Apply: Leadership Examination

Motivation: What It Is, Why It’s Important

Why do people do the things they do? The answer is this: they are mainly motivated to fulfill their wants, their needs.

What Is Motivation & How Does It Work?  Motivation  may be defined as the psychological processes that arouse and direct goal-directed behavior.5 Motivation is difficult to understand because you can’t actually see it or know it in another person; it must be inferred from one’s behavior. Nevertheless, it’s imperative that you as a manager understand the process of motivation if you are to guide employees in accomplishing your organization’s objectives.

The way motivation works actually is complex, the result of multiple personal and contextual factors. (See  Figure 12.1 .)

FIGURE 12.1 An integrated model of motivation

Page 377The individual personal factors that employees bring to the workplace range from personality to ability to emotions to attitudes, many of which we described in Chapter 11. The contextual factors range from organizational culture, to cross-cultural values, to the physical environment, and other matters we discuss in this chapter and the next. Both categories of factors influence an employee’s level of motivation and engagement at work.

However, motivation can also be expressed in a simple model—namely, that people have certain needs that motivate them to perform specific behaviors for which they receive rewards that feed back and satisfy the original need. (See  Figure 12.2 , below.)

FIGURE 12.2 A simple model of motivation

For example, as an hourly worker you desire more money (need), which impels you (motivates you) to work more hours (behavior), which provides you with more money (reward) and informs you (feedback loop) that working more hours will fulfill your need for more money in the future.

Rewards (as well as motivation itself) are of two types—extrinsic and intrinsic. 6 Managers can use both to encourage better work performance.

   Extrinsic rewards—satisfaction in the payoff from others. An  extrinsic reward  is the payoff, such as money, a person receives from others for performing a particular task. An extrinsic reward is an external reward; the payoff comes from pleasing others.

Example: An experiment by General Electric found that paying employees who were smokers up to $750—an extrinsic reward—to quit and stay off cigarettes was three times as successful as a comparison group that got no paid incentives.7 (Some firms are asking their employees to pay higher insurance premiums or adopt other financial incentives to spur them to quit smoking, lose weight, or join a fitness program.8)

   Intrinsic rewards—satisfaction in performing the task itself. An  intrinsic reward  is the satisfaction, such as a feeling of accomplishment, a person receives from performing the particular task itself. An intrinsic reward is an internal reward; the payoff comes from pleasing yourself.

Example: Jenny Balaze left her post in Ernst & Young LLC’s Washington, DC, office to spend 12 weeks in Buenos Aires as a volunteer providing free accounting services to a small publishing firm. It was among “the best three months of my life,” says the 27-year-old business advisory services manager.9

Page 378We all are motivated by a combination of extrinsic and intrinsic rewards. Which type of reward is more valuable to you? Answering this question can help you generate self-motivation and higher performance. Find out about your relative interest in extrinsic and intrinsic rewards by taking Self-Assessment 12.1.

SELF-ASSESSMENT 12.1

Are You More Interested in Extrinsic or Intrinsic Rewards?

The following survey was designed to assess extrinsic and intrinsic motivation. Go to  connect.mheducation.com  and take Self-Assessment 12.1. When you’re done, answer the following questions:

1.   What is more important to you, extrinsic or intrinsic rewards? Are you surprised by the results?

2.   How can you use the results to increase your motivation to obtain good grades in your classes?

3.   If you were managing someone like yourself, what would you do to increase the individual’s motivation?

Why Is Motivation Important? It seems obvious that organizations would want to motivate their employees to be more productive. Actually, though, as a manager you will find knowledge of motivation important for five reasons.10 In order of importance, you want to motivate people to:

1.  Join your organization. You need to instill in talented prospective workers the desire to come to work for you.

2.  Stay with your organization. Whether you are in good economic times or bad, you always want to be able to retain good people.

3.  Show up for work at your organization. In many organizations, absenteeism and lateness are tremendous problems.11

4.  Be engaged while at your organization. Engaged employees produce higher-quality work and better customer service.

5.  Do extra for your organization. You hope your employees will perform extra tasks above and beyond the call of duty (be organizational “good citizens”).

The Four Major Perspectives on Motivation: Overview

There is no theory accepted by everyone as to what motivates people. In this chapter, therefore, we present the four principal perspectives. From these, you may be able to select what ideas seem most workable to you. The four perspectives on motivation are (1) content, (2) process, (3) job design, and (4) reinforcement, as described in the following four main sections. 

Page 379Content Perspectives on Employee Motivation What kinds of needs motivate employees? THE BIG PICTURE Content perspectives are theories emphasizing the needs that motivate people. Needs are defined as physiological or psychological deficiencies that arouse behavior. The content perspective includes four theories: Maslow’s hierarchy of needs, McClelland’s acquired needs theory, Deci and Ryan’s self- determination theory, and Herzberg’s two-factor theory.

Content perspectives,  also known as need-based perspectives, are theories that emphasize the needs that motivate people. Content theorists ask, “What kind of needs motivate employees in the workplace?”  Needs  are defined as physiological or psychological deficiencies that arouse behavior. They can be strong or weak, and, because they are influenced by environmental factors, they can vary over time and from place to place.

In addition to McGregor’s Theory X/Theory Y (see Chapter 2), content perspectives include four theories:

   Maslow’s hierarchy of needs theory

   McClelland’s acquired needs theory

   Deci and Ryan’s self-determination theory

   Herzberg’s two-factor theory

Maslow’s Hierarchy of Needs Theory: Five Levels

In 1943, one of the first researchers to study motivation, Brandeis University psychology professor Abraham Maslow (mentioned previously in Chapter 2) put forth his  hierarchy of needs theory,  which proposes that people are motivated by five levels of needs: (1) physiological, (2) safety, (3) love, (4) esteem, and (5) self-actualization.12 (See  Figure 12.3 .)

FIGURE 12.3 Maslow’s hierarchy of needs

Page 380The Five Levels of Needs In proposing this hierarchy of five needs, ranging from basic to highest level, Maslow suggested that needs are never completely satisfied. That is, our actions are aimed at fulfilling the “deprived” needs, the needs that remain unsatisfied at any point in time. Thus, for example, once you have achieved safety (security), which is the second most basic need, you will then seek to fulfill the third most basic need—love (belongingness).

 EXAMPLE

Looking for Peak Performance: A Hotel CEO Applies Maslow’s Hierarchy to Employees, Customers, & Investors

Chip Conley is CEO and founder of boutique hotel company Joie de Vivre (JDV), whose mission statement is “creating opportunities to celebrate the joy of life.” In Peak: How Great Companies Get Their Mojo from Maslow, he describes how JDV used Maslow’s theory to motivate the business’s three key stakeholders—employees, customers, and investors—by tapping into the power of self-actualization to create peak performance.13

Motivating Employees. Applying the Maslow pyramid to employees, says Conley, “the basic need that a job satisfies is money. Toward the middle are needs like recognition for a job well done, and at the top are needs like meaning and creative expression.”14

Thus, housekeepers, who represent half of a hotel’s workers, would be gathered in small groups and asked what the hotels would look like if they weren’t there each day. Following their answers (unvacuumed carpets, piled-up trash, bathrooms filled with wet towels), they were then asked to come up with alternative names for housekeeping. Some responses: “serenity keepers,” “clutter busters,” “the peace-of-mind police.”

From this exercise, workers developed a sense of how the customer experience would not be the same without them.15 And that, says Conley, “gets to a sense of meaning in your work that satisfies that high-level human motivation.” Addressing the highest-level need gives employees “a sense that the job helps them become the best people they can be.”16

Motivating Customers. Many hotels offer clean, safe accommodations. JDV designs each of its 30 hotels to “flatter and vindicate a different category of customers’ distinct self-image,” says Conley. Thus, in San Francisco, the Hotel Rex’s tweedy décor and Jack London touches appeal to urbane literary types. The Vitale’s fitness-conscious services and minimalist design target “the kind of bourgeois bohemian who might like Dwell Magazine.” 17

Motivating Investors. Although most investors focus on a “returns-driven relationship” (bottom of the pyramid), some have higher motivations. They are driven not by the deal “but rather [by] an interesting, worthwhile deal,” which JDV attempts to provide.18

YOUR CALL

To what extent can Chip Conley’s ideas be used in larger organizations?

Using the Hierarchy of Needs Theory to Motivate Employees Research does not clearly support Maslow’s theory, although it remains popular among managers. Still, the importance of Maslow’s contribution is that he showed that workers have needs beyond that of just earning a paycheck. To the extent the organization permits, managers should first try to meet employees’ level 1 and level 2 needs, of course, so that employees won’t be preoccupied with them. Then, however, they need to give employees a chance to fulfill their higher-level needs in ways that also advance the goals of the organization.19

McClelland’s Acquired Needs Theory: Achievement, Affiliation, & Power

David McClelland, a well-known psychologist, investigated the needs for affiliation and power and as a consequence proposed the  acquired needs theory,  which states that three needs—achievement, affiliation, and power—are major motives determining people’s behavior in the workplace.20 McClelland believes that we are not born with our needs; rather we learn them from the culture—from our life experiences.

Page 381The Three Needs Managers are encouraged to recognize three needs in themselves and others and to attempt to create work environments that are responsive to them. The three needs, one of which tends to be dominant in each of us, are as follows. (See  Figure 12.4 , right.)

FIGURE 12.4 McClelland’s three needs

   Need for achievement—“I need to excel at tasks.” This is the desire to excel, to do something better or more efficiently, to solve problems, to achieve excellence in challenging tasks.

   Need for affiliation—“I need close relationships.” This is the desire for friendly and warm relations with other people.

   Need for power—“I need to control others.” This is the desire to be responsible for other people, to influence their behavior or to control them.21

McClelland identifies two forms of the need for power—personal and institutional. The negative kind is the need for personal power, as expressed in the desire to dominate others, and involves manipulating people for one’s own gratification.

The positive kind, characteristic of top managers and leaders, is the desire for institutional power, as expressed in the need to solve problems that further organizational goals.

Research tells us that your performance will vary along the lines of the three acquired needs. Where do you think you stand in terms of being motivated by these three needs? You can find out by completing Self-Assessment 12.2.

SELF-ASSESSMENT 12.2

Assessing Your Acquired Needs

The following survey was designed to assess your motivation in terms of acquired needs. Go to  connect.mheducation.com  and take Self-Assessment 12.2. When you’re done, answer the following questions:

1.   What is the order of your most important needs? Are you surprised by this result?

2.   Given that achievement and power needs are associated with career advancement, how might you increase these two need states?

Using Acquired Needs Theory to Motivate Employees McClelland associates the three needs with different sets of work preferences, as follows:22

Need for Achievement If you (or an employee) are happy with accomplishment of a task being its own reward, don’t mind or even prefer working alone, and are willing to take moderate risks, then you probably have a high need for achievement. That being the case, you (or your employee) would probably prefer doing the kind of work that offers pay for performance, challenging but achievable goals, and individual responsibility for results. People high in need for achievement tend to advance in technical fields requiring creativity and individual skills.23

Need for Power If you, like most effective managers, have a high need for power, that means you enjoy being in control of people and events and being recognized for this responsibility. Accordingly, your preference would probably be for work that allows you to control or have an effect on people and be publicly recognized for your accomplishments.

Page 382Need for Affiliation If you tend to seek social approval and satisfying personal relationships, you may have a high need for affiliation. In that case, you may not be the most efficient manager because at times you will have to make decisions that will make people resent you. Instead, you will tend to prefer work, such as sales, that provides for personal relationships and social approval.

Deci & Ryan’s Self-Determination Theory: Competence, Autonomy, & Relatedness

Developed by Edward Deci (pronounced “Dee-see”) and Richard Ryan, psychologists at the University of Rochester,  self-determination theory  assumes that people are driven to try to grow and attain fulfillment, with their behavior and well-being influenced by three innate needs: competence, autonomy, and relatedness.24

Focus on Intrinsic Motivation Self-determination theory focuses primarily on intrinsic motivation and rewards (such as feeling independent) rather than on extrinsic motivation and rewards (such as money or fame). Intrinsic motivation is longer lasting than extrinsic motivation and has a more positive impact on task performance.25

The Three Innate Needs To achieve psychological growth, according to the theory, people need to satisfy the three innate (that is, inborn) needs of competence, autonomy, and relatedness:

1.  Competence—“I want to feel a sense of mastery.” People need to feel qualified, knowledgeable, and capable of completing a goal or task and to learn different skills.

2.  Autonomy—“I want to feel independent and able to influence my environment.” People need to feel they have freedom and the discretion to determine what they want to do and how they want to do it.

3.  Relatedness—“I want to feel connected to other people.” People need to feel a sense of belonging, of attachment to others.

Using Self-Determination Theory to Motivate Employees Managers can apply this theory by trying to create work environments that encourage employees to experience competence, autonomy, and relatedness. Some specific suggestions:

   Competence. Managers can provide tangible resources, time, contacts, and coaching to improve employee competence, making sure that employees have the knowledge and information they need to perform their jobs. Example: At NetApp, a data storage company, managers regularly notify the vice chairman when they “catch someone doing something right.” He makes 10–20 phone calls a day to thank such special employees.26

   Autonomy. To enhance feelings of autonomy, managers can develop trust with their employees and empower them by delegating meaningful tasks to them. Example: Unilever provides smartphones and other technologies to 100,000 employees (factory production workers excepted) to enable them to work anytime, anywhere, as long as they meet company needs.27

   Relatedness. Many companies, such as Sacramento-based Nugget Market, use camaraderie to foster relatedness. “The company doesn’t see this as a workplace,” says one employee. “They see it as a family. This is our home, where customers are treated as guests.”28

Are you feeling motivated in this course? To what extent does the instructor for this course satisfy your needs for competence, autonomy, and relatedness? You can find out by taking Self-Assessment 12.3.

Page 383SELF-ASSESSMENT 12.3

Assessing Your Needs for Self-Determination

The following survey was designed to assess the extent to which an instructor is satisfying your needs for self-determination. Go to  connect.mheducation.com  and take Self-Assessment 12.3. When you’re done, answer the following questions:

1.   Are your needs being met? Do the results make sense in terms of your level of motivation in this course?

2.   Based on the results, identify two things you might do to increase your motivation.

3.   Based on the results, identify two things your instructor might do to increase your motivation.

Herzberg’s Two-Factor Theory: From Dissatisfying Factors to Satisfying Factors

Frederick Herzberg arrived at his needs-based theory as a result of a landmark study of 203 accountants and engineers who were interviewed to determine the factors responsible for job satisfaction and dissatisfaction.29 Job satisfaction was more frequently associated with achievement, recognition, characteristics of the work, responsibility, and advancement. Job dissatisfaction was more often associated with working conditions, pay and security, company policies, supervisors, and interpersonal relationships. The result was Herzberg’s  two-factor theory,  which proposed that work satisfaction and dissatisfaction arise from two different factors—work satisfaction from motivating factors and work dissatisfaction from hygiene factors .

Hygiene Factors versus Motivating Factors In Herzberg’s theory, the hygiene factors are the lower-level needs, and the motivating factors are the higher-level needs. The two areas are separated by a zone in which employees are neither satisfied nor dissatisfied. (See  Figure 12.5 , next page.)

How much do you want? Would a clean desk in a big office with a view represent the tangible realization of managerial success for you? Would this be a motivation that would make you feel satisfied?

Page 384FIGURE 12.5 Herzberg’s two-factor theory: satisfaction versus dissatisfaction

   Hygiene factors—“Why are my people dissatisfied?” The lower-level needs,  hygiene factors,  are factors associated with job dissatisfaction—such as salary, working conditions, interpersonal relationships, and company policy—all of which affect the job context in which people work.

An example of a hygiene factor is the temperature in a factory that’s not air-conditioned during the summer. Installing air-conditioning will remove a cause of job dissatisfaction. It will not, however, spur factory workers’ motivation and make them greatly satisfied in their work. Because motivating factors are absent, workers become, in Herzberg’s view, merely neutral in their attitudes toward work—neither dissatisfied nor satisfied.

   Motivating factors—“What will make my people satisfied?” The higher-level needs,  motivating factors,  or simply motivators, are factors associated with job satisfaction—such as achievement, recognition, responsibility, and advancement—all of which affect the job content or the rewards of work performance. Motivating factors—challenges, opportunities, recognition—must be instituted, Herzberg believed, to spur superior work performance.

An example of a motivating factor would be to give factory workers more control over their work. For instance, instead of repeating a single task over and over, a worker might join with other workers on a team in which each one does several tasks. This is the approach that Swedish automaker Volvo took in building cars.

Page 385Using Two-Factor Theory to Motivate Employees During the Great Recession, with fewer jobs available, many people felt they were stuck in jobs they disliked—61% in 2009, according to a survey by the Conference Board.30 In 2013, the survey found even worse results—only half of American workers said they were satisfied with their jobs.31 Another study, however, finds that 81% of U.S. employees report overall satisfaction with their current job, with the important parts being compensation/pay (by 60%), job security (59%), and opportunities to use skills/abilities (also 59%).32

There will always be some employees who dislike their jobs, but the basic lesson of Herzberg’s research is that you should first eliminate dissatisfaction (hygiene factors), making sure that working conditions, pay levels, and company policies are reasonable. You should then concentrate on spurring motivation by providing opportunities for achievement, recognition, responsibility, and personal growth (motivating factors).

Positive hygiene factors could include allowing pets at work; offering videogame arcades, fitness classes, and intramural sports (volleyball, soccer); and providing a library of free movies, books, and magazines.33 (Or, if you work at Google, you could also have a college reimbursement plan, legal aid, and travel assistance—and if you die, the company will pay your family half your salary for a decade.)34

The four needs theories are compared below. (See  Figure 12.6 .) Note how acquired need theory (McClelland) and self-determination theory (Deci & Ryan) focus only on higher-level needs. 

FIGURE 12.6 A comparison of needs & satisfaction theories: Maslow hierarchy of needs, McClelland acquired need, Deci & Ryan self-determination, and Herzberg two-factor

Page 386Process Perspectives on Employee Motivation Is a good reward good enough? How do other factors affect motivation? THE BIG PICTURE Process perspectives, which are concerned with the thought processes by which people decide how to act, have three viewpoints: equity theory, expectancy theory, and goal-setting theory.

Process perspectives  are concerned with the thought processes by which people decide how to act—how employees choose behavior to meet their needs. Whereas need-based perspectives simply try to understand employee needs, process perspectives go further and try to understand why employees have different needs, what behaviors they select to satisfy them, and how they decide if their choices were successful.

In this section we discuss three process perspectives on motivation:

   Equity theory

   Expectancy theory

   Goal-setting theory

Equity Theory: How Fairly Do You Think You’re Being Treated in Relation to Others?

Fairness—or, perhaps equally important, the perception of fairness—can be a big issue in organizations. For example, if, as a salesperson for Target, you received a 10% bonus for doubling your sales, would that be enough? What if other Target salespeople received 15%?

Equity theory  focuses on employee perceptions as to how fairly they think they are being treated compared with others. Developed by psychologist J. Stacey Adams, equity theory is based on the idea that employees are motivated to see fairness in the rewards they expect for task performance.35 Employees are motivated to resolve feelings of injustice.

How, for example, might employees respond to knowing that the average pay for CEOs in 2013 was about 257 times the average worker’s pay, up from 181 times in 2009?36 (The head of a typical large public company earned $10.5 million in 2013. The average American with a bachelor’s degree makes $2.3 million—over a lifetime. By contrast, Apple CEO Timothy Cook earns that amount in a shade over two days.37) How about the fact that in 2013 women made only 81% of men’s earnings?38 Some experts suggest that such imbalances are partly responsible for the more than $50 billion a year in employee theft.39

The Elements of Equity Theory: Comparing Your Inputs & Outputs with Those of Others The key elements in equity theory are inputs, outputs (rewards), and comparisons. (See  Figure 12.7 , opposite page.)

   Inputs—“What do you think you’re putting into the job?” The inputs that people perceive they give to an organization are their time, effort, training, experience, intelligence, creativity, seniority, status, and so on.

   Outputs or rewards—“What do you think you’re getting out of the job?” The outputs are the rewards that people receive from an organization: pay, benefits, praise, recognition, bonuses, promotions, status perquisites (corner office with a view, say, or private parking space), and so on.

   Comparison—“How do you think your ratio of inputs and rewards compares with those of others?” Equity theory suggests that people compare the ratio of their own outcomes to inputs against the ratio of someone else’s Page 387outcomes to inputs. When employees compare the ratio of their inputs and outputs (rewards) with those of others—whether coworkers within the organization or even other people in similar jobs outside it—they then make a judgment about fairness. Either they perceive there is equity, and so are satisfied with the ratio and so they don’t change their behavior. Or they perceive there is inequity, and so they feel resentful and act to change the inequity.40

FIGURE 12.7 Equity theory

How people perceive they are being fairly or unfairly rewarded.

Using Equity Theory to Motivate Employees Adams suggests that employees who feel they are being underrewarded will respond to the perceived inequity in one or more negative ways, as by reducing their inputs, trying to change the outputs or rewards they receive, distorting the inequity, changing the object of comparison, or leaving the situation. (See  Table 12.1 .)

TABLE 12.1 Some Ways Employees Try to Reduce Inequity

Page 388By contrast, employees who think they are treated fairly are more likely to support organizational change, more apt to cooperate in group settings, and less apt to turn to arbitration and the courts to remedy real or imagined wrongs.

Three practical lessons that can be drawn from equity theory are as follows.

1. Employee Perceptions Are What Count Probably the most important result of research on equity theory is this: No matter how fair managers think the organization’s policies, procedures, and reward system are, each employee’s perception of those factors is what counts. Thus, managers should provide positive recognition about employee behavior and performance and explain the reasons behind their decisions.

2. Employee Participation Helps Managers benefit by allowing employees to participate in important decisions. For example, a recent study showed that employees were more satisfied with changes to their jobs when they participated in creating the changes.41

3. Having an Appeal Process Helps When employees are able to appeal decisions affecting their welfare, it promotes the belief that management treats them fairly. Perceptions of fair treatment promote job satisfaction, commitment, and citizenship behavior and reduce absenteeism and turnover.42

Research clearly shows that our perceptions of equity or fair treatment are significantly associated with job satisfaction, commitment, performance, and turnover. It thus is important for managers to understand employees’ feelings about equitable treatment. Are you being treated fairly at work? Do you have an appreciation for the different ways in which managers can treat us fairly? You can get answers to these questions by taking Self-Assessment 12.4.

SELF-ASSESSMENT 12.4

Measuring Perceived Fair Interpersonal Treatment

The following survey was designed to assess the extent to which you are experiencing fair interpersonal treatment at work. Go to  connect.mheducation.com  and take Self-Assessment 12.4. When you’re done, answer the following questions:

1.  Are you being treated equitably?

2.  Based on examining the three lowest-scoring items, what could your manager do to improve your perceptions of equity?

3.  What can you do to increase your perceptions of fair interpersonal treatment?

Expectancy Theory: How Much Do You Want & How Likely Are You to Get It?

Introduced by Victor Vroom,  expectancy theory  suggests that people are motivated by two things: (1) how much they want something and (2) how likely they think they are to get it.43 In other words, assuming they have choices, people will make the choice that promises them the greatest reward if they think they can get it.

The Three Elements: Expectancy, Instrumentality, Valence What determines how willing you (or an employee) are to work hard at tasks important to the success of the organization? The answer, says Vroom, is: You will do what you can do when you want to.

Page 389Your motivation, according to expectancy theory, involves the relationship between your effort, your performance, and the desirability of the outcomes (such as pay or recognition) of your performance. These relationships, which are shown in the following drawing, are affected by the three elements of expectancy, instrumentality, and valence. (See  Figure 12.8 .)

FIGURE 12.8 Expectancy theory: the major elements

1. Expectancy—“Will I Be Able to Perform at the Desired Level on a Task?”  Expectancy  is the belief that a particular level of effort will lead to a particular level of performance. This is called the effort-to-performance expectancy.

Example: If you believe that putting in more hours working at Target selling clothes will result in higher sales, then you have high effort-to-performance expectancy. That is, you believe that your efforts will matter. You think you have the ability, the product knowledge, and so on so that putting in extra hours of selling can probably raise your sales of clothes.

2. Instrumentality—“What Outcome Will I Receive If I Perform at This Level?”  Instrumentality  is the expectation that successful performance of the task will lead to the outcome desired. This is called the performance-to-reward expectancy.

Example: If you believe that making higher sales will cause Target to give you a bonus, then you have high performance-to-reward expectancy. You believe if you can achieve your goals, the outcome will be worthwhile. This element is independent of the previous one—you might decide you don’t have the ability to make the extra sales, but if you did, you’ll be rewarded. (Lately, because of the public’s concern about the quality of the educational system in the United States, school boards and politicians are implementing programs that tie teachers’ pay to performance.44)

3. Valence—“How Much Do I Want the Outcome?”  Valence  is value, the importance a worker assigns to the possible outcome or reward.

Example: If you assign a lot of importance or a high value to Target’s prospective bonus or pay raise, then your valence is said to be high.

For your motivation to be high, you must be high on all three elements—expectancy, instrumentality, and valence. If any element is low, you will not be motivated. Your effort-to-performance expectancy might be low, for instance, because you doubt making an effort will make a difference (because retail clothing selling has too much competition). Or your performance-to-reward expectancy might be low because you don’t think Target is going to give you a bonus for being a star at selling. Or your valence might be low because you don’t think the bonus or raise is going to be high enough to justify working evenings and weekends.

Page 390Using Expectancy Theory to Motivate Employees The principal problem with the expectancy theory is that it is complex. Even so, the underlying logic is understandable, and research seems to show that managers are not following its principles.45

When attempting to motivate employees, managers should ask the following questions:

   What rewards do your employees value? As a manager, you need to get to know your employees and determine what rewards (outcomes) they value, such as pay raises or recognition.

   What are the job objectives and the performance level you desire? You need to clearly define the performance objectives and determine what performance level or behavior you want so that you can tell your employees what they need to do to attain the rewards.

   Are the rewards linked to performance? You want to reward high performance, of course. Thus, employees must be aware that X level of performance within Y period of time will result in Z kinds of rewards. In a team context, however, research shows that it is best to use a combination of individual and team-based rewards.46

   Do employees believe you will deliver the right rewards for the right performance? Your credibility is on the line here. Your employees must believe that you have the power, the ability, and the will to give them the rewards you promise for the performance you are requesting.

 EXAMPLE

Reducing the F’s: Applying Expectancy Theory to Failing Students

“A highly skilled CEO is hard to find,” observes a business writer. “Highly paid CEOs, however, are everywhere you look.”47

Indeed, the mass media are full of stories about top managers who don’t produce results but are still rewarded (such as the Staples executives who didn’t make their 2013 goals but received a special bonus anyway—“for effort”).48 Where’s the inducement to deliver superior performance when you’re going to be rewarded anyway?49

Maybe we can learn from high school.

Fewer F’s. As a principal in Arizona high schools, Dr. Tim Richard has used a motivational program called Celebration/Remediation to improve the grades of students. For instance, at 3,000-student Westwood High School in Mesa, which had 1,200 failing pupils, students with F grades dropped to 900 within the first few months. At Poston Butte High School, the number of students with one or more F’s was reduced from 555 to 262 in nine weeks. “Once we changed the culture by bringing on Celebration/Remediation . . . ,” Richard said, “the kids have completely embraced it.”50 (Poston Butte also rewards students who pass all their classes with an early release from school.)

Celebration or Remediation? At Westwood, the program worked like this: “Students are allowed to go outside and have fun with their friends for 28 minutes on four mornings a week,” Richard told The Arizona Republic. “But those who have even one F must stay inside for ‘remediation’—28 minutes of extra study, help from peer tutors, or meetings with teachers.”51

Richard believes the key to motivating students is to link a highly valued reward—socializing with friends outside—with grades. Socializing includes not only hanging out but also eating snacks, playing organized games, and listening and dancing to music. “You really appreciate celebration after you have been in remediation,” said Ivana Baltazar, a 17-year-old senior who raised her grade in economics from an F to a B after receiving help through the program.

YOUR CALL

The tricky part, observes Westwood student tutor Joseph Leung, is addressing expectancy—“getting people out of the mindset that they can’t succeed. . . . A lot of times they just haven’t done their homework. I try to help them understand that the difference between a person passing and failing is their work ethic.” For top executives in business, expectancy doesn’t seem to be a problem, it’s instrumentality and valence. How could you apply Richard’s program to reward performance in business?

Page 391Goal-Setting Theory: Objectives Should Be Specific & Challenging but Achievable

We have been considering the importance of goal setting since first introducing the topic in Chapter 5.  Goal-setting theory  suggests that employees can be motivated by goals that are specific and challenging but achievable. According to psychologists Edwin Locke and Gary Latham, who developed the theory, it is natural for people to set and strive for goals; however, the goal-setting process is useful only if people understand and accept the goals.

The Four Motivational Mechanisms of Goal-Setting Theory Goal setting helps motivate you by doing the following:

1. It Directs Your Attention Goal setting directs your attention toward goal-relevant tasks and away from irrelevant ones.

2. It Regulates the Effort Expended The effort you expend is generally proportional to the goal’s difficulty.

3. It Increases Your Persistence Goal setting makes obstacles become challenges to be overcome, not reasons to fail.

4. It Fosters Use of Strategies & Action Plans The use of strategies and action plans make it more likely you will realize success.

Some Practical Results of Goal-Setting Theory A goal is defined as an objective that a person is trying to accomplish through his or her efforts. To result in high motivation and performance, according to recent research, goals must have a number of characteristics, as follows:

1. Goals Should Be Specific Goals such as “Sell as many cars as you can” or “Be nicer to customers” are too vague. Instead, goals need to be specific—usually meaning quantitative, as in “Boost your revenues 25%” and “Cut absenteeism by 10%.”52

2. Goals Should Be Challenging but Achievable Goals should be tailored to fit individual abilities and training, not set so low that lots of people can achieve them nor set so high that most people will give up. Difficult goals will lead to higher performance only when employees are committed to them; if they are not, difficult goals may simply lead to low performance.53

3. Goals Should Be Linked to Action Plans An action plan outlines the activities or tasks that need to be accomplished in order to obtain a goal and reminds us of what we should be working on. Both individuals (such as college students) and organizations are more likely to achieve their goals when they develop detailed action plans.54

4. Goals Need Not Be Set Jointly to Be Effective It doesn’t seem to matter whether goals are set by managers, by employees, or by both together to be effective.55 Thus, managers should probably do whatever suits the individual and the situation (a contingency approach). On the other hand, employees should be encouraged to develop their own action plans, which will foster stronger goal commitment.56

5. Feedback Enhances Goal Attainment Feedback lets employees know if they are on or off course, provides them with performance standards, and gives them the information they need to adjust their efforts.

Some of the preceding recommendations are embodied in the advice we presented in Chapter 5—namely, that goals should be SMART: Specific, Measurable, Attainable, Results-oriented, and have Target dates. 

Page 392Job Design Perspectives on Motivation What’s the best way to design jobs—adapt people to work or work to people? THE BIG PICTURE Job design, the division of an organization’s work among employees, applies motivational theories to jobs to increase performance and satisfaction. The traditional approach to job design is to fit people to the jobs; the modern way is to fit the jobs to the people, using job enrichment and approaches that are based on Herzberg’s landmark two-factor theory, discussed earlier in this chapter. The job characteristics model offers five job attributes for better work outcomes.

About half of workers reported in a recent year that their current job was stagnant.57 Is there anything that can be done about this?

Job design  is (1) the division of an organization’s work among its employees and (2) the application of motivational theories to jobs to increase satisfaction and performance. There are two different approaches to job design, one traditional, one modern, that can be taken in deciding how to design jobs. The traditional way is fitting people to jobs; the modern way is fitting jobs to people. 58

Fitting People to Jobs

Fitting people to jobs is based on the assumption that people will gradually adapt to any work situation. Even so, jobs must still be tailored so that nearly anyone can do them. This is the approach often taken with assembly-line jobs and jobs involving routine tasks. For managers the main challenge becomes “How can we make the worker most compatible with the work?”

One technique is  job simplification,  the process of reducing the number of tasks a worker performs. When a job is stripped down to its simplest elements, it enables a worker to focus on doing more of the same task, thus increasing employee efficiency and productivity. This may be especially useful, for instance, in designing jobs for mentally disadvantaged workers, such as those run by Goodwill Industries. However, research shows that simplified, repetitive jobs lead to job dissatisfaction, poor mental health, and a low sense of accomplishment and personal growth.59

Fitting Jobs to People

Fitting jobs to people is based on the assumption that people are underutilized at work and that they want more variety, challenges, and responsibility. This philosophy, an outgrowth of Herzberg’s theory, is one of the reasons for the popularity of work teams in the United States. The main challenge for managers is “How can we make the work most compatible with the worker so as to produce both high performance and high job satisfaction?”

Two techniques for this type of job design are (1) job enlargement and (2) job enrichment.

Job Enlargement: Putting More Variety into a Job The opposite of job simplification,  job enlargement  consists of increasing the number of tasks in a job to increase variety and motivation. For instance, the job of installing flat screens in television sets could be enlarged to include installation of the circuit boards as well.

Although proponents claim job enlargement can improve employee satisfaction, motivation, and quality of production, research suggests job enlargement by itself won’t have a significant and lasting positive effect on job performance. After all, working at two boring tasks instead of one doesn’t add up to a challenging job. Instead, job enlargement is just one tool of many that should be considered in job design.60

Page 393Job Enrichment: Putting More Responsibility & Other Motivating Factors into a Job Job enrichment is the practical application of Frederick Herzberg’s two-factor motivator-hygiene theory of job satisfaction.61 Specifically,  job enrichment consists of building into a job such motivating factors as responsibility, achievement, recognition, stimulating work, and advancement.

However, instead of the job-enlargement technique of simply giving employees additional tasks of similar difficulty (known as horizontal loading), with job enrichment employees are given more responsibility (known as vertical loading). Thus, employees take on chores that would normally be performed by their supervisors. For example, one department store authorized thousands of its sales clerks to handle functions normally reserved for store managers, such as handling merchandise-return problems and approving customers’ checks.

The Job Characteristics Model: Five Job Attributes for Better Work Outcomes

Developed by researchers J. Richard Hackman and Greg Oldham, the job characteristics model of design is an outgrowth of job enrichment.62 The  job characteristics model  consists of (a) five core job characteristics that affect (b) three critical psychological states of an employee that in turn affect (c) work outcomes—the employee’s motivation, performance, and satisfaction. The model is illustrated below. (See  Figure 12.9 .)

FIGURE 12.9 The job characteristics model

Source: From J. Richard Hackman and Greg R. Oldham, Work Redesign, le ©1980. Reproduced by permission of Pearson Education, Inc., Upper Saddle River, New Jersey.

Five Job Characteristics The five core job characteristics are skill variety, task identity, task significance, autonomy, and feedback, as follows.

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Skill variety. Being an airline pilot—or a museum curator, a building contractor, a physician, or an orchestra conductor—requires a greater number of skills than, say, driving a truck. Do highly skilled employees typically make good managers? What skills do airline pilots have that would make them effective managers in other kinds of work?

1. Skill Variety—“How Many Different Skills Does Your Job Require?” Skill variety describes the extent to which a job requires a person to use a wide range of different skills and abilities.

Example: The skill variety required by a rocket scientist is higher than that for a short-order cook.

2. Task Identity—“How Many Different Tasks Are Required to Complete the Work?” Task identity describes the extent to which a job requires a worker to perform all the tasks needed to complete the job from beginning to end.

Example: The task identity for a craftsperson who goes through all the steps to build a handmade acoustic guitar is higher than it is for an assembly-line worker who just installs windshields on cars.

3. Task Significance—“How Many Other People Are Affected by Your Job?” Task significance describes the extent to which a job affects the lives of other people, whether inside or outside the organization.

Example: A technician who is responsible for keeping a hospital’s electronic equipment in working order has higher task significance than a person wiping down cars in a carwash.

4. Autonomy—“How Much Discretion Does Your Job Give You?” Autonomy describes the extent to which a job allows an employee to make choices about scheduling different tasks and deciding how to perform them.

Example: College-textbook salespeople have lots of leeway in planning which campuses and professors to call on. Thus, they have higher autonomy than do toll-takers on a bridge, whose actions are determined by the flow of vehicles.

5. Feedback—“How Much Do You Find Out How Well You’re Doing?” Feedback describes the extent to which workers receive clear, direct information about how well they are performing the job.

Page 395Example: Professional basketball players receive immediate feedback on how many of their shots are going into the basket. Engineers working on new weapons systems may go years before learning how effective their performance has been.

How the Model Works According to the job characteristics model, these five core characteristics affect a worker’s motivation because they affect three critical psychological states: meaningfulness of work, responsibility for results, and knowledge of results.(Refer to Figure 12.9 again.) In turn, these positive psychological states fuel high motivation, high performance, high satisfaction, and low absenteeism and turnover.

One other element—shown at the bottom of Figure 12.9—needs to be discussed: contingency factors. This refers to the degree to which a person wants personal and psychological development. Job design works when employees are motivated; to be so, they must have three attributes: (1) necessary knowledge and skill, (2) desire for personal growth, and (3) context satisfactions—that is, the right physical working conditions, pay, and supervision.

Job design works. A meta-analysis of 259 studies involving 219,625 people showed that job design was positively associated with employee performance, job satisfaction, organizational commitment, and physical and psychological well-being. Job design also was associated with lower absenteeism and intentions to quit.63 Similar results were found in another meta-analysis involving studies of over 75,000 people.64

Applying the Job Characteristics Model There are three major steps to follow when applying the model.

   Diagnose the work environment to see whether a problem exists. Hackman and Oldham developed a self-report instrument for managers to use called the job diagnostic survey. This will indicate whether an individual’s so-called motivating potential score (MPS)—the amount of internal work motivation associated with a specific job—is high or low.

   Determine whether job redesign is appropriate. If a person’s MPS score is low, an attempt should be made to determine which of the core job characteristics is causing the problem. You should next decide whether job redesign is appropriate for a given group of employees. Job design is most likely to work in a participative environment in which employees have the necessary knowledge and skills.

   Consider how to redesign the job. Here you try to increase those core job characteristics that are lower than national norms.

Example: Employers want to save on health costs by helping employees with diabetes, heart disease, and similar chronic conditions avoid emergency room visits and hospital admissions.65 However, since primary care doctors, who could help patients manage their conditions (as by reminding diabetics to monitor their blood-glucose levels daily), are paid less than physicians in other specialties, the system has turned such doctors “into little chipmunks on a wheel, pumping out patients every five minutes,” as one observer described it.66 The solution? Redesign the job by rewarding primary care doctors for spending more time with patients.67 

Page 396Reinforcement Perspectives on Motivation What are the types of incentives I might use to influence employee behavior? THE BIG PICTURE Reinforcement theory suggests behavior will be repeated if it has positive consequences and won’t be if it has negative consequences. There are four types of reinforcement: positive reinforcement, negative reinforcement, extinction, and punishment. This section also describes how to use some reinforcement techniques to modify employee behavior.

Reinforcement evades the issue of people’s needs and thinking processes in relation to motivation, as we described under the need-based and process perspectives. Instead, the reinforcement perspective, which was pioneered by Edward L. Thorndike and B. F. Skinner, is concerned with how the consequences of a certain behavior affect that behavior in the future.68

Skinner was the father of operant conditioning, the process of controlling behavior by manipulating its consequences. Operant conditioning rests on Thorndike’s law of effect, which states that behavior that results in a pleasant outcome is likely to be repeated and behavior that results in unpleasant outcomes is not likely to be repeated.

From these underpinnings has come  reinforcement theory,  which attempts to explain behavior change by suggesting that behavior with positive consequences tends to be repeated, whereas behavior with negative consequences tends not to be repeated. The use of reinforcement theory to change human behavior is called behavior modification.

The Four Types of Reinforcement: Positive, Negative, Extinction, & Punishment

Reinforcement  is anything that causes a given behavior to be repeated or inhibited, whether praising a child for cleaning his or her room or scolding a child for leaving a tricycle in the driveway.

There are four types of reinforcement: (1) positive reinforcement, (2) negative reinforcement, (3) extinction, and (4) punishment. (See  Figure 12.10 , next page.)

Positive Reinforcement: Strengthens Behavior  Positive reinforcement  is the use of positive consequences to strengthen a particular behavior.

Example: A supervisor who’s asked an insurance salesperson to sell more policies might reward successful performance by saying, “It’s great that you exceeded your sales quota, and you’ll get a bonus for it. Maybe next time you’ll sell even more and will become a member of the Circle of 100 Top Sellers and win a trip to Paris as well.” Note the rewards: praise, more money, recognition, awards. Presumably this will strengthen the behavior and the sales rep will work even harder in the coming months.

Negative Reinforcement: Also Strengthens Behavior  Negative reinforcement  is the process of strengthening a behavior by withdrawing something negative.

Example: A supervisor who has been nagging a salesperson might say, “Well, so you exceeded your quota” and stop the nagging. Note the neutral statement; there is no praise but also no longer any negative statements. This could cause the sales rep to maintain his or her existing behavior.

Extinction: Weakens Behavior  Extinction  is the weakening of behavior by ignoring it or making sure it is not reinforced.

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FIGURE 12.10 Four types of reinforcement

These are different ways of changing employee behavior.

Example: A supervisor might tell a successful salesperson, “I know you exceeded your sales-goal quota, but now that our company has been taken over by another firm, we’re not giving out bonuses anymore.” Presumably this will weaken the salesperson’s efforts to perform better in the future.

Punishment: Also Weakens Behavior  Punishment  is the process of weakening behavior by presenting something negative or withdrawing something positive.

Example: A supervisor might tell an unsuccessful salesperson who’s been lazy about making calls to clients and so didn’t make quota, “Well, if this keeps up, you’ll probably be let go.” This could inhibit the salesperson from being so lackadaisical about making calls to clients. (Incidentally, criticism has a stronger impact than praise, suggests one social psychologist, and is longer lasting in its effects.69)

Using Reinforcement to Motivate Employees

The following are some guidelines for using two types of reinforcement—positive reinforcement and punishment.

Positive Reinforcement There are several aspects of positive reinforcement, which should definitely be part of your toolkit of managerial skills:

   Reward only desirable behavior. You should give rewards to your employees only when they show desirable behavior. Thus, for example, you shouldPage 398 give praise to employees not for showing up for work on time (an expected part of any job) but for showing up early.

   Give rewards as soon as possible. You should give a reward as soon as possible after the desirable behavior appears. Thus, you should give praise to an early-arriving employee as soon as he or she arrives, not later in the week.

   Be clear about what behavior is desired. Clear communication is everything. You should tell employees exactly what kinds of work behaviors are desirable and you should tell everyone exactly what they must do to earn rewards.

   Have different rewards and recognize individual differences. Recognizing that different people respond to different kinds of rewards, you should have different rewards available. Thus, you might give a word of praise verbally to one person, text or e-mail a line or two to another person, or send a hand-scrawled note to another.

Punishment Unquestionably there will be times when you’ll need to threaten or administer an unpleasant consequence to stop an employee’s undesirable behavior. Sometimes it’s best to address a problem by combining punishment with positive reinforcement. Some suggestions for using punishment are as follows.

   Punish only undesirable behavior. You should give punishment only when employees show frequent undesirable behavior. Otherwise, employees may come to view you negatively as a tyrannical boss. Thus, for example, you should reprimand employees who show up, say, a half hour late for work but not 5 or 10 minutes late.

   Give reprimands or disciplinary actions as soon as possible. You should mete out punishment as soon as possible after the undesirable behavior occurs. Thus, you should give a reprimand to a late-arriving employee as soon as he or she arrives.

   Be clear about what behavior is undesirable. Tell employees exactly what kinds of work behaviors are undesirable and make any disciplinary action or reprimand match the behavior. A manager should not, for example, dock an hourly employee’s pay if he or she is only 5 or 10 minutes late for work.

   Administer punishment in private. You would hate to have your boss chew you out in front of your subordinates, and the people who report to you also shouldn’t be reprimanded in public, which would lead only to resentments that may have nothing to do with an employee’s infractions.

   Combine punishment and positive reinforcement. If you’re reprimanding an employee, be sure to also say what he or she is doing right and state what rewards the employee might be eligible for. For example, while reprimanding someone for being late, say that a perfect attendance record over the next few months will put that employee in line for a raise or promotion. 

Punishment. Does getting a wallet-busting speeding ticket change your behavior? What if it happens several times? Yet consider also other, presumably stronger forms of governmental punishment that are supposed to act as deterrents to bad behavior. Does the possibility of the death penalty really deter homicides? Why or why not?

Page 399Using Compensation & Other Rewards to Motivate How can I use compensation and other rewards to motivate people? THE BIG PICTURE Compensation, the main motivator of performance, includes pay for performance, bonuses, profit sharing, gainsharing, stock options, and pay for knowledge. Other nonmonetary incentives address needs that aren’t being met, such as work–life balance, growth in skills, and commitment.

“In the past, people could see the fruits of their labor immediately: a chair made or a ball bearing produced,” writes Wall Street Journal columnist Jared Sandberg. However, in the information age, when so much of a person’s time is spent looking into a phone display or computer screen and working on partial tasks seemingly unconnected to something whole, “it can be hard to find gratification from work that is largely invisible.”70 As work becomes more invisible and intangible, more team based rather than individual based, it also becomes harder to measure, harder to define its successful accomplishment—and harder to motivate employees to perform well at it.

Is Money the Best Motivator?

Most workers rate having a caring boss higher than they value monetary benefits, according to several surveys.71 The Great Place to Work Institute has determined that great employers have three traits in common: employee trust in management, pride in the company, and camaraderie with colleagues.72 Clearly, then, motivating doesn’t just involve dollars.

Motivation & Compensation

Most people are paid an hourly wage or a weekly or monthly salary. Both of these are easy for organizations to administer, of course. But by itself a wage or a salary gives an employee little incentive to work hard. Incentive compensation plans try to do so, although no single plan will boost the performance of all employees.

Characteristics of the Best Incentive Compensation Plans In accordance with most of the theories of motivation we described earlier, for incentive plans to work, certain criteria are advisable, as follows. (1) Rewards must be linked to performance and be measurable. (2) The rewards must satisfy individual needs. (3) The rewards must be agreed on by manager and employees. (4) The rewards must be believable and achievable by employees.

Popular Incentive Compensation Plans In what way would you like to be rewarded for your efforts? Some of the most well-known incentive compensation plans are pay for performance, bonuses, profit sharing, gainsharing, stock options, and pay for knowledge.

   Pay for performance. Also known as merit pay,  pay for performance  bases pay on one’s results. Thus, different salaried employees might get different pay raises and other rewards (such as promotions) depending on their overall job performance.73

Examples: One standard pay-for-performance plan, already mentioned, is payment according to a  piece rate,  in which employees are paid according to how much output they produce, as is often used with farmworkers picking fruit and vegetables. Another is the  sales commission,  in which sales representatives are paid a percentage of the earnings the company made from their sales, so that the more they sell, the more they are paid.74

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Motivation as a small business owner. Susan Brown of Golden, Colorado, had dreamed of opening her own business since she was a child. However, she invented the Boppy, a simple pillow stuffed with foam, almost accidentally, when her daughter’s day care center asked parents to bring in pillows to prop up infants who couldn’t sit up on their own. Today the Boppy Co. (now part of the Artsana Group) has annual sales of $15–$25 million. For some people, like Brown, the only way to merge motivation and compensation is to own and manage their own business. What factors or incentives motivate you to work hard?

   Bonuses.  Bonuses  are cash awards given to employees who achieve specific performance objectives.

Example: Nieman Marcus, the department store, pays its salespeople a percentage of the earnings from the goods they sell.

Unfortunately, the documents that most companies file (proxy documents to the Securities and Exchange Commission) to explain what specific targets executives had to meet to earn their bonuses are not very clear, being couched mainly in legalese.75

   Profit sharing.  Profit sharing  is the distribution to employees of a percentage of the company’s profits.

Example: In one T-shirt and sweatshirt manufacturing company, 10% of pretax profits are distributed to employees every month, and more is given out at the end of the year. Distributions are apportioned according to such criteria as performance, attendance, and lateness for individual employees.

   Gainsharing.  Gainsharing  is the distribution of savings or “gains” to groups of employees who reduced costs and increased measurable productivity. In one version (the so-called Scanlon plan), a portion of any cost savings, usually 75%, are distributed to employees. Example: In a recent year, Indianapolis-based Mike’s Carwash paid out $569,000 in gainsharing to 437 employees in 37 locations who had been challenged to beat targets set at the corporate level.

   Stock options. With  stock options,  certain employees are given the right to buy stock at a future date for a discounted price. The motivator here is that employees holding stock options will supposedly work hard to make the company’s stock rise so that they can obtain it at a cheaper price. Along with its other benefits, by giving stock options to all employees who work 20 or more hours a week, Starbucks Corp. has been able to hold its employee turnover rate 120% below the quick-service restaurant industry average.76

   Pay for knowledge. Also known as skill-based pay,  pay for knowledge  ties employee pay to the number of job-relevant skills or academic degrees they earn.

Example: The teaching profession is a time-honored instance of this incentive, in which elementary and secondary teachers are encouraged to increase their salaries by earning further college credit. However, firms such as FedEx also have pay-for-knowledge plans.

Page 401Nonmonetary Ways of Motivating Employees

Employees who can behave autonomously, solve problems, and take the initiative are apt to be the very ones who will leave if they find their own needs aren’t being met—namely:

   The need for work–life balance. For more than half of men and women in a 2013 Accenture survey, work–life balance is the key determinant of career success—ahead of money, recognition, autonomy, or making a difference.77 A 25-year study of values in the United States found that “employees have become less convinced that work should be an important part of one’s life or that working hard makes me a better person.”78 Millennials in particular are apt to say the most important things in life are “being a good parent” (52%) and “having a successful marriage” (30%) rather than “having a high-paying career” (15%).79

   The need to expand skills. Having watched their parents undergo downsizing, younger workers in particular are apt to view a job as a way of gaining skills that will enable them to earn a decent living in the future.

   The need to matter. Workers now want to be with an organization that allows them to feel they matter. They want to commit to their profession or fellow team members rather than have to profess a blind loyalty to the corporation.80

There is a whole class of nonmonetary incentives to attract, retain, and motivate employees. The foremost example is the flexible workplace—including part-time work, flextime, compressed workweek, job sharing, and telecommuting, as described in the Practical Action box.

 PRACTICAL ACTION

The Flexible Workplace 81

At Maynard Webb’s investment fund, Webb Investment Network, employees are encouraged to work remotely and set their own schedules, and are assessed by their performance. That’s because, says Webb, the author of Reinventing Work, traditional 9-to-5 jobs are becoming a thing of the past, and top talent are looking for more options in their lives.82

But it’s not just the cream of the crop who can benefit. With so many two-paycheck families, single parents, and other diverse kinds of employees in the workforce, many employers now recognize the idea of a flexible workplace as a way of recruiting, retaining, and motivating staff. Several studies have found that employees with flexible work arrangements are healthier, happier, more productive, more positive about their work, and less likely to change jobs.83 Among the types of alternative work schedules available are the following.

Part-Time Work—Less Than 40 hours

Part-time work is any work done on a schedule less than the standard 40-hour workweek. Some part-time workers—so-called temporary workers or contingency workers—actually want to work 40 hours or more, but can’t find full-time jobs.84 Others, however, work part time by choice. Today an organization can hire not only part-time clerical help, for instance, but also part-time programmers, market researchers, lawyers, even part-time top executives.

Flextime—Flexible Working Hours

Flextime, or flexible time, consists of flexible working hours, or any schedule that gives one some choices in working hours. If, for example, an organization’s normal working hours are 9 a.m. to 5 p.m., a flextime worker might be allowed to start and finish an hour earlier or an hour later—for instance, to work from 8 a.m. to 4 p.m. The main requirement is that the employee be at work during certain core hours, to be available for meetings, consultations, and so on. By offering flextime hours, organizations can attract and keep employees with special requirements such as the need to take care of children or elderly parents. It also benefits employees who wish to avoid commuting during rush hour. (Unfortunately, one study found that it was men—particularly men seeking career advancement opportunities—who are more likely to be granted a flexible schedule.85)

Compressed Workweek—40 Hours in Four Days

In a compressed workweek, employees perform a full-time job in less than 5 days of standard 8- (or 9-) hour shifts. The most common variation is a 40-hour week performed in 4 days of 10 hours each, which gives employees three (instead of two) consecutive days off. The benefits are that organizations can offer employees more leisure time and reduced wear and tear and expense from commuting. The disadvantages are possiblePage 402 scheduling problems, unavailability of an employee to coworkers and customers, and fatigue from long workdays.

Job Sharing—Two People Split the Same Job

In job sharing, two people divide one full-time job. Usually, each person works a half day, although there can be other arrangements—working alternate days or alternate weeks, for example. As with a compressed workweek, job sharing provides employees with more personal or leisure time. The disadvantage is that it can result in communication problems with coworkers or customers. (Recently only 18% of employers in one survey allowed two workers to divide responsibilities between them, down from 29% in 2008.86)

Telecommuting & Other Work-at-Home Schedules

There have always been some employees who have had special full-time or part-time arrangements whereby they are allowed to work at home—an activity known as telecommuting—keeping in touch with their employers and coworkers by e-mail and phone. By one estimate, 2.6% of the American workforce are telecommuting.87 Today two-thirds of employers in one study allow at least some employees to work from home occasionally (up from 50% in 2008), and 38% allow some to do so occasionally (up from 23%).88

Working at home with telecommunications between office and home is called telecommuting. The advantages to employers are increased productivity because telecommuters experience less distraction at home and can work flexible hours.89

YOUR CALL

For what you’re doing right now at this point in your life, which of these possibilities would suit you best, and why? Would it be workable for your employer if all your coworkers did it as well?

Other incentives can be expressed simply as treat employees well, some examples of which follow.

Thoughtfulness: The Value of Being Nice A study by Walker Information, an Indianapolis-based research firm, found that employers spend too little time showing workers they matter, as manifested in lack of communication and lack of interest in new ideas and contributions.90 A majority of employees feel underappreciated, according to one survey. Forty percent of employees who rated their boss’s performance as poor said they were likely to look for a new job; only 11% of those who rated it excellent said they would.91 “Being nice” to employees means, for example, reducing criticism, becoming more effusive in your praise, and writing thank-you notes to employees for exceptional performance.92

The number one reason people quit their jobs, it’s believed, is their dissatisfaction with their supervisors, not their paychecks. Thus, industrial psychologist B. Lynn Ware suggests that if you learn valued employees are disgruntled, you should discuss it with them.93 Employers can promote personal relationships, which most employees are concerned about on the job, by offering breaks or other opportunities in which people can mix and socialize.

Work–Life Benefits Work–life benefits, according to Kathie Lingle, are programs “used by employers to increase productivity and commitment by removing certain barriers that make it hard for people to strike a balance between their work and personal lives.”94(Unfortunately, the United States ranks 28 out of 36 on a list of countries with the best work–life balance.95)

Lingle, who is national work–life director for KPMG, an accounting and consulting firm, emphasizes that work–life benefits “are not a reward, but a way of getting work done.” After all, some employees are low performers simply because of a lack of work– life balance, with great demands at home. “If you only give these ‘rewards’ to existing high performers,” says Lingle, “you’re cutting people off who could, with some support, be high performers.” Nevertheless, handing out extra time off can be used to reward performance and prevent burnout.96

Besides alternative scheduling, work–life benefits include helping employees with day care costs or even establishing on-site centers; domestic-partner benefits; job-protected leave for new parents; and provision of technology such as mobile phones and laptops to enable parents to work at home.97

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Cubicle culture. It might be too difficult to design a setup in which everyone has an office with a view. But would it be possible to design a layout in which everyone has a private office? Do you think it would better motivate employees?

Surroundings The cubicle, according to new research, is stifling the creativity and morale of many workers, and the bias of modern-day office designers for open spaces and neutral colors is leading to employee complaints that their workplaces are too noisy or too bland. Some businesses, such as advertising giant Grey Group in New York, have even moved beyond cubicles to completely open offices, which at Grey has required a business psychologist to hold “space therapy” sessions to ease employee concerns.98

“There is no such thing as something that works for everybody,” says Alan Hedge, a professor of environmental analysis at Cornell University.99 An 8-foot-by-8-foot cubicle may not be a good visual trigger for human brains, and companies wanting to improve creativity and productivity may need to think about giving office employees better things to look at.100

Skill-Building & Educational Opportunities Learning opportunities can take two forms. Managers can see that workers are matched with coworkers from whom they can learn, allowing them, for instance, to “shadow” (watch and imitate) workers in other jobs or be in interdepartmental task forces. There can also be tuition reimbursement for part-time study at a college or university.101

Sabbaticals Intel and Apple understand that in a climate of 80-hour weeks people need to recharge themselves. But even McDonald’s offers sabbaticals to long-time employees, giving a month to a year of paid time off in which to travel, learn, and pursue personal projects. The aim, of course, is to enable employees to recharge themselves but also, it is hoped, to cement their loyalty to the organization.102 

Page 404Key Terms Used in This Chapter

acquired needs theory

bonuses

content perspectives

equity theory

expectancy

expectancy theory

extinction

extrinsic reward

gainsharing

goal-setting theory

hierarchy of needs theory

hygiene factors

instrumentality

intrinsic reward

job characteristics model

job design

job enlargement

job enrichment

job simplification

motivating factors

motivation

needs

negative reinforcement

pay for knowledge

pay for performance

piece rate

positive reinforcement

process perspectives

profit sharing

punishment

reinforcement

reinforcement theory

sales commission

self-determination theory

stock options

two-factor theory

valence

Key Points

 12.1  Motivating for Performance

•   Motivation is defined as the psychological processes that arouse and direct goal-directed behavior.

•    In a simple model of motivation, people have certain needs that motivate them to perform specific behaviors for which they receive rewards that feed back and satisfy the original need.

•    Rewards are of two types: (1) An extrinsic reward is the payoff, such as money, a person receives from others for performing a particular task. (2) An intrinsic reward is the satisfaction, such as a feeling of accomplishment, that a person receives from performing the particular task itself.

•    As a manager, you want to motivate people to do things that will benefit your organization—join it, stay with it, show up for work at it, perform better for it, and do extra for it.

•    Four major perspectives on motivation are (1) content, (2) process, (3) job design, and (4) reinforcement.

 12.2  Content Perspectives on Employee Motivation

•   Content perspectives or need-based perspectives emphasize the needs that motivate people. Needs are defined as physiological or psychological deficiencies that arouse behavior.

•    Besides the McGregor Theory X/Theory Y (Chapter 2), need-based perspectives include (1) the hierarchy of needs theory, (2) the acquired needs theory, (3) the self-determination theory, and (4) the two-factor theory.

•    The hierarchy of needs theory proposes that people are motivated by five levels of need: physiological, safety, love, esteem, and self-actualization needs.

•    The acquired needs theory states that three needs—achievement, affiliation, and power—are major motives determining people’s behavior in the workplace.

•    The self-determination theory assumes that people are driven to try to grow and attain fulfillment, with their behavior and well-being influenced by three innate needs: competence, autonomy, and relatedness.

•    The two-factor theory proposes that work satisfaction and dissatisfaction arise from two different factors: work satisfaction from so-called motivating factors, and work dissatisfaction from so-called hygiene factors.

•    Hygiene factors, the lower-level needs, are factors associated with job dissatisfaction—such as salary and working conditions—which affect the environment in which people work. Motivating factors, the higher-level needs, are factors associated with job satisfaction—such as achievement and advancement—which affect the rewards of work performance.

 12.3  Process Perspectives on Employee Motivation

•   Process perspectives are concerned with the thought processes by which people decide how to act. Three process perspectives onPage 405 motivation are (1) equity theory, (2) expectancy theory, and (3) goal-setting theory.

•    Equity theory focuses on employee perceptions as to how fairly they think they are being treated compared with others.

•    The key elements in equity theory are inputs, outputs (rewards), and comparisons. (1) With inputs, employees consider what they are putting into the job in time, effort, and so on. (2) With outputs or rewards, employees consider what they think they’re getting out of the job in terms of pay, praise, and so on. (3) With comparison, employees compare the ratio of their own outcomes to inputs against the ratio of someone else’s outcomes to inputs. Three practical lessons of equity theory are that employee perceptions are what count, employee participation helps, and having an appeal process helps.

•    Expectancy theory suggests that people are motivated by how much they want something and how likely they think they are to get it. The three elements affecting motivation are expectancy, instrumentality, and valence. (1) Expectancy is the belief that a particular level of effort will lead to a particular level of performance. (2) Instrumentality is the expectation that successful performance of the task will lead to the outcome desired. (3) Valence is the value, the importance a worker assigns to the possible outcome or reward.

•    When attempting to motivate employees, according to the logic of expectancy theory, managers should ascertain what rewards employees value, what job objectives and performance level they desire, whether there are rewards linked to performance, and whether employees believe managers will deliver the right rewards for the right performance.

•    Goal-setting theory suggests that employees can be motivated by goals that are specific and challenging but achievable and linked to action plans.

•    In addition, the theory suggests that goals should be set jointly with the employee, be measurable, and have a target date for accomplishment and that employees should receive feedback and rewards.

 12.4  Job Design Perspectives on Motivation

•   Job design is, first, the division of an organization’s work among its employees and, second, the application of motivational theories to jobs to increase satisfaction and performance.

•    Two approaches to job design are fitting people to jobs (the traditional approach) and fitting jobs to people.

•    Fitting jobs to people assumes people are underutilized and want more variety. Two techniques for this type of job design include (1) job enlargement, increasing the number of tasks in a job to increase variety and motivation, and (2) job enrichment, building into a job such motivating factors as responsibility, achievement, recognition, stimulating work, and advancement.

•    An outgrowth of job enrichment is the job characteristics model, which consists of (a) five core job characteristics that affect (b) three critical psychological states of an employee that in turn affect (c) work outcomes—the employee’s motivation, performance, and satisfaction.

•    The five core job characteristics are (1) skill variety—how many different skills a job requires; (2) task identity—how many different tasks are required to complete the work; (3) task significance—how many other people are affected by the job; (4) autonomy—how much discretion the job allows the worker; and (5) feedback—how much employees find out how well they’re doing.

•    These five characteristics affect three critical psychological states: meaningfulness of work, responsibility for results, and knowledge of results.

•    Three major steps to follow when applying the job characteristics model are (1) diagnose the work environment to see if a problem exists, (2) determine whether job redesign is appropriate, and (3) consider how to redesign the job.

 12.5  Reinforcement Perspectives on Motivation

•   Reinforcement theory attempts to explain behavior change by suggesting that behavior with positive consequences tends to be repeated whereas behavior with negative consequences tends not to be repeated. Reinforcement is anything that causes a given behavior to be repeated or inhibited.

•    There are four types of reinforcement. (1) Positive reinforcement is the use of positive consequences to strengthen a particular behavior. (2) Negative reinforcement is the process of strengthening a behavior by withdrawing something negative. (3) Extinction is the weakening of behavior by ignoring it or making sure it is not reinforced. (4) Punishment is the process of weakening behavior by presenting something negative or withdrawing something positive.

•    In using positive reinforcement to motivate employees, managers should reward only desirable behavior, give rewards as soon as possible, be clear about what behavior isPage 406 desired, and have different rewards and recognize individual differences.

•    In using punishment, managers should punish only undesirable behavior, give reprimands or disciplinary actions as soon as possible, be clear about what behavior is undesirable, administer punishment in private, and combine punishment and positive reinforcement.

 12.6  Using Compensation & Other Rewards to Motivate

•   Compensation is only one form of motivator. For incentive compensation plans for work, rewards must be linked to performance and be measurable; they must satisfy individual needs; they must be agreed on by manager and employee; and they must be perceived as being equitable, believable, and achievable by employees.

•    Popular incentive compensation plans are the following. (1) Pay for performance bases pay on one’s results. One kind is payment according to piece rate, in which employees are paid according to how much output they produce. Another is the sales commission, in which sales representatives are paid a percentage of the earnings the company made from their sales. (2) Bonuses are cash awards given to employees who achieve specific performance objectives. (3) Profit sharing is the distribution to employees of a percentage of the company’s profits. (4) Gainsharing is the distribution of savings or “gains” to groups of employees who reduced costs and increased measurable productivity. (5) Stock options allow certain employees to buy stock at a future date for a discounted price. (6) Pay for knowledge ties employee pay to the number of job-relevant skills or academic degrees they earn.

•    There are also nonmonetary ways of compensating employees. Some employees will leave because they feel the need for work–life balance, the need to expand their skills, and the need to matter. To retain such employees, nonmonetary incentives have been introduced, such as the flexible workplace.

•    Other incentives that keep employees from leaving are thoughtfulness by employees’ managers, work–life benefits such as day care, attractive surroundings, skill-building and educational opportunities, and work sabbaticals.

Understanding the Chapter: What Do I Know?

1.  What is motivation, and how does it work?

2.  What are the two principal types of rewards?

3.  What are the four major perspectives on motivation?

4.  Briefly describe the four content perspectives discussed in this chapter: hierarchy of needs theory, acquired needs theory, self-determination theory, and two-factor theory.

5.  What are the principal elements of the three process perspectives: equity theory, expectancy theory, and goal-setting theory?

6.  What is the definition of job design, and what are two techniques of job design?

7.  Describe the five job attributes of the job characteristics model?

8.  What are the four types of reinforcement?

9.  What are six incentive compensation plans?

10.  Discuss some nonmonetary ways of motivating employees?

Management in Action

Caterpillar Puts Employee Pay at Risk, but Is It Done Fairly?

Caterpillar has put workers on notice that its short-term incentive plan, the centerpiece of a performance-based, profit-sharing program, will make its smallest payout since the recession when the payments go out next March [2014].

Like a lot of companies, the world’s largest maker of mining and construction equipment has adopted what is known as a “pay-at-risk” compensation system, which ties a percentage of nearly every nonunion employee’s income to Caterpillar’s financial performance.

In updates to the plan’s roughly 60,000 participants, and in quarterly disclosures to investors, CaterpillarPage 407 said it expects outlays related to the program to be down as much as 40% from last year, reflecting sharply reduced payments to employees.

As U.S. workers pause this weekend to mark Labor Day, more of them than ever before are being required to participate in these alternative pay systems. The plans enable companies to have their labor costs more closely track the ups and downs of business cycles—but they also expose employees to those fluctuations.

Advocates of the plans say they allow employees to participate in the prosperity of their employers. Caterpillar, for instance, has issued checks worth nearly $2.8 billion over the last three years.

But critics say the plans are also part of a broader transfer of risk from employer to employee that has in recent decades led to the demise of company-paid traditional pension plans and the rise of self-funded, self-directed 401(k)s.

“Variable pay is not just for executives anymore,” said Ken Abosch, a compensation expert at Aon Hewitt. “There’s been a very strong but consistent trend to push variable pay programs deeper into organizations, and it’s become a mainstream pay-for-performance practice.”

The “pay-at-risk” plan at Caterpillar, like similar incentive programs at thousands of other U.S. companies, accounts for between 8% and 64% of an employee’s annual compensation, depending upon pay grade.

Yet the payouts can roller coaster in ways that seem unrelated to the company’s actual performance, and create uncertainty around what employees actually get paid for the work they do.

In March 2012, shortly after Caterpillar closed out what was at the time the most profitable year since its founding, it distributed a record $1.2 billion to the roughly 50% of its 120,000 global workers who participate in the plan.

The next year, the Peoria, Illinois, company did even better, with sales up 10% and earnings-per-share up 15%. But the payout to employees plunged 31%. The reason: The results, while impressive and an all-time record, fell short of internal targets set by management.

Doug Oberhelman, Caterpillar’s chairman and chief executive, was not exempted. His short-term incentive pay dropped 34% last year, according to securities filings. But unlike many rank-and-file employees, Oberhelman also participates in a medium-term incentive plan, which pays out cash each year based on three-year performance measures, providing a cushion from annual fluctuations.

As a result, Oberhelman’s total cash incentive pay rose 2% last year, and his overall compensation jumped 32%, according to SEC filings.

Caterpillar spokesman Jim Dugan said in a statement that the anticipated reduction in short-term incentive pay for 2013 would “impact Doug Oberhelman’s compensation significantly in total cash terms.” Dugan added that “the value of other compensation components will also significantly impact his total compensation” but declined to be more specific.

Caterpillar will not break any profit records in 2013. Cancellations from mining customers have weighed on sales and profits, and the company has been forced to cut its forecast for full-year earnings twice, and to plan major cost cuts.

Still, Caterpillar is on track to report its third-highest profit in history. If the company’s current projections hold up, when this year ends, Caterpillar’s earnings per share will have fallen 12% over a two-year period. But payouts under its short-term incentive plan will have plunged 60%.

In Peoria, home to 6,000 of the workers covered by the plan, City Treasurer Patrick Nichting said that in good years, it is easy to see ripple effects of the Caterpillar payouts on the local economy.

“If we just look at home rule sales tax, from 2009 to 2012, comparing it year over year and month over month, there always seems to be a spike in March,” Nichting said.

This year, though, retailers noticed a dip after Caterpillar began to warn employees that payments for 2013 could drop. Some local business people say they noticed an almost immediate drop in sales activity.

FOR DISCUSSION

1.  To what extent is Caterpillar’s compensation plan consistent with recommendations derived from need theories? Discuss.

2.  To what extent is Caterpillar’s pay plan consistent with equity theory? Explain.

3.  To what extent is Caterpillar’s pay plan consistent with expectancy theory? Explain.

4.  What are the key lessons learned from this case? Discuss.

Source: Excerpted from James B. Kelleher, “Caterpillar Plan Illustrates Risk of Variable Pay Plans,” Reuters, September 1, 2013,  www.reuters.com/article/2013/09/01/us-usa-workers-pay-analysis  (accessed August 15, 2014).

Page 408Legal/Ethical Challenge

Should College Athletes Be Paid to Perform?

As of today, college athletes are not allowed to be paid for playing a sport according to rules established by the National Collegiate Athletic Association (NCAA). The NCAA describes it mission as “a membership-driven organization dedicated to safeguarding the well-being of student-athletes and equipping them with the skills to succeed on the playing field, in the classroom and throughout life.”103 The NCAA believes that athletes should not receive any direct compensation because they receive benefits such as athletic scholarships, medical care, academic support services, and first-class training.

Others think that the NCAA is unfairly benefiting on the talent of college athletes. Consider the revenue generated only from the Bowl Championship Series (BCS) to determine a national champion in college football. According to Bloomberg Businessweek, the BCS generated $170 million in 2013. Revenue from college football is expected to grow in 2014 under a new system called the College Football Playoff.

Here is what Bloomberg Businessweek had to say about the new playoff system. “The new system will be better in almost every conceivable way. Regular-season games will matter more. In addition to the title game, we’ll be given two high stakes semifinals. The national champion will truly be the national champion. And let’s not forget about the money. More games mean more revenue—a lot more revenue—for the school and the NCAA.” It is estimated that the playoff series will generate $480 million a year.104

The NCAA has also refused to pay college athletes for the use of their likeness in licensing agreements. This led to a lawsuit in 2009 by Ed O’Bannon, a former University of California at Los Angeles basketball player. His image was used in video games, yet he received nothing from the profits. He filed an antitrust suit against the NCAA, and a federal judge ruled in his favor in August 2014. The judge concluded that basketball and football players can earn “a limited share of the revenues generated from the use of their names, images, and likeness in addition to a full grant-in-aid.”105 The ruling says nothing about paying athletes separately for their performance in a chosen sport.

SOLVING THE CHALLENGE

Is it fair to not pay college athletes direct compensation for playing a sport?

1.  Yes. I agree with the NCAA. Athletes receive plenty of benefits such as scholarships, medical coverage, and world class training.

2.  No. The athletes risk personal injury and they spend lots of time practicing instead of studying, which can impact their nonathletic marketability upon graduation. Athletes deserve to be paid.

3.  No, but doing so would create havoc with college sports. It would mean that players in every sport would need to be paid. This would likely lead to the cancellation of low revenue sports like volleyball, swimming, golf, and gymnastics. I would pay athletes for the use of their likenesses in games and marketing, but no direct compensation for playing the sport.

4.  Invent another option.