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Reading 3.1_ Ethics and Corporate Social Responsibility.pdf

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Ethics and Corporate Social Responsibility

2.1 Learning Objectives After finishing this chapter, you will:

Understand what a stakeholder is and how di�erent groups are a�ected by decisions made within an

organization.

Recognize what constitutes an ethical dilemma and how values conflict to create dilemmas.

Understand how people and organizations develop ethical reasoning and how it a�ects their decision-

making processes.

Understand di�erent approaches to handling ethical situations.

Learn how to promote ethics in organizational settings.

2.2 What is Ethics? In the beginning, there was a definition...

In reality, there are several definitions for ethics , but this one does well on several levels—the branch of

philosophy dealing with values relating to human conduct, with respect to the rightness and wrongness of

certain actions and to the goodness and badness of the motives and ends of such actions.1  

Figure 2.1. We need to make sure we are being fair and ethical in our actions both as individuals and organizations. [1]

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Business ethics is seen a little differently. When we put this into a

business context, it becomes the study of proper business policies and

practices regarding potentially controversial issues.2 

So why do we have different definitions for these two terms? The

difference is in how we perceive these issues. When we discuss

individuals, we focus on the goodness and badness attached to a

situation because we expect certain behaviors from human beings. When

discussing businesses in regards to ethics, it becomes more difficult to put things into terms of good or bad. It

instead becomes a question of what is proper, or even legal. Should it be that way, though?

Questions such as the one above are not meant to have absolute answers.

This is the difficulty in trying to get a grasp on something as individualized

and philosophical as ethics. The reason why ethics is such an individual

issue is that every person and every organization has different values.

 Values are important and lasting beliefs or ideals shared by the members

of a culture about what is good or bad and desirable or undesirable. 

Every person has values that they feel more strongly about, and are therefore more willing to stand up for. 

Behavioral Ethics As managers, we are will be asked to make decisions based on our values (and therefore, our ethics). This idea

of making decisions brings behavioral ethics to the forefront - why people make the ethical (and unethical)

decisions that they do.11  

Figure 2.2. Ethics can play an important role in a business context. [2]

Figure 2.3. Which values are you willing to stand up for? [3]

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Behavioral ethics allows us to gain insights into how people can improve their individual ethical decision-making capacities and promote ethical culture in organizations.11

2.3 Ethical Dilemmas and Values What exactly are values? The basic gist of values is that they are the beliefs

we hold about whether something is desirable or not. The issue with this

is that each individual will find certain things more desirable than others.

For instance, you may prefer domestic autos to foreign, or pepperoni on a

pizza over anchovies. These differences are shaped by our attitudes , or

a predisposition to respond positively or negatively toward something. As

you grow up, your attitudes and behaviors are shaped by everything

surrounding you—family, friends, schools, your environment, and a

number of other players. We learn to value certain ideals more so than

others.  

Ethical dilemmas  occur when a situation arises in which two or more potentially "right" values are in

conflict. Each person or organization will hold certain values higher than another, and therefore be more likely

to choose to uphold those values over others. Let's look at a basic example of an ethical dilemma:

You have a job as an IT representative for a company that also employs your best friend’s husband.

One day, he sends you a note requesting an email to be released from holding. To do this, you must

open the email. Upon opening this message, you discover that it’s actually a message between this

Figure 2.4. Our friends have the ability to greatly influence our attitudes and

behaviours. [4]

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guy and his secret lover. A�er releasing the email, you start to question how you should handle the

situation. Your instinct is to tell your best friend about her husband’s a�air, but you could be

terminated since divulging the contents of company emails is against company policy. There is no

getting around that the information would have come from the email; all trails will inevitably lead to

you as the leak. 3

Question 2.04

Which door do you choose to walk through? Do you tell her about the indiscretion?

A Yes; your loyalty to your best friend eclipses any company policy.

B No; it sucks that your best friend has a cheating husband, but you can’t risk losing your job.

Show Responses

For those of you who chose to tell your best friend, you likely hold loyalty and friendship at a higher value than

respecting company policy or rule-following. For those of you who chose not to tell, you likely hold gainful

employment and personal security at a higher value. The point is that when it comes to ethical dilemmas,

there isn't technically a "wrong" answer. One of the biggest issues with explaining and understanding ethical

dilemmas is that most people think there has to be something illegal or inherently wrong occurring. That is

what makes it a dilemma, that both answers could be equally justifiable as being "right" based on the decision

maker's value system.  

2.4 Stakeholders As mentioned earlier, each person or organization is going to have their own idea of which values are more

important to them. Thus, any decision is going to affect some person or group and potentially cause a conflict

or issue. 

Let's get into some of the different people and groups that are affected by an organization's activities. These

people and groups are called stakeholders, and there are several different types. The most basic of these types are internal and external. However, stakeholders can come from a number of different areas depending

on what your organization does and the decisions being made. Let's take a closer look at some of these

stakeholders:

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Internal Stakeholders

Stockholders: Expect to maximize their return on investment Managers: Expect a good return or reward by investing their human capital to improve a company’s performance

Employees: Expect to receive rewards consistent with their performance

External Stakeholders

Suppliers and Distributors: Expect to be paid fairly and promptly for their inputs (suppliers) and receive quality products at agreed-upon prices (distributors)

Customers: Expect to receive the purchased good and/or service; o�en considered the most important stakeholder

Community, Society, and Nation: Expect the company to contribute to the economy of the town or region through salaries, wages, and taxes

2.4.1 Learning Ethics

So are we born knowing how to make these decisions? Of course not. There are several theorists out there that

have studied and theorized the different ways we learn and develop our ethical thresholds over time. Probably

the most well-known of these theorists is Lawrence Kohlberg. Here's a short video explaining some of

Kohlberg's theory of moral development:4

Types of Company Stakeholders

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An important part of this theory is understanding that people need to experience life and take part in ethical

situations to be able to process at higher levels. How a person responds to, and justifies, different dilemmas

would signify that he or she is capable of reasoning at a certain level.  

For example, in the dilemma from above, how you justified your answer to the question would give a

theoretical bearing of your capacity of reasoning. If you chose to tell your friend about her husband cheating

because your friend would expect it, you may be at stage 3—concerned with relationships and interpersonal

expectations. If you chose not to tell because corporate policy prohibits divulging the information, you may be

at stage 4—concerned with adherence to laws and the social system of the institution.

More important than the level at which someone may be reasoning is that we continue to develop and learn

through our experiences. It is our experiences that lead us to how we feel about a given situation or dilemma. It

is often our feelings that dictate what justifications we make about how we handle certain situations. This

brings us to a different theory of moral development—social intuition:5

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In contrast to older theories like Kohlberg's, Jonathan Haidt's theory of social intuition provides a newer way of

thinking about how we approach these dilemmas based on our intuition or gut feelings. A constant of many

theories is that we spend time analyzing and evaluating what would happen, when in many cases, Haidt (2001)

argues that we actually have an instantaneous, emotional reaction about a morally charged situation. While

ethics are based on individual values, morals are based on societal principles. So as you experience things

throughout our lives, you are shaped, or developed, to think certain events are right or wrong based on the

society you have experienced. According to Haidt, the moral reasoning aspect of the dilemma is actually not so

much the person developing and changing as much as it is looking at how society might see the dilemma.

Again, let's look back at our dilemma from above. Per social intuition, if you are from a society that is not

accepting of marital infidelities, your gut and emotions may immediately call the cheating husband a

slimeball, and you would thus make a judgment that your friend should know what is going on. However, if

you are from a society where monogamy isn't the norm, you would make the judgment that you keep your

mouth shut about the affair. It is the social context of our experiences that shape our immediate intuitive

responses.

2.4.2 What Makes Something an Ethical Issue?

Not everything is going to be an ethical death match that will leave you struggling with your identity. We also

need to understand when ethical issues are actually present. Philosopher Ray Billington (2003) put a few

caveats on what we should see as an ethical or moral issue. The following six characteristics come in to play

when discussing ethical issues:6

Dealing with questions of ethics and morals is unavoidable. There is not a human being that has had a career and not been confronted by some moral or ethical

question to answer. It is in our nature to question others and di�er in what we value.

Figure 2.5. Social Intuition Model .

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Ethical decisions involve other people.  There is no such thing as private ethics. Decisions of all kinds are going to a�ect more than one

person.

Not all decisions have ethical implications. Importance is a factor in these situations. If the consequences are not great enough, people will not

be swayed to go against a deeply-held value system.  

There are no final answers to ethical decisions.  There are no “right” and “wrong” answers in ethical dilemmas. When looking at matters that involve

values, you can’t tell someone that theirs are wrong. Each individual or organization holds their own

beliefs about what is most important to them.

A central element of ethics is choice.  An ethical dilemma is just that, a dilemma, because there is a choice that needs to be made. If there

were only one option, the answer wouldn’t be very di�icult to choose.

The aim of ethical and moral reasoning is to try to discover the correct form of behavior for the given situation. 

Don’t take this as there being a “right” answer. No action can be deemed correct or incorrect with any

absolution because of the nature of what is being discussed. However, through discussion and

analysis, certain decisions may be more justifiable than others.   

2.4.3 Approaches for Dealing with Ethical Dilemmas

Just as values and perspectives are individualized, so too are the methods

used for addressing these dilemmas.  

The first approach to dealing with ethical dilemmas is the

consequentialist approach. This approach asks the decision-maker to identify the different alternative actions as well as the consequences

attached to those actions. The best-known consequentialist approach is

Utilitarianism. The utilitarian approach basically states a person should

choose the option that creates the greatest good for the greatest number of people. Taking this approach

requires you to inspect several different options and weigh the benefits and harms those actions could

possibly cause to select the best one for society as a whole.

Figure 2.6. Honest Abe's approach to dealing with ethical dilemmas. [5]

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The next approach to discuss is a deontological approach, based on the belief that society has (or should have) several universal principles and that each of us has a duty to uphold them. So in stark contrast to the

consequentialists, deontology is focused on making sure the individual takes the right action, regardless of the

consequences. So let's suppose you have a time machine and have the chance to go back and kill a young (still

innocent) Adolph Hitler as a child, well before he came into power. Deontology says that you should not go

back and kill him because it is wrong to kill innocent people. It is more important to do the right thing, even if

the consequence produces more harm.  

Another approach to discuss here is called virtue ethics. The virtue approach focuses on the integrity of the decision maker instead of the action or its impending consequences. In a business sense, integrity and

character can be defined by the community of the decision maker. For example, if you are a lawyer or doctor,

your community would define someone as high in character if they uphold the attorney-client or doctor-

patient confidentiality.  

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There are many factors that come in to play when it comes to finding a way to determine which course of

action is the "right" one for a given situation. It is up to the decision-maker to weigh the options and decide

which is the best one for that situation.

2.5 How Do We Go About Promoting Ethics? Learning and promoting ethics is not a quick or easy task. To truly create the correct ethical climate - how an organization handles motives, pressures, and its surrounding environment that may affect its overall culture—

an organization has to involve all levels of management in both formal and informal ways.  

First and foremost, organizations must have a formal, written set of standards to guide employees of how they

should behave, or code of ethics, and proper training of how to follow the code that is in place. The training becomes an imperative because you want to make sure consistency is provided for all new hires and

continuing education that may occur. All employees need to know how they should behave in interactions

with any of the stakeholders we mentioned previously.

Along with the formal code, leadership behavior needs to be monitored and actions made according to the

core values of the organization. Employees will model the behaviors of their supervisors. If a manager is cutting

corners and being underhanded, his employee will see that as being acceptable and will likely follow suit

without fear of repercussion. The more the leaders behave responsibly and according to the culture that is

targeted, the stronger that culture will become. 

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The underlining aspect of each of these is the need to communicate

ethics within an organization. Both formal and informal communication

from all levels is a vital component in the existence of an ethical

organization. People cannot fear discussion of ethical situations. The

more comfortably employees can discuss potentially ethical issues, the

more they will avoid unethical actions. Top-level managers need to make

sure to highlight ethical actions in memos and reports and employees

need to have regular discussions about situations to reinforce the

behaviors a company aspires to have on a daily basis.

2.5.1 Corporate Governance

Even with proper communication and training, there is still a need to make sure the interests of the

organization, it's owners, and other stakeholders are being safeguarded. This concept is called corporate governance, and it is continuously utilized within organizations. Corporations have to go through all sorts of checks and balances to ensure that there is a separation of authority and to save the many from the follies of

the few. 

One such example was the creation of the Sarbanes-Oxley Reform Act of

2002. This act, created by the Securities and Exchange Commission,

created required guidelines for public companies to follow in regards to

financial record keeping. Among other aspects, a company's CEO and CFO

have to personally certify financial reports. Failure to comply could bring

about severe financial penalties, as well as up to a 25-year sentence in

prison for executives found to be falsifying information. This act was

designed to stop companies, like Enron for example, from taking

advantage of the public and exploiting markets through the use of non-

certified financing.7

Figure 2.7. Every company has a code of ethics. However, it is the communication and

leadership that dictates how well it is followed. [6]

Figure 2.8. Companies like Enron and WorldCom have had a lot to do with

advancements in regulations for ethical issues. [7]

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Another aspect of this governance is the encouragement of whistleblowers—employees who disclose information that s/he reasonably believes is evidence of illegality, gross waste or fraud, mismanagement,

abuse of power, general wrongdoing, or a substantial and specific danger to public health and safety. The

trailblazers who have come forward and reported potential wrong-doings have helped to create change

among organizations and are justly protected from retribution by the companies for coming forward and

exposing illegal activity. Acts such as Sarbanes-Oxley and the Whistleblower Protection Enhancement Act

(WPEA) have established guidelines for how whistleblowers can come forward without fear of retaliation. In

fact, the False Claims Act has even set up rewards for whistleblowers that provide information to help the

government recover funds from fraudulent companies.

Some companies have thrived by making corporate governance an everyday component of their decision-

making process. One of these companies is AT&T, who has been named several times as one of the top

companies in the U.S. for corporate governance by Corporate Responsibility Magazine. Among the things AT&T

does to keep governance on the forefront is publishing different material assessment briefs on their website

and for their employees to see how they should act in given situations.

 

2.6 Corporate Social Responsibility

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The concept of Corporate Social Responsibility (CSR) has become increasingly popular in the entire

business community all over the world. CSR strategies can provide benefits to all interest groups and

individuals in any area in which a firm operates, which management scholar R. Edward Freeman calls

stakeholders.

Most corporate leaders and business advisors agree that engaging in socially responsible behavior is the

correct thing for businesses to do and that if you don’t listen to the needs of multiple stakeholders it could

impact your business in the short to long term:

Figure 2.9. Warren Bu�et, chairman and CEO of BerkshireHathaway (1970 – Present) . [8]

Figure 2.10. "Corporate social responsibility is a hard-edged business decision. Not because it is a nice thing to do or because people are forcing us to do it... because it is good for our business" - Niall Fitzgerald, former CEO of Unilever (1996 – 2004) . [9]

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2.6.1 Evolution of CSR

The social responsibility of a business has evolved from a focus on the well-being of employees to make them

more productive during the Industrial Revolution and to the emphasis and growth of business philanthropy by

Cornelius Vanderbilt and John D. Rockefeller in the 1800s.

CSR originated as a business management concept in the early 1930s after the Wall Street crash of 1929

exposed corporate irresponsibility in large organizations. It began to take form in the 1950s with the

publication of Howard R. Bowen’s book Social Responsibilities of the Businessman in 1953. Since then, the

focus of CSR on a few stakeholders has expanded to be more inclusive and global in scope.

During the past two decades, CSR has moved towards full integration with the strategy and governance of the

corporation. CSR provides a business the opportunity to respond quickly to the emerging needs of the

stakeholders, whether they are social, economic or environmental.  

Figure 2.11. "It takes 20 years to build a reputation and five minutes to ruin it." "It is not good enough to do what the law says. We need to be in the forefront of these [social responsibility] issues." - Anders Dahlvig, former CEO of IKEA (1999 – 2009) . [10]

Figure 2.12. A conceptual timeline of the evolution of CSR .

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2.6.2 Milton Friedman vs Archie Carroll

Milton Friedman, who won the Nobel Prize in Economics, made one of the most famous arguments regarding

the social responsibility of corporations. Friedman’s seminal article against the merits of CSR, The Social

Responsibility of Business is to Increase Its Profits, was published in a 1970 edition of New York Times

Magazine. Friedman’s thoughts on the subject were that corporate executives should not be concerned with

“socialist” beliefs such as social responsibility, but instead on increasing profits.10

Friedman’s article caused a stir among the growing CSR movement.

Several management scholars argued about the importance of moving

beyond the economic responsibility of a business and they should

include areas relevant to interest groups besides the profit maximization

for stockholders. These other responsibilities are described in Archie

Carroll’s Pyramid of CSR which include the Economic, Legal, Ethical and

Philanthropic Responsibilities.

2.6.3 Stakeholders and CSR

The concept of CSR is derived from stakeholder theory, which requires the organization to consider their

internal and external stakeholders. CSR requires organizations to take care of all stakeholders that are in some

way connected to them. The CSR practices require organizations to act in a broader perspective and view the

society as a whole.

CSR also enables organizations to enhance their corporate reputation through the building of relationships

with the various stakeholders, including society and interest groups. It also makes certain that the organization

is not perceived as an outcast in terms of social development and environmental care. 

Michael Porter and Mark Kramer proposed in 2006 that CSR should be

linked to core business objectives that are leveraged for increased

economic and social values. They encouraged corporations to analyze

their opportunities for social responsibility using the same frameworks

that guide their core business choices.

Corporations such as Whole Foods Market, Toyota, and Volvo discovered

that CSR and sustainability can be a compelling source of innovation and

competitive advantage instead of cost, a limitation, or philanthropy.

Figure 2.13. Carroll's CSR Pyramid gives a visual understanding of the foundations for

socially responsible organizations.

Figure 2.14. Stakeholders are a central element of CSR practices.

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2.6.4 Benefits of Corporate Social Responsibility

Community Engagement

A company committed to CSR supports initiatives that benefit the communities in which they operate.

Companies engage in philanthropic ventures or employees volunteer for community-building non-profits.

Overall, a commitment to CSR helps the community surrounding the corporation, and could also have a larger

impact on the world, particularly if multiple companies commit to it.

The Body Shop was one of the first companies to publish a full report on their CSR initiatives. Anita Roddick,

founder the Body Shop (1976), was committed to protecting the environment, as well as protecting the rights

of both humans and animals. Roddick even created an organization charity called The Roddick foundation,

which helps fund those who can affect social change on a measurable scale. In 1987, The Body Shop launched

a community trade program fair trade program, that emphasized their commitment to trading fairly with

suppliers in exchange for offering good trading practices.

Brand Differentiation

Brand differentiation was one of the primary reasons companies got behind the CSR movement. During the

past 20 years, CSR has become a norm and it has become harder for large corporations to use to differentiate a

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brand.

Coke and Pepsi, who have been engaged in the "Cola Wars" for decades, are constantly looking to grab as

much market share as they can from each other. Both companies are adopting similar approaches to CSR

regarding zero net water usage and offer sustainable packaging for their water bottles.

Cost Savings

Companies can save money and make your business more efficient by engaging in sustainability practice that

can reduce waste or optimize energy savings.

In 2012 Nike announce the long-expected achievement of the Nike Flyknit Technology. After 10 years of

research, Nike was able to develop a technology to improve performance while minimizing waste. In only four

years, Nike Flyknit technology reduced nearly 3.5 million pounds of waste.

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Employee Engagement

Studies show that increasing numbers in the workforce want to be part of a company that impacts the world

around them. CSR plays an important role in enhancing the company reputation among its employees and

subsequently boosts their motivation and engagement.

In 2017 Timberland celebrated the 25 anniversary of the Path of Service Volunteer program, which was created

to give employees paid time to serve their communities and encourage them to become proactive agents of

service in and out of the office.

Customer Engagement

Using CSR can help companies to engage with customers in different ways that could return in customer

loyalty. With the increasing concerns over the growing environmental and societal issues, modern consumers

are realizing the importance of responsible consumption and they are ready to engage with socially

responsible businesses. 

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Ben and Jerry’s has spent 40 years making “the best possible ice cream in the nicest way possible”. Ben Cohen

and Jerry Greenfield named an important part of the mission “linked prosperity”—the idea that everyone and

everything the company touches should benefit from its profits. Their involvement in social activism was

meant to attack the roots of the social problems and their customers become loyal not only because of the

quality of their products but also because of their commitment to solving social and environmental issues in

meaningful ways.

2.7 References 1.  Dictionary.com (2018). Ethics. Retrieved May 7, 2018, from http://www.dictionary.com/browse/ethics

2. Investopedia Staff. (2018, April 23). Business Ethics. Retrieved May 7, 2018, from

http://www.investopedia.com/terms/b/business-ethics.asp?

ad=dirN&qo=investopediaSiteSearch&qsrc=0&o=40186

3. Pixi. (2014, January 07). 25 Moral Dilemmas. Retrieved May 7, 2018, from

http://psychopixi.com/uncategorized/25-moral-dilemmas/

4. Kohlberg, Lawrence (1973). "The Claim to Moral Adequacy of a Highest Stage of Moral Judgment". Journal of

Philosophy. The Journal of Philosophy, Vol. 70, No. 18: 630–646.

5. Haidt, J. (2001). The emotional dog and its rational tail: a social intuitionist approach to moral

judgment. Psychological review, 108(4), 814.

6. Billington, R. (2003). Living Philosophy: An introduction to moral thought. Routledge.

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7. U.S. Securities and Exchange Commission. (2013, October 01). The Laws That Govern the Securities Industry.

Retrieved May 7, 2018, from https://www.sec.gov/answers/about-lawsshtml.html#sox2002

8. Government Accountability Project. (n.d.). What is a Whistleblower? Retrieved May 7, 2018, from

https://www.whistleblower.org/what-whistleblower

9. Financial Times. (n.d.). Definition of corporate social responsibility (CSR). Retrieved May 7, 2018, from

http://lexicon.ft.com/Term?term=corporate-social-responsibility--(CSR)

10. Friedman, Milton. “The Social Responsibility of Business Is to Increase Its Profits.” New York Times Magazine,

13 Sept. 1970.

11. Ethics Unwrapped - McCombs School of Business – The University of Texas at Austin,  from

https://ethicsunwrapped.utexas.edu/subject-area/behavioral-ethics

2.8 Image Credits [1] Image courtesy of AJEL under CC0 1.0.

[2] Image courtesy of Kiwiev under CC0 1.0.

[3] Image created by Ryan Greenbaum via Wordart.com

[4] Image courtesy of Pepe Pont under CC BY-ND 2.0.

[5] Image courtesy of Mar11 in the Public Domain.

[6] Image courtesy of the Federal Bureau of Investigation under CC0 1.0.

[7] Image courtesy of Ken Teegardin under CC BY-SA 2.0.

[8] Image courtesy of Democracy Chronicles under CC BY 2.0.

[9] Image courtesy of Unilever in the Public Domain.

[10] Image courtesy of Masrur Odinaev under CC BY 2.0.

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Reading 3.2_ Organizational Behavior and Individual Differences.pdf

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Organizational Behavior and Individual Di�erences

5.1 Learning Objectives & Introduction After finishing this chapter, you will:

Learn what organizational behavior is and how di�erent factors a�ect the overall workplace.

Understand how your individual personality can make a di�erence in how comfortable you are in your

career.

Understand how values and attitudes held by employees can a�ect decision-making and processes in an

organization.

Learn how positive and negative views of the organization can a�ect productivity.

Understand di�erent barriers to perception and what keeps employees and managers from having an

open mind in regard to the workplace.

John is a terrible coworker. He is disorganized, unfriendly, and generally hard to work with, but he puts up

great sales numbers. You very well may know someone like John, or know John personally, but the question

is, why does John act this way?

Figure 5.1. In service-based industries, like automobile repair, employees are a crucial part of a company's success. The individual di�erences of the employees, and how well they work together, can a�ect how satisfied a customer with the job. [1]

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Organizational Behavior (OB) is the study of individual and group

behavior in organizational settings. Any time we inspect individuals and

their reasoning, we have to dive into the shallow end of psychology. The

first of two approaches to evaluating John’s behavior in the workplace is

done by looking at internal reasons. This perspective would explain that

John’s behavior and attitude are due to factors inside John himself

(personality, self-esteem, etc.). We refer to these factors as the

dispositional factors. The second perspective instead focuses on things

around John, such as his coworkers, boss, or environment. We think of these external factors as the situational

factors. While these two approaches seem contradictory, we have to examine dispositional factors (the internal

person) in context (the external environment) to understand why John is the way he is in the workplace. If we

just look at one part, the equation doesn’t add up correctly.

As we go through this chapter, we will investigate how these different factors play off of each other and help us

to understand why all of us behave the way we do within our organizations.

5.2 Personality Personality is the set of stable characteristics that influence a person’s behavior. Personality has been found

to have both hereditary and environmental influences, and some studies have found that our personalities are

established as early as 1st grade and continue to be stable throughout our lives.1 Organizations will often

attempt to assess personality for use in hiring and promotion decisions, and in employee development

activities, so it is important for us to understand both how to define personality and how it is measured. The

two most common approaches used by companies in the United States today are the Big 5 model and the

MBTI. While they are different in their conceptualization and use, both offer insight into how we define

personality. We will discuss both of these methods as well as some more contemporary findings regarding

personality in the workplace.

The Big 5 model of personality begins with the premise that we can divide our personality into five different

dimensions.2 This doesn’t mean that there are five different personality “types,” but that all of us have five

different aspects to our personalities and that each of us have these aspects in unique combinations. These

personality dimensions are openness to experience, conscientiousness, extraversion, agreeableness, and

neuroticism, which is sometimes referred to as emotional stability. All of these factors are related to behaviors

in the workplace and many employers assess these personality traits prior to making hiring decisions. You can

use the acronym OCEAN to help you remember!

Figure 5.2. Individual di�erences play a huge part in how well an organization functions. [2]

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The Myers-Briggs Type Index (MBTI) is another approach to assessing personality. The MBTI is based on the work of C.G. Jung and attempts to evaluate personality based on people’s preferences regarding their

perception and judgement.3 Using this method, we examine four important aspects of personality to identify

people as belonging to one of sixteen different personality types. The aspects used by the MBTI include

favorite world (Extraversion or Introversion), information (Sensing or iNtuition), decisions (Thinking or Feeling),

and structure (Judging or Perceiving). Each person is scored on these four elements to determine their

personality type. For example, you could be an ISFP, which might indicate that you seek both beauty and

practicality in your life. You can see Isabella Briggs Myers and Katharine Briggs's definitions for these factors

and their descriptions of the various personality types on the Myers-Briggs Foundation website. You can find

multiple MBTI instruments online, and even compare yourself to multiple pop culture characters on this

website.

More current research in personality has led to the evaluation of an additional aspect of personality called

egoism. Egoism is associated with being self-centered or interested in self-enrichment.4 Is a person so interested in themselves that they will do what’s in their own best interest even at the expense of others?

Scholars argue that the current evaluation of the Big 5 personality dimensions omits this important aspect,

which can be a predictor of unethical decision making, anti-social behavior, workplace delinquency, and even

psychopathy.

5.3 Self-Evaluation Related to the concept of personality is core self-evaluation . How we view ourselves plays a large part in our

ability to perform in our everyday tasks. Some of the concepts associated with this larger concept of core self-

evaluation are self-esteem, self-efficacy, and locus of control.5

Self-esteem  is a term that you have most likely heard before. Do you like your overall self? Do you see

yourself in a positive or negative light? Individuals that have high self-esteem generally feel that their strengths

outweigh their weaknesses, and have a generally positive overall evaluation of themselves. People with low

self-esteem have a generally low overall evaluation of themselves and tend to be defensive when criticized. 

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The importance of understanding self-esteem is its impact on workplace behavior. Higher self-esteem is

related to trying harder at difficult tasks and overcoming failure. While self-esteem is generally a good thing,

like most everything, too much can be a problem. An overabundance of self-esteem has been linked to

aggression, overconfidence, and other behaviors that might be viewed negatively. Generally, we want to

encourage self-esteem in our employees by providing positive feedback and opportunities for success in the

workplace.

While self-esteem is a more global feeling of self-worth, self-efficacy  is a more specific self-evaluation that is

related to a person’s beliefs regarding performance when it comes to a task. Individuals that have a high level

of self-efficacy believe that if they put effort into their work-related tasks, they will be successful in those tasks.

People that have low self-efficacy may doubt their ability to be successful at these same work-related tasks.

While we can view self-efficacy as being a general characteristic, we can also think about it as being specific to

certain tasks. I may have a high general self-efficacy, but know that I will never be a great bowler. When it

comes to this specific task or activity, I feel that no matter how hard I try, I will never be good. So we can think

about self-efficacy as being both general and task-specific.6

A third related concept is locus of control . Before you read the rest of this section, take this survey to (briefly)

assess your own locus of control.

Locus of control is an internalized belief regarding who or what influences the outcomes in your life. Locus of

control is considered to be either internal or external. Those with an internal locus of control tend to believe

that they are directly responsible for their own outcomes in life and in the workplace. Individuals with an

external locus of control view their outcomes as being shaped by external forces beyond their control, such as

luck, other people, or fate. The implication for managers is that those with an internal locus of control tend to

want to exercise that control in the workplace. 

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In addition to these core self-evaluations, we also want to address the issue of self-monitoring .7 How well

do you feel you are able to adjust how you act based on the situation? People that are considered high self-

monitors pay close attention to their environments and adjust their behavior appropriately. This may include

changing their expressive behaviors, tone of voice, or even emotional displays. Those considered low self-

monitors tend to ignore these external cues and instead operate based on their own internal instincts. From a

manager’s perspective, a high self-monitor may appear to be inconsistent or unpredictable, while the low-self-

monitor may seem to not care about the appropriateness of their behavior in certain circumstances. The

research also indicates that, while high self-monitors tend to do better in the workplace in regards to

promotions, they also tend to experience more role-related conflict.8 Similar to the previous characteristics we

have discussed, you can evaluate your own self-monitoring using this survey.

Much of the current research regarding personality and the related characteristics that we have discussed try

to integrate the disposition of the individual with the importance of the situation. This is essentially

addressing the “nature vs. nurture” argument that has plagued personality research for years. Is personality

stable and consistent, or do people react based on the context of the situation? Well, obviously the answer is

both! It is important to recognize the importance of both the person and situation when we consider how to

understand individual employees. 

5.4 Attitudes When your parents or teachers tell you that you have a “bad attitude” (or maybe that’s just me), how do you

interpret that statement? What is attitude ? When your parents or teachers use the term in this fashion, they

are probably referring to your behavior, or possibly your general disposition. For our discussion of

organizational behavior, neither of these actually represent attitude. Attitude is a learned feeling toward some

specific target (e.g., person, place, situation, etc.) and the favorable or unfavorable response that goes along

with that feeling. For instance, if we mention Donald Trump, many of you automatically have a positive or

negative feeling that comes up. This represents your attitude toward that specific individual.

There are three components of attitude in the workplace we need to understand.9 The first is the affective, or

emotional component of attitude. I hate Nickelback! This statement reflects my (and most everyone else’s)

Figure 5.4. Attitude is as easy as A-B-C!

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feelings regarding a specific target. When we make similar positive or negative statements regarding a person

or thing, we are expressing part of our affective (emotional) attitude toward that person or thing. The

behavioral component expresses our intentions in regard to a target. What are we either going to do or not

going to do based on our attitude? Because I dislike Nickelback, I will not purchase their music. Our attitudes

thus guide our behavior. The final component of attitude is cognitive. This component comes from our beliefs

regarding the target. These beliefs come from an idea of what we believe, and have learned over time, to be

true. Why do I dislike Nickelback? The belief (or fact, in my mind) that all of their songs sound alike, that they

used their music for furniture commercials, or that they fit the stereotypes for many of the other bands of that

period—there are many reasons! These beliefs are the cognitive basis for that attitude.

Attitude-behavior consistency is the idea that if we can understand a person’s attitude, we can use it to predict

their behavior.10 While this may be true in many circumstances, it certainly is not always the case. The strength

of the attitude has much to do with whether or not there is consistency between an attitude and a supporting

behavior. If you love a certain TV show, you may cancel other plans so that you can watch it when it airs.

Someone else may just like the show and, offered another opportunity, might simply record the show to

maybe watch later. The behavior of these two individuals is driven by how much they enjoy the show, not just

the fact that they both enjoy the program. There may also be social factors that influence whether or not we

exhibit attitude-behavior consistency. If you hold an attitude that is socially unacceptable, or frowned upon,

you may not act upon that attitude to avoid the social consequences.

Have you ever had to deal with something that went against your beliefs or values? That uneasy feeling you get

in the back of your mind or in the pit of your stomach when behaviors are not consistent with your attitudes is

called cognitive dissonance . This is a common feeling when dealing with ethical dilemmas, or occasional

work tasks that an authority figure tells you to do.11 Picture a manager (or professor) that you greatly respect.

The manager is known to be very intelligent and is seemingly correct about how something should be done.

One day that manager says, in all seriousness, that they do not believe the world is round. Your cognitive

attitude that the manager is intelligent doesn’t mesh with the action that has just occurred. It leaves you

befuddled and likely wondering what just happened. That is cognitive dissonance.

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Attitudes are learned through direct experience and social observation. We learn many of our attitudes from

our parents and friends. Children may express a preference for certain political candidates, even though they

have never considered their (the politicians’) various positions.12 This could be explained by the fact parents

may reward attitudes that are consistent with their own. Think about your own attitudes and how many of

them are influenced by what you have heard from others rather than depending on direct experience. Peer

pressure and social conformity play a large part in work attitudes. If two of your work friends begin

badmouthing a change that has been made to their workload, it is common that you may begin to feel that

way as well despite never previously having any of those thoughts.

In the workplace, there are two attitudes that deserve special attention—job satisfaction and

organizational commitment . Job satisfaction can be defined in many ways, but for the purposes of this

chapter, we will use a very general description would define this attitude as a general sense of contentment or

fulfillment received from a job. Understanding job satisfaction is important because research has shown that

organizations with satisfied employees have better performance as a whole. Interestingly, the connection

between job satisfaction and individual performance is much more complex. Having happy workers doesn’t

necessarily mean that they are more productive. Much of the problem with the link between satisfaction and

performance is based on the impact of rewards on satisfaction.13 We are also unsure if satisfaction leads to

better productivity, or if more productive employees are happier at work. This will be discussed in more detail

in Chapter 6, which focuses on motivation. Nevertheless, we pay attention to this important work attitude

because it is linked to other important workplace behaviors such as organizational citizenship behavior (OCB),

counterproductive work behaviors (CWB), absenteeism, and turnover. 

Organizational citizenship behaviors are activities that are above and beyond the scope of an employee’s normal tasks, duties, and

responsibilities.14 A highly satisfied employee may be more likely to help

out their coworkers, or stay late to finish an important project. Happy

workers are more likely to “go the extra mile” or put in that extra effort to

help the organization succeed. On the flip side, unhappy workers may be

inclined to engage in counterproductive work behaviors that are harmful to the organization. These behaviors might hurt the company itself, its

clients, or other employees. Dissatisfied workers might be tempted to

steal from the company, engage in sabotage of property, or hurt fellow

employees (physically or psychologically).

Job satisfaction is highly correlated to another important workplace attitude called organizational

commitment. Organizational commitment is described as the degree to which employees identify with their

organization. If employees have high organizational commitment, it is a good indicator that they intend to stay

Figure 5.5. Absenteeism and turnover are signs that workers may not be happy. [4]

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with the organization. Similar to job satisfaction, some research suggests that there are multiple ways to

examine organizational commitment, but for our purposes we will focus on the concept more generally.

Because organizational commitment and job satisfaction have such a strong relationship, a change in one

attitude is likely to correspond to a change in the other attitude. This means that we should think about how

we can influence or change our employees’ work-related attitudes. 

5.5 Emotion We also want to think about the role that emotion plays in the workplace.

While some of you may think that emotion  should play no role in our

work lives, that assumption is simply not consistent with reality. Research

has shown that we simply cannot make decisions in the absence of

emotion and that the process of decision making is driven more by

emotion than rationality.15 We also want to distinguish emotion from

mood , which is comprised of multiple emotions and tends to last for

longer periods of time. Because employees are constantly engaged in

activities to which they might react positively (happiness, joy, excitement)

or negatively (anger, sadness), we want to understand how mood and emotion could influence other

workplace behaviors. It is generally accepted that people who experience more positive emotions do so

consistently and are more productive. Those who experience more negative emotion in the workplace are

more prone to counterproductive work behaviors.

Emotional intelligence (EI)  is the ability to carry out accurate reasoning about emotions and the ability to

use emotions and emotional knowledge to enhance thought.16 We can also think of emotional intelligence as

a person’s ability to read the emotions of others and react accordingly. Emotional intelligence is comprised of

four characteristics: self-awareness, empathy, adaptability, and self-confidence. While we all have this

characteristic to various extents, emotional intelligence is thought to increase with age and experience.

Figure 5.6. We have to be aware of how our emotions can a�ect our behaviors in the

workplace. [5]

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Organizations such as the United States Air Force, Google, and the cosmetics company L’Oreal all use

emotional intelligence for selection and/or training purposes. 

Individuals with higher emotional intelligence tend to maintain their composure in stressful situations and

establish better relationships with their coworkers. Detractors of the emotional intelligence concept would

point to neuroscience research that questions whether or not we can truly “control” our emotions.

5.6 The Importance of Perception People use their senses to inform their awareness. We use sight, sound, touch, smell, and taste (or some

combination) to interpret and understand the world. Perception is a process that helps add meaning to those physical inputs. Social Perception (also called interpersonal perception) is an awareness of those individuals around us. It is a process by which we add meaning and value to the people and situations that we come in

contact with. The concept of social perception is significant because from time to time we will all suffer from

warped or inaccurate perceptions that will lead us to make poor decisions or lead to causal attributions.

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5.7 Learning Another important aspect of OB is learning . You may only think about learning from an academic

perspective. Students gain knowledge (hopefully) from instruction that then changes their views and behavior.

However, instruction is only one piece of the pie.

Albert Bandura proposed a theory of social learning by which people learn best through observation and

modeling.17 Your supervisor may teach several behaviors not through instruction, but by exhibiting the

appropriate behavior in the workplace. It isn’t all about what is happening right in front of you, though.

Advancements in technology have changed the prevailing thought about how we learn, and what we pay

attention to. Social media as a training tool for showing proper behavior has become increasingly popular, and

effective. Critical to this learning process is the self-efficacy concept that we discussed earlier in this chapter.

When people have self-efficacy, it leads to higher performance in many physical and cognitive tasks. If more,

often younger, employees learn better from watching something happen, we need to be prepared to offer it to

them in a way that best suits them.

Goal-orientation will be discussed more in the motivation chapter, but can be an important concept in the

learning process. We should understand that individuals have dispositions toward either performance or

mastery approaches to learning. Those with a performance orientation will focus on achievement and learning

because their supervisor expects a certain level of performance. A mastery orientation is a more internalized

drive to learn based on a desire to become proficient. Those with a mastery orientation will also tend to exert

more effort toward learning, as opposed to those with a performance orientation.

5.8 The Importance of Context In the introduction to this chapter, we mentioned that it is important to consider both the individual and the

context in which we find the individual. We referred to these views as the internal and external perspectives.

Now that you are nearing the end of the chapter, you might be asking, “Where is all of the external perspective

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material?” Or maybe you’re just happy that it’s almost over. The reason that we don’t place any of those things

in this chapter is that the rest of the book is full of that material. Human Resource Management discusses work

design and its impact. The Diversity and Culture chapter examines the role of culture, while the Strategic

Management chapter looks at how structure affects performance. The book is full of examples of how the

external environment impacts performance and the important attitudes that we have discussed.

5.9 References 1. Caspi, A., & Silva, P. A. (1995). Temperamental qualities at age three predict personality traits in young

adulthood: Longitudinal evidence from a birth cohort. Child development, 66(2), 486-498.

2. Goldberg, L. R. (1990). An alternative" description of personality": the big-five factor structure. Journal of

personality and social psychology, 59(6), 1216.

3. Pittenger, D. J. (1993). The utility of the Myers-Briggs type indicator. Review of Educational Research, 63(4),

467-488.

4. de Vries, R. E., de Vries, A., de Hoogh, A. and Feij, J. (2009), More than the Big Five: Egoism and the HEXACO

model of personality. Eur. J. Pers., 23: 635–654. doi:10.1002/per.733

5. Judge, T. A., Erez, A., Bono, J. E., & Thoresen, C. J. (2003). The core self‐evaluations scale: Development of a measure. Personnel psychology, 56(2), 303-331.

6. Judge, T. A., & Bono, J. E. (2001). Relationship of core self-evaluations traits—self-esteem, generalized self-

efficacy, locus of control, and emotional stability—with job satisfaction and job performance: A meta-

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analysis. Journal of applied Psychology, 86(1), 80.

7. Snyder, M. (1974). Self-monitoring of expressive behavior. Journal of personality and social psychology, 30(4),

526.

8. Mehra, A., & Schenkel, M. T. (2008). The Price Chameleons Pay: Self‐monitoring, Boundary Spanning and Role Conflict in the Workplace. British Journal of Management, 19(2), 138-144.

9. Breckler, S. J. (1984). Empirical validation of affect, behavior, and cognition as distinct components of

attitude. Journal of personality and social psychology, 47(6), 1191.

10. Ajzen, I., & Fishbein, M. (1977). Attitude-behavior relations: A theoretical analysis and review of empirical

research. Psychological bulletin, 84(5), 888.

11. Festinger, L. (1962). A theory of cognitive dissonance (Vol. 2). Stanford university press.

12. Tedin, K. L. (1974). The influence of parents on the political attitudes of adolescents. American Political

Science Review, 68(4), 1579-1592.

13. Porter, L. W., Steers, R. M., Mowday, R. T., & Boulian, P. V. (1974). Organizational commitment, job

satisfaction, and turnover among psychiatric technicians. Journal of applied psychology, 59(5), 603.

14. Bies, R. J. (1989). Organizational citizenship behavior: The good soldier syndrome.

15. Camp, Jim. "Decisions Are Emotional, Not Logical: The Neuroscience behind Decision Making." Big Think.

N.p., 11 June 2012. Web. 07 Aug. 2017.

16. Human Abilities: Emotional Intelligence. John D. Mayer, Richard D. Roberts, Sigal G. Barsade. Annual

Review of Psychology 2008 59:1, 507-536 

17. Bandura, A. (1986). Social foundations of thought and action: A social cognitive theory. Englewood Cliffs, NJ,

US: Prentice-Hall, Inc.

5.10 Answer to Discussion Questions Answer to Question 5.14

What types of individuals would be successful at Amazon? 

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Exported for Ashwini Gurwale on Mon, 16 Nov 2020 20:03:53 GMT

Based on personality: individuals that are low on agreeableness due to the confrontational nature of the

culture, high on conscientiousness due to the need to be self-directed and detail oriented, and high on

openness to experience due to the need to engage with unique opportunities and engage in innovative

projects. 

The article discusses the fact that employees will o�en sabotage each other. Employees that are high on

egoism would fit this profile. 

Employees at Amazon would need positive core self-evaluations and high self-esteem to overcome the

consistent negative feedback and persist through work challenges, as well as have high self-e�icacy for

the tasks related to their positions. 

Amazon would also favor employees with an external locus of control, related to the need to work

independently with little to no oversight. 

The anecdotes from the article also infer that self-monitoring is not important for Amazon employees. 

How would the culture affect the workplace attitudes?

Long hours and a “bruising” workplace would generally lower job satisfaction and organizational

commitment which would decrease the organizational citizenship behaviors and potentially increase the

counterproductive work behaviors.

Click here to return to Question 5.14.

5.11 Image Credits [1] Image courtesy of Gary Prill in the Public Domain.

[2] Image courtesy of geralt under CC0 1.0.

[3] Image courtesy of claudioscott under CC0 1.0.

[4] Image courtesy of Annie Spratt under CC0 1.0.

[5] Image courtesy of ThoroughlyReviewed under CC BY 2.0.

Reading 3.3_ Motivation in the Workplace.pdf

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Motivation in the Workplace

6.1 Learning Objectives & Introduction After finishing this chapter, you will:

Understand the motivation process and how it a�ects our actions.

Learn the di�erent perspectives of motivation and understand the di�erence between needs

perspectives, process theories, and job-design theories.

Gain a better understanding of how di�erent individual perspectives will enhance and hinder motivation

in organizations.

Understand how di�erent changes in the job or tasks can greatly a�ect how engaged an employee is in

their positions.

Understand how di�erent incentive and non-incentive plans work in organizations and what may be

more beneficial to the individual employees.

Why do people do the things they do? We are asking this question rhetorically because we don’t actually

expect you to provide some deeply metaphysical explanation. However, this is the basic question behind

motivation. Some psychologists may simply define motivation as the degree to which an individual cares

about a task, or desires a specific outcome, but for our purposes, we want to examine motivation as a process

Figure 6.1. What factors drive people to give their best e�ort or to push through a di�icult task? [1]

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and discuss what we, as managers, can do to impact the motivation of our employees. We define

motivation  as the process that directs our behavior toward certain goals. 

Using this basic model of motivation, we can see that individuals identify an unmet need or desire in their lives.

For some, this may be wanting a better job or more money. This recognition that you don’t make enough

money or are qualified for a better job creates a psychological tension that results in one of two outcomes.

First, it results in motivation to pursue the job or money, or you decide that you are actually fine with your

current job or income. When that tension results in motivation, you are then directed towards certain actions

or behaviors that are likely to help you reach that goal (better job/more money). The final aspect of the model

is to get feedback and evaluate whether or not our actions led to the goal that originally motivated us. Was the

need met or not? Then the cycle continues. If it was met, we begin fulfilling another desire. If not, we find a

different way to go about filling that desire.

This view of motivation is drastically oversimplified, though, and there are multiple individual and contextual

factors that must be considered. Motivation can vary based on individuals’ personalities and attitudes, the

organization's values, the physical environment, and the rewards that are offered. We can think about

performance as being a function of motivation, ability, and environment. Often, this relationship is represented

as [performance = motivation x ability x environment].   These factors are not additive but multiplicative, and

this is important. This means that if either ability or motivation or environment is equal to zero, then

performance will equal zero. When you think about it, it makes sense that if someone is unmotivated, or if they

don’t have any ability, or if they aren't ever placed in the proper environment (ex: given an opportunity), then

they won’t perform. Additionally, we must consider the nature of the reward or outcome that is desired.  

Figure 6.2. Basic Model of Motivation.

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Generally, we can identify these rewards and outcomes as being either

extrinsic or intrinsic. An extrinsic reward  is something that is external to

the individual, such as money or any other reward we might receive from

others. An intrinsic reward  is based on a feeling of satisfaction or

accomplishment.1 For example, I am motivated to learn the guitar

because playing for my children makes me feel good, rather than getting

paid for my performances (people might actually pay me to not play in

public).

6.2 Theories of Motivation Motivation is important in the workplace because it drives behavior. From a management perspective, we

want to influence motivation because of its impact on such behaviors as performance, retention, engagement,

and organizational citizenship. To advance our ability to influence motivation, we should examine some

existing motivation theories and discuss how they might influence behavior in a work environment. These

theories are generally divided into four categories: (1)Need and Content theories, (2)Process theories, (3)Job

Design, and (4)Reinforcement theories. In addition to these four groups, we will also briefly discuss some

relatively new ideas in the area of workplace motivation.

6.2.1 Needs Theories

Maslow’s Hierarchy of Needs

We begin with the content theories, which are also referred to as need-based theories, the most famous of

which is Maslow’s hierarchy of needs. You have probably seen this before, and possibly so many times that you

are internally screaming “not this again!” Maslow’s hierarchy is discussed in the context of psychology,

sociology, education, and business.2 You can see the breakdown of Maslow’s five basic needs and their

descriptions in Figure 6.4. Important for our discussion, though, is how this theory applies to the workplace. 

Figure 6.3. Are you motivated by satisfaction

of winning or the gold medal that comes with

it? [2]

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Maslow hypothesized that individuals are motivated by their lowest order (bottom of the pyramid) unmet

needs. If John is struggling to pay his rent, then he would be motivated to pursue actions that would allow him

to meet that safety need. John would try to find a better job so he could pay his bills more easily. 

Generally, we would define safety and physiological needs as being lower order (and to a certain extent

belongingness), while esteem and self-actualization would be considered higher-order needs. From a

management perspective, we would want to identify where our employees fall within the hierarchy to

determine which needs our employees are attempting to meet and offer rewards that are related to those

needs. For lower-order needs that might mean offering monetary bonuses, while for higher-order needs

employees could be more motivated by recognition or opportunity for advancement. Maslow’s hierarchy, as

you will see, acts as the basis for many of the motivational theories we will discuss moving forward.

Alderfer’s ERG Theory

Clayton Alderfer developed a related needs-based theory called ERG

theory. ERG stands for existence, relatedness, and growth.3 We can directly compare Maslow’s hierarchy to ERG theory. Existence needs are

related to physiological and safety needs and relatedness is associated

with belongingness. Growth is connected to self-esteem and self-

actualization. The advance that Alderfer offered to Maslow’s work was the

addition of a frustration-regression component to his

theory. Frustration-regression is the idea that if an individual is unable

Figure 6.4. Maslow’s Hierarchy of Needs…again.

Figure 6.5. Frustration is a legitimate cause for lack of motivation. [3]

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to fulfill a higher-order need, that they will regress and concentrate on an already-met need. So if I find that I

am not meeting my relatedness needs by having fulfilling relationships, I might throw myself into work to make

more money.

McClelland’s Acquired Needs Theory

The next step in the development of these needs-based theories is the work of David McClelland. McClelland

proposed an acquired needs theory comprised of achievement, affiliation, and power needs. The need for achievement is a desire to be good at what you do. The need for affiliation is like Maslow’s belongingness and Alderfer’s relatedness, in that it is a recognition of the need for fulfilling social relationships. The need for

power is divided into two different types of power.  Personal power is the need to dominate others, while

institutional power  is the need to have control for more beneficial ends, such as furthering organizational

goals.4 You might notice some significant differences between this acquired need theory and both Maslow and

Alderfer. First, McClelland ignores the lower-order needs such as physiological and safety because they are less

important in the work context. He also proposes that all of these needs are not biological in nature, but instead

are learned from social and environmental factors. This means that everyone’s environment and connections

to others will help determine which of these needs actually motivate their actions and behaviors. Some people

might have a very low need for power, but be very motivated to pursue social interaction or personal

achievement. Each of these needs can be activated at different levels for each of us! Again, the key from a

management perspective is to identify where are our employees are in this framework and provide rewards

and opportunities accordingly.

Deci & Ryan’s Self-Determination Theory

The work of Deci and Ryan can be compared to McClelland in that they also ignore the importance of lower

order needs, but their self-determination theory also has some significant differences. Self-determination theory (SDT) is based on the assumption that employees are essentially driven to “behave in effective and healthy ways.” Unlike McClelland, SDT proposes that all individuals have basic innate needs for competence,

autonomy, and relatedness rather than socially learning these needs.5

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 Competence is similar to the need for achievement. There is a drive in people to master tasks in which they

participate. We typically don’t enjoy doing tasks where we continue to be average. We want to be good at what

we do. Autonomy is the need to be self-directed and independent. Employees want to feel as though they

have some control over the type of work they do and how that work is done. Relatedness can be seen as we have discussed previously. However, another way of looking at this concept is to think about how the tasks

relate to the bigger picture. Is there a purpose that I can relate to what I am accomplishing? The more people

find a purpose in what they do, the more engaged they become in their jobs.

Herzberg’s Two-Factor Theory

We finish our discussion of the need-based theories with Fredrick Herzberg and his two-factor theory. The

Two-factor theory says that the things that satisfy, or motivate, us; and the things that dissatisfy, or demotivate, us are related to two different factors. Herzberg discovered that employees are motivated by

things related to competence and achievement, and are demotivated by things such as working conditions

and the pay associated with the job.6  

Hygiene factors are the aspects of the job that don’t actually motivate employees, but the lack of these factors can lead to dissatisfaction. A good way to think about this is that there are expectations for each of

these factors. You expect your company to have a clean and safe working environment, the fact that they do

have a good environment doesn’t motivate you, but if your workplace is dirty, dangerous, or unpleasant, then

it decreases your job-satisfaction. 

The motivational factors are the aspects of the job that increase employee’s job satisfaction. These factors tend to be more aspirational in nature. Challenge, opportunity, and employee recognition are all things that

Figure 6.6. A few of the basic factors.

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have been related to higher job satisfaction. We can tie this back to Maslow and the earlier needs-based

theories by seeing that satisfying lower order needs are hygiene factors while the motivating factors are all

related to the higher order needs.

As a manager or an organization, you want to try to eliminate the dissatisfaction of the hygiene factors and

improve the motivational factors as much as possible. The better you are at this, the more motivated

employees will be.

6.2.2 Process Theories

The process theories of motivation focus on the psychological processes that drive individuals toward certain behaviors. These theories, rather

than identifying unmet needs to explain motivation, examine the thought

processes that lead to a specific action. 

Equity Theory

The first of these theories is equity, or justice theory. However, before we

get too far into this theory, we need to be clear about what equity actually

is. Many people think of equity and equality as being the same. Not so

fast, my friend. When we mention equality, this means that everyone gets the same thing—treatment, pay,

benefits, whatever it may be. Equity, on the other hand, is the idea of being fair to everyone. 

Suppose that I have a reward system in place for achieving goals. For this

certain goal, the award is a pair of size 8, Jimmy Choo heels. Some of the

ladies out there (and some men as well) think this is phenomenal and the

reward is outstanding. However, if you are a man or a woman who doesn’t

wear a size 8, the heels don’t do you a lot of good. The reward I am

providing is equal, though, because everyone is getting the same thing.

The equitable reward would be to get anyone who reaches the goal a pair

of shoes that fits them. This option would be the fair and just reward.

Now that we have covered that, equity theory is based on the idea that we all have a basic desire for fairness in relation to our inputs and outcomes in the workplace when compared

with our peers. We can use a simple equation to show what this looks like.

This theory rests on the assumption that people want fairness in the workplace, and our peers that have

similar levels of knowledge, skill, and ability that exert similar effort deserve similar compensation (

Figure 6.7. What’s going on up there to drive

you to do something? [4]

Figure 6.8. ...but those straps make my ankle look fat! [5]

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Video

Please visit the textbook on a web or mobile device to view video content.

outcomes ) for their efforts (inputs ). When this is not the case, we are motivated to change the equation so

that it comes back into balance. Equity theory also depends heavily on the concept of cognitive dissonance

that was addressed in the organizational behavior chapter. As a reminder, cognitive dissonance is when our

attitudes and our behaviors don’t match. This dissonance between attitude and action causes an

uncomfortable psychological state that we are motivated to try and correct.7

 

In this case, that means that if I notice that I work just as hard as my coworkers, but receive less money for my

efforts, I will change my behavior or attitude to bring this back into balance. How do we achieve balance in that

situation? We might reduce our effort so that we don’t feel cheated by earning less, we might be motivated to

ask for a raise, or in extreme cases, I might be motivated to affect my coworkers’ inputs or outcomes. When we

perceive that there is a balance between our inputs and outcomes compared to those of our peers, we are not

motivated to change our behavior.

Organizational Justice

Other researchers used the work of J. Stacy Adams to develop related theories on organizational

justice. Organizational justice is the perception that individuals are treated fairly in the workplace. This perception is based on three elements: distributive justice, procedural justice, and interactional justice. 

Distributive justice is how fair employees consider the distribution of rewards. In other words, is

everyone paid the same wage, and is that fair given their level of e�ort, skill, and experience? 

Procedural justice has to do with how decisions are made regarding those allocations of rewards. Do

we feel that the process that managers use to reach those decisions are fair?

Interactional justice is based on the perception that we feel the interaction between employees and

managers is fair and equitable. Does the manager treat everyone with respect? Do they yell at certain

employees in public, but are more discreet with others? If this is the case, then there may be a lack of

interactional justice. Managers should have a consistent pattern of behavior with all employees.8

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A few final thoughts on equity theory should be included. First, you may

have heard the saying “perception is reality,” and while we don’t want to

belabor an abstract concept, it is important to understand. When it comes

to equity and justice, reality isn’t important, only the perceptions of the

employees really matter. If an individual perceives that they are being

treated or compensated unfairly, they are going to be motivated by that

perception rather than any objective reality. So, perception is reality when

it comes to motivation. Second, we need to understand that much of

employee perception is driven by the behavior of managers or

supervisors. If managers or supervisors enact a “do as I say, not as I do”

mentality, it will directly influence employee perceptions of the fairness of

the workplace. Finally, using equity theory, we need to be sure that

employees have a method of voicing their concerns and some form of

due process to question decisions. Having a system of due process allows

us to address concerns before employees are motivated to action

themselves.

Expectancy Theory

The second of our process theories is expectancy theory. While

expectancy theory is used in a variety of contexts and disciplines, the

version of expectancy theory that we use in the workplace is based on the

work of Victor Vroom (I love that name, it sounds like a super villain.). 

Expectancy theory is based on the idea that people are motivated by how much they want something and how likely they think they are to get

that thing. There are three important elements to expectancy theory:

expectancy, instrumentality, and valence. Expectancy  is the belief that if you put forth effort, then that effort

will lead to the desired performance. If you study hard, do you believe you can make an “A” on the next exam?

That belief is your expectancy. Instrumentality is the belief that if you perform, you will receive the reward

that has been promised. Suppose that your professor tells you that if you get an “A” on the exam, he will give

you $1,000! Do you actually believe him? If you believe him, that would mean that you have high

instrumentality. I wouldn’t believe him! That means I have low instrumentality. Valence is the value that

individuals put on the rewards they are pursuing. The higher the value, the more it is a motivating factor. If you

are offered an all-expenses-paid trip to Hawaii, it has greater value than a trip to the middle of nowhere, thus

the trip to Hawaii would have higher valence. 

Figure 6.9. Justice looks at how fairly people are treated. [6]

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To effectively use expectancy theory to motivate our employees, we need

to pay special attention to the value that they put on the rewards that we

are offering, as well as monitoring the level of performance that we

require to get those rewards. According to Vroom, expectancy,

instrumentality, and valence are multiplied by each other to determine

motivation.9

This means that if any of those elements is missing, then employees will not be motivated. If they don’t believe

they can perform, they won’t try. If they don’t believe that their performance will result in the reward, then

there’s no point, and if they don’t value the reward, why put forth any effort.

Goal-Setting Theory

The final process theories that we will discuss focus on goals . We are all somewhat familiar with goals, but

we will look at them from a motivation perspective. There are many different theories associated with goals

and motivation, but we will focus on goal-setting and goal orientation.

Goal-setting theory, based on the work of Edwin Locke and Gary Latham, states that employees are motivated by goals that are specific and challenging yet attainable. This theory proposes that goal-setting

motivates people through specific psychological mechanisms. It directs employee behavior toward associated

tasks while ignoring unimportant tasks.10 Goal setting helps us develop strategies to meet our goals, boost

persistence, and regulate how much effort we put forth based on how difficult the goal is to attain. This is also

Figure 6.10. Oh no! It’s the evil Victor Vroom and his expectancy theory! [7]

Figure 6.11. Expectancy theory model

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where we get the concept of SMART goals.11

This interactive image was created with ThingLink View this image on thinglink.com.

[8]

Goal orientation theory was developed primarily in relation to educational settings, but it does apply to the workplace as well. Instead of focusing on what people are attempting to achieve, this theory looks at why and

how people try to achieve a goal and the purposes behind their actions.12 This theory is based on the idea that

individuals have a predisposition toward either performance or mastery. Performance orientation means that individuals are motivated to meet the expectations established by managers or supervisors, while a

person with a mastery orientation is motivated by becoming good at, or mastering, the task that is assigned. This is important because those with a mastery orientation are more likely to be motivated to persist and

improve over time while those with a performance orientation simply want to produce an outcome and then

move on. For example, if your goal is to get an A in this class, is it because you want to perform better than your

classmates (performance) or is it because you want to master the content for the course (mastery)?13

Job Design Theory

In the human resource management chapter, we further discuss job analysis and job design . In basic terms,

job analysis is the gathering of information to describe a job as it currently exists. These two factors play a large

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part in job design theory, which is the process of changing a job or position to suit our needs. Suppose that we

have had high turnover for a particular job and we find out that the biggest issue is that the job itself is

monotonous and lacks challenge. We would need to design that job so that it is inherently more motivating for

our employees. So how do we go about doing this? 

One thing we may try is to increase the scope of the job to make it more interesting. Job enlargement  is the

process of increasing the number of tasks that are associated with specific jobs. This doesn’t involve changing

the tasks or making them more or less challenging, it is simply putting more on someone’s plate. By increasing

the number of tasks we can hopefully alleviate the boredom and dissatisfaction.

Or perhaps instead of just piling more work on our employees, we offer them the opportunity to work on more

challenging and important projects or tasks. This approach is called job enrichment.  As you hopefully

remember, employees respond to opportunities to meet higher order needs such as autonomy and

competence much more positively than opportunities to more fully meet lower order needs. A final thought

related to job design is that rather than altering existing jobs, we instead focus on designing jobs that have

these motivational characteristics already included. 

The job characteristics model identifies five important characteristics that drive three important psychological states to improve motivation.

The five characteristics are: skill variety, task identity, task significance,

autonomy, and feedback.14

Employees should engage in a variety of tasks at their job (skill variety), should be able to identify their contribution to a finished product or

service (task identity), and feel that their efforts matter to the organization and its customers (task significance). These three characteristics will affect the first state, which is whether employees feel

their work is meaningful or not.

The next psychological state we are concerned with is how responsible

employees feel they are for work outcomes. Employees want to feel as

though they are in control of the work that they do (autonomy). They more an employee controls their own schedule and the manner in which

the work is done, the more they will get that sense of responsibility.

Finally, how much information is given to an employee about how they are doing and why their jobs are

important (feedback)? How do they know if they are making a difference if we aren’t telling them? Positive, and even constructive, feedback helps employees to understand the actual results of their work and why it

matters. This sense of purpose and accomplishment is the third psychological state we are concerned with.

Figure 6.12. If your job is juggling, adding fire and balancing a bike on your face would

qualify as job enrichment. [9]

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The thought behind this theory is that the more we can create positive mental states in these areas for our

employees, the more we will see things like higher job satisfaction, better performance, higher levels of

motivation, and decreased turnover. As the saying goes, a happy worker is a productive worker.

Reinforcement Theory

Reinforcement theory is based on the idea that you can change people’s behavior by using rewards and punishment. Some of you may associate reinforcement with Pavlov’s classical conditioning (it may ring a bell

with some of you), but we are going to focus instead on operant conditioning, which is based on the work of

B.F. Skinner and Edward Thorndike.15 From the management perspective, we want to think about how we

provide rewards and punishments to motivate certain behaviors.

Whether in work or life, there are two basic outcomes that we would like to see after any kind of behavior

occurs: (1) We want the behavior to continue happening or (2) we want the behavior to stop happening. It’s as

simple as that. The harder part is how to get something good to keep happening or figuring out how to stop

something from happening again.

According to this theory, if we want a behavior to continue happening, we can try two things.

Positive reinforcement – We provide a desirable reward a�er we observe a behavior that we would like to see. If Cindy provides excellent customer service to one of our guests, we want to praise her

immediately. In this example, the reward is praise, but we could also o�er a monetary reward or anything

else that our employees might value.

Negative Reinforcement – We remove something unpleasant to encourage a desirable behavior. Suppose that you are continually late to work. Your manager gets on your case every single time and

gives you the same, awful speech about how you should understand the importance of punctuality that

Figure 6.13. An explanation of reinforcement theory.

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makes your eyes roll back into your head. However, once you start showing up on time, the speech goes

away. As long as you continue showing up on time, the awful speech is never heard from again. The

removal of the speech is encouragement to you to continue the behavior of showing up on time.

If we want a behavior to stop happening, we can try these two approaches.

Punishment – We add something negative following behavior we want to stop from happening again. If you are familiar with cats, you would know that they hate getting wet. So a good punishment for a cat is

to spray them with a water bottle whenever they jump on or scratch furniture. The cat doesn’t want to

keep getting sprayed, so they eventually stop scratching. Of course, cats are evil, so they would probably

just go pee in your closet or something to get back at you. But hey, at least they aren’t ruining your

furniture anymore!

Extinction – We eliminate undesirable behaviors by ignoring them or withholding reinforcement. The idea is that if we ignore certain behaviors, they will not be repeated. If a student in class continually raises

their hand to participate in class discussions, but I never call on them, eventually they will stop raising

their hand.

The major thing we want to watch when it comes to any of these methods is to be clear and consistent. Make

sure you are being fair and consistent with rewards and punishments. It needs to be clear what behaviors are

being rewarded or punished and explained properly. If there is confusion or unfairness in these methods, you

could cause more problems than what you started with.

6.2.3 Incentive-Based Options

While we have spent the majority of this chapter discussing motivation from theoretical and psychological

perspective, many of you may be thinking, “these are businesses, just give them (the employees) more money

and they will be motivated!” Some organizations do just that. There are multiple ways that companies use

money as a motivator. There are positives and negatives to each.

Piecework plans are compensation systems that base pay on the level of output. For manufacturing or service companies that have a quantitative measure of output, this plan might be used. The logic being

that if you are paid per unit of production, you are motivated to work faster. A possible issue is that

workers may focus on pushing out the most units possible, and this could cause quality to su�er.

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This is similar to companies that use commission systems for sales performance. Commission is a system of compensation that gives the salesperson a percentage of the sale’s value. The problem with

these types of compensation programs is that it only motivates a single behavior. Employees that receive

commission are motivated only to make sales, not collaborate with coworkers or focus on excellent

customer service. 

Profit sharing is giving employees a certain percentage of company profits. This encourages employees to not only focus on the revenues of the organization but also the costs. 

Gainsharing is similar to profit sharing, but instead of a percentage of profit, it o�ers employees a percentage of improvement. If employees help increase revenue or reduce costs, employees receive

some monetary reward for that improvement. 

Stock options are opportunities for employees to purchase an ownership interest in their organization in the form of stock. The logic is that if the employees are also the owners of the company, then they will do

whatever is in the best interest of the organization because they can benefit from its performance.

United Airlines has recently attempted to re-vamp their company-wide bonuses. If monetary incentives are

used, it is important that the reward system is handled properly and does not create more motivational issues

due to a flawed process.

Figure 6.14. Many retail positions o�er a commission on sales to motivate employees. [10]

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Video

Please visit the textbook on a web or mobile device to view video content.

The problem with all of these monetary based incentive programs has already been discussed. They still only

meet lower-order needs, and may not be the motivators that employers are hoping for. Because of that, other

organizations may use nonmonetary incentives.

Nonmonetary incentives are benefits that the organization can provide that are not directly tied to pay. These types of incentives are meant to motivate employees by addressing the higher order needs we

discussed previously. Employers might offer paid-time-off so that employees can have a better work-life

balance. They can offer training and development opportunities to improve their employees’ knowledge and

skills. This could include special training, professional conferences, or tuition reimbursement to enroll in

classes at local colleges or universities. Depending on the culture and types of employees, there are several

ways you can incentivize your employees to work their hardest.

So What Else Is Out There?

Research has consistently shown that those who have the greatest success in life tend to have high levels of

willpower . Willpower exists when people resist tempting urges in an effort to demonstrate more

commendable behaviors. The good news is that willpower can be developed. In fact, when people engage in

high levels of self-discipline in certain areas of their life, they are more like to exhibit high levels of self-

discipline in other areas of their life. Have you ever gone on a diet and found that in addition to resisting

yummy chips and sugary sodas, you start to exercise more? Or perhaps in addition to improving your diet and

exercise, you also make goals to be a better son or daughter, or to be a more productive employee. This is

willpower at work. When you increase your self-discipline, this good habit transcends multiple areas of your

life.16

However, there’s a catch. A person’s willpower can become depleted. Let’s say you have a very important work

deadline, one that could secure you that coveted big promotion. Within a few days of the important deadline,

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both of your children become sick, so you have to stay home from work, your sister calls and tells you she’s

getting a divorce, and you wake up with pink eye! Willpower is like a muscle. Even though it can be

“strengthened” and can improve multiple areas of our life, there are also times when circumstances become so

physically or emotionally trying that we essentially lose control of our self-discipline and give in to that big bag

of chips because we don’t have what it takes in the moment to keep it together.

What does this mean for you as a future manager? Giving your employees

opportunities to strengthen their willpower will most likely make them

more productive employees. It’s no wonder why big corporations across

the country have recognized the benefits of offering employees

opportunities to lead healthy lifestyles. When people do yoga over their

lunch breaks, this disciplined practice likely produces benefits on the job.

However, managers need to be mindful that employees may eventually

experience a breaking point, in which they may not have what it takes to

produce high-quality work, simply because they are too overwhelmed.

When this happens, managers can help by providing social support—by

reaching out to employees to temporarily help them with their workloads, or to reset deadlines, for the sake of

giving them the breather they need to get back on track.

6.3 Conclusion As we hope you have gathered from this chapter, there is no one perfect way to motivate employees. The

research has consistently shown however that money is not the best motivator, and that instead, we should

address the higher order psychological needs of our employees. 

Figure 6.15. Do you give in to the dark side of temptation or demonstrate the willpower of a

Jedi? [11]

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Management: A Modern Perspective In- Chapter Feedback (Optional)

Please con�rm which chapter you're in.* 1

What did you like best about this chapter?* 2

How could this chapter be improved?* 3

6.4 References 1. Ryan, R. M., & Deci, E. L. (2000). Intrinsic and extrinsic motivations: Classic definitions and new

directions. Contemporary educational psychology, 25(1), 54-67.

2. Maslow, A. H. (1943). A theory of human motivation. Psychological review, 50(4), 370.

3. Alderfer, C. P. (1969). An empirical test of a new theory of human needs. Organizational behavior and human

performance, 4(2), 142-175.

4. McClelland, D. C., Atkinson, J. W., Clark, R. A., & Lowell, E. L. (1953). The achievement motive.

5. Ryan, R. M., & Deci, E. L. (2000). Self-determination theory and the facilitation of intrinsic motivation, social

development, and well-being. American psychologist, 55(1), 68.

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6. Herzberg, F. I. (1966). Work and the nature of man.

7. Adams, J. S., & Freedman, S. (1976). Equity theory revisited: Comments and annotated bibliography.

In Advances in experimental social psychology (Vol. 9, pp. 43-90). Academic Press.

8. Adams, J. S. (1965). Inequity in social exchange. Advances in experimental social psychology, 2, 267-299.

9. Vroom, V. H. (2005). On the origins of expectancy theory. Great minds in management: The process of theory

development, 239-258.

10. Locke, E. A., & Latham, G. P. (1990). A theory of goal setting & task performance. Prentice-Hall, Inc.

11. Doran, G. T. (1981). There’s a S.M.A.R.T. Way to Write Management’s Goals and Objectives. Management

Review, 70, 35-36.

12. Kaplan, Avi, and Martin L. Maehr. "The Contributions and Prospects of Goal Orientation

Theory." Educational Psychology Review 19.2 (2006): 141-84. Web.

13. Dweck, C. S. (1986). Motivational processes affecting learning. American psychologist, 41(10), 1040.

14. Hackman, J. R., & Oldham, G. R. (1976). Motivation through the design of work: Test of a

theory. Organizational behavior and human performance, 16(2), 250-279.

15. Skinner, B. F. (1963). Operant behavior. American Psychologist, 18(8), 503.

16. Baumeister, Roy F. & Tierney, John. (2011). Willpower: Rediscovering the Greatest Human Strength. The

Penguin Press. 

6.5 Image Credits [1] Image courtesy of Pexels under CC0 1.0.

[2] Image courtesy of skeeze under CC0 1.0.

[3] Image courtesy of Peter Alfred Hess under CC BY 2.0.

[4] Image courtesy of geralt under CC0 1.0.

[5] Image courtesy of Gadini under CC0 1.0.

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Exported for Ashwini Gurwale on Mon, 16 Nov 2020 20:05:54 GMT

[6] Image courtesy of Erich Ferdinand under CC BY 2.0.

[7] Image courtesy of J.J. under CC BY-SA 3.0.

[8] Image courtesy of Dungdm93 under CC BY-SA 4.0.

[9] Image courtesy of miss pupik under CC BY 2.0.

[10] Image courtesy of Daniel von Appel under CC0 1.0.

[11] Image courtesy of novelrobinson under CC0 1.0.

Table of Contents.html

 
Spring 2021 - Principles of Mgt (MGT-305-01B-01W) - Module 3 Ethics, Org Behavior, Motivation

1. Supplement: Ethics and Corporate Social Responsibility

2. Supplement: Organizational Behavior and Individual Differences

3. Supplement: Motivation in the Workplace