Outcome/input ratio and comparison other are elements of:

5

Foundations of Employee Motivation

LEARNING OBJECTIVES

After reading this chapter, you should be able to:

1. Diagram and discuss the relationship between human drives, needs, and behavior.

2. Summarize Maslow’s needs hierarchy and discuss Maslow’s contribution to the field of motivation.

3. Summarize McClelland’s learned needs theory, including the three needs he studied.

4. Describe four-drive theory and discuss its implications for motivating employees.

5. Diagram the expectancy theory model and discuss its practical implications for motivating employees.

6. Describe the characteristics of effective goal setting and feedback.

7. Summarize equity theory and describe how to improve procedural justice.

8. Identify the factors that influence procedural justice, as well as the consequences of procedural justice.

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132 Part Two Individual Behavior and Processes

Rewards, social events, strength-based feedback, and various celebrations for good performance are designed to maintain and improve employee motivation at Rack- space Hosting. This motivation has catapulted the company’s performance in a highly competitive market. Rackspace is also recognized as one of the best places to work. Recall from Chapter 2 that motivation refers to the forces within a person that affect the direction, intensity, and persistence of voluntary behavior. 2 Motivated employees are willing to exert a particular level of effort (intensity), for a certain amount of time (persistence), toward a particular goal (direction). Motivation is one of the four essen- tial drivers of individual behavior and performance. This chapter introduces the core theories of employee motivation. We begin by introducing employee engagement, an increasingly popular concept associated with motivation. Next, we distinguish between drives and needs and explain how needs are shaped through the individual’s self-concept and other personal factors. Three theories that focus on drives and needs—Maslow’s needs hierarchy, McClelland’s learned needs theory, and four-drive theory—are introduced and evaluated. Next, we turn our attention to the popular rational decision model of employee motivation: expectancy theory. This is followed by a discussion of the key elements of goal setting and feedback. In the final section, we look at organizational justice, including the dimensions and dynamics of equity theory and procedural justice.

Employee Engagement When Rackspace Hosting executives discuss employee motivation, they are just as likely to use the phrase employee engagement. This concept, which is closely connected to em- ployee motivation, has become so popular in everyday language that we introduce it here. Employee engagement’s popularity far exceeds its conceptual development; its definition varies across studies, and its distinction from job satisfaction, organizational commitment, and other variables is unclear. 3 Even so, there are enough threads of simi- larity that we can cautiously define employee engagement as the employee’s emo- tional and cognitive motivation, self-efficacy to perform the job, perceived clarity of the organization’s vision and his or her specific role in that vision, and belief that he or she has the resources to get the job done. 4 This definition relates to the four cornerstones of individual behavior and performance identified in the MARS model (see Chapter 2): motivation, ability, role perceptions, and situational factors. Employee engagement en- compasses the employee’s beliefs about and emotional responses to these conditions. Additionally, some writers suggest that employee engagement includes a high level of absorption in the work—the experience of “getting carried away” while working. Employee engagement is a hot topic among executives and consultants. One re- port estimates that one in every four large organizations has a formal employee en- gagement program, and three out of five intend to develop plans to improve employee engagement. 5 Some companies even have employee engagement departments or managers. The popularity of employee engagement is partly due to preliminary evi- dence that it improves organizational effectiveness. Royal Bank of Scotland calcu- lated that when its employee engagement scores increase, productivity rises and staff turnover falls. British retailer Marks & Spencer claims that a 1 percent improvement in the engagement levels of its workforce produces a 2.9 percent increase in sales per square foot. JCPenney has calculated that stores with higher employee engagement produce higher sales. Other research indicates that employee engagement is associ- ated with higher organizational citizenship and lower turnover intentions. 6

motivation The forces within a person that affect the direction, intensity, and persistence of voluntary behavior.

employee engagement The employee’s emo- tional and cognitive motivation, self-efficacy to perform the job, perceived clarity of the organization’s vision and his or her specific role in that vision, and belief that he or she has the resources to get the job done.

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Chapter 5 Foundations of Employee Motivation 133

The challenge facing organizational leaders is that most employees aren’t very en- gaged. Several consulting reports estimate that only about one-quarter of American employees are highly engaged, which is slightly above the global average. Less than 60 per cent are somewhat engaged, and approximately one-fifth have low engagement or are actively disengaged. Actively disengaged employees tend to be disruptive at work, not just disconnected from work. Globally, employees in Mexico and Brazil seem to have the highest levels of engagement, whereas several Asian countries (notably Japan, China, and South Korea) and a few European countries (notably Italy, Netherlands, and France) have the lowest levels. 8 Some writers suggest that globalization, informa- tion technology, corporate restructuring, and other changes have potentially under- mined the levels of trust and commitment necessary to motivate employees beyond minimum standards. 9 Others point out that companies have not adjusted to the chang- ing needs and expectations of new workforce entrants. 10 Overall, these reports of low employee engagement imply that many employees are not very motivated to perform their jobs. To create a more motivated workforce, we first need to understand employee drives and needs and how these concepts relate to individual goals and behavior.

After reading this section, you should be able to: 1. Diagram and discuss the relationship between human drives, needs,

and behavior. 2. Summarize Maslow’s needs hierarchy and discuss Maslow’s con-

tribution to the field of motivation. 3. Summarize McClelland’s learned needs theory, including the three

needs he studied. 4. Describe four-drive theory and discuss its implications for motivat-

ing employees.

Getting Engaged at JCPenney In the hypercompetitive retail industry, the number-one ingredient for winning the hearts and pocketbooks of customers is the quality, style, and price of the merchandise. What’s the second most important ingredient? It’s employee engagement, according to executives at JCPenney. “We feel strongly there’s a correlation between engaged associates and store profitability,” says Myron “Mike” Ullman, CEO of the Plano, Texas, retailer. In fact, the company’s internal research revealed that stores with the top-quartile engagement scores generate about 10 percent more in sales per square foot and 36 percent greater operating income than similar-size stores in the lowest quartile. A few years ago, about two-thirds of JCPenney associates were “engaged.” Thanks to improved training, career development, and other management practices, more than three-quarters of employees now are engaged. Per-share earnings have more than doubled since JCPenney management focused on improving employee engagement. “We see a 200 basis-point [increase in] profit when we engage the associates,” Ullman claims. “This isn’t just warm, fuzzy stuff. It’s solid business logic.”7

Learning Objectives

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134 Part Two Individual Behavior and Processes

Self-concept, social norms, and past experience

Drives (primary needs) and emotions

Needs (secondary)

Decisions and behavior

Exhibit 5.1 Drives, Needs, and Behavior

drives Hardwired characteris- tics of the brain that correct deficiencies or maintain an internal equilibrium by produc- ing emotions to energize individuals.

needs Goal-directed forces that people experience.

Employee Drives and Needs To figure out how to create a more engaged and motivated workforce, we first need to understand the motivational “forces” within people. Unfortunately, many writers conveniently avoid this topic, and the result is a stream of confusing phrases such as innate drives, learned needs, motivations, instincts, secondary drives, and primary needs. 11 We define drives (also called primary needs or innate motives ) as hardwired characteristics of the brain that correct deficiencies or maintain an internal equilibrium by produc- ing emotions to energize individuals. 12 Drives are the “prime movers” of behavior because they generate emotions, which put people in a state of readiness to act on their environment (see Chapter 4). Although typically overlooked in organizational behavior, emotions play a central role in motivation. 13 In fact, both words (emotion and motivation) are derivations of the same Latin word, movere, which means “to move.” Although there is no clear list of human drives, several are consistently identi- fied in research, such as the drives for social interaction, understanding of the envi- ronment, competence or status, and defense of oneself against physiological and psychological harm. 14 We define needs as goal-directed forces that people experience. Needs are the motivational forces of emotions channeled toward particular goals to correct deficien- cies or imbalances. So drives produce emotions, and needs are essentially the emo- tional experience channeled toward goals believed to address the source of emotion. Consider the following example: Everyone has a drive to bond—an inherent need to be associated with other people to some degree. The drive to bond generates nega- tive emotions when we are rejected by others or lack social interaction over time. These negative emotions are experienced as unfulfilled needs; they motivate us to do something that will increase our connectedness to and acceptance by other people.

Individual Differences in Needs Even though all people have the same drives, they don’t have the same emotional responses (such as loneliness, curiosity, or anger) or needs in the same situation. Exhibit 5.1 explains why this difference occurs. The left side of the model shows that the individual’s self-concept (including personality and values), social norms, and past experience amplify or suppress drive-based emotions, thereby resulting in stron- ger or weaker needs. 15 People who define themselves as very sociable typically expe- rience a strong need for social interaction if alone for a while, whereas people who view themselves as less sociable would experience a less intense need to socialize over that time. These individual differences also explain, as you shall discover later in this chapter, why needs can be “learned” to some extent. Socialization and reinforce- ment may cause people to alter their self-concept somewhat, resulting in a stronger or weaker need for social interaction, achievement, and so on. Self-concept, social norms, and past experience do more than adjust the emotions generated by our built-in drives. The right side of Exhibit 5.1 shows that these individual

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Chapter 5 Foundations of Employee Motivation 135

Maslow’s needs hierarchy theory A motivation theory of needs arranged in a hierarchy, whereby people are motivated to fulfill a higher need as a lower one becomes gratified.

characteristics also regulate a person’s motivated goals and behavior. Even if you have a strong desire for social interaction, you probably wouldn’t walk up to strangers and start talking to them; this action is contrary to social norms of behavior in most (but not all) cultures. Similarly, suppose that you dislike your boss’s decision to assign you to a par- ticular project. Openly confronting the boss about this assignment is common in some companies and cultures and much less common in other contexts. People regulate their goals and behavior on the basis of these social and cultural norms, as well as their self- concept and reinforcement (or observation of others) in previous situations. Employees are more likely to direct their emotional energy toward speaking up if they view them- selves as being forthright, live in a low power distance culture, and work in a company that encourages constructive debate. We have presented this detail about needs and drives for a few reasons. 16 First, as mentioned, motivation theories use the terms needs, drives, and motivations so loosely that they make it difficult to compare theories, so it is important to settle this confu- sion at the outset. Second, the field of organizational behavior has been woefully slow to acknowledge the central role of emotions in employee motivation, as will be ap- parent when we review most motivation theories in this chapter. Third, Exhibit 5.1 provides a useful template for understanding various motivation theories. In fact, you will see pieces of this theory when we discuss four-drive theory, expectancy theory, goal setting, and other concepts in this chapter. The remainder of this section de- scribes theories that try to explain the dynamics of drives and needs. Later theories in this chapter explain how experiences—such as expectancies, feedback, and work experiences—influence the motivation process.

Maslow’s Needs Hierarchy Theory By far, the most widely known theory of human motivation is Maslow’s needs hierarchy theory (see Exhibit 5.2 ). Developed by psychologist Abraham Maslow

Exhibit 5.2 Maslow’s Needs Hierarchy

Belongingness

Safety

Physiological

Source: Based on information in A. H. Maslow, “A Theory of Human Motivation,” Psychological Review 50 (1943), pp. 370–396.

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136 Part Two Individual Behavior and Processes

in the 1940s, the model condenses and integrates the long list of needs that had been studied previously into a hierarchy of five basic categories (from lowest to highest): 17

Physiological. The need for food, air, water, shelter, and the like. Safety. The need for a secure and stable environment and the absence of pain, threat, or illness. Belongingness/love. The need for love, affection, and interaction with other people. Esteem. The need for self-esteem through personal achievement as well as social esteem through recognition and respect from others. Self-actualization. The need for self-fulfillment, realization of one’s potential.

Along with developing these five categories, Maslow identified the desire to know and the desire for aesthetic beauty as two innate drives that do not fit within the hierarchy. Maslow’s list represents drives (primary needs) because they are described as innate and universal. According to Maslow, we are motivated simultaneously by several needs but the strongest source is the lowest unsatisfied need at the time. As the person satisfies a lower-level need, the next higher need in the hierarchy becomes the primary motivator and remains so even if never satisfied. Physiological needs are initially the most important, and people are motivated to satisfy them first. As they become gratified, the desire for safety emerges as the strongest motivator. As safety needs are satisfied, belongingness needs become most important, and so forth. The exception to this need fulfillment process is self-actualization; as people experience self-actualization, they desire more rather than less of this need. Thus, while the bottom four groups are deficiency needs because they become activated when unful- filled, self-actualization is known as a growth need because it continues to develop even when fulfilled.

Limitations and Contributions of Maslow’s Work In spite of its popularity, Maslow’s needs hierarchy theory has been dismissed by most motivation experts. 18 Maslow developed the theory from only his professional observations, and he was later surprised that it was so widely accepted before anyone tested it. Empirical stud- ies have concluded that people do not progress through the hierarchy as the theory predicts. For example, some people strive more for self-esteem before their belong- ingness needs have been satisfied. The theory also assumes that needs priorities shift over a long time, whereas in reality needs priorities rise and fall far more frequently with the situation. A person’s needs for status, food, social interaction, and so forth, change daily or weekly, not every few years. As Global Connections 5.1 describes, companies around the world routinely motivate all staff through recognition. These examples illustrate that people regularly need—and are motivated to receive—respect and belongingness in the workplace. Although needs hierarchy theory has failed the reality test, Maslow deserves credit for bringing a more holistic, humanistic, and positive approach to the study of human motivation. 19 First, Maslow brought a more holistic perspective by explain- ing that needs and drives should be studied together because human behavior is typically initiated by more than one of them at the same time. Previously, motiva- tion experts had splintered needs or drives into dozens of categories, each studied in isolation. 20

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Shining the Spotlight on Employee Recognition David Gachuru lives by a motto that motivates employees with much more than money: “If an employee’s work calls for a thumbs-up, I will appreciate him or her as many times as pos- sible.” Translating this advice into practice is a daily event for the general manager of Sarova Panafric Hotel in Nairobi, Kenya. In addition to thanking staff personally and through e-mails, Gachuru holds bimonthly meetings at which top-performing em- ployees are congratulated and receive paid holidays with their family. Employee achievements are also celebrated in the hotel’s newsletter, which is distributed to guests as well as to employees. Sarova Panafric Hotel and other firms are returning to good old-fashioned praise and recognition to regularly motivate staff. Good thing, because recent surveys in several countries identify lack of praise, recognition, or appreciation as a major reason why employees are demotivated and disengaged and decide to find work elsewhere. For instance, on the basis of 1,000 exit interviews, Ireland’s Small Firms Association (SMA) recently reported that lack of recognition was a top reason why employees in that country quit their jobs. “Increasingly people need to feel that their contribution is valued,” suggests

SMA director Patricia Callan. “If people do not feel important, they are not motivated to stay.” The challenge of recognition is to “catch” employees do- ing extraordinary work or showing organizational citizenship. Peer recognition, in which co-workers identify exemplary per- formers, is an increasingly popular way for companies to iden- tify employees deserving special recognition and reward. At the Ritz-Carlton Hotel in Kuala Lumpur, Malaysia, co-workers write words of appreciation to each other using First Class Cards. “This serves as a motivational aspect of the work envi- ronment,” says an executive at Ritz-Carlton Kuala Lumpur, which is rated as one of the best places to work in Asia. Amgen, the California-based biotechnology company, re- cently introduced globally a more intricate peer recognition pro- gram called Bravo! Tier I recognition is an e-mail–based thank-you sent by co-workers through a special Bravo Web site. Tier II peer recognitions are accompanied by an electronic gift certificate. At Tier III, employees nominate individuals or teams, and an “award wizard” determines the amount of the reward (ranging from $100 to $500). A Tier IV recognition is accompanied by a larger financial reward for those who significantly improved the company’s operations. The Tier V award, which is reviewed by the executive team, is received by employees who have made the highest material impact on company performance.21

Global Connections 5.1

David Gachuru (left in photo) motivates staff at Sarova Panafric Hotel in Nairobi, Kenya, through plenty of praise and recognition.

137

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138 Part Two Individual Behavior and Processes

Second, Maslow brought a more humanistic perspective to the study of motiva- tion. In particular, he suggested that higher-order needs are influenced by personal and social influences, not just instincts. In other words, he was among the first to rec- ognize that human thoughts (including self-concept, social norms, and past experience) play a role in motivation. Previous motivation experts had focused almost entirely on human instincts without considering that motivation could be shaped by human thought. Third, Maslow brought a more positive perspective of employee motivation by focusing on need gratification rather than only on need deprivation. In particular, he popularized the previously developed concept of self-actualization, suggesting that people are naturally motivated to reach their potential and that organizations and societies need to be structured to help people continue and develop this motiva- tion. 22 Due to his writing on self-actualization and the power of need gratification, Maslow is a pioneer in positive organizational behavior . Recall from Chapter 3 that positive OB says that focusing on the positive rather than negative aspects of life will improve organizational success and individual well-being. In other words, this approach advocates building positive qualities and traits within individuals or institutions as opposed to focusing on trying to fix what might be wrong with them. 23

What’s Wrong with Needs Hierarchy Models? Maslow’s theory is not the only attempt to map employee needs onto a single hier- archy. Another hierarchy model, called ERG theory , reorganizes Maslow’s five groups into three—existence, relatedness, and growth. 24 Unlike Maslow’s theory, which only explained how people progress up the hierarchy, ERG theory also describes how people regress down the hierarchy when they fail to fulfill higher needs. ERG theory seems to explain human motivation somewhat better than Maslow’s needs hierarchy, but that’s mainly because it is easier to cluster human needs around ERG’s three categories than Maslow’s five categories. Otherwise, research studies have found that ERG theory only marginally improves our under- standing of human needs. 25 Why have Maslow’s needs hierarchy theory, ERG theory, and other needs hierar- chies largely failed to explain the dynamics of employee needs? The most glaring explanation is that people don’t fit into a single needs hierarchy. Some people place social status at the top of their personal hierarchy; others consider personal develop- ment and growth an ongoing priority over social relations or status. There is increas- ing evidence that needs hierarchies are unique to each person, not universal, because needs are strongly influenced by each individual’s self-concept, including personal values and social identity. If your most important values lean toward stimulation and self-direction, you probably pay more attention to self-actualization needs. If power and achievement are at the top of your value system, status needs will likely be at the top of your needs hierarchy. This connection between values and needs suggests that a needs hierarchy is unique to each person and can possibly change over time, just as values change over a lifetime. 26

Learned Needs Theory Earlier in this chapter we said that drives (primary needs) are innate whereas needs are shaped, amplified, or suppressed through self-concept, social norms, and past

ERG theory A needs hierarchy theory consisting of three fundamental needs—existence, relatedness, and growth.

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Chapter 5 Foundations of Employee Motivation 139

experience. Maslow noted that individual characteristics influence the strength of higher-order needs, such as the need to belong. Psychologist David McClelland further investigated the idea that need strength can be altered through social influ- ences. In particular, he recognized that a person’s needs can be strengthened through reinforcement, learning, and social conditions. McClelland examined three “learned” needs: achievement, power, and affiliation. 27