Foundations of Employee Motivation

Opening Vignette: Motivation at Capital One

Capital One has a motivated workforce by hiring people with an entrepreneurial spirit, challenging them through stretch goals, and continually evaluating individual and organizational performance.

Motivation -- the internal forces that affect the direction, intensity, and persistence of voluntary behavior

Motivating employees is more challenging today because:

1.       Layoffs, restructuring have damaged employee trust and commitment

2.       Flatter organizations -- not enough supervisors to practice ‘command-and-control’ motivation

3.       Changing workforce

--  younger generation employees have different needs than baby boomers

--  people have more diverse values – results in more variety in what motivates employees

Two types of motivation theories:

1.       Content theories -- explain why people have different needs at different times

2.       Process theories -- describe the processes through which needs are translated into behavior

Content Theories of Motivation

Needs -- deficiencies that energize behaviors to satisfy those needs

1. Needs hierarchy theory (Maslow)

•        Five basic human needs in a hierarchy of importance

-    physiological, safety, belongingness, esteem, and self-actualization

•        Satisfaction-progression hypothesis

-    as a need level is satisfied, move to next level up the hierarchy

-    self-actualization is the exception -- people desire more of this need

•        Problem:  Needs hierarchy theory lacks empirical support

-    too rigid for dynamics of human needs

-    needs do not cluster around Maslow’s categories

2. ERG theory  (Alderfer)

•        Three need categories: existence, relatedness, and growth

•        Applies both satisfaction-progression and frustration-regression process

•        Frustration-regression – people shift to a lower need if a higher need is blocked

•        Provides good representation of need dynamics

-    less rigid, more accurate than needs hierarchy theory

3. Motivator-Hygiene Theory (Herzberg)

•        Does not suggest that people change their needs over time

•        Proposes that employees are primarily motivated by growth and esteem needs

--  Motivators -- growth needs -- result in job satisfaction when received, so employees motivated by them

--  Hygienes -- extrinsic factors -- increasing them reduces job dissatisfaction, but doesn’t increase satisfaction

•        Job satisfaction -- a person’s attitude (beliefs, assessed feelings, and behavioral intentions) regarding the job and work context.

•        Limitation of motivator-hygiene theory

--  limited empirical support

--  hygiene factors are widely used to motivate

•        Importance of Herzberg’s work: recognizes job content as a dominant source of employee motivation.  

4. McClelland’s theory of learned needs  

•        Secondary needs -- learned rather than instinctive

•        Need for achievement

--  need to reach goals, take responsibility

--  good entrepreneurs have high achievement need

--  need for achievement related to economic growth in a society

Companies are trying to support entrepreneurship by:

1.       Clarifying the firm’s purpose and shared values

2.       Supporting and reinforcing entrepreneurial behavior

3.       Creating small businesses within the larger organization

•        Need for affiliation

--  want others’ approval, avoid conflict

--  effective executives -- low affiliation need, less affected by need for approval.

•        Need for power

--  want to control one’s environment

--  socialized (help others) vs. person power need (personal gain)

--  effective executives -- need socialized power to achieve organizational goals

•        Training programs can strengthen learned need

Practical implications of content theories

•        Match rewards with employee needs

•        Offer employees a choice of rewards – because people have different needs at different times

•        Do not rely too heavily on financial rewards as a source of employee motivation

Content theories across cultures

•        Some scholars think content theories of motivation don’t apply across cultures

•        Main arguments have been directed at needs hierarchy theory, which doesn’t fit North America, either.

•        research has mostly found support for cross-cultural relevance of content theories

--  McClelland’s learned needs theory also seems to apply across cultures

--  conceptual structure of need for achievement is consist across several different cultures

Process Theories of Motivation

•        process theories describe the processes through which need deficiencies are translated into behavior

Expectancy Theory

•        Work effort is directed toward behaviors believed to lead to desired outcomes

•        Effort -- a person’s actual exertion of energy

Effort level depends on a combination of three factors:

1. Effort—>performance (E-to-P) expectancy

•        Perceived probability that a particular effort level will result in a particular performance level

•        Ranges from 0.0 (no chance) to 1.0 (certainty)

2. Performance—>outcome (P-to-O) expectancy

•        Perceived probability that a specific behavior or performance level will lead to specific outcomes.

•        Ranges from 0.0 (no chance) to 1.0 (certainty)

3. Outcome valences

•        Anticipated satisfaction/dissatisfaction toward an outcome

•   Range from negative to positive feelings about outcome

Expectancy Theory in Practice

1. Increasing the E-to-P expectancies

•        Provide training

•        Select qualified applicants

•        Provide sufficient resources

•        Clarify role perceptions

•        Increase self-efficacy -- coaching, feedback, shaping

2. Increasing the P-to-O expectancies

•        Measure performance accurately -- give higher rewards to better performers

•        Communicate the performance-based reward system

•        Explain how rewards are based on past performance

3. Increasing outcome valences

•        Distribute rewards that employees value

•        Individualize rewards

•        Minimize the presence of countervalent outcomes

Evaluating expectancy theory

•        Past measurement and research design problems in expectancy theory research

•        Theory is not culture-bound

•        One of the best models for predicting work effort

--  P-to-O expectancies strongly influence motivation

Equity Theory

•        how people develop perceptions of fairness in the distribution and exchange of resources

•        what employees are motivated to do when they feel inequitably treated

Elements in Equity Theory

1. Outcome/input ratio   

•        Inputs -- what employee contributes(e.g. skill)

•        Outcomes -- what employees receive (e.g. pay)

•        Inputs and outcomes weighted by importance -- unique to each person

2. Comparison other

•        Compare situation with others

•        Comparison other is not easily identifiable -- often in same company, may be composite of several people

3. Equity evaluation

•        Compare outcome/input ratio with comparison other

•        Result is overreward or underreward inequity, or equity

Overreward vs. Underreward Equity

•        Equity condition -- you and the comparison other have the same outcome/input ratios

•        Underreward inequity -- comparison other has a higher ratio than your ratio --more valuable outcomes proportional to inputs

•        Overreward inequity -- you seem to have a higher ratio than the comparison other’s ratio --you received more valuable outcomes proportional to inputs

Inequity consequences -- motivation to reduce inequity

1.       Change inputs -- reduce effort corrects underreward

2.       Change outcomes -- ask for pay increase corrects underreward

3.       Change perceptions -- if overrewarded, perceive more value of one’s experience

4.       Leave the field -- transfer to more equitable environment

5.       Act on the comparison other -- e.g. overrewarded employees encourage comparison other to work less

6.       Change comparison other -- better O/I ratio

Ethics of Inequity

•        Distributive justice rule -- inequality is acceptable if:

--  Equal access to favored positions in society (e.g., employment equity)

--  Inequalities are ultimately in the best interest of the least well off in society -- reward those who takes risks for benefit of society

Equity Sensitivity --Individual Differences in Equity

•        Outcome/input preferences and reaction to various outcome/input ratios

•        Benevolents

--  tolerant of being underrewarded

--  tend to have higher internal locus of control, conscientiousness, and agreeableness

•        Equity Sensitives

--  want ratio to be equal to the comparison other

--  applies standard equity model

•        Entitleds

–   prefer receiving proportionately more than others

Equity Theory in Practice

•        Treat people fairly in the distribution of rewards

--  this is more difficult as workforce and employment relationships become more diverse

Goal setting at CDW Computer Centers

CDW Computer Centers has become a leading direct marketer of computers and peripherals by setting specific, challenging goals for its employees. “we set BHAGS -- which are big, hairy aggressive goals,” says CEO John A. Edwardson.

Goal Setting

Process of motivating employees and clarifying their role perceptions by establishing performance objectives

•        Goals -- objectives that employees try to accomplish from their work effort

•        Improves motivation and role perceptions

Management-by-objectives

•        A formal participative goal-setting process in which organizational objectives are cascaded down to work units and individual employees.

Conditions for Effective Goal Setting

•        Specific goals -- measurable change over specific time

•        Relevant goals

--  relevant to the individual’s job

--  within employee’s control

•        Challenging goals

--  greater effort and persistence than easier goals

--  greater potential self-actualization

--  goals that appear to be too difficult will be rejected

•        Goal commitment

-    employees must be committed to the goal

-    stronger with higher self-efficacy -- perceived ability to accomplish the goal

•        Participation in goal formation (sometimes)

-    may improve goal quality and commitment

•        Goal feedback

-    need to know whether the goal achieved or effort is properly directed

Goal setting is widely supported in research and practice, but:

•        May not work when goal tied to rewards

•        Some job performance dimensions are difficult to measure for goal setting