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 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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 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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 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 • Need Theories

– A requirement or – People are
necessity for motivated to
survival and well- obtain outcomes
being. at work that will
satisfy their needs

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 Maslow’s Hierarchy of Needs
Needs Description Examples
Highest-level
Self- Realize one’s Use abilities
needs
actualization full potential to the fullest

Feel good Promotions

Esteem
about oneself and recognition

Social Interpersonal
Belongingness
interaction, love relations, parties

Job security,
Safety Security, stability
health insurance

Lowest-level Food, water, Basic pay level

Physiological
needs shelter to buy items

Lower-level needs must be satisfied

before higher-level needs are addressed.
Table 13.1
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 Alderfer’s ERG Theory

Needs Description Examples

Highest-level
needs Self-development, Continually
Growth creative work improve skills

Interpersonal Good relations,

Relatedness relations, feelings accurate feedback

Food, water, Adequate pay

Lowest-level Existence clothing, and shelter for necessities
needs

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

Table 13.2 13-17

 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

Condition Person Referent Example

Worker contributes
Outcomes = Outcomes more inputs but also
Equity Inputs Inputs gets more outputs
than referent

Worker contributes
Underpayment Outcomes < Outcomes more inputs but also
Equity Inputs Inputs gets the same outputs
as referent

Worker contributes
Overpayment Outcomes > Outcomes same inputs but also
Equity Inputs Inputs gets more outputs
than referent

Table 13.3
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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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 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 13-40

 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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 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 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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 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 organization’s stock at a
certain price during a certain period of time or
under certain conditions.

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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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