employees gave strong “yes” answers to the following 12 questions:

• Do I know what’s expected of me? • Do I have the right materials and equipment

I need to do my work right? • Do I have the opportunity to do what I do best

every day? • In the last seven days, have I received

recognition or praise for good work?

• Does my supervisor, or someone at work, seem to care about me as a person?

• Is there someone at work who encourages my development?

• Does my opinion seem to count? • Does the mission of my company make me

feel like my work is important? • Are my coworkers committed to doing quality work? • Do I have a best friend at work? • In the last six months, have I talked with

someone about my progress? • Have I had opportunities to learn and grow?

Involving Employees in the Company’s Success The best managers, Gallup says, meet with workers individually at least every three months, not just once or twice a year. In doing so, they not only discuss performance but also try to find out what employees want to accomplish and how the manager can help. In addition, good managers focus on strengths, rather than weaknesses, allowing employees to devote time to what they do best.

Even before Fortune magazine began publishing its annual list of “The 100 Best Companies to Work For” (Google was No. 1 in 2014), managers had been concerned about trying to motivate their employees. In prerecession times, according to a project leader who helped with the Fortune list, the best companies kept their employees an average of 6 years, as op- posed to a U.S. average of 3.6 years. They accom- plished this by pushing for employees at all levels to feel involved in the company’s success.3

For Discussion Which 3 of the 12 questions listed above are most important to you? Which do you think are most important to most employees?

the manager’s toolbox

Managing for Motivation: Keeping Employees Invested in Their Jobs

forecccasst What’s Ahead in This Chapter

This chapter discusses motivation from four perspectives: content (theories by Maslow,

McClelland, Deci and Ryan, and Herzberg); process (equity, expectancy, and goal-setting theo-

ries); job design; and reinforcement. We then consider rewards for motivating performance.

12.1 Motivating for Performance What’s the motivation for studying motivation?

THE BIG PICTURE Motivation is defined as the psychological processes that arouse and direct people’s goal-directed behavior. The model of how it works is that people have certain needs that motivate them to perform specific behav- iors for which they receive rewards, both extrinsic and intrinsic, that feed back and satisfy the original need. The three major perspectives on motivation are need-based, process, and reinforcement.

? MAJOR QUESTION

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• Organizational culture • Cross-cultural values • Physical environment • Rewards and reinforcement • Group norms • Communication technology • Leader behavior • Organizational design

Contextual factors

• Personality • Ability • Core self-evaluations • Emotions • Attitudes • Needs

Personal factors

Motivation & employee engagement

FIGURE 12.1 An integrated model of motivation

What would make you rise a half hour earlier than usual to ensure you got to work on time—and to perform your best once there? Among the possible inducements (such as those offered by SAS, Google, and Salesforce): free snacks, on-site laundry, child care assistance, freedom to paint your walls, scholarships for employees’ children, having your dog at work.4

Whether employment rates are high or low, there are always companies, industries, and occupations in which employers feel they need to bend over backward to retain their human capital.

Motivation: What It Is, Why It’s Important Why do people do the things they do? The answer is this: they are mainly motivated to fulfill their wants, their needs.

What Is Motivation & How Does It Work? Motivation may be defined as the psychological processes that arouse and direct goal-directed behavior.5 Motivation is difficult to understand because you can’t actually see it or know it in another person; it must be inferred from one’s behavior. Nevertheless, it’s imperative that you as a man- ager understand the process of motivation if you are to guide employees in accom- plishing your organization’s objectives.

The way motivation works actually is complex, the result of multiple personal and contextual factors. (See Figure 12.1.)

Motivating Employees CHAPTER 12 377

The individual personal factors that employees bring to the workplace range from personality to ability to emotions to attitudes, many of which we described in Chapter 11. The contextual factors range from organizational culture, to cross-cultural values, to the physical environment, and other matters we discuss in this chapter and the next. Both categories of factors influence an employee’s level of motivation and engagement at work.

However, motivation can also be expressed in a simple model—namely, that people have certain needs that motivate them to perform specific behaviors for which they receive rewards that feed back and satisfy the original need. (See Figure 12.2, below.)

Unfulfilled need Desire is created

to fulfill a need—as for food, safety,

recognition.

Behaviors You choose a type

of behavior you think might satisfy

the need.

Rewards Two types of

rewards satisfy needs—extrinsic

or intrinsic.

Motivation You search for ways to satisfy

the need.

Feedback Reward informs you whether behavior worked and should be used again.

Yo o

th re

ne

FIGURE 12.2 A simple model of motivation

For example, as an hourly worker you desire more money (need), which impels you (motivates you) to work more hours (behavior), which provides you with more money (reward) and informs you (feedback loop) that working more hours will fulfill your need for more money in the future.

Rewards (as well as motivation itself) are of two types—extrinsic and intrinsic.6 Managers can use both to encourage better work performance.

■ Extrinsic rewards—satisfaction in the payoff from others. An extrinsic reward is the payoff, such as money, a person receives from others for performing a particular task. An extrinsic reward is an external reward; the payoff comes from pleasing others.

Example: An experiment by General Electric found that paying employees who were smokers up to $750—an extrinsic reward—to quit and stay off cig- arettes was three times as successful as a comparison group that got no paid incentives.7 (Some firms are asking their employees to pay higher insurance premiums or adopt other financial incentives to spur them to quit smoking, lose weight, or join a fitness program.8)

■ Intrinsic rewards—satisfaction in performing the task itself. An intrinsic reward is the satisfaction, such as a feeling of accomplishment, a person receives from performing the particular task itself. An intrinsic reward is an internal reward; the payoff comes from pleasing yourself.

Example: Jenny Balaze left her post in Ernst & Young LLC’s Washing- ton, DC, office to spend 12 weeks in Buenos Aires as a volunteer provid- ing free accounting services to a small publishing firm. It was among “the best three months of my life,” says the 27-year-old business advisory ser- vices manager.9

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Why Is Motivation Important? It seems obvious that organizations would want to motivate their employees to be more productive. Actually, though, as a manager you will find knowledge of motivation important for five reasons.10 In order of importance, you want to motivate people to:

1. Join your organization. You need to instill in talented prospective workers the desire to come to work for you.

2. Stay with your organization. Whether you are in good economic times or bad, you always want to be able to retain good people.

3. Show up for work at your organization. In many organizations, absentee- ism and lateness are tremendous problems.11

4. Be engaged while at your organization. Engaged employees produce higher-quality work and better customer service.

5. Do extra for your organization. You hope your employees will perform extra tasks above and beyond the call of duty (be organizational “good citizens”).

The Four Major Perspectives on Motivation: Overview There is no theory accepted by everyone as to what motivates people. In this chapter, therefore, we present the four principal perspectives. From these, you may be able to select what ideas seem most workable to you. The four perspectives on motivation are (1) content, (2) process, (3) job design, and (4) reinforcement, as described in the fol- lowing four main sections. ●

Are You More Interested in Extrinsic or Intrinsic Rewards? The following survey was designed to assess extrinsic and in- trinsic motivation. Go to connect.mheducation.com and take Self-Assessment 12.1. When you’re done, answer the following questions:

1. What is more important to you, extrinsic or intrinsic rewards? Are you surprised by the results?

2. How can you use the results to increase your motivation to obtain good grades in your classes?

3. If you were managing someone like yourself, what would you do to increase the individual’s motivation?

SELF-ASSESSMENT 12.1 ®

We all are motivated by a combination of extrinsic and intrinsic rewards. Which type of reward is more valuable to you? Answering this question can help you generate self-motivation and higher performance. Find out about your relative interest in extrin- sic and intrinsic rewards by taking Self-Assessment 12.1.

12.2 Content Perspectives on Employee Motivation What kinds of needs motivate employees?

THE BIG PICTURE Content perspectives are theories emphasizing the needs that motivate people. Needs are defined as physiological or psychological deficiencies that arouse behavior. The content perspective includes four theories: Maslow’s hierarchy of needs, McClelland’s acquired needs theory, Deci and Ryan’s self- determination theory, and Herzberg’s two-factor theory.

? MAJOR QUESTION

Content perspectives, also known as need-based perspectives, are theories that em- phasize the needs that motivate people. Content theorists ask, “What kind of needs motivate employees in the workplace?” Needs are defined as physiological or psycho- logical deficiencies that arouse behavior. They can be strong or weak, and, because they are influenced by environmental factors, they can vary over time and from place to place.

In addition to McGregor’s Theory X/Theory Y (see Chapter 2), content perspectives include four theories:

■ Maslow’s hierarchy of needs theory ■ McClelland’s acquired needs theory ■ Deci and Ryan’s self-determination theory ■ Herzberg’s two-factor theory

Maslow’s Hierarchy of Needs Theory: Five Levels In 1943, one of the first researchers to study motivation, Brandeis University psychol- ogy professor Abraham Maslow (mentioned previously in Chapter 2) put forth his hierarchy of needs theory, which proposes that people are motivated by five levels of needs: (1) physiological, (2) safety, (3) love, (4) esteem, and (5) self-actualization.12 (See Figure 12.3.)

Motivating Employees CHAPTER 12 379

Self- actualization

Esteem

Love

Safety

5. Self-actualization need—the highest level need: Need for self-fulfillment: increasing competence, using abilities to the fullest. Workplace example: sabbatical leave to further personal growth.

4. Esteem need: Need for self-respect, status, reputation, recognition, self-confidence. Workplace examples: bonuses, promotions, awards.

3. Love need: Need for love, friendship, affection. Workplace examples: office parties, company softball teams, management retreats.

2. Safety need: Need for physical safety, emotional security, avoidance of violence. Workplace examples: health insurance, job security, work safety rules, pension plans satisfy this need.

1. Physiological need—the most basic human physical need: Need for food, clothing, shelter, comfort, self- preservation. Workplace example: these are covered by wages.

Physiological

FIGURE 12.3 Maslow’s hierarchy of needs

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The Five Levels of Needs In proposing this hierarchy of five needs, ranging from basic to highest level, Maslow suggested that needs are never completely satisfied. That is, our actions are aimed at fulfilling the “deprived” needs, the needs that remain unsatisfied at any point in time. Thus, for example, once you have achieved safety (security), which is the second most basic need, you will then seek to fulfill the third most basic need—love (belongingness).

EXAMPLE Looking for Peak Performance: A Hotel CEO Applies Maslow’s Hierarchy to Employees, Customers, & Investors

Chip Conley is CEO and founder of boutique hotel company Joie de Vivre (JDV), whose mission statement is “creating opportuni- ties to celebrate the joy of life.” In Peak: How Great Companies Get Their Mojo from Maslow, he describes how JDV used Maslow’s theory to motivate the business’s three key stakeholders— employees, customers, and investors—by tapping into the power of self-actualization to create peak performance.13

Motivating Employees. Applying the Maslow pyramid to em- ployees, says Conley, “the basic need that a job satisfies is money. Toward the middle are needs like recognition for a job well done, and at the top are needs like meaning and creative expression.”14

Thus, housekeepers, who represent half of a hotel’s work- ers, would be gathered in small groups and asked what the hotels would look like if they weren’t there each day. Following their answers (unvacuumed carpets, piled-up trash, bathrooms filled with wet towels), they were then asked to come up with alternative names for housekeeping. Some responses: “seren- ity keepers,” “clutter busters,” “the peace-of-mind police.”

From this exercise, workers developed a sense of how the customer experience would not be the same without them.15

And that, says Conley, “gets to a sense of meaning in your work that satisfies that high-level human motivation.” Addressing the highest-level need gives employees “a sense that the job helps them become the best people they can be.”16

Motivating Customers. Many hotels offer clean, safe accommo- dations. JDV designs each of its 30 hotels to “flatter and vindicate a different category of customers’ distinct self-image,” says Conley. Thus, in San Francisco, the Hotel Rex’s tweedy décor and Jack London touches appeal to urbane literary types. The Vitale’s fitness-conscious services and minimalist design target “the kind of bourgeois bohemian who might like Dwell Magazine.”17

Motivating Investors. Although most investors focus on a “returns-driven relationship” (bottom of the pyramid), some have higher motivations. They are driven not by the deal “but rather [by] an interesting, worthwhile deal,” which JDV attempts to provide.18

YOUR CALL To what extent can Chip Conley’s ideas be used in larger organizations?

Using the Hierarchy of Needs Theory to Motivate Employees Research does not clearly support Maslow’s theory, although it remains popular among managers. Still, the importance of Maslow’s contribution is that he showed that workers have needs beyond that of just earning a paycheck. To the extent the organization permits, managers should first try to meet employees’ level 1 and level 2 needs, of course, so that employees won’t be preoccupied with them. Then, however, they need to give employees a chance to fulfill their higher-level needs in ways that also advance the goals of the organization.19

McClelland’s Acquired Needs Theory: Achievement, Affiliation, & Power David McClelland, a well-known psychologist, investigated the needs for affili- ation and power and as a consequence proposed the acquired needs theory, which states that three needs—achievement, affiliation, and power—are major motives determining people’s behavior in the workplace.20 McClelland believes that we are not born with our needs; rather we learn them from the culture—from our life experiences.

Motivating Employees CHAPTER 12 381

A “well-balanced” individual: achievement, affiliation, and power are of equal size.

A “control freak” individual: achievement is normal, but affiliation is small and power is large.

Ach.

Power

Aff.

Ach.

Power

Aff.

FIGURE 12.4 McClelland’s three needs

The Three Needs Managers are encouraged to recognize three needs in them- selves and others and to attempt to create work environments that are responsive to them. The three needs, one of which tends to be dominant in each of us, are as follows. (See Figure 12.4, right.)

■ Need for achievement—“I need to excel at tasks.” This is the desire to ex- cel, to do something better or more efficiently, to solve problems, to achieve excellence in challenging tasks.

■ Need for affiliation—“I need close relationships.” This is the desire for friendly and warm relations with other people.

■ Need for power—“I need to control others.” This is the desire to be respon- sible for other people, to influence their behavior or to control them.21

McClelland identifies two forms of the need for power—personal and institutional. The negative kind is the need for personal power, as expressed in the

desire to dominate others, and involves manipulating people for one’s own gratification.

The positive kind, characteristic of top managers and leaders, is the desire for institutional power, as expressed in the need to solve problems that further organi- zational goals.

Research tells us that your performance will vary along the lines of the three ac- quired needs. Where do you think you stand in terms of being motivated by these three needs? You can find out by completing Self-Assessment 12.2.

Assessing Your Acquired Needs The following survey was designed to assess your motivation in terms of acquired needs. Go to connect.mheducation.com and take Self-Assessment 12.2. When you’re done, answer the following questions:

1. What is the order of your most important needs? Are you surprised by this result?

2. Given that achievement and power needs are associated with career advancement, how might you increase these two need states?

SELF-ASSESSMENT 12.2 ®

Using Acquired Needs Theory to Motivate Employees McClelland associ- ates the three needs with different sets of work preferences, as follows:22

Need for Achievement If you (or an employee) are happy with accomplishment of a task being its own reward, don’t mind or even prefer working alone, and are will- ing to take moderate risks, then you probably have a high need for achievement. That being the case, you (or your employee) would probably prefer doing the kind of work that offers pay for performance, challenging but achievable goals, and individual re- sponsibility for results. People high in need for achievement tend to advance in techni- cal fields requiring creativity and individual skills.23

Need for Power If you, like most effective managers, have a high need for power, that means you enjoy being in control of people and events and being recognized for this responsibility. Accordingly, your preference would probably be for work that allows you to control or have an effect on people and be publicly recognized for your accomplishments.

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Need for Affiliation If you tend to seek social approval and satisfying personal relationships, you may have a high need for affiliation. In that case, you may not be the most efficient manager because at times you will have to make decisions that will make people resent you. Instead, you will tend to prefer work, such as sales, that pro- vides for personal relationships and social approval.

Deci & Ryan’s Self-Determination Theory: Competence, Autonomy, & Relatedness Developed by Edward Deci (pronounced “Dee-see”) and Richard Ryan, psycholo- gists at the University of Rochester, self-determination theory assumes that people are driven to try to grow and attain fulfillment, with their behavior and well-being influ- enced by three innate needs: competence, autonomy, and relatedness.24

Focus on Intrinsic Motivation Self-determination theory focuses primarily on intrinsic motivation and rewards (such as feeling independent) rather than on extrinsic motivation and rewards (such as money or fame). Intrinsic motivation is longer lasting than extrinsic motivation and has a more positive impact on task performance.25

The Three Innate Needs To achieve psychological growth, according to the theory, people need to satisfy the three innate (that is, inborn) needs of competence, autonomy, and relatedness:

1. Competence—“I want to feel a sense of mastery.” People need to feel qual- ified, knowledgeable, and capable of completing a goal or task and to learn different skills.

2. Autonomy—“I want to feel independent and able to influence my envi- ronment.” People need to feel they have freedom and the discretion to deter- mine what they want to do and how they want to do it.

3. Relatedness—“I want to feel connected to other people.” People need to feel a sense of belonging, of attachment to others.

Using Self-Determination Theory to Motivate Employees Managers can apply this theory by trying to create work environments that encourage employees to experience competence, autonomy, and relatedness. Some specific suggestions:

■ Competence. Managers can provide tangible resources, time, contacts, and coaching to improve employee competence, making sure that employees have the knowledge and information they need to perform their jobs. Example: At NetApp, a data storage company, managers regularly notify the vice chairman when they “catch someone doing something right.” He makes 10–20 phone calls a day to thank such special employees.26

■ Autonomy. To enhance feelings of autonomy, managers can develop trust with their employees and empower them by delegating meaningful tasks to them. Example: Unilever provides smartphones and other technologies to 100,000 employees (factory production workers excepted) to enable them to work anytime, anywhere, as long as they meet company needs.27

■ Relatedness. Many companies, such as Sacramento-based Nugget Market, use camaraderie to foster relatedness. “The company doesn’t see this as a workplace,” says one employee. “They see it as a family. This is our home, where customers are treated as guests.”28

Are you feeling motivated in this course? To what extent does the instructor for this course satisfy your needs for competence, autonomy, and relatedness? You can find out by taking Self-Assessment 12.3.

Motivating Employees CHAPTER 12 383

Herzberg’s Two-Factor Theory: From Dissatisfying Factors to Satisfying Factors Frederick Herzberg arrived at his needs-based theory as a result of a landmark study of 203 accountants and engineers who were interviewed to determine the factors responsible for job satisfaction and dissatisfaction.29 Job satisfaction was more frequently associated with achievement, recognition, characteristics of the work, responsibility, and advancement. Job dissatisfaction was more often associ- ated with working conditions, pay and security, company policies, supervisors, and interpersonal relationships. The result was Herzberg’s two-factor theory, which proposed that work satisfaction and dissatisfaction arise from two different factors—work satisfaction from motivating factors and work dissatisfaction from hygiene factors.

Hygiene Factors versus Motivating Factors In Herzberg’s theory, the hygiene factors are the lower-level needs, and the motivating factors are the higher-level needs. The two areas are separated by a zone in which employees are neither satisfied nor dissatisfied. (See Figure 12.5, next page.)

Assessing Your Needs for Self-Determination The following survey was designed to assess the extent to which an instructor is satisfying your needs for self-determination. Go to connect.mheducation.com and take Self-Assessment 12.3. When you’re done, answer the following questions:

1. Are your needs being met? Do the results make sense in terms of your level of motivation in this course?

2. Based on the results, identify two things you might do to increase your motivation.

3. Based on the results, identify two things your instructor might do to increase your motivation.

SELF-ASSESSMENT 12.3 ®

How much do you want? Would a clean desk in a big office with a view represent the tangible realization of managerial success for you? Would this be a motivation that would make you feel satisfied?

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Motivating factors: “What will make my people satisfied?” Achievement Recognition The work itself Responsibility Advancement & growth

Hygiene factors: “What will make my people dissatisfied?” Pay & security Working conditions Interpersonal relationships Company policy Supervisors

No satisfaction Satisfaction

Dissatisfaction No dissatisfaction

Neutral area: neither satisfied nor dissatisfied

FIGURE 12.5 Herzberg’s two-factor theory: satisfaction versus dissatisfaction

■ Hygiene factors—“Why are my people dissatisfied?” The lower-level needs, hygiene factors, are factors associated with job dissatisfaction—such as salary, working conditions, interpersonal relationships, and company policy— all of which affect the job context in which people work.

An example of a hygiene factor is the temperature in a factory that’s not air-conditioned during the summer. Installing air-conditioning will remove a cause of job dissatisfaction. It will not, however, spur factory workers’ motivation and make them greatly satisfied in their work. Be- cause motivating factors are absent, workers become, in Herzberg’s view, merely neutral in their attitudes toward work—neither dissatisfied nor satisfied.

■ Motivating factors—“What will make my people satisfied?” The higher- level needs, motivating factors, or simply motivators, are factors associated with job satisfaction—such as achievement, recognition, responsibility, and advancement—all of which affect the job content or the rewards of work per- formance. Motivating factors—challenges, opportunities, recognition—must be instituted, Herzberg believed, to spur superior work performance.

An example of a motivating factor would be to give factory workers more control over their work. For instance, instead of repeating a single task over and over, a worker might join with other workers on a team in which each one does several tasks. This is the approach that Swedish automaker Volvo took in building cars.

Motivating Employees CHAPTER 12 385

Deci & Ryan

Higher-level needs

Lower-level needs

Maslow

Self-actualization

Esteem

Safety

Physiological

Deci & Ryan

Competence Autonomy

Relatedness

Achievement Power

Affiliation

McClelland Herzberg

Motivating factors

Hygiene factors

Love

FIGURE 12.6 A comparison of needs & satisfaction theories: Maslow hierarchy of needs, McClelland acquired need, Deci & Ryan self-determination, and Herzberg two-factor

Using Two-Factor Theory to Motivate Employees During the Great Reces- sion, with fewer jobs available, many people felt they were stuck in jobs they disliked—61% in 2009, according to a survey by the Conference Board.30 In 2013, the survey found even worse results—only half of American workers said they were sat- isfied with their jobs.31 Another study, however, finds that 81% of U.S. employees report overall satisfaction with their current job, with the important parts being com- pensation/pay (by 60%), job security (59%), and opportunities to use skills/abilities (also 59%).32

There will always be some employees who dislike their jobs, but the basic lesson of Herzberg’s research is that you should first eliminate dissatisfaction (hygiene factors), making sure that working conditions, pay levels, and company policies are reasonable. You should then concentrate on spurring motivation by providing op- portunities for achievement, recognition, responsibility, and personal growth (moti- vating factors).

Positive hygiene factors could include allowing pets at work; offering video- game arcades, fitness classes, and intramural sports (volleyball, soccer); and pro- viding a library of free movies, books, and magazines.33 (Or, if you work at Google, you could also have a college reimbursement plan, legal aid, and travel assistance— and if you die, the company will pay your family half your salary for a decade.)34

The four needs theories are compared below. (See Figure 12.6.) Note how acquired need theory (McClelland) and self-determination theory (Deci & Ryan) focus only on higher-level needs. ●

Process perspectives are concerned with the thought processes by which people decide how to act—how employees choose behavior to meet their needs. Whereas need- based perspectives simply try to understand employee needs, process perspectives go further and try to understand why employees have different needs, what behaviors they select to satisfy them, and how they decide if their choices were successful.

In this section we discuss three process perspectives on motivation:

■ Equity theory ■ Expectancy theory ■ Goal-setting theory

Equity Theory: How Fairly Do You Think You’re Being Treated in Relation to Others? Fairness—or, perhaps equally important, the perception of fairness—can be a big issue in organizations. For example, if, as a salesperson for Target, you received a 10% bo- nus for doubling your sales, would that be enough? What if other Target salespeople received 15%?

Equity theory focuses on employee perceptions as to how fairly they think they are be- ing treated compared with others. Developed by psychologist J. Stacey Adams, equity theory is based on the idea that employees are motivated to see fairness in the rewards they expect for task performance.35 Employees are motivated to resolve feelings of injustice.

How, for example, might employees respond to knowing that the average pay for CEOs in 2013 was about 257 times the average worker’s pay, up from 181 times in 2009?36 (The head of a typical large public company earned $10.5 million in 2013. The average American with a bachelor’s degree makes $2.3 million—over a lifetime. By contrast, Apple CEO Timothy Cook earns that amount in a shade over two days.37) How about the fact that in 2013 women made only 81% of men’s earnings?38 Some experts suggest that such imbalances are partly responsible for the more than $50 bil- lion a year in employee theft.39

The Elements of Equity Theory: Comparing Your Inputs & Outputs with Those of Others The key elements in equity theory are inputs, outputs (rewards), and comparisons. (See Figure 12.7, opposite page.)

■ Inputs—“What do you think you’re putting into the job?” The inputs that people perceive they give to an organization are their time, effort, training, experience, intelligence, creativity, seniority, status, and so on.

■ Outputs or rewards—“What do you think you’re getting out of the job?” The outputs are the rewards that people receive from an organization: pay, benefits, praise, recognition, bonuses, promotions, status perquisites (corner office with a view, say, or private parking space), and so on.

■ Comparison—“How do you think your ratio of inputs and rewards com- pares with those of others?” Equity theory suggests that people compare the ratio of their own outcomes to inputs against the ratio of someone else’s

12.3 Process Perspectives on Employee Motivation Is a good reward good enough? How do other factors affect motivation?

THE BIG PICTURE Process perspectives, which are concerned with the thought processes by which people decide how to act, have three viewpoints: equity theory, expectancy theory, and goal-setting theory.?

MAJOR QUESTION

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Motivating Employees CHAPTER 12 387

outcomes to inputs. When employees compare the ratio of their inputs and outputs (rewards) with those of others—whether coworkers within the organi- zation or even other people in similar jobs outside it—they then make a judg- ment about fairness. Either they perceive there is equity, and so are satisfied with the ratio and so they don’t change their behavior. Or they perceive there is inequity, and so they feel resentful and act to change the inequity.40

Using Equity Theory to Motivate Employees Adams suggests that employees who feel they are being underrewarded will respond to the perceived inequity in one or more negative ways, as by reducing their inputs, trying to change the outputs or rewards they receive, distorting the inequity, changing the object of comparison, or leaving the situation. (See Table 12.1.)

My inputs “What does it seem like I am putting into the

job?”: time, effort, training, etc.

My outputs “What does it seem like I am getting out of the job?”: pay,

benefits, praise, etc.

Comparison “How does it seem the ratio of my inputs and outputs compares with the ratio of theirs? Are

they fair (equity) or unfair (inequity)?”

Their inputs “What does it

seem like they are putting into the

job?”: time, effort, training, etc.

Their outputs “What does it

seem like they are getting out of the job?”: pay, bene- fits, praise, etc.

Equity is perceived

“I’m satisfied and so I won’t

change my behavior.”

Inequity is perceived

“I’m dissatisfied and so I will change my behavior.”

My inputs are compared with other employees’

inputs.

My outputs (rewards) are compared with other employees’ outputs.

FIGURE 12.7 Equity theory How people perceive they are being fairly or unfairly rewarded.

• They will reduce their inputs: They will do less work, take long breaks, call in “sick” on Mondays, leave early on Fridays, and so on.

• They will try to change the outputs or rewards they receive: They will lobby the boss for a raise, or they will pilfer company equipment.

• They will distort the inequity: They will exaggerate how hard they work so they can complain they’re not paid what they’re worth.

• They will change the object of comparison: They may compare themselves with another person instead of the original one.

• They will leave the situation: They will quit, transfer, or shift to another reference group.

TABLE 12.1 Some Ways Employees Try to Reduce Inequity

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By contrast, employees who think they are treated fairly are more likely to support organizational change, more apt to cooperate in group settings, and less apt to turn to arbitration and the courts to remedy real or imagined wrongs.

Three practical lessons that can be drawn from equity theory are as follows.

1. Employee Perceptions Are What Count Probably the most important re- sult of research on equity theory is this: No matter how fair managers think the organi- zation’s policies, procedures, and reward system are, each employee’s perception of those factors is what counts. Thus, managers should provide positive recognition about employee behavior and performance and explain the reasons behind their decisions.

2. Employee Participation Helps Managers benefit by allowing employees to participate in important decisions. For example, a recent study showed that employees were more satisfied with changes to their jobs when they participated in creating the changes.41

3. Having an Appeal Process Helps When employees are able to appeal deci- sions affecting their welfare, it promotes the belief that management treats them fairly. Perceptions of fair treatment promote job satisfaction, commitment, and citizenship behavior and reduce absenteeism and turnover.42

Research clearly shows that our perceptions of equity or fair treatment are signifi- cantly associated with job satisfaction, commitment, performance, and turnover. It thus is important for managers to understand employees’ feelings about equitable treatment. Are you being treated fairly at work? Do you have an appreciation for the different ways in which managers can treat us fairly? You can get answers to these questions by taking Self-Assessment 12.4.

Measuring Perceived Fair Interpersonal Treatment The following survey was designed to assess the extent to which you are experiencing fair interpersonal treatment at work. Go to connect.mheducation.com and take Self-Assessment 12.4. When you’re done, answer the following questions:

1. Are you being treated equitably? 2. Based on examining the three lowest-scoring items, what

could your manager do to improve your perceptions of equity?

3. What can you do to increase your perceptions of fair interpersonal treatment?

SELF-ASSESSMENT 12.4 ®

Expectancy Theory: How Much Do You Want & How Likely Are You to Get It? Introduced by Victor Vroom, expectancy theory suggests that people are motivated by two things: (1) how much they want something and (2) how likely they think they are to get it.43 In other words, assuming they have choices, people will make the choice that promises them the greatest reward if they think they can get it.

The Three Elements: Expectancy, Instrumentality, Valence What deter- mines how willing you (or an employee) are to work hard at tasks important to the success of the organization? The answer, says Vroom, is: You will do what you can do when you want to.

Motivating Employees CHAPTER 12 389

Your motivation, according to expectancy theory, involves the relationship between your effort, your performance, and the desirability of the outcomes (such as pay or recognition) of your performance. These relationships, which are shown in the follow- ing drawing, are affected by the three elements of expectancy, instrumentality, and valence. (See Figure 12.8.)

Performance . . . a particular

level of task performance, . . .

Effort I exert an effort . . .

Outcomes . . . certain outcomes

(e.g., pay or recognition)

Expectancy “Will I be able to perform at the desired level on a task?”

Valence “How much do I

want the outcome?”

Instrumentality “What outcome will I receive if I perform at this

level?”

. . . in order to achieve . . .

. . . so that I can realize . . .

FIGURE 12.8 Expectancy theory: the major elements

1. Expectancy—“Will I Be Able to Perform at the Desired Level on a Task?” Expectancy is the belief that a particular level of effort will lead to a particu- lar level of performance. This is called the effort-to-performance expectancy.

Example: If you believe that putting in more hours working at Target selling clothes will result in higher sales, then you have high effort-to-performance expectancy. That is, you believe that your efforts will matter. You think you have the ability, the product knowledge, and so on so that putting in extra hours of selling can probably raise your sales of clothes.

2. Instrumentality—“What Outcome Will I Receive If I Perform at This Level?” Instrumentality is the expectation that successful performance of the task will lead to the outcome desired. This is called the performance-to-reward expectancy.

Example: If you believe that making higher sales will cause Target to give you a bonus, then you have high performance-to-reward expectancy. You believe if you can achieve your goals, the outcome will be worthwhile. This element is independent of the previous one—you might decide you don’t have the ability to make the extra sales, but if you did, you’ll be rewarded. (Lately, because of the public’s concern about the quality of the educational system in the United States, school boards and politicians are implementing programs that tie teachers’ pay to performance.44)

3. Valence—“How Much Do I Want the Outcome?” Valence is value, the importance a worker assigns to the possible outcome or reward.

Example: If you assign a lot of importance or a high value to Target’s prospective bonus or pay raise, then your valence is said to be high.

For your motivation to be high, you must be high on all three elements—expectancy, instrumentality, and valence. If any element is low, you will not be motivated. Your effort-to-performance expectancy might be low, for instance, because you doubt making an effort will make a difference (because retail clothing selling has too much competition). Or your performance-to-reward expectancy might be low because you don’t think Target is going to give you a bonus for being a star at selling. Or your va- lence might be low because you don’t think the bonus or raise is going to be high enough to justify working evenings and weekends.

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Using Expectancy Theory to Motivate Employees The principal problem with the expectancy theory is that it is complex. Even so, the underlying logic is understand- able, and research seems to show that managers are not following its principles.45

When attempting to motivate employees, managers should ask the following questions:

■ What rewards do your employees value? As a manager, you need to get to know your employees and determine what rewards (outcomes) they value, such as pay raises or recognition.

■ What are the job objectives and the performance level you desire? You need to clearly define the performance objectives and determine what perfor- mance level or behavior you want so that you can tell your employees what they need to do to attain the rewards.

■ Are the rewards linked to performance? You want to reward high perfor- mance, of course. Thus, employees must be aware that X level of performance within Y period of time will result in Z kinds of rewards. In a team context, however, research shows that it is best to use a combination of individual and team-based rewards.46

■ Do employees believe you will deliver the right rewards for the right per- formance? Your credibility is on the line here. Your employees must believe that you have the power, the ability, and the will to give them the rewards you promise for the performance you are requesting.

EXAMPLE Reducing the F’s: Applying Expectancy Theory to Failing Students “A highly skilled CEO is hard to find,” observes a business writer. “Highly paid CEOs, however, are everywhere you look.”47

Indeed, the mass media are full of stories about top manag- ers who don’t produce results but are still rewarded (such as the Staples executives who didn’t make their 2013 goals but received a special bonus anyway—“for effort”).48 Where’s the inducement to deliver superior performance when you’re going to be rewarded anyway?49

Maybe we can learn from high school.

Fewer F’s. As a principal in Arizona high schools, Dr. Tim Richard has used a motivational program called Celebration/ Remediation to improve the grades of students. For instance, at 3,000-student Westwood High School in Mesa, which had 1,200 failing pupils, students with F grades dropped to 900 within the first few months. At Poston Butte High School, the number of students with one or more F’s was reduced from 555 to 262 in nine weeks. “Once we changed the culture by bringing on Celebration/Remediation . . . ,” Richard said, “the kids have completely embraced it.”50 (Poston Butte also rewards students who pass all their classes with an early release from school.)

Celebration or Remediation? At Westwood, the program worked like this: “Students are allowed to go outside and

have fun with their friends for 28 minutes on four mornings a week,” Richard told The Arizona Republic. “But those who have even one F must stay inside for ‘remediation’— 28 minutes of extra study, help from peer tutors, or meetings with teachers.”51

Richard believes the key to motivating students is to link a highly valued reward—socializing with friends outside—with grades. Socializing includes not only hanging out but also eat- ing snacks, playing organized games, and listening and danc- ing to music. “You really appreciate celebration after you have been in remediation,” said Ivana Baltazar, a 17-year-old senior who raised her grade in economics from an F to a B after re- ceiving help through the program.

YOUR CALL The tricky part, observes Westwood student tutor Joseph Leung, is addressing expectancy—“getting people out of the mindset that they can’t succeed. . . . A lot of times they just haven’t done their homework. I try to help them understand that the difference between a person passing and failing is their work ethic.” For top executives in business, expectancy doesn’t seem to be a problem, it’s instrumentality and valence. How could you apply Richard’s program to reward performance in business?

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Goal-Setting Theory: Objectives Should Be Specific & Challenging but Achievable We have been considering the importance of goal setting since first introducing the topic in Chapter 5. Goal-setting theory suggests that employees can be motivated by goals that are specific and challenging but achievable. According to psychologists Edwin Locke and Gary Latham, who developed the theory, it is natural for people to set and strive for goals; however, the goal-setting process is useful only if people understand and accept the goals.

The Four Motivational Mechanisms of Goal-Setting Theory Goal setting helps motivate you by doing the following:

1. It Directs Your Attention Goal setting directs your attention toward goal- relevant tasks and away from irrelevant ones.

2. It Regulates the Effort Expended The effort you expend is generally pro- portional to the goal’s difficulty.

3. It Increases Your Persistence Goal setting makes obstacles become chal- lenges to be overcome, not reasons to fail.

4. It Fosters Use of Strategies & Action Plans The use of strategies and action plans make it more likely you will realize success.

Some Practical Results of Goal-Setting Theory A goal is defined as an ob- jective that a person is trying to accomplish through his or her efforts. To result in high motivation and performance, according to recent research, goals must have a number of characteristics, as follows:

1. Goals Should Be Specific Goals such as “Sell as many cars as you can” or “Be nicer to customers” are too vague. Instead, goals need to be specific—usually meaning quantitative, as in “Boost your revenues 25%” and “Cut absenteeism by 10%.”52

2. Goals Should Be Challenging but Achievable Goals should be tailored to fit individual abilities and training, not set so low that lots of people can achieve them nor set so high that most people will give up. Difficult goals will lead to higher performance only when employees are committed to them; if they are not, difficult goals may simply lead to low performance.53

3. Goals Should Be Linked to Action Plans An action plan outlines the ac- tivities or tasks that need to be accomplished in order to obtain a goal and reminds us of what we should be working on. Both individuals (such as college students) and organi- zations are more likely to achieve their goals when they develop detailed action plans.54

4. Goals Need Not Be Set Jointly to Be Effective It doesn’t seem to matter whether goals are set by managers, by employees, or by both together to be effective.55 Thus, managers should probably do whatever suits the individual and the situation (a contingency approach). On the other hand, employees should be encouraged to de- velop their own action plans, which will foster stronger goal commitment.56

5. Feedback Enhances Goal Attainment Feedback lets employees know if they are on or off course, provides them with performance standards, and gives them the information they need to adjust their efforts.

Some of the preceding recommendations are embodied in the advice we presented in Chapter 5—namely, that goals should be SMART: Specific, Measurable, Attainable, Results-oriented, and have Target dates. ●

12.4 Job Design Perspectives on Motivation What’s the best way to design jobs—adapt people to work or work to people?

THE BIG PICTURE Job design, the division of an organization’s work among employees, applies motivational theories to jobs to increase performance and satisfaction. The traditional approach to job design is to fit people to the jobs; the modern way is to fit the jobs to the people, using job enrichment and approaches that are based on Herzberg’s landmark two-factor theory, discussed earlier in this chapter. The job characteristics model offers five job attributes for better work outcomes.