chapter thirteen

Motivation and Performance

McGraw-Hill/Irwin Contemporary Management, 5/e

Copyright 2008 The McGraw-Hill Companies, Inc. All rights reserved.

Learning Objectives
Explain what motivation is and why managers need to be concerned about it. Describe from the perspectives of expectancy theory and equity theory what managers should do to have a highly motivated workforce. Explain how goals and needs motivate people and what kinds of goals are especially likely to result in high performance.
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Learning Objectives
Identify the motivation lessons that managers can learn from operant conditioning theory and social learning theory. Explain why and how managers can use pay as a major motivation tool.

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The Nature of Motivation

Motivation
The psychological forces that determine the direction of a persons behavior in an organization, a persons level of effort, and a persons level of persistence Explains why people behave the way they do in organizations

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The Nature of Motivation

Direction - possible behaviors the individual could engage in Effort - how hard the individual will work Persistence - whether the individual will keep trying or give up

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Question?
What behavior is performed for its own sake? A. Intrinsically Motivated Behavior B. Extrinsically Motivated Behavior C. Centrally Motivated Behavior D. Inherently Motivated Behavior

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The Nature of Motivation

Intrinsically Motivated Behavior
Behavior that is performed for its own sake. The source of the motivation that comes from actually performing the behavior. The sense of accomplishment and achievement derived from doing the work itself

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The Nature of Motivation

Extrinsically Motivated Behavior
Behavior that is performed to acquire material or social rewards or to avoid punishment. The source of the motivation is the consequences of the behavior and not the behavior itself.

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Outcomes and Inputs

Outcome
Anything a person gets from a job or an organization Pay, job security, autonomy, accomplishment

Input
Anything a person contributes to his or her job or organization Time, effort, skills, knowledge, work behaviors
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The Motivation Equation

Figure 13.1

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Expectancy Theory
Motivation will be high when workers believe:
High levels of effort will lead to high performance. High performance will lead to the attainment of desired outcomes.

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Expectancy Theory
Major Factors of Motivation
Expectancy - the belief that effort (input) will result in a certain level of performance Instrumentality - the belief that performance results in the attainment of outcomes Valence - how desirable each of the available outcomes from the job is to a person

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Expectancy, Instrumentality, and Valence

Figure 13.2

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Expectancy Theory

Figure 13.3

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Need Theories
Need
A requirement or necessity for survival and wellbeing.

Need Theories
People are motivated to obtain outcomes at work that will satisfy their needs

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Maslows Hierarchy of Needs

Needs
Highest-level needs Selfactualization

Description
Realize ones full potential Feel good about oneself Social interaction, love Security, stability Food, water, shelter

Examples
Use abilities to the fullest Promotions and recognition Interpersonal relations, parties Job security, health insurance Basic pay level to buy items

Esteem

Belongingness

Safety

Lowest-level needs

Physiological

Table 13.1

Lower-level needs must be satisfied before higher-level needs are addressed.

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Alderfers ERG Theory

Needs
Highest-level needs

Description
Self-development, creative work Interpersonal relations, feelings Food, water, clothing, and shelter

Examples
Continually improve skills Good relations, accurate feedback Adequate pay for necessities

Growth

Relatedness

Lowest-level needs

Existence

After lower level needs satisfied, person seeks higher needs. When unable to satisfy higher needs, lower needs motivation is raised.

Table 13.2

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Alderfers ERG Theory

As lower level needs become satisfied, a person seeks to satisfy higher-level needs A person can be motivated by needs at more than one level at the same time When people experience need frustration they will focus on satisfying the needs at the next-lowest level
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Herzbergs Motivation-Hygiene Theory

Focuses on outcomes that lead to higher motivation and job satisfaction, and those outcomes that can prevent dissatisfaction. Unsatisfied hygiene needs create dissatisfaction; satisfaction of hygiene needs does not lead to motivation or job satisfaction.

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Herzbergs Motivation-Hygiene Theory

Motivator needs relate to the nature of the work itselfautonomy, responsibility, interesting work. Hygiene needs are related to the physical and psychological context of the workcomfortable work environment, pay, job security.

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McClellands Needs for Achievement, Affiliation, and Power

Need for Achievement

A strong need to perform challenging tasks well and meet personal standards for excellence

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McClellands Needs for Achievement, Affiliation, and Power Need for Affiliation
Concerned about establishing and maintaining good interpersonal relations, being liked, and having the people around him get along with each other

Need for Power

A desire to control or influence others

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Equity Theory
Equity Theory
Focuses on peoples perceptions of the fairness (or lack of fairness) of their work outcomes in proportion to their work inputs.

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Equity Theory
A relative outcome to input ratio comparison to oneself or to another person (referent) perceived as similar to oneself. Equity exists when a person perceives that their outcome/input ratio to be equal to the referents ratio.
If the referent receives more outcomes, they should also give more inputs to achieve equity.
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Equity Theory
Condition Person Referent Example
Worker contributes more inputs but also gets more outputs than referent

Equity

Outcomes Inputs

= Outcomes Inputs

Underpayment Equity

Outcomes Inputs

< Outcomes Inputs

Worker contributes more inputs but also gets the same outputs as referent

Overpayment Equity

Outcomes Inputs

> Outcomes Inputs

Worker contributes same inputs but also gets more outputs than referent

Table 13.3
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Equity Theory
Inequity exists when workers outcome/input ratio is not equal to referent.
Underpayment inequity: ratio is less than the referent. Workers feel they are not getting the outcomes they should for their inputs. Overpayment inequity: ratio is higher than the referent. Workers feel they are getting more outcomes than they should for their inputs.

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Equity Theory
Restoring Equity: Inequity creates tension in workers causing them to attempt to restore equity.
In underpayment, workers may reduce input levels to correct (rebalance) the ratio or seek a raise. In overpayment, workers may change the referent person and readjust their ratio perception. If inequity persists, workers will often choose to leave the organization.

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Goal Setting Theory

Focuses on motivating workers to contribute their inputs to their jobs and organizations Considers how managers can ensure that workers focus their inputs in the direction of high performance and the achievement of organizational goals.

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Goal Setting Theory

Goal
What a person is trying to accomplish through his efforts and behaviors Must be specific and difficult Goals point out what is important to the firm.
Workers should be encouraged to develop action plans to attain goals.
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Goal Setting Theory

Goals motivate people to contribute more inputs to their jobs Goals help people focus their inputs in the right direction

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Learning Theories
Managers can increase employee motivation and performance by the ways they link the outcomes that employees receive to the performance of desired behaviors in an organization and the attainment of goals

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Learning Theories
Learning
A relatively permanent change in persons knowledge or behavior that results from practice or experience.

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Operant Conditioning Theory

Operant Conditioning
People learn to perform behaviors that lead to desired consequences and learn not to perform behaviors that lead to undesired consequences. Linking specific behaviors to the attainment of specific outcomes can motivate high performance and prevent behaviors that detract from organizational effectiveness.

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Question?
Which operant conditioning tool administers an undesired consequence to immediately stop a dysfunctional behavior? A. Positive reinforcement B. Negative reinforcement C. Extinction D. Punishment
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Operant Conditioning Tools

Positive Reinforcement
Gives people outcomes they desire when they perform organizationally functionally behaviors Positive reinforcers: Pay, praises, or promotions

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Operant Conditioning Tools

Negative Reinforcement
Eliminating undesired outcomes once the functional behavior occurs Negative reinforcers: criticisms, pay cuts, suspension

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Operant Conditioning Tools

Extinction
Curtailing the performance of a dysfunctional behavior by eliminating whatever is reinforcing it.

Punishment
Administering an undesired/negative consequence to immediately stop a dysfunctional behavior.
Manager administers an undesired consequence to worker (verbal reprimand, demotion, pay cut).
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Avoiding Side Effects of Punishment

Downplay the emotional element involved Try to punish dysfunctional behaviors as soon as they occur Try to avoid punishing someone in front of others

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Organizational Behavior Modification

Organizational Behavior Modification
Managers systematically apply operant conditioning techniques to promote the performance of organizationally functional behaviors and discourage the performance of dysfunctional behaviors

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Organizational Behavior Modification

Used to improve productivity, efficiency, attendance, punctuality, safe work practices, and customer service Sometimes questioned because of lack of relevance to certain work behaviors To critics it is overly controlling and robs workers of their dignity, individuality, freedom of choice and creativity
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Steps in Organizational Behavior Modification

Figure 13.4

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Social Learning Theory

Social Learning Theory
Proposes that motivation results not only from direct experience of rewards and punishments but also from a persons thoughts and beliefs

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Social Learning Theory

Vicarious Learning (Observational Learning)
Occurs when a person becomes motivated to perform a behavior by watching another person perform the behavior and be positively reinforced for doing so

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Social Learning Theory

Self-Reinforcement
Any desired or attractive outcome or award that a person can give himself or herself for good performance.

Self-efficacy
A persons belief about his or her ability to perform a behavior successfully.

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Pay and Motivation

Pay as a Motivator
Expectancy: Instrumentality, the association between performance and outcomes, must be high for motivation to be high. Need Theory: pay is used to satisfy many needs. Equity Theory: pay is given in relation to inputs.

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Pay and Motivation

Pay as a Motivator
Goal Setting Theory: pay is linked to attainment of goals. Learning Theory: outcomes (pay), is distributed upon performance of functional behaviors.

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Merit Pay and Performance

Merit Pay Plan
A compensation plan that bases pay on based on individual, group and/or organization performance. Individual plan: when individual performance (sales) can accurately measured.

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Merit Pay and Performance

Merit Pay Plan
Group plan: when group that works closely together is measured and rewarded as a group. Organization plan: when group or individual outcomes not easily measured.

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Salary Increase or Bonus?

Motivational Value of a Bonus Is Higher When:
Salary levels are unrelated to current performance. Changes in other compensation items (cost of living, seniority) are not having a large effect in increasing compensation. Salaries rarely change and performance does.

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Salary Increase or Bonus?

Benefits of Using Bonuses
Do not become permanent part of compensation Are more directly tied to current performance Provide more flexibility in distributing rewards

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Salary Increase or Bonus?

Employee Stock Option
A financial instrument that entitles the bearer to buy shares of an organizations stock at a certain price during a certain period of time or under certain conditions.

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Discussion Question?
Which merit pay plan is the most effective? A. Piece rate B. Commission C. Scanlon plan D. Profit sharing

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Examples of Merit Pay Plans

Piece-rate Pay
Employees pay is based on the number of units that the employee produces.

Commission Pay
Employees pay is based on a percentage of sales that the employee makes.

Organization-based Merit Plans

Scanlon planfocuses on reduced expenses or cutting costs Profit sharingemployees receive a share of an organizations profits
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Movie Example: Mr. Hollands Opus

As a manager, is it important for Principal Jacobs to know the motivations of her subordinates?

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