Chapter 12 Motivation Power Point Presentation by Charlie

Learning Objectives • After studying the chapter, you should be able to: ØExplain what motivation is and why managers need to be concerned about it. ØDescribe from the perspectives of expectancy theory and equity theory what managers should do to have a highly motivated workforce. ØExplain how goals and needs motivate people and what kinds of goals are especially likely to result in high performance. ØIdentify the motivation lessons that managers can learn from operant conditioning theory and social learning theory. © Copyright Mc. Graw-Hill. All rights reserved. 2

Learning Objectives (cont’d) ØExplain why and how managers can use pay as a major

Chapter Outline • The Nature of Motivation • Expectancy Theory ØExpectancy ØInstrumentality ØValence ØBringing It All Together • Need Theories ØMaslow’s Hierarchy of Needs ØAlderfer’s ERG Theory ØHerzberg’s Motivator-Hygiene Theory © Copyright Mc. Graw-Hill. All rights reserved. 4

Chapter Outline (cont’d) • Need Theories (cont’d) ØMc. Clelland’s Needs for Achievement, Affiliation, and Power ØOther Needs • Equity Theory ØEquity ØInequity ØWays to Restore Equity • Goal-Setting Theory © Copyright Mc. Graw-Hill. All rights reserved. 5

Chapter Outline (cont’d) • Learning Theory ØOperant Conditioning Theory • Social Learning Theory • Pay and Motivation ØBasing Merit Pay on Individual, Group, or Organizational Performance ØSalary Increase or Bonus? ØExamples of Merit Pay Plans © Copyright Mc. Graw-Hill. All rights reserved. 6

The Nature of Motivation • Motivation ØThe psychological forces acting on an individual that determine: • 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 ØExplains why people behave the way they do in organizations © Copyright Mc. Graw-Hill. All rights reserved. 7

The Nature of Motivation (cont’d) • Intrinsic Motivation ØBehavior that is performed for its own sake. • The source of the motivation that comes from actually engaging in the behavior. • The sense of accomplishment and achievement derived from doing the work itself • Extrinsic Motivation ØBehavior 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. © Copyright Mc. Graw-Hill. All rights reserved. 8

Sources of Motivation Personal Characteristics Nature of the Job Individual Motivation Nature of the

Outcomes and Inputs • Outcome ØAnything a person gets from a job or an organization • Pay, job security, autonomy, accomplishment • Input ØAnything a person contributes to his or her job or organization • Time, effort, skills, knowledge, work behaviors © Copyright Mc. Graw-Hill. All rights reserved. 10

The Motivation Equation © Copyright Mc. Graw-Hill. All rights reserved. Figure 12. 1 11

Expectancy Theory • Motivation will be high when workers believe: ØHigh levels of effort will lead to high performance. ØHigh performance will lead to the attainment of desired outcomes. • Major Factors of Motivation ØExpectancy—the belief that effort (input) will result in a certain level of performance ØInstrumentality—the belief that performance results in the attainment of outcomes ØValence—how desirable each of the available outcomes from the job is to a person © Copyright Mc. Graw-Hill. All rights reserved. 12

Expectancy, Instrumentality, and Valence Source: © Copyright Mc. Graw-Hill. All rights reserved. Figure 12.

Expectancy Theory in Practice ØExpectancy: Effort will result in a level of performance. • Employees will work hard if they believe they can attain high performance—organizations must provide the resources that support performance. ØInstrumentality: Performance leads to outcomes. • Workers are only motivated if they think performance leads to an outcome—managers must link performance to outcomes. ØValence: How desirable an outcome is to a person. • Workers have preferences for outcomes—managers must determine which outcomes are valued. © Copyright Mc. Graw-Hill. All rights reserved. 14

Expectancy and Motivation • Motivation is highest when expectancy, instrumentality, and valence levels are high. ØIf one of the values is low, motivation will be low. • Workers do not believe they can perform well. • Workers do not believe that performance and rewards are closely linked. • Workers do not value the rewards offered for performance. © Copyright Mc. Graw-Hill. All rights reserved. 15

Expectancy Theory Source: © Copyright Mc. Graw-Hill. All rights reserved. Figure 12. 3 16

Need Theories • Need ØA requirement for survival and well-being. • Need Theories ØTheories of motivation that focus on what needs people are trying to satisfy at work and what outcomes will satisfy those needs. ØBasis premise is that people are motivated to obtain outcomes at work to satisfy their needs. • Managers must determine what needs a worker wants satisfied and ensure that a person receives the outcomes when performing well. © Copyright Mc. Graw-Hill. All rights reserved. 17

Maslow’s Hierarchy of Needs Highest-level needs Description Examples Realize one’s full potential Use abilities to the fullest Esteem Feel good about oneself Promotions and recognition Belongingness Social interaction, love Interpersonal relations, parties Safety Lowest-level needs Selfactualization Security, stability Job security, health insurance Physiological Food, water, shelter Basic pay level to buy items Lower-level needs must be satisfied before higher-level needs are addressed. © Copyright Mc. Graw-Hill. All rights reserved. Table 12. 1 18

Alderfer’s ERG Theory Needs Highest-level needs Description Examples Self-development, creative work Continually improve skills Relatedness Lowest-level needs Growth Interpersonal relations, feelings Good relations, accurate feedback Existence Food, water, clothing, and shelter Adequate pay for necessities After lower level needs satisfied, person seeks higher needs. When unable to satisfy higher needs, lower needs motivation is raised. Source: © Copyright Mc. Graw-Hill. All rights reserved. Table 12. 2 19

Herzberg’s Motivation-Hygiene Theory • Focuses on outcomes that lead to higher motivation and job satisfaction, and those outcomes that can prevent dissatisfaction. ØMotivator needs relate to the nature of the work itself—autonomy, responsibility, interesting work. ØHygiene needs are related to the physical and psychological context of the work—comfortable work environment, pay, job security. • Unsatisfied hygiene needs create dissatisfaction; satisfaction of hygiene needs does not lead to motivation or job satisfaction. © Copyright Mc. Graw-Hill. All rights reserved. 20

Mc. Clelland’s Needs for Achievement, Affiliation, and Power • Need for Achievement ØA strong need to perform challenging tasks well and meet personal standards for excellence • Need for Affiliation ØA concern for good interpersonal relations, being liked, and getting along • Need for Power ØA desire to control or influence others © Copyright Mc. Graw-Hill. All rights reserved. 21

Adam’s Equity Theory • Focuses on people’s perceptions of the fairness (or lack of fairness) of their work outcomes in proportion to their work inputs. ØA relative outcome to input ratio comparison to oneself or to another person (referent) perceived as similar to oneself. ØEquity 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. © Copyright Mc. Graw-Hill. All rights reserved. 22

Equity Theory Condition Equity Underpayment Equity Overpayment Equity Person Outcomes Inputs © Copyright Mc. Graw-Hill. All rights reserved. Referent Example = Outcomes Inputs Worker contributes more inputs but also gets more outputs than referent < Outcomes Inputs Worker contributes more inputs but also gets the same outputs as referent > Outcomes Inputs Worker contributes same inputs but also gets more outputs than referent Table 12. 3 23

Equity Theory (cont’d) • Inequity exists when worker’s outcome/input ratio is not equal to referent. ØUnderpayment inequity: ratio is less than the referent. • Workers feel they are not getting the outcomes they should for their inputs. ØOverpayment inequity: ratio is higher than the referent. • Workers feel they are getting more outcomes than they should for their inputs. © Copyright Mc. Graw-Hill. All rights reserved. 24

Equity Theory (cont’d) • Restoring Equity: Inequity creates tension in workers causing them to attempt to restore equity. ØIn underpayment, workers may reduce input levels to correct (rebalance) the ratio or seek a raise. ØIn overpayment, workers may change the referent person and readjust their ratio perception. ØIf inequity persists, workers will often choose leave the organization. © Copyright Mc. Graw-Hill. All rights reserved. 25

Goal Setting Theory • Focuses on identifying the types of goals that are effective in producing high levels of motivation and explaining why goals have these effects. • Considers how managers can ensure that workers focus their inputs in the direction of high performance and the achievement of organizational goals. © Copyright Mc. Graw-Hill. All rights reserved. 26

Goal Setting Theory (cont’d) • Goal ØWhat a person is trying to accomplish. • Characteristics of Motivating Goals ØSpecific and not vague in providing direction ØDifficult but not impossible to attain ØAccepted and committed to by workers ØFeedback on goal attainment is important. • Goals point out what is important to the firm. ØWorkers should be encouraged to develop action plans to attain goals. © Copyright Mc. Graw-Hill. All rights reserved. 27

Learning Theories • Theories that focus on increasing motivation and performance by linking outcomes to performance and the attainment of goals. • Learning ØA relatively permanent change in person’s knowledge or behavior that results from practice or experience. © Copyright Mc. Graw-Hill. All rights reserved. 28

Operant Conditioning Theory • Operant Conditioning ØPeople learn to perform behaviors that lead to desired consequences and learn not to perform behaviors that lead to undesired consequences. ØLinking specific behaviors to the attainment of specific outcomes can motivate high performance and prevent behaviors that detract from organizational effectiveness. © Copyright Mc. Graw-Hill. All rights reserved. 29

Operant Conditioning Tools • Positive Reinforcement ØGetting desired outcomes for performing needed work behaviors • Positive reinforcers: Pay, praises, or promotions • Negative Reinforcement ØEliminating undesired outcomes once the desired behavior occurs • Negative reinforcers: criticisms, pay cuts, suspension © Copyright Mc. Graw-Hill. All rights reserved. 30

Operant Conditioning Tools (cont’d) • Extinction ØCurtailing the performance of a dysfunctional behavior by eliminating whatever is reinforcing it. • Behavior is not rewarded and over time, the worker stops performing it. • Punishment ØAdministering an undesired/negative consequence to immediately stop a dysfunctional behavior. • Manager administers an undesired consequence to worker (verbal reprimand, demotion, pay cut). © Copyright Mc. Graw-Hill. All rights reserved. 31

Organizational Behavior Modification • Organizational Behavior Modification (OB MOD) ØThe systematic application of operant conditioning techniques to organizationally functional behaviors and discourage dysfunctional behaviors. ØImproves productivity, attendance, punctuality and other behaviors that are specific, objective and countable. ØHas Criticized for ethicality of application and effects on workers. ØAppears to be effective in promoting organizational efficiency. © Copyright Mc. Graw-Hill. All rights reserved. 32

Steps in Organizational Behavior Modification Figure 12. 4 Source: Adapted from Organizational Behavior Modification and Beyond by F. Luthans and R. Kreitner (Scott, Foresman, 1985). With permission of the authors. © Copyright Mc. Graw-Hill. All rights reserved. 33

Social Learning Theory • A theory that takes into account how learning and motivation are influenced by people’s thoughts and beliefs and their observations of other people’s behavior. • Vicarious Learning (Observational Learning) ØLearning that occurs when a learner is motivated to perform a behavior by watching another person perform and be rewarded. • People are motivated to imitate models who are highly competent, expert, receive attractive reinforcers, and are friendly or approachable. © Copyright Mc. Graw-Hill. All rights reserved. 34

Social Learning Theory (cont’d) • Conditions for Social Learning ØThe learner observes the model performing the behavior. ØThe learner accurately perceives the model’s behavior. ØThe learner remembers the behavior. ØThe learner has the skills and abilities needed to perform the behavior. ØThe learner sees or knows that the model is positively reinforced for the behavior. © Copyright Mc. Graw-Hill. All rights reserved. 35

Social Learning Theory (cont’d) • Self-Reinforcement ØAny desired or attractive outcome or award that a person can give himself or herself for good performance. • “The self-management of behavior” • Self-efficacy ØA person’s belief about his or her ability to perform a behavior successfully. • Influences motivation both when managers provide reinforcement and when workers themselves provide it. © Copyright Mc. Graw-Hill. All rights reserved. 36

Pay and Motivation • Pay as a Motivator ØExpectancy: pay is an instrumentality (and outcome), must be high for motivation to be high. ØNeed Theory: pay is used to satisfy many needs. ØEquity Theory: pay is given in relation to inputs. ØGoal Setting Theory: pay is linked to attainment of goals. ØLearning Theory: outcomes (pay), is distributed upon performance of functional behaviors. © Copyright Mc. Graw-Hill. All rights reserved. 37

Merit Pay and Performance • Merit Pay Plan ØA compensation plan that bases pay on based on individual, group and/or organization performance. ØIndividual plan: when individual performance (sales) can accurately measured. ØGroup plan: when group that works closely together is measured and rewarded as a group. ØOrganization plan: when group or individual outcomes not easily measured. © Copyright Mc. Graw-Hill. All rights reserved. 38

Salary Increase or Bonus? • Motivational Value of a Bonus Is Higher When: ØSalary levels are unrelated to current performance. ØChanges in other compensation items (cost of living, seniority) are not having a large effect in increasing compensation. ØSalaries rarely change and performance does. • Benefits of Using Bonuses ØDo not become permanent part of compensation ØAre more directly tied to current performance ØProvide more flexibility in distributing rewards © Copyright Mc. Graw-Hill. All rights reserved. 39

Salary Increase or Bonus? (cont’d) • Employee Stock Option ØA 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. ØUses • To attract high-level managers • To motivate employee performance through ownership in the firm © Copyright Mc. Graw-Hill. All rights reserved. 40

Examples of Merit Pay Plans • Piece-rate Pay ØEmployee’s pay is based on the number of units that the employee produces. • Commission Pay ØEmployee’s pay is based on a percentage of sales that the employee makes. • Organization-based Merit Plans ØScanlon plan—focuses on reduced expenses or cutting costs ØProfit sharing—employees receive a share of an organization’s profits © Copyright Mc. Graw-Hill. All rights reserved. 41