Week 4 Discussion 1

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Chapter 5 Theories of Motivation

L E A R N I N G O B J E C T I V E S

After reading this chapter, you should be able to do the following:

1. Understand the role of motivation in determining employee performance.

2. Classify the basic needs of employees.

3. Describe how fairness perceptions are determined and consequences of these

perceptions.

4. Understand the importance of rewards and punishments.

5. Apply motivation theories to analyze performance problems.

What inspires employees to provide excellent service, market a company’s products

effectively, or achieve the goals set for them? Answering this question is of utmost

importance if we are to understand and manage the work behavior of our peers,

subordinates, and even supervisors. Put a different way, if someone is not performing well,

what could be the reason?

Job performance is viewed as a function of three factors and is expressed with the equation

below.Mitchell, T. R. (1982). Motivation: New directions for theory, research, and practice.

Academy of Management Review, 7, 80–88; Porter, L. W., & Lawler, E. E. (1968).

Managerial attitudes and performance. Homewood, IL: Dorsey Press. According to this

equation, motivation, ability, and environment are the major influences over employee

performance.

Figure 5.1

Performance is a function of the interaction between an individual’s motivation, ability, and

environment.

Motivation is one of the forces that lead to performance. Motivation is defined as the

desire to achieve a goal or a certain performance level, leading to goal-directed behavior.

When we refer to someone as being motivated, we mean that the person is trying hard to

accomplish a certain task. Motivation is clearly important if someone is to perform well;

however, it is not sufficient. Ability—or having the skills and knowledge required to

perform the job—is also important and is sometimes the key determinant of effectiveness.

Finally, environmental factors such as having the resources, information, and support

one needs to perform well are critical to determine performance. At different times, one of

these three factors may be the key to high performance. For example, for an employee

sweeping the floor, motivation may be the most important factor that determines

performance. In contrast, even the most motivated individual would not be able to

successfully design a house without the necessary talent involved in building quality homes.

Being motivated is not the same as being a high performer and is not the sole reason why

people perform well, but it is nevertheless a key influence over our performance level.

So what motivates people? Why do some employees try to reach their targets and pursue

excellence while others merely show up at work and count the hours? As with many

questions involving human beings, the answer is anything but simple. Instead, there are

several theories explaining the concept of motivation. We will discuss motivation theories

under two categories: need-based theories and process theories.

5.1 A Motivating Place to Work: The Case of

Zappos

It is unique to hear about a CEO who studies happiness and motivation and builds

those principles into the company’s core values or about a company with a 5-week

training course and an offer of $2,000 to quit anytime during that 5 weeks if you feel

the company is not a good fit. Top that off with an on-site life coach who also happens

to be a chiropractor, and you are really talking about something you don’t hear about

every day. Zappos is known as much for its 365-day return policy and free shipping as it

is for its innovative corporate culture. Although acquired in 2009 by Amazon

(NASDAQ: AMZN), Zappos managed to move from number 23 in 2009 on Fortune

magazine’s “100 Best Companies to Work For” list to 15 in 2010.

Performance is a function of motivation, ability, and the environment in which you

work. Zappos seems to be creating an environment that encourages motivation and

builds inclusiveness. The company delivers above and beyond basic workplace needs

and addresses the self-actualization needs that most individuals desire from their work

experience. CEO Tony Hsieh believes that the secret to customer loyalty is to make a

corporate culture of caring a priority. This is reflected in the company’s 10 core values

and its emphasis on building a team and a family. During the interview process,

applicants are asked questions relating to the company’s values, such as gauging their

own weirdness, open-mindedness, and sense of family. Although the offer to be paid to

quit during the training process has increased from its original number of $400, only

1% of trainees take the offer. Work is structured differently at Zappos as well. For

example, there is no limit to the time customer service representatives spend on a

phone call, and they are encouraged to make personal connections with the individuals

on the other end rather than try to get rid of them.

Although Zappos has over 1,300 employees, the company has been able to maintain a

relatively flat organizational structure and prides itself on its extreme transparency. In

an exceptionally detailed and lengthy letter to employees, Hsieh spelled out what the

new partnership with Amazon would mean for the company, what would change, and

more important, what would remain the same. As a result of this type of company

structure, individuals have more freedom, which can lead to greater satisfaction.

Although Zappos pays its employees well and offers attractive benefits such as

employees receiving full health-care coverage and a compressed workweek, the desire

to work at Zappos seems to go beyond that. As Hsieh would say, happiness is the

driving force behind almost any action an individual takes. Whether your goals are for

achievement, affiliation, or simply to find an enjoyable environment in which to work,

Zappos strives to address these needs.

Case written by [citation redacted per publisher request]. Based on information from

Robischon, N. (2009, July 22). Amazon buys Zappos for $847 million. Fast Company.

Retrieved February 28, 2010, from http://www.fastcompany.com/blog/noah-

robischon/editors-desk/amazon-buys-zappos-807-million; Walker, A. (2009, March

14). Zappos’ Tony Hsieh on Twitter, phone calls and the pursuit of happiness. Fast

Company. Retrieved February 27, 2010, from

http://www.fastcompany.com/blog/alissa-walker/member-blog/tony-hsiehs-

zapposcom; Happy feet—Inside the online shoe utopia. (2009, September 14). New

Yorker. Retrieved February 28, 2010, from http://about.zappos.com/press-

center/media-coverage/happy-feet-inside-online-shoe-utopia; 100 best companies to

work for. (2010, February 8). Fortune. Retrieved February 26, 2010, from

http://money.cnn.com/magazines/fortune/bestcompanies/2010/snapshots/15.html.

D I S C U S S I O N Q U E S T I O N S

1. What potential organizational changes might result from the acquisition by

Amazon?

2. Why do you think Zappos’ approach is not utilized more often? In other words,

what are the challenges to these techniques?

3. Why do you think Zappos offers a $2,000 incentive to quit?

4. Would you be motivated to work at Zappos? Why or why not?

5.2 Need-Based Theories of Motivation

L E A R N I N G O B J E C T I V E S

1. Explain how employees are motivated according to Maslow’s hierarchy of

needs.

2. Explain how the ERG (existence, relatedness, growth) theory addresses the

limitations of Maslow’s hierarchy.

3. Describe the differences among factors contributing to employee motivation and

how these differ from factors contributing to dissatisfaction.

4. Describe need for achievement, power, and affiliation, and identify how these

acquired needs affect work behavior.

The earliest studies of motivation involved an examination of individual needs. Specifically,

early researchers thought that employees try hard and demonstrate goal-driven behavior in

order to satisfy needs. For example, an employee who is always walking around the office

talking to people may have a need for companionship, and his behavior may be a way of

satisfying this need. At the time, researchers developed theories to understand what people

need. Four theories may be placed under this category: Maslow’s hierarchy of needs, ERG

theory, Herzberg’s two-factor theory, and McClelland’s acquired-needs theory.

Maslow’s Hierarchy of Needs

Abraham Maslow is among the most prominent psychologists of the twentieth century. His

hierarchy of needs is an image familiar to most business students and managers. The theory

is based on a simple premise: Human beings have needs that are hierarchically

ranked.Maslow, A. H. (1943). A theory of human motivation. Psychological Review, 50,

370–396; Maslow, A. H. (1954). Motivation and personality. New York: Harper. There are

some needs that are basic to all human beings, and in their absence nothing else matters. As

we satisfy these basic needs, we start looking to satisfy higher order needs. In other words,

once a lower level need is satisfied, it no longer serves as a motivator.

Figure 5.3 Maslow’s Hierarchy of Needs

The most basic of Maslow’s needs are physiological needs. Physiological needs refer to

the need for food, water, and other biological needs. These needs are basic because when

they are lacking, the search for them may overpower all other urges. Imagine being very

hungry. At that point, all your behavior may be directed at finding food. Once you eat,

though, the search for food ceases and the promise of food no longer serves as a motivator.

Once physiological needs are satisfied, people tend to become concerned about safety

needs. Are they free from the threat of danger, pain, or an uncertain future? On the next

level up, social needs refer to the need to bond with other human beings, be loved, and

form lasting attachments with others. In fact, attachments, or lack of them, are associated

with our health and well-being.Baumeister, R. F., & Leary, M. R. (1995). The need to belong:

Desire for interpersonal attachments as a fundamental human motivation. Psychological

Bulletin, 117, 497–529. The satisfaction of social needs makes esteem needs more salient.

Esteem need refers to the desire to be respected by one’s peers, feel important, and be

appreciated. Finally, at the highest level of the hierarchy, the need for self-actualization

refers to “becoming all you are capable of becoming.” This need manifests itself by the

desire to acquire new skills, take on new challenges, and behave in a way that will lead to the

attainment of one’s life goals.

Maslow was a clinical psychologist, and his theory was not originally designed for work

settings. In fact, his theory was based on his observations of individuals in clinical settings;

some of the individual components of the theory found little empirical support. One

criticism relates to the order in which the needs are ranked. It is possible to imagine that

individuals who go hungry and are in fear of their lives might retain strong bonds to others,

suggesting a different order of needs. Moreover, researchers failed to support the arguments

that once a need is satisfied it no longer serves as a motivator and that only one need is

dominant at a given time.Neher, A. (1991). Maslow’s theory of motivation: A critique.

Journal of Humanistic Psychology, 31, 89–112; Rauschenberger, J., Schmitt, N., & Hunter,

J. E. (1980). A test of the need hierarchy concept by a Markov model of change in need

strength. Administrative Science Quarterly, 25, 654–670.

Despite the lack of strong research support, Maslow’s theory found obvious applications in

business settings. Understanding what people need gives us clues to understanding them.

The hierarchy is a systematic way of thinking about the different needs employees may have

at any given point and explains different reactions they may have to similar treatment. An

employee who is trying to satisfy esteem needs may feel gratified when her supervisor

praises an accomplishment. However, another employee who is trying to satisfy social needs

may resent being praised by upper management in front of peers if the praise sets the

individual apart from the rest of the group.

How can an organization satisfy its employees’ various needs? In the long run, physiological

needs may be satisfied by the person’s paycheck, but it is important to remember that pay

may satisfy other needs such as safety and esteem as well. Providing generous benefits that

include health insurance and company-sponsored retirement plans, as well as offering a

measure of job security, will help satisfy safety needs. Social needs may be satisfied by

having a friendly environment and providing a workplace conducive to collaboration and

communication with others. Company picnics and other social get-togethers may also be

helpful if the majority of employees are motivated primarily by social needs (but may cause

resentment if they are not and if they have to sacrifice a Sunday afternoon for a company

picnic). Providing promotion opportunities at work, recognizing a person’s

accomplishments verbally or through more formal reward systems, and conferring job titles

that communicate to the employee that one has achieved high status within the organization

are among the ways of satisfying esteem needs. Finally, self-actualization needs may be

satisfied by the provision of development and growth opportunities on or off the job, as well

as by work that is interesting and challenging. By making the effort to satisfy the different

needs of each employee, organizations may ensure a highly motivated workforce.

ERG Theory

Figure 5.4

ERG theory includes existence, relatedness, and growth.

Source: Based on Alderfer, C. P. (1969). An empirical test of a new theory of human needs.

Organizational Behavior and Human Performance, 4, 142–175.

ERG theory, developed by Clayton Alderfer, is a modification of Maslow’s hierarchy of

needs.Alderfer, C. P. (1969). An empirical test of a new theory of human needs.

Organizational Behavior and Human Performance, 4, 142–175. Instead of the five needs

that are hierarchically organized, Alderfer proposed that basic human needs may be

grouped under three categories, namely, existence, relatedness, and growth. Existence

corresponds to Maslow’s physiological and safety needs, relatedness corresponds to social

needs, and growth refers to Maslow’s esteem and self-actualization.

ERG theory’s main contribution to the literature is its relaxation of Maslow’s assumptions.

For example, ERG theory does not rank needs in any particular order and explicitly

recognizes that more than one need may operate at a given time. Moreover, the theory has a

“frustration-regression” hypothesis suggesting that individuals who are frustrated in their

attempts to satisfy one need may regress to another. For example, someone who is

frustrated by the growth opportunities in his job and progress toward career goals may

regress to relatedness need and start spending more time socializing with coworkers. The

implication of this theory is that we need to recognize the multiple needs that may be

driving individuals at a given point to understand their behavior and properly motivate

them.

Two-Factor Theory

Frederick Herzberg approached the question of motivation in a different way. By asking

individuals what satisfies them on the job and what dissatisfies them, Herzberg came to the

conclusion that aspects of the work environment that satisfy employees are very different

from aspects that dissatisfy them.Herzberg, F., Mausner, B., & Snyderman, B. (1959). The

motivation to work. New York: John Wiley; Herzberg, F. (1965). The motivation to work

among Finnish supervisors. Personnel Psychology, 18, 393–402. Herzberg labeled factors

causing dissatisfaction of workers as “hygiene” factors because these factors were part of the

context in which the job was performed, as opposed to the job itself. Hygiene factors

included company policies, supervision, working conditions, salary, safety, and security on

the job. To illustrate, imagine that you are working in an unpleasant work environment.

Your office is too hot in the summer and too cold in the winter. You are being harassed and

mistreated. You would certainly be miserable in such a work environment. However, if these

problems were solved (your office temperature is just right and you are not harassed at all),

would you be motivated? Most likely, you would take the situation for granted. In fact, many

factors in our work environment are things that we miss when they are absent but take for

granted if they are present.

In contrast, motivators are factors that are intrinsic to the job, such as achievement,

recognition, interesting work, increased responsibilities, advancement, and growth

opportunities. According to Herzberg’s research, motivators are the conditions that truly

encourage employees to try harder.

Figure 5.5

The two-factor theory of motivation includes hygiene factors and motivators.

Sources: Based on Herzberg, F., Mausner, B., & Snyderman, B. (1959). The motivation to work.

New York: John Wiley and Sons; Herzberg, F. (1965). The motivation to work among Finnish

supervisors. Personnel Psychology, 18, 393–402.

Herzberg’s research is far from being universally accepted.Cummings, L. L., & Elsalmi, A.

M. (1968). Empirical research on the bases and correlates of managerial motivation.

Psychological Bulletin, 70, 127–144; House, R. J., & Wigdor, L. A. (1967). Herzberg’s dual-

factor theory of job satisfaction and motivation: A review of the evidence and a criticism.

Personnel Psychology, 20, 369–389. One criticism relates to the primary research

methodology employed when arriving at hygiene versus motivators. When people are asked

why they are satisfied, they may attribute the causes of satisfaction to themselves, whereas

when explaining what dissatisfies them, they may blame the situation. The classification of

the factors as hygiene or motivator is not that simple either. For example, the theory views

pay as a hygiene factor. However, pay may have symbolic value by showing employees that

they are being recognized for their contributions as well as communicating that they are

advancing within the company. Similarly, the quality of supervision or the types of

relationships employees form with their supervisors may determine whether they are

assigned interesting work, whether they are recognized for their potential, and whether they

take on more responsibilities.

Despite its limitations, the theory can be a valuable aid to managers because it points out

that improving the environment in which the job is performed goes only so far in motivating

employees. Undoubtedly, contextual factors matter because their absence causes

dissatisfaction. However, solely focusing on hygiene factors will not be enough, and

managers should also enrich jobs by giving employees opportunities for challenging work,

greater responsibilities, advancement opportunities, and a job in which their subordinates

can feel successful.

Acquired-Needs Theory

Among the need-based approaches to motivation, David McClelland’s acquired-needs

theory is the one that has received the greatest amount of support. According to this theory,

individuals acquire three types of needs as a result of their life experiences. These needs are

the need for achievement, the need for affiliation, and the need for power. All individuals

possess a combination of these needs, and the dominant needs are thought to drive

employee behavior.

McClelland used a unique method called the Thematic Apperception Test (TAT) to

assess the dominant need.Spangler, W. D. (1992). Validity of questionnaire and TAT

measures of need for achievement: Two meta-analyses. Psychological Bulletin, 112, 140–

154. This method entails presenting research subjects an ambiguous picture asking them to

write a story based on it. Take a look at the following picture. Who is this person? What is

she doing? Why is she doing it? The story you tell about the woman in the picture would

then be analyzed by trained experts. The idea is that the stories the photo evokes would

reflect how the mind works and what motivates the person.

If the story you come up with contains themes of success, meeting deadlines, or coming up

with brilliant ideas, you may be high in need for achievement. Those who have high need

for achievement have a strong need to be successful. As children, they may be praised for

their hard work, which forms the foundations of their persistence.Mueller, C. M., & Dweck,

C. S. (1998). Praise for intelligence can undermine children’s motivation and performance.

Journal of Personality and Social Psychology, 75, 33–52. As adults, they are preoccupied

with doing things better than they did in the past. These individuals are constantly striving

to improve their performance. They relentlessly focus on goals, particularly stretch goals

that are challenging in nature.Campbell, D. J. (1982). Determinants of choice of goal

difficulty level: A review of situational and personality influences. Journal of Occupational

Psychology, 55, 79–95. They are particularly suited to positions such as sales, where there

are explicit goals, feedback is immediately available, and their effort often leads to success.

In fact, they are more attracted to organizations that are merit-based and reward

performance rather than seniority. They also do particularly well as entrepreneurs,

scientists, and engineers.Harrell, A. M., & Stahl, M. J. (1981). A behavioral decision theory

approach for measuring McClelland’s trichotomy of needs. Journal of Applied Psychology,

66, 242–247; Trevis, C. S., & Certo, S. C. (2005). Spotlight on entrepreneurship. Business

Horizons, 48, 271–274; Turban, D. B., & Keon, T. L. (1993). Organizational attractiveness:

An interactionist perspective. Journal of Applied Psychology, 78, 184–193.

Are individuals who are high in need for achievement effective managers? Because of their

success in lower level jobs where their individual contributions matter the most, those with

high need for achievement are often promoted to higher level positions.McClelland, D. C., &

Boyatzis, R. E. (1982). Leadership motive pattern and long-term success in management.

Journal of Applied Psychology, 67, 737–743. However, a high need for achievement has

significant disadvantages in management positions. Management involves getting work

done by motivating others. When a salesperson is promoted to be a sales manager, the job

description changes from actively selling to recruiting, motivating, and training salespeople.

Those who are high in need for achievement may view managerial activities such as

coaching, communicating, and meeting with subordinates as a waste of time and may

neglect these aspects of their jobs. Moreover, those high in need for achievement enjoy

doing things themselves and may find it difficult to delegate any meaningful authority to

their subordinates. These individuals often micromanage, expecting others to approach

tasks a particular way, and may become overbearing bosses by expecting everyone to

display high levels of dedication.McClelland, D. C., & Burnham, D. H. (1976). Power is the

great motivator. Harvard Business Review, 25, 159–166.

If the story you created in relation to the picture you are analyzing contains elements of

making plans to be with friends or family, you may have a high need for affiliation.

Individuals who have a high need for affiliation want to be liked and accepted by others.

When given a choice, they prefer to interact with others and be with friends.Wong, M. M., &

Csikszentmihalyi, M. (1991). Affiliation motivation and daily experience: Some issues on

gender differences. Journal of Personality and Social Psychology, 60, 154–164. Their

emphasis on harmonious interpersonal relationships may be an advantage in jobs and

occupations requiring frequent interpersonal interaction, such as a social worker or teacher.

In managerial positions, a high need for affiliation may again serve as a disadvantage

because these individuals tend to be overly concerned about how they are perceived by

others. They may find it difficult to perform some aspects of a manager’s job such as giving

employees critical feedback or disciplining poor performers. Thus, the work environment

may be characterized by mediocrity and may even lead to high performers leaving the team.

Finally, if your story contains elements of getting work done by influencing other people or

desiring to make an impact on the organization, you may have a high need for power. Those

with a high need for power want to influence others and control their environment. A

need for power may in fact be a destructive element in relationships with colleagues if it

takes the form of seeking and using power for one’s own good and prestige. However, when

it manifests itself in more altruistic forms such as changing the way things are done so that

the work environment is more positive, or negotiating more resources for one’s department,

it tends to lead to positive outcomes. In fact, the need for power is viewed as an important

trait for effectiveness in managerial and leadership positions.McClelland, D. C., & Burnham,

D. H. (1976). Power is the great motivator. Harvard Business Review, 25, 159–166;

Spangler, W. D., & House, R. J. (1991). Presidential effectiveness and the leadership motive

profile. Journal of Personality and Social Psychology, 60, 439–455; Spreier, S. W. (2006).

Leadership run amok. Harvard Business Review, 84, 72–82.

McClelland’s theory of acquired needs has important implications for the motivation of

employees. Managers need to understand the dominant needs of their employees to be able

to motivate them. While people who have a high need for achievement may respond to

goals, those with a high need for power may attempt to gain influence over those they work

with, and individuals high in their need for affiliation may be motivated to gain the approval

of their peers and supervisors. Finally, those who have a high drive for success may

experience difficulties in managerial positions, and making them aware of common pitfalls

may increase their effectiveness.

K E Y TA K E AWAY

Need-based theories describe motivated behavior as individuals’ efforts to meet their

needs. According to this perspective, the manager’s job is to identify what people

need and make the work environment a means of satisfying these needs. Maslow’s

hierarchy describes five categories of basic human needs, including physiological,

safety, social, esteem, and self-actualization needs. These needs are hierarchically

ranked, and as a lower level need is satisfied, it no longer serves as a motivator.

ERG theory is a modification of Maslow’s hierarchy, in which the five needs are

collapsed into three categories (existence, relatedness, and growth). The theory

recognizes that when employees are frustrated while attempting to satisfy higher

level needs, they may regress. The two-factor theory differentiates between factors

that make people dissatisfied on the job (hygiene factors) and factors that truly

motivate employees (motivators). Finally, acquired-needs theory argues that

individuals possess stable and dominant motives to achieve, acquire power, or

affiliate with others. The type of need that is dominant will drive behavior. Each of

these theories explains characteristics of a work environment that motivates

employees. These theories paved the way to process-based theories that explain

the mental calculations employees make to decide how to behave.

E X E R C I S E S

1. Many managers assume that if an employee is not performing well, the reason

must be a lack of motivation. Do you think this reasoning is accurate? What is

the problem with the assumption?

2. Review Maslow’s hierarchy of needs. Do you agree with the particular ranking of

employee needs?

3. How can an organization satisfy employee needs that are included in Maslow’s

hierarchy?

4. Which motivation theory have you found to be most useful in explaining why

people behave in a certain way? Why?

5. Review the hygiene and motivators in the two-factor theory of motivation. Do

you agree with the distinction between hygiene factors and motivators? Are

there any hygiene factors that you would consider to be motivators?

6. A friend of yours demonstrates the traits of achievement motivation: This person

is competitive, requires frequent and immediate feedback, and enjoys

accomplishing things and doing things better than she did before. She has

recently been promoted to a managerial position and seeks your advice. What

would you tell her?

5.3 Process-Based Theories

L E A R N I N G O B J E C T I V E S

1. Explain how employees evaluate the fairness of reward distributions.

2. Describe the three types of fairness that affect employee attitudes and

behaviors.

3. List the three questions individuals consider when deciding whether to put forth

effort at work.

4. Describe how managers can use learning and reinforcement principles to

motivate employees.

A separate stream of research views motivation as something more than action aimed at

satisfying a need. Instead, process-based theories view motivation as a rational process.

Individuals analyze their environment, develop thoughts and feelings, and react in certain

ways. Process theories attempt to explain the thought processes of individuals who

demonstrate motivated behavior. Under this category, we will review equity theory,

expectancy theory, and reinforcement theory.

Equity Theory

Imagine that you are paid $10 an hour working as an office assistant. You have held this job

for 6 months. You are very good at what you do, you come up with creative ways to make

things easier around you, and you are a good colleague who is willing to help others. You

Figure 5.7

Equity is determined by

comparing one’s input-

outcome ratio with the

input-outcome ratio of a

referent. When the two

ratios are equal, equity

exists.

Source: Based on Adams,

J. S. (1965). Inequity in

social exchange. In L.

Berkowitz (Ed.),

Advances in

experimental social

psychology: Vol. 2 (pp.

267–299). New York:

Academic Press.

stay late when necessary and are flexible if requested to change hours. Now imagine that

you found out they are hiring another employee who is going to work with you, who will

hold the same job title, and who will perform the same type of tasks. This particular person

has more advanced computer skills, but it is unclear whether these will be used on the job.

The starting pay for this person will be $14 an hour. How would you feel? Would you be as

motivated as before, going above and beyond your duties? How would you describe what

you would be feeling?

If your reaction to this scenario is along the lines of “this would

be unfair,” your behavior may be explained using equity

theory.Adams, J. S. (1965). Inequity in social exchange. In L.

Berkowitz (Ed.), Advances in experimental social psychology

(Vol. 2, pp. 267–299). New York: Academic Press. According to

this theory, individuals are motivated by a sense of fairness in

their interactions. Moreover, our sense of fairness is a result of

the social comparisons we make. Specifically, we compare our

inputs and outcomes with other people’s inputs and outcomes.

We perceive fairness if we believe that the input-to-outcome

ratio we are bringing into the situation is similar to the input-to-

outcome ratio of a comparison person, or a referent.

Perceptions of inequity create tension within us and drive us to

action that will reduce perceived inequity.

What Are Inputs and Outcomes?

Inputs are the contributions people feel they are making to the

environment. In the previous example, the person’s hard work;

loyalty to the organization; amount of time with the

organization; and level of education, training, and skills may

have been relevant inputs. Outcomes are the perceived rewards

someone can receive from the situation. For the hourly wage

employee in our example, the $10 an hour pay rate was a core outcome. There may also be

other, more peripheral outcomes, such as acknowledgment or preferential treatment from a

manager. In the prior example, however, the person may reason as follows: I have been

working here for 6 months. I am loyal, and I perform well (inputs). I am paid $10 an hour

for this (outcomes). The new person does not have any experience here (referent’s inputs)

but will be paid $14 an hour. This situation is unfair.

We should emphasize that equity perceptions develop as a result of a subjective process.

Different people may look at the same situation and perceive different levels of equity. For

example, another person may look at the same scenario and decide that the situation is fair

because the newcomer has computer skills and the company is paying extra for those skills.

Who Is the Referent?

The referent other may be a specific person as well as a category of people. Referents should

be comparable to us—otherwise the comparison is not meaningful. It would be pointless for

a student worker to compare himself to the CEO of the company, given the differences in

the nature of inputs and outcomes. Instead, individuals may compare themselves to

someone performing similar tasks within the same organization or, in the case of a CEO, a

different organization.

Reactions to Unfairness

The theory outlines several potential reactions to perceived inequity. Oftentimes, the

situation may be dealt with perceptually by altering our perceptions of our own or the

referent’s inputs and outcomes. For example, we may justify the situation by downplaying

our own inputs (I don’t really work very hard on this job), valuing our outcomes more highly

(I am gaining valuable work experience, so the situation is not that bad), distorting the

other person’s inputs (the new hire really is more competent than I am and deserves to be

paid more), or distorting the other person’s outcomes (she gets $14 an hour but will have to

work with a lousy manager, so the situation is not unfair). Another option would be to have

the referent increase inputs. If the other person brings more to the situation, getting more

out of the situation would be fair. If that person can be made to work harder or work on

more complicated tasks, equity would be achieved. The person experiencing a perceived

inequity may also reduce inputs or attempt to increase outcomes. If the lower paid person

puts forth less effort, the perceived inequity would be reduced. Research shows that people

who perceive inequity reduce their work performance or reduce the quality of their

inputs.Carrell, M. R., & Dittrich, J. E. (1978). Equity theory: The recent literature,

methodological considerations, and new directions. Academy of Management Review, 3,

202–210; Goodman, P. S., & Friedman, A. (1971). An examination of Adams’ theory of

inequity. Administrative Science Quarterly, 16, 271–288. Increasing one’s outcomes can be

achieved through legitimate means such as negotiating a pay raise. At the same time,

research shows that those feeling inequity sometimes resort to stealing to balance the

scales.Greenberg, J. (1993). Stealing in the name of justice: Informational and interpersonal

moderators of theft reactions to underpayment inequity. Organizational Behavior and

Human Decision Processes, 54, 81–103. Other options include changing the comparison

person (e.g., others doing similar work in different organizations are paid only minimum

wage) and leaving the situation by quitting.Schmidt, D. R., & Marwell, G. (1972).

Withdrawal and reward reallocation as responses to inequity. Journal of Experimental

Social Psychology, 8, 207–211. Sometimes it may be necessary to consider taking legal

action as a potential outcome of perceived inequity. For example, if an employee finds out

the main reason behind a pay gap is gender related, the person may react to the situation by

taking legal action because sex discrimination in pay is illegal in the United States.

Table 5.1 Potential Responses to Inequity

Reactions to inequity

Example

Distort perceptions

Changing one’s thinking to believe that the referent actually is more skilled than previously thought

Increase referent’s inputs

Encouraging the referent to work harder

Reduce own input

Deliberately putting forth less effort at work. Reducing the quality of one’s work

Increase own outcomes

Negotiating a raise for oneself or using unethical ways of increasing rewards such as stealing from the company

Change referent Comparing oneself to someone who is worse off

Leave the situation Quitting one’s job

Seek legal action

Suing the company or filing a complaint if the unfairness in question is under legal protection

Source: Based on research findings reported in Carrell, M. R., & Dittrich, J. E. (1978).

Equity theory: The recent literature, methodological considerations, and new directions.

Academy of Management Review, 3, 202–210; Goodman, P. S., & Friedman, A. (1971). An

examination of Adams’s theory of inequity. Administrative Science Quarterly, 16, 271–288;

Greenberg, J. (1993). Stealing in the name of justice: Informational and interpersonal

moderators of theft reactions to underpayment inequity. Organizational Behavior and

Human Decision Processes, 54, 81–103; Schmidt, D. R., & Marwell, G. (1972). Withdrawal

and reward reallocation as responses to inequity. Journal of Experimental Social

Psychology, 8, 207–211.

Overpayment Inequity

What would you do if you felt you were over-rewarded? In other words, how would you feel

if you were the new employee in our student-worker scenario? Originally, equity theory

proposed that over-rewarded individuals would experience guilt and would increase their

effort to restore perceptions of equity. However, research does not provide support for this

argument. Instead, it seems that individuals experience less distress as a result of being

over-rewarded.Austin, W., & Walster, E. (1974). Reactions to confirmations and

disconfirmations of expectancies of equity and inequity. Journal of Personality and Social

Psychology, 30, 208–216. It is not hard to imagine that individuals find perceptual ways to

deal with a situation like this, such as believing they have more skills and bring more to the

situation compared to the referent person. Therefore, research does not support equity

theory’s predictions with respect to people who are overpaid.Evan, W. M., & Simmons, R. G.

(1969). Organizational effects of inequitable rewards: Two experiments in status

inconsistency. IEEE Engineering Management Review, 1, 95–108.

Individual Differences in Reactions to Inequity

So far, we have assumed that once people feel a situation is inequitable, they will be

motivated to react. However, does inequity disturb everyone equally? Researchers have

identified a personality trait that explains different reactions to inequity and named this

trait as equity sensitivity.Huseman, R. C., Hatfield, J. D., & Miles, E. W. (1987). A new

perspective on equity theory: The equity sensitivity construct. Academy of Management

Review, 12, 222–234. Equity-sensitive individuals expect to maintain equitable

relationships, and they experience distress when they feel they are over-rewarded or under-

rewarded. At the same time, there are some individuals who are benevolents, those who

give without waiting to receive much in return, and entitleds, who expect to receive

substantial compensation for relatively little input. Therefore, the theory is more useful in

explaining the behavior of equity-sensitive individuals, and organizations will need to pay

particular attention to how these individuals view their relationships.

Fairness Beyond Equity: Procedural and Interactional Justice

Equity theory looks at perceived fairness as a motivator. However, the way equity theory

defines fairness is limited to fairness of rewards. Starting in the 1970s, research on

Figure 5.8

Dimensions of

Organizational

Justice

workplace fairness began taking a broader view of justice. Equity theory deals with outcome

fairness, and therefore it is considered to be a distributive justice theory. Distributive

justice refers to the degree to which the outcomes received from the organization are

perceived to be fair. Two other types of fairness have been identified: procedural justice and

interactional justice.

Let’s assume that you just found out you are getting a

promotion. Clearly, this is an exciting outcome and comes with a

pay raise, increased responsibilities, and prestige. If you feel you

deserve to be promoted, you would perceive high distributive

justice (your getting the promotion is fair). However, you later

found out upper management picked your name out of a hat!

What would you feel? You might still like the outcome but feel

that the decision-making process was unfair. If so, you are

describing feelings of procedural justice. Procedural justice

refers to the degree to which fair decision-making procedures

are used to arrive at a decision. People do not care only about

reward fairness. They also expect decision-making processes to

be fair. In fact, research shows that employees care about the

procedural justice of many organizational decisions, including layoffs, employee selection,

surveillance of employees, performance appraisals, and pay decisions.Alge, B. J. (2001).

Effects of computer surveillance on perceptions of privacy and procedural justice. Journal

of Applied Psychology, 86, 797–804; Bauer, T. N., Maertz, C. P., Jr., Dolen, M. R., &

Campion, M. A. (1998). Longitudinal assessment of applicant reactions to employment

testing and test outcome feedback. Journal of Applied Psychology, 83, 892–903; Kidwell,

R. E. (1995). Pink slips without tears. Academy of Management Executive, 9, 69–70. People

also tend to care more about procedural justice in situations in which they do not get the

outcome they feel they deserve.Brockner, J., & Wiesenfeld, B. M. (1996). An integrative

framework for explaining reactions to decisions: Interactive effects of outcomes and

procedures. Psychological Bulletin, 120, 189–208. If you did not get the promotion and

later discovered that management chose the candidate by picking names out of a hat, how

would you feel? This may be viewed as adding insult to injury. When people do not get the

rewards they want, they tend to hold management responsible if procedures are not

fair.Brockner, J., Fishman, A. Y., Reb, J., Goldman, B., Spiegel, S., & Garden, C. (2007).

Procedural fairness, outcome favorability, and judgments of an authority’s responsibility.

Journal of Applied Psychology, 92, 1657–1671.

Why do employees care about procedural justice? There are three potential

reasons.Cropanzano, R., Bowen, D. E., & Gilliland, S. W. (2007). The management of

organizational justice. Academy of Management Perspectives, 21, 34–48; Tyler, T. R.

(1994). Psychological models of the justice motive: Antecedents of distributive and

procedural justice. Journal of Personality and Social Psychology, 67, 850–863; Tyler, T.,

Degoey, P., & Smith, H. (1996). Understanding why the justice of group procedures matters:

A test of the psychological dynamics of the group-value model. Journal of Personality and

Social Psychology, 70, 913–930. First, people tend to believe that fairness is an end in itself

and it is the right thing to do. Second, fair processes guarantee future rewards. If your name

was picked out of a hat, you have no control over the process, and there is no guarantee that

you will get future promotions. If the procedures are fair, you are more likely to believe that

things will work out in the future. Third, fairness communicates that the organization values

its employees and cares about their well-being.

Research has identified many ways of achieving procedural justice. For example, giving

employees advance notice before laying them off, firing them, or disciplining them is

perceived as fair.Kidwell, R. E. (1995). Pink slips without tears. Academy of Management

Executive, 9, 69–70. Advance notice helps employees get ready for the changes facing them

or gives them an opportunity to change their behavior before it is too late. Allowing

employees voice in decision making is also important.Alge, B. J. (2001). Effects of computer

surveillance on perceptions of privacy and procedural justice. Journal of Applied

Psychology, 86, 797–804; Kernan, M. C., & Hanges, P. J. (2002). Survivor reactions to

reorganization: Antecedents and consequences of procedural, interpersonal, and

informational justice. Journal of Applied Psychology, 87, 916–928; Lind, E. A., Kanfer, R.,

& Earley, C. P. (1990). Voice, control, and procedural justice: Instrumental and

noninstrumental concerns in fairness judgments. Journal of Personality and Social

Psychology, 59, 952–959. When designing a performance-appraisal system or

implementing a reorganization, it may be a good idea to ask people for their input because it

increases perceptions of fairness. Even when it is not possible to have employees

participate, providing explanations to employees is helpful in fostering procedural

justice.Schaubroeck, J., May, D. R., & William, B. F. (1994). Procedural justice explanations

and employee reactions to economic hardship: A field experiment. Journal of Applied

Psychology, 79, 455–460. Finally, people expect consistency in treatment.Bauer, T. N.,

Maertz, C. P., Jr., Dolen, M. R., & Campion, M. A. (1998). Longitudinal assessment of

applicant reactions to employment testing and test outcome feedback. Journal of Applied

Psychology, 83, 892–903. If one person is given extra time when taking a test while another

is not, individuals would perceive decision making as unfair.

Now let’s imagine the moment your boss told you that you are getting a promotion. Your

manager’s exact words were, “Yes, we are giving you the promotion. The job is so simple

that we thought even you can handle it.” Now what is your reaction? The feeling of

unfairness you may now feel is explained by interactional justice. Interactional justice

refers to the degree to which people are treated with respect, kindness, and dignity in

interpersonal interactions. We expect to be treated with dignity by our peers, supervisors,

and customers. When the opposite happens, we feel angry. Even when faced with negative

outcomes such as a pay cut, being treated with dignity and respect serves as a buffer and

alleviates our stress.Greenberg, J. (2006). Losing sleep over organizational injustice:

Attenuating insomniac reactions to underpayment inequity with supervisory training in

interactional justice. Journal of Applied Psychology, 91, 58–69.

OB Toolbox: Be a Fair Person!

When distributing rewards, make sure you pay attention to different contribution

levels of employees. Treating everyone equally could be unfair if they participated

and contributed at different levels. People who are more qualified, skilled, or those

who did more than others expect to receive a greater share of rewards.

Sometimes you may have to disregard people’s contributions to distribute certain

rewards. Some rewards or privileges may be better distributed equally (e.g., health

insurance) or based on the particular employee’s needs (such as unpaid leave for

health reasons).

Pay attention to how you make decisions. Before making a decision, ask people to

give you their opinions if possible. Explain your decisions to people who are

affected by it. Before implementing a change, give people advance notice. Enforce

rules consistently among employees.

Pay attention to how you talk to people. Treat others the way you want to be

treated. Be kind, courteous, and considerate of their feelings.

Remember that justice is in the eye of the beholder. Even when you feel you are

being fair, others may not feel the same way, and it is their perception that counts.

Therefore, pay attention to being perceived as fair.

People do not care only about their own justice level. They also pay attention to

how others are treated as well. Therefore, in addition to paying attention to how

specific employees feel, creating a sense of justice in the entire organization is

important.

Sources: Adapted from ideas in Colquitt, J. A. (2004). Does the justice of the one

interact with the justice of the many? Reactions to procedural justice in teams. Journal

of Applied Psychology, 89, 633–646; Cropanzano, R., Bowen, D. E., & Gilliland, S. W.

(2007). The management of organizational justice. Academy of Management

Perspectives, 21, 34–48.

Employers would benefit from paying attention to all three types of justice perceptions. In

addition to being the right thing to do, paying attention to justice perceptions leads to

outcomes companies care about. Injustice is directly harmful to employees’ psychological

health and well-being and contributes to stress.Greenberg, J. (2004). Managing workplace

stress by promoting organizational justice. Organizational Dynamics, 33, 352–365; Tepper,

B. J. (2001). Health consequences of organizational injustice: Tests of main and interactive

effects. Organizational Behavior and Human Decision Processes, 86, 197–215. High levels

of justice create higher levels of employee commitment to organizations, and they are

related to higher job performance, higher levels of organizational citizenship (behaviors that

are not part of one’s job description but help the organization in other ways, such as

speaking positively about the company and helping others), and higher levels of customer

satisfaction. Conversely, low levels of justice lead to retaliation and support of

unionization.Blader, S. L. (2007). What leads organizational members to collectivize?

Injustice and identification as precursors of union certification. Organization Science, 18,

108–126; Cohen-Charash, Y., & Spector, P. E. (2001). The role of justice in organizations: A

meta-analysis. Organizational Behavior and Human Decision Processes, 86, 278–321;

Colquitt, J. A., Conlon, D. E., Wesson, M. J., Porter, C. O. L. H., & Ng, K. Y. (2001). Justice

at the millennium: A meta-analytic review of 25 years of organizational justice research.

Journal of Applied Psychology, 86, 425–445; Cropanzano, R., Bowen, D. E., & Gilliland, S.

W. (2007). The management of organizational justice. Academy of Management

Perspectives, 21, 34–48; Masterson, S. S. (2001). A trickle-down model of organizational

justice: Relating employees’ and customers’ perceptions of and reactions to fairness.

Journal of Applied Psychology, 86, 594–604; Masterson, S. S., Lewis, K., Goldman, B. M.,

& Taylor, S. M. (2000). Integrating justice and social exchange: The differing effects of fair

procedures and treatment on work relationships. Academy of Management Journal, 43,

738–748; Moorman, R. H. (1991). Relationship between organizational justice and

organizational citizenship behaviors: Do fairness perceptions influence employee

citizenship? Journal of Applied Psychology, 76, 845–855; Skarlicki, D. P., & Folger, R.

(1997). Retaliation in the workplace: The roles of distributive, procedural, and interactional

justice. Journal of Applied Psychology, 82, 434–443.

Expectancy Theory

According to expectancy theory, individual motivation to put forth more or less effort is

determined by a rational calculation in which individuals evaluate their situation.Porter, L.

W., & Lawler, E. E. (1968). Managerial attitudes and performance. Homewood, IL: Irwin;

Vroom, V. H. (1964). Work and motivation. New York: Wiley. According to this theory,

individuals ask themselves three questions.

Figure 5.9 Summary of Expectancy Theory

Sources: Based on Porter, L. W., & Lawler, E. E. (1968). Managerial attitudes and performance.

Homewood, IL: Irwin; Vroom, V. H. (1964). Work and motivation. New York: Wiley.

The first question is whether the person believes that high levels of effort will lead to

outcomes of interest, such as performance or success. This perception is labeled

expectancy. For example, do you believe that the effort you put forth in a class is related to

performing well in that class? If you do, you are more likely to put forth effort.

The second question is the degree to which the person believes that performance is related

to subsequent outcomes, such as rewards. This perception is labeled instrumentality. For

example, do you believe that getting a good grade in the class is related to rewards such as

getting a better job, or gaining approval from your instructor, or from your friends or

parents? If you do, you are more likely to put forth effort.

Finally, individuals are also concerned about the value of the rewards awaiting them as a

result of performance. The anticipated satisfaction that will result from an outcome is

labeled valence. For example, do you value getting a better job, or gaining approval from

your instructor, friends, or parents? If these outcomes are desirable to you, your expectancy

and instrumentality is high, and you are more likely to put forth effort.

Expectancy theory is a well-accepted theory that has received a lot of research

attention.Heneman, H. G., & Schwab, D. P. (1972). Evaluation of research on expectancy

theory predictions of employee performance. Psychological Bulletin, 78, 1–9; Van Eerde,

W., & Thierry, H. (1996). Vroom’s expectancy models and work-related criteria: A meta-

analysis. Journal of Applied Psychology, 81, 575–586. It is simple and intuitive. Consider

the following example. Let’s assume that you are working in the concession stand of a movie

theater. You have been selling an average of 100 combos of popcorn and soft drinks a day.

Now your manager asks you to increase this number to 300 combos a day. Would you be

motivated to try to increase your numbers? Here is what you may be thinking:

Expectancy: Can I do it? If I try harder, can I really achieve this number? Is there a link

between how hard I try and whether I reach this goal or not? If you feel that you can

achieve this number if you try, you have high expectancy.

Instrumentality: What is in it for me? What is going to happen if I reach 300? What are

the outcomes that will follow? Are they going to give me a 2% pay raise? Am I going to

be named the salesperson of the month? Am I going to receive verbal praise from my

manager? If you believe that performing well is related to certain outcomes,

instrumentality is high.

Valence: How do I feel about the outcomes in question? Do I feel that a 2% pay raise is

desirable? Do I find being named the salesperson of the month attractive? Do I think

that being praised by my manager is desirable? If your answers are yes, valence is

positive. In contrast, if you find the outcomes undesirable (you definitely do not want to

be named the salesperson of the month because your friends would make fun of you),

valence is negative.

If your answers to all three questions are affirmative—you feel that you can do it, you will

get an outcome if you do it, and you value the reward—you are more likely to be motivated

to put forth more effort toward selling more combos.

As a manager, how can you motivate employees? In fact, managers can influence all three

perceptions.Cook, C. W. (1980). Guidelines for managing motivation. Business Horizons,

23, 61–69.

Influencing Expectancy Perceptions

Employees may not believe that their effort leads to high performance for a multitude of

reasons. First, they may not have the skills, knowledge, or abilities to successfully perform

their jobs. The answer to this problem may be training employees or hiring people who are

qualified for the jobs in question. Second, low levels of expectancy may be because

employees may feel that something other than effort predicts performance, such as political

behaviors on the part of employees. If employees believe that the work environment is not

conducive to performing well (resources are lacking or roles are unclear), expectancy will

also suffer. Therefore, clearing the path to performance and creating an environment in

which employees do not feel restricted will be helpful. Finally, some employees may

perceive little connection between their effort and performance level because they have an

external locus of control, low self-esteem, or other personality traits that condition them to

believe that their effort will not make a difference. In such cases, providing positive

feedback and encouragement may help motivate employees.

Influencing Instrumentality Perceptions

Showing employees that their performance is rewarded is going to increase instrumentality

perceptions. Therefore, the first step in influencing instrumentality is to connect pay and

other rewards to performance using bonuses, award systems, and merit pay. However, this

is not always sufficient, because people may not be aware of some of the rewards awaiting

high performers. Publicizing any contests or award programs is needed to bring rewards to

the awareness of employees. It is also important to highlight that performance, not

something else, is being rewarded. For example, if a company has an employee of the month

award that is rotated among employees, employees are unlikely to believe that performance

is being rewarded. This type of meritless reward system may actually hamper the

motivation of the highest performing employees by eroding instrumentality.

Influencing Valence

Employees are more likely to be motivated if they find the reward to be attractive. This

process involves managers finding what their employees value. Desirable rewards tend to be

fair and satisfy different employees’ diverging needs. Ensuring high valence involves getting

to know a company’s employees. Talking to employees and surveying them about what

rewards they find valuable are some methods to gain understanding. Finally, giving

employees a choice between multiple rewards may be a good idea to increase valence.

Figure 5.10 Ways in Which Managers Can Influence Expectancy, Instrumentality, and

Valence

Reinforcement Theory

Reinforcement theory is based on the work of Ivan Pavlov on behavioral conditioning and

the later work of B. F. Skinner on operant conditioning.Skinner, B. F. (1953). Science and

human behavior. New York: Free Press. According to reinforcement theory, behavior is a

function of its outcomes. Imagine that even though no one asked you to, you stayed late and

drafted a report. When the manager found out, she was ecstatic and took you out to lunch

and thanked you genuinely. The consequences following your good deed were favorable,

and therefore you are more likely to demonstrate similar behaviors in the future. In other

words, your taking initiative was reinforced. Instead, if your manager had said nothing

about it and everyone ignored the sacrifice you made, you are less likely to demonstrate

similar behaviors in the future.

Reinforcement theory is based on a simple idea that may be viewed as common sense.

Beginning at infancy we learn through reinforcement. If you have observed a small child

discovering the environment, you will see reinforcement theory in action. When the child

discovers manipulating a faucet leads to water coming out and finds this outcome pleasant,

he is more likely to repeat the behavior. If he burns his hand while playing with hot water,

the child is likely to stay away from the faucet in the future.

Despite the simplicity of reinforcement, how many times have you seen positive behavior

ignored, or worse, negative behavior rewarded? In many organizations, this is a familiar

scenario. People go above and beyond the call of duty, yet their actions are ignored or

criticized. People with disruptive habits may receive no punishments because the manager

is afraid of the reaction the person will give when confronted. Problem employees may even

receive rewards such as promotions so they will be transferred to a different location and

become someone else’s problem. Moreover, it is common for people to be rewarded for the

wrong kind of behavior. Steven Kerr has labeled this phenomenon “the folly of rewarding A

while hoping for B.”Kerr, S. (1995). On the folly of rewarding A while hoping for B.

Academy of Management Executive, 9, 7–14. For example, a company may make public

statements about the importance of quality. Yet, if they choose to reward shipments on time

regardless of the amount of defects contained in the shipments, employees are more likely

to ignore quality and focus on hurrying the delivery process. Because people learn to repeat

their behaviors based on the consequences following their prior activities, managers will

need to systematically examine the consequences of employee behavior and make

interventions when needed.

Reinforcement Interventions

Reinforcement theory describes four interventions to modify employee behavior. Two of

these are methods of increasing the frequency of desired behaviors, while the remaining two

are methods of reducing the frequency of undesired behaviors.

Figure 5.11 Reinforcement Methods

Positive reinforcement is a method of increasing the desired behavior.Beatty, R. W., &

Schneier, C. E. (1975). A case for positive reinforcement. Business Horizons, 18, 57–66.

Positive reinforcement involves making sure that behavior is met with positive

consequences. For example, praising an employee for treating a customer respectfully is an

example of positive reinforcement. If the praise immediately follows the positive behavior,

the employee will see a link between the behavior and positive consequences and will be

motivated to repeat similar behaviors.

Negative reinforcement is also used to increase the desired behavior. Negative

reinforcement involves removal of unpleasant outcomes once desired behavior is

demonstrated. Nagging an employee to complete a report is an example of negative

reinforcement. The negative stimulus in the environment will remain present until positive

behavior is demonstrated. The problem with negative reinforcement is that the negative

stimulus may lead to unexpected behaviors and may fail to stimulate the desired behavior.

For example, the person may start avoiding the manager to avoid being nagged.

Extinction is used to decrease the frequency of negative behaviors. Extinction is the

removal of rewards following negative behavior. Sometimes, negative behaviors are

demonstrated because they are being inadvertently rewarded. For example, it has been

shown that when people are rewarded for their unethical behaviors, they tend to

demonstrate higher levels of unethical behaviors.Harvey, H. W., & Sims, H. P. (1978). Some

determinants of unethical decision behavior: An experiment. Journal of Applied

Psychology, 63, 451–457. Thus, when the rewards following unwanted behaviors are

removed, the frequency of future negative behaviors may be reduced. For example, if a

coworker is forwarding unsolicited e-mail messages containing jokes, commenting and

laughing at these jokes may be encouraging the person to keep forwarding these messages.

Completely ignoring such messages may reduce their frequency.

Punishment is another method of reducing the frequency of undesirable behaviors.

Punishment involves presenting negative consequences following unwanted behaviors.

Giving an employee a warning for consistently being late to work is an example of

punishment.

Reinforcement Schedules

In addition to types of reinforcements, researchers have focused their attention on

schedules of reinforcement as well.Beatty, R. W., & Schneier, C. E. (1975). A case for positive

reinforcement. Business Horizons, 18, 57–66. Reinforcement is presented on a

continuous schedule if reinforcers follow all instances of positive behavior. An example

of a continuous schedule would be giving an employee a sales commission every time he

makes a sale. In many instances, continuous schedules are impractical. For example, it

would be difficult to praise an employee every time he shows up to work on time. Fixed-

ratio schedules involve providing rewards every nth time the right behavior is

demonstrated. An example of this would be giving the employee a bonus for every tenth sale

he makes. Variable ratio involves providing the reinforcement on a random pattern, such

as praising the employee occasionally when the person shows up on time. In the case of

continuous schedules, behavioral change is more temporary. Once the reward is withdrawn,

the person may stop performing the desired behavior. The most durable results occur under

variable ratios, but there is also some evidence that continuous schedules produce higher

performance than do variable schedules.Beatty, R. W., & Schneier, C. E. (1975). A case for

positive reinforcement. Business Horizons, 18, 57–66; Cherrington, D. J., & Cherrington, J.

O. (1974). Participation, performance, and appraisal. Business Horizons, 17, 35–44; Saari,

L. M., & Latham, G. P. (1982). Employee reactions to continuous and variable ratio

reinforcement schedules involving a monetary incentive. Journal of Applied Psychology,

67, 506–508; Yukl, G. A., & Latham, G. P. (1975). Consequences of reinforcement schedules

and incentive magnitudes for employee performance: Problems encountered in an

industrial setting. Journal of Applied Psychology, 60, 294–298.

OB Toolbox: Be Effective in Your Use of Discipline

As a manager, sometimes you may have to discipline an employee to eliminate

unwanted behavior. Here are some tips to make this process more effective.

Consider whether punishment is the most effective way to modify behavior.

Sometimes catching people in the act of doing good things and praising or

rewarding them is preferable to punishing negative behavior. Instead of criticizing

them for being late, consider praising them when they are on time. Carrots may be

more effective than sticks. You can also make the behavior extinct by removing any

rewards that follow undesirable behavior.

Be sure that the punishment fits the crime. If a punishment is too harsh, both the

employee in question and coworkers who will learn about the punishment will feel

it is unfair. Unfair punishment may not change unwanted behavior.

Be consistent in your treatment of employees. Have disciplinary procedures and

apply them in the same way to everyone. It is unfair to enforce a rule for one

particular employee but then give others a free pass.

Document the behavior in question. If an employee is going to be disciplined, the

evidence must go beyond hearsay.

Be timely with discipline. When a long period of time passes between behavior and

punishment, it is less effective in reducing undesired behavior because the

connection between the behavior and punishment is weaker.

Sources: Adapted from ideas in Ambrose, M. L., & Kulik, C. T. (1999). Old friends, new

faces: Motivation research in the 1990s. Journal of Management, 25, 231–292; Guffey,

C. J., & Helms, M. M. (2001). Effective employee discipline: A case of the Internal

Revenue Service. Public Personnel Management, 30, 111–128.

A systematic way in which reinforcement theory principles are applied is called

Organizational Behavior Modification (or OB Mod).Luthans, F., & Stajkovic, A. D. (1999).

Reinforce for performance: The need to go beyond pay and even rewards. Academy of

Management Executive, 13, 49–57. This is a systematic application of reinforcement theory

to modify employee behaviors in the workplace. The model consists of five stages. The

process starts with identifying the behavior that will be modified. Let’s assume that we are

interested in reducing absenteeism among employees. In step 2, we need to measure the

baseline level of absenteeism. How many times a month is a particular employee absent? In

step 3, the behavior’s antecedents and consequences are determined. Why is this employee

absent? More importantly, what is happening when the employee is absent? If the behavior

is being unintentionally rewarded (e.g., the person is still getting paid or is able to avoid

unpleasant assignments because someone else is doing them), we may expect these positive

consequences to reinforce the absenteeism. Instead, to reduce the frequency of absenteeism,

it will be necessary to think of financial or social incentives to follow positive behavior and

negative consequences to follow negative behavior. In step 4, an intervention is

implemented. Removing the positive consequences of negative behavior may be an effective

way of dealing with the situation, or, in persistent situations, punishments may be used.

Finally, in step 5 the behavior is measured periodically and maintained.

Studies examining the effectiveness of OB Mod have been supportive of the model in

general. A review of the literature found that OB Mod interventions resulted in 17%

improvement in performance.Stajkovic, A. D., & Luthans, F. (1997). A meta-analysis of the

effects of organizational behavior modification on task performance, 1975–1995. Academy

of Management Journal, 40, 1122–1149. Particularly in manufacturing settings, OB Mod

was an effective way of increasing performance, although positive effects were observed in

service organizations as well.

Figure 5.12 Stages of Organizational Behavior Modification

Source: Based on information presented in Stajkovic, A. D., & Luthans, F. (1997). A meta-analysis

of the effects of organizational behavior modification on task performance, 1975–1995. Academy

of Management Journal, 40, 1122–1149.

K E Y TA K E AWAY

Process-based theories use the mental processes of employees as the key to

understanding employee motivation. According to equity theory, employees are

demotivated when they view reward distribution as unfair. Perceptions of fairness

are shaped by the comparisons they make between their inputs and outcomes with

respect to a referent’s inputs and outcomes. Following equity theory, research

identified two other types of fairness (procedural and interactional) that also affect

worker reactions and motivation. According to expectancy theory, employees are

motivated when they believe that their effort will lead to high performance

(expectancy), when they believe that their performance will lead to outcomes

(instrumentality), and when they find the outcomes following performance to be

desirable (valence). Reinforcement theory argues that behavior is a function of its

consequences. By properly tying rewards to positive behaviors, eliminating rewards

following negative behaviors, and punishing negative behaviors, leaders can

increase the frequency of desired behaviors. These three theories are particularly

useful in designing reward systems within a company.

E X E R C I S E S

1. Your manager tells you that the best way of ensuring fairness in reward

distribution is to keep the pay a secret. How would you respond to this

assertion?

2. When distributing bonuses or pay, how would you ensure perceptions of

fairness?

3. What are the differences between procedural, interactional, and distributive

justice? List ways in which you could increase each of these justice perceptions.

4. Using examples, explain the concepts of expectancy, instrumentality, and

valence.

5. Some practitioners and researchers consider OB Mod unethical because it may

be viewed as a way of manipulation. What would be your reaction to such a

criticism?

5.4 The Role of Ethics and National Culture

L E A R N I N G O B J E C T I V E S

1. Consider the role of motivation for ethical behavior.

2. Consider the role of national culture on motivation theories.

Motivation and Ethics

What motivates individuals to behave unethically? Motivation theories have been applied to

explain this interesting and important question. One theory that has been particularly

successful in explaining ethical behavior is reinforcement theory. Just like any other

behavior such as performance or cooperation, ethical behavior is one that is learned as a

result of the consequences following one’s actions. For example, in an experiment

simulating the job of a sales manager, participants made a series of decisions using a

computer. Partway through the simulation, subjects were informed that salespeople

reporting to them were giving kickbacks to customers. Subjects in this experiment were

more likely to cut the kickbacks if there was a threat of punishment to the manager. On the

other hand, subjects playing the sales manager were more likely to continue giving away the

kickbacks if they made a profit after providing the kickbacks.Hegarty, W. H., & Sims, H. P.

(1978). Some determinants of unethical decision behavior: An experiment. Journal of

Applied Psychology, 63, 451–457. In a separate study highlighting the importance of

rewards and punishments, researchers found that the severity of expected punishment was

the primary predictor of whether subjects reported inclination to behave unethically. In

addition to the severity of the punishment, the perceived likelihood of punishment was also

a major influence of ethical behavior.Rettig, S., & Rawson, H. E. (1963). The risk hypothesis

in predictive judgments of unethical behavior. Journal of Abnormal and Social Psychology,

66, 243–248. These findings highlight the importance of rewards and punishments for

motivating unethical behaviors.

There are many organizational situations in which individuals may do unethical things but

then experience positive consequences such as being awarded promotions for meeting their

sales quotas. For example, in many hotels, staff members routinely receive kickbacks from

restaurants or bars if they refer customers to those locations.Elliott, C. (2007). Is your

bellhop on the take? National Geographic Traveler, 24(3), 18–20. Similarly, sales staff

rewarded with spiffs (product-specific sales incentives) may give customers advice that goes

against their own personal beliefs and in this sense act unethically.Radin, T. J., & Predmore,

C. E. (2002). The myth of the salesperson: Intended and unintended consequences of

product-specific sales incentives. Journal of Business Ethics, 36, 79–92. As long as

unethical behavior is followed by positive consequences for the person in question, we

would expect unethical behavior to continue. Thus, in order to minimize the occurrence of

unethical behavior (and in some instances legal problems), it seems important to examine

the rewards and punishments that follow unethical behavior and remove rewards following

unethical behavior while increasing the severity and likelihood of punishment.

Motivation Around the Globe

Motivation is a culturally bound topic. In other words, the factors that motivate employees

in different cultures may not be equivalent. The motivation theories we cover in this chapter

are likely to be culturally bound because they were developed by Western researchers and

the majority of the research supporting each theory was conducted on Western subjects.

Based on the cultural context, Maslow’s hierarchy of needs may require modification

because the ranking of the needs may differ across cultures. For example, a study conducted

in 39 countries showed that financial satisfaction was a stronger predictor of overall life

satisfaction in developing nations compared to industrialized nations. In industrialized

nations, satisfaction with esteem needs was a more powerful motivator than it was in

developing nations.Oishi, S., Diener, E. F., & Suh, E. M. (1999). Cross-cultural variations in

predictors of life satisfaction: Perspectives from needs and values. Personality and Social

Psychology Bulletin, 25, 980–990.

People around the world value justice and fairness. However, what is perceived as fair may

be culturally dependent. Moreover, people in different cultures may react differently to

perceived unfairness.Erdogan, B., & Liden, R. C. (2006). Collectivism as a moderator of

responses to organizational justice: Implications for leader-member exchange and

ingratiation. Journal of Organizational Behavior, 27, 1–17; Mueller, C. W., & Wynn, T.

(2000). The degree to which justice is valued in the workplace. Social Justice Research, 13,

1–24. For example, in cross-cultural studies, it was found that participants in low power

distance cultures such as the United States and Germany valued voice into the process (the

opportunities for explanation and appealing a decision) more than those in high power

distance cultures such as China and Mexico. At the same time, interactional justice was

valued more by the Chinese subjects.Brockner, J., Ackerman, G., Greenberg, J., Gelfand, M.

J., Francesco, A. M., Chen, Z. X., et al. (2001). Culture and procedural justice: The influence

of power distance on reactions to voice. Journal of Experimental Social Psychology, 37,

300–315; Tata, J. (2005). The influence of national culture on the perceived fairness of

grading procedures: A comparison of the United States and China. Journal of Psychology,

139, 401–412. There is also some evidence indicating that equity (rewarding employees

based on their contributions to a group) may be a culture-specific method of achieving

fairness. One study shows that Japanese subjects viewed equity as less fair and equality-

based distributions as more fair than did Australian subjects.Kashima, Y., Siegal, M.,

Tanaka, K., & Isaka, H. (1988). Universalism in lay conceptions of distributive justice: A

cross-cultural examination. International Journal of Psychology, 23, 51–64. Similarly,

subjects in different cultures varied in their inclination to distribute rewards based on

subjects’ need or age, and in cultures such as Japan and India, a person’s need may be a

relevant factor in reward distributions.Kashima, Y., Siegal, M., Tanaka, K., & Isaka, H.

(1988). Universalism in lay conceptions of distributive justice: A cross-cultural examination.

International Journal of Psychology, 23, 51–64; Murphy-Berman, V., Berman, J., Singh,

P., Pachauri, A., & Kumar, P. (1984). Factors affecting allocation to needy and meritorious

recipients: A cross-cultural comparison. Journal of Personality and Social Psychology, 46,

1267–1272.

K E Y TA K E AWAY

Motivation theories are particularly useful for understanding why employees behave

unethically. Based on reinforcement theory, people will demonstrate higher unethical

behaviors if their unethical behaviors are followed by rewards or go unpunished.

Similarly, according to expectancy theory, if people believe that their unethical

actions will be rewarded with desirable outcomes, they are more likely to

demonstrate unethical behaviors. In terms of culture, some of the motivation

theories are likely to be culture-bound, whereas others may more readily apply to

other cultures. Existing research shows that what is viewed as fair or unfair tends to

be culturally defined.

E X E R C I S E S

1. What is the connection between a company’s reward system and the level of

ethical behaviors?

2. Which of the motivation theories do you think would be more applicable to many

different cultures?

5.5 Motivation in Action: The Case of Trader Joe’s

People in Hawaiian T-shirts. Delicious fresh fruits and vegetables. A place where

parking is tight and aisles are tiny. A place where you will be unable to find half the

things on your list but will go home satisfied. We are, of course, talking about Trader

Joe’s (a privately held company), a unique grocery store headquartered in California

and located in 22 states. By selling store-brand and gourmet foods at affordable prices,

this chain created a special niche for itself. Yet the helpful employees who stock the

shelves and answer questions are definitely key to what makes this store unique and

helps it achieve twice the sales of traditional supermarkets.

Shopping here is fun, and chatting with employees is a routine part of this experience.

Employees are upbeat and friendly to each other and to customers. If you look lost,

there is the definite offer of help. But somehow the friendliness does not seem scripted.

Instead, if they see you shopping for big trays of cheese, they might casually inquire if

you are having a party and then point to other selections. If they see you chasing your

toddler, they are quick to tie a balloon to his wrist. When you ask them if they have any

cumin, they get down on their knees to check the back of the aisle, with the attitude of

helping a guest that is visiting their home. How does a company make sure its

employees look like they enjoy being there to help others?

One of the keys to this puzzle is pay. Trader Joe’s sells cheap organic food, but they are

not “cheap” when it comes to paying their employees. Employees, including part-

timers, are among the best paid in the retail industry. Full-time employees earn an

average of $40,150 in their first year and also earn average annual bonuses of $950

with $6,300 in retirement contributions. Store managers’ average compensation is

$132,000. With these generous benefits and above-market wages and salaries, the

company has no difficulty attracting qualified candidates.

But money only partially explains what energizes Trader Joe’s employees. They work

with people who are friendly and upbeat. The environment is collaborative, so that

people fill in for each other and managers pick up the slack when the need arises,

including tasks like sweeping the floors. Plus, the company promotes solely from

within, making Trader Joe’s one of few places in the retail industry where employees

can satisfy their career aspirations. Employees are evaluated every 3 months and

receive feedback about their performance.

Employees are also given autonomy on the job. They can open a product to have the

customers try it and can be honest about their feelings toward different products. They

receive on- and off-the-job training and are intimately familiar with the products, which

enables them to come up with ideas that are taken seriously by upper management. In

short, employees love what they do, work with nice people who treat each other well,

and are respected by the company. When employees are treated well, it is no wonder

they treat their customers well daily.

Case written by [citation redacted per publisher request]. Based on information from

Lewis, L. (2005). Trader Joe’s adventure. Chicago: Dearborn Trade; McGregor, J.,

Salter, C., Conley, L., Haley, F., Sacks, D., & Prospero, M. (2004). Customers first. Fast

Company, 87, 79–88; Speizer, I. (2004). Shopper’s special. Workforce Management,

83, 51–55.

D I S C U S S I O N Q U E S T I O N S

1. How much of Trader Joe’s success can be attributed to the fact that most larger

chain grocery stores do not sell the type of food available at Trader Joe’s?

2. Is pay enough of an incentive to continue at a job you do not enjoy?

3. Trader Joe’s promotes entirely from within the organization. This means that if

you are a good, dedicated worker, you can rise up within the company. Do you

feel employees would be as dedicated to the company if this were not the case?

Would high pay be enough to keep employees? What if the company only

promoted from within but pay were not as good?

5.6 Conclusion

In this chapter we have reviewed the basic motivation theories that have been developed to

explain motivated behavior. Several theories view motivated behavior as attempts to satisfy

needs. Based on this approach, managers would benefit from understanding what people

need so that the actions of employees can be understood and managed. Other theories

explain motivated behavior using the cognitive processes of employees. Employees respond

to unfairness in their environment, they learn from the consequences of their actions and

repeat the behaviors that lead to positive results, and they are motivated to exert effort if

they see their actions will lead to outcomes that would get them desired rewards. None of

these theories are complete on their own, but each theory provides us with a framework we

can use to analyze, interpret, and manage employee behaviors in the workplace.

5.7 Exercises

E T H I C A L D I L E M M A

Companies are interested in motivating employees: Work hard, be productive,

behave ethically—and stay healthy. Health care costs are rising, and employers are

finding that unhealthy habits such as smoking or being overweight are costing

companies big bucks.

Your company is concerned about the rising health care costs and decides to

motivate employees to adopt healthy habits. Therefore, employees are given a year

to quit smoking. If they do not quit by then, they are going to lose their jobs. New

employees will be given nicotine tests, and the company will avoid hiring new

smokers in the future. The company also wants to encourage employees to stay

healthy. For this purpose, employees will get cash incentives for weight loss. If they

do not meet the weight, cholesterol, and blood pressure standards to be issued by

the company, they will be charged extra fees for health insurance.

Is this plan ethical? Why or why not? Can you think of alternative ways to motivate

employees to adopt healthy habits?

I N D I V I D U A L E X E R C I S E

Your company provides diversity training programs to ensure that employees realize

the importance of working with a diverse workforce, are aware of the equal

employment opportunity legislation, and are capable of addressing the challenges of

working in a multicultural workforce. Participation in these programs is mandatory,

and employees are required to take the training as many times as needed until they

pass. The training program lasts one day and is usually conducted in a nice hotel

outside the workplace. Employees are paid for the time they spend in the training

program. You realize that employees are not really motivated to perform well in this

program. During the training, they put in the minimum level of effort, and most

participants fail the exam given at the conclusion of the training program and then

have to retake the training.

Using expectancy and reinforcement theories, explain why they may not be

motivated to perform well in the training program. Then suggest improvements in the

program so that employees are motivated to understand the material, pass the

exam, and apply the material in the workplace.

G R O U P E X E R C I S E

A Reward Allocation Decision

You are in charge of allocating a $12,000 bonus to a team that recently met an

important deadline. The team was in charge of designing a Web-based product for a

client. The project lasted a year. There were five people in the team. Your job is to

determine each person’s share from the bonus.

Devin: Project manager. He was instrumental in securing the client, coordinating

everyone’s effort, and managing relationships with the client. He put in a lot of extra

hours for this project. His annual salary is $80,000. He is independently wealthy,

drives an expensive car, and does not have any debt. He has worked for the

company for 5 years and worked for the project from the beginning.

Alice: Technical lead. She oversaw the technical aspects of the project. She

resolved many important technical issues. During the project, while some members

worked extra hours, she refused to stay at the office outside regular hours. However,

she was productive during regular work hours, and she was accessible via e-mail in

the evenings. Her salary is $50,000. She is a single mother and has a lot of debt.

She has worked for the company for 4 years and worked for the project for 8

months.

Erin: Graphic designer. She was in charge of the creative aspects of the project. She

experimented with many looks, and while doing that she slowed down the entire

team. Brice and Carrie were mad at her because of the many mistakes she made

during the project, but the look and feel of the project eventually appealed to the

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client, which resulted in repeat business. Her salary is $30,000. She is single and

lives to party. She has worked for the company for 2 years and worked for this

project from the beginning.

Brice: Tester. He was in charge of finding the bugs in the project and ensuring that it

worked. He found many bugs, but he was not very aggressive in his testing. He

misunderstood many things, and many of the bugs he found were not really bugs

but his misuse of the system. He had a negative attitude toward the whole project,

acted very pessimistically regarding the likelihood of success, and demoralized the

team. His salary is $40,000. He has accumulated a large credit card debt. He has

worked for the company for 3 years and worked for the project in the last 6 months.

Carrie: Web developer. She was in charge of writing the code. She was frustrated

when Erin slowed down the entire project because of her experimentation. Carrie

was primarily responsible for meeting the project deadline because she put in a lot

of extra work hours. Her salary is $50,000. Her mother has ongoing health issues,

and Carrie needs money to help her. She worked for the company for the past year

and was involved in this project for 6 months.

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