Management Chapter13

Motivation and Performance

McGraw-Hill/IrwinContemporary Management, 5/e

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

chapter thirteen

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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 person’s behavior in an organization, a person’s level of effort, and a person’s level of persistence

– Explains why people behave the way they do in organizations

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• 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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• 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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• 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 well-being.

• Need Theories– People are

motivated to obtain outcomes at work that will satisfy their needs

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Maslow’s Hierarchy of Needs

Table 13.1

Self-Self-actualizationactualization

Self-Self-actualizationactualization

Realize one’sRealize one’s full potentialfull potential

Realize one’sRealize one’s full potentialfull potential

Use abilities Use abilities to the fullestto the fullest

Use abilities Use abilities to the fullestto the fullest

EsteemEsteemEsteemEsteem Feel good Feel good about oneselfabout oneself

Feel good Feel good about oneselfabout oneself

PromotionsPromotions and recognitionand recognition

PromotionsPromotions and recognitionand recognition

BelongingnessBelongingnessBelongingnessBelongingness Social Social interaction, loveinteraction, love

Social Social interaction, loveinteraction, love

Interpersonal Interpersonal relations, partiesrelations, parties

Interpersonal Interpersonal relations, partiesrelations, parties

SafetySafetySafetySafety Security, stabilitySecurity, stabilitySecurity, stabilitySecurity, stability Job security, Job security, health insurancehealth insurance

Job security, Job security, health insurancehealth insurance

PhysiologicalPhysiologicalPhysiologicalPhysiological Food, water, Food, water, sheltershelter

Food, water, Food, water, sheltershelter

Basic pay level Basic pay level to buy itemsto buy items

Basic pay level Basic pay level to buy itemsto buy items

NeedsNeeds DescriptionDescription ExamplesExamples

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

Highest-level needs

Lowest-level needs

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Alderfer’s ERG Theory

Table 13.2

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

GrowthGrowthGrowthGrowth Self-development,Self-development,creative workcreative work

Self-development,Self-development,creative workcreative work

ContinuallyContinuallyimprove skillsimprove skills

ContinuallyContinuallyimprove skillsimprove skills

RelatednessRelatednessRelatednessRelatedness Interpersonal Interpersonal relations, feelingsrelations, feelings

Interpersonal Interpersonal relations, feelingsrelations, feelings

Good relations,Good relations,accurate feedbackaccurate feedback

Good relations,Good relations,accurate feedbackaccurate feedback

ExistenceExistenceExistenceExistence Food, water, Food, water, clothing, and shelterclothing, and shelter

Food, water, Food, water, clothing, and shelterclothing, and shelter

Adequate payAdequate payfor necessitiesfor necessities

Adequate payAdequate payfor necessitiesfor necessities

NeedsNeeds DescriptionDescription ExamplesExamplesHighest-level

needs

Lowest-level needs

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Alderfer’s 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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Herzberg’s 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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Herzberg’s Motivation-Hygiene Theory

• Motivator needs relate to the nature of the work itself—autonomy, responsibility, interesting work.

• Hygiene needs are related to the physical and psychological context of the work—comfortable work environment, pay, job security.

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McClelland’s 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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McClelland’s 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 people’s 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 referent’s ratio.– If the referent receives more outcomes, they

should also give more inputs to achieve equity.

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Equity Theory

Table 13.3

Condition Person Referent Example

EquityEquityEquityEquity OutcomesOutcomes = = OutcomesOutcomesInputs InputsInputs Inputs

OutcomesOutcomes = = OutcomesOutcomesInputs InputsInputs Inputs

Worker contributesWorker contributesmore inputs but alsomore inputs but also

gets more outputsgets more outputsthan referentthan referent

Worker contributesWorker contributesmore inputs but alsomore inputs but also


UnderpaymentEquity

UnderpaymentEquity

Outcomes < OutcomesInputs Inputs

Outcomes < OutcomesInputs Inputs

Worker contributesmore inputs but also

gets the same outputsas referent

Worker contributesmore inputs but also

gets the same outputsas referent

OverpaymentOverpaymentEquityEquity

OverpaymentOverpaymentEquityEquity

OutcomesOutcomes > > OutcomesOutcomesInputs InputsInputs Inputs

OutcomesOutcomes > > OutcomesOutcomesInputs InputsInputs Inputs

Worker contributesWorker contributessame inputs but alsosame inputs but also


Worker contributesWorker contributessame inputs but alsosame inputs but also


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Equity Theory

• Inequity exists when worker’s 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 person’s

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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• Negative Reinforcement– Eliminating undesired outcomes once the

functional behavior occurs• Negative reinforcers: criticisms, pay cuts,

suspension

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• 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

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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 person’s thoughts and beliefs

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• 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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• Self-Reinforcement– Any desired or attractive outcome or award

that a person can give himself or herself for good performance.

• Self-efficacy– A person’s 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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• 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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• Employee Stock Option–A financial instrument that entitles the bearer

to buy shares of an organization’s 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– Employee’s pay is based on the number of units

that the employee produces.

• Commission Pay– Employee’s pay is based on a percentage of sales

that the employee makes.

• Organization-based Merit Plans– Scanlon plan—focuses on reduced expenses or

cutting costs– Profit sharing—employees receive a share of an

organization’s profits

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Movie Example: Mr. Holland’s Opus

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

Education

Management Chapter13