Contemporary Management Chapter 13

Contemporary Management Chapter 13: Motivation and Performance

• Motivation is the psychological forces affecting behavior direction, effort, and persistence within organizations. This explains why people behave as they do in an organizational setting.
• Motivation has three key components:
  • Direction: Possible behaviors an individual can engage in.
  • Effort: How hard an individual works.
  • Persistence: The individual's willingness to keep trying in the face of obstacles.
• Motivation can be categorized as follows:
  • Intrinsically motivated behavior: Behaviors performed for their own sake.
  • Extrinsically motivated behavior: Behaviors performed for material or social rewards or to avoid punishment.
  • Prosocially motivated behavior: Behaviors performed for the benefit of others.
• Outcomes: Anything an individual receives from a job or organization. Examples include pay, job security, benefits, and vacation time.
• Inputs: Anything an individual contributes to a job or organization. Examples include time, effort, skills, knowledge, and work behaviors.
  • (Motivational Equation includes "Inputs", "Performance", and "Outcomes" sections)

Learning Objectives

• Explain motivation and why managers should be concerned about it.
• Describe expectancy theory and equity theory to understand how managers can create a highly motivated workforce.
• Explain how goals and needs motivate people, along with the types of goals that lead to high performance.
• Identify the lessons about motivation from operant conditioning theory and social learning theory.
• Explain how managers can use pay as a motivational tool.

Expectancy Theory

• A theory that motivation is high when workers believe effort leads to high performance, and that high performance leads to desired outcomes.
• Developed by Victor H. Vroom in the 1960s.
• Three key components to expectancy theory are:
  • Expectancy: How much an individual believes that effort will lead to performance and success.
  • Instrumentality: How much an individual believes that performance will lead to outcomes.
  • Valence: The value that an individual places on outcomes.

Need Theories

• Theories focusing on the needs people try to satisfy at work and the outcomes that satisfy those needs.
• Need: A requirement or necessity for survival and well-being.

Maslow's Hierarchy of Needs

• A hierarchical arrangement of five basic needs that motivate behavior.
• The lowest level of unmet needs is the primary motivator.
• Only one level of needs is motivational at a given time.

Alderfer's ERG Theory

• A theory that suggests three universal needs—existence, relatedness, and growth—comprise a hierarchy of needs and drive behavior.
• Needs at multiple levels can be motivational simultaneously.

Herzberg's Motivation-Hygiene Theory

• This theory distinguishes between motivator needs and hygiene needs to explain motivation and job satisfaction.
• Satisfying motivator needs leads to high motivation and job satisfaction. These needs relate to the nature of the work itself such as autonomy, responsibility, interesting work.
• Hygiene needs are the background conditions, and if not met they can result in dissatisfaction. These related to the work environment and context, such as pay, job security, and work environment.

McClelland's Needs for Achievement, Affiliation, and Power

• Need for achievement: The extent to which an individual desires to perform demanding tasks well and meet high personal standards.
• Need for affiliation: A concern about establishing and maintaining relationships, being liked, and having people around the individual get along well.
• Need for power: The desire to control or influence others.

Equity Theory

• A theory that focuses on people's perceptions of fairness in their work outcomes relative to their work inputs.
• Equity exists when a person's outcome-to-input ratio is equal to a referent's ratio.
• Inequity arises when the ratios are unequal.
  • Underpayment inequity: A perceived lower outcome-to-input ratio than a referent's.
  • Overpayment inequity: A perceived higher outcome-to-input ratio than a referent's.

Equity and Justice in Organizations

• Distributive justice: The fairness of outcomes distribution.
• Procedural justice: The fairness of procedures used for distributing outcomes.
• Interpersonal justice: The fairness in interpersonal treatment.
• Informational justice: The fairness in providing information about decisions and procedures.

Goal-Setting Theory

• A theory focusing on identifying effective goals to motivate high performance.
• Goals must be specific and difficult.

Learning Theories

• Theories that link employee outcomes (e.g., pay) to performance and desired behaviors.

Operant Conditioning Theory

• People learn through consequences.
• Managers use positive reinforcement, negative reinforcement, punishment, and extinction to shape desired behaviors.

Social Learning Theory

• Learning and motivation are influenced by thoughts, beliefs, and observations of others' behavior.
• Vicarious learning (observational learning): Motivated to perform behavior by watching someone else perform it and being rewarded.
• Self-reinforcer: Desired reward a person gives themselves.
• Self-efficacy: One's belief in their ability to successfully perform a behavior.

Pay and Motivation

• Pay can be a motivator, influenced by factors from different theories discussed earlier.
• Expectancy Theory: High instrumentality (link between performance and pay) is significant.
• Needs Theory: Used to address various needs (physiological, safety, etc.)
• Equity Theory: Pay needs to be fair in relation to inputs and other employees' compensation.
• Goal-Setting Theory: Pay should be directly linked and tied to achieving goals.
• Learning Theory: Pay is linked to desired behaviors and the attainment of goals.

Merit Pay and Performance

• Compensation plans that base pay on individual, group, or organizational performance.
• An individual plan is appropriate where performance is easy to measure, such as sales.

Additional Concepts

• Employee Stock Options: A financial instrument for employees to buy company stock, often used to attract and motivate managers, encouraging ownership in the firm.
• Example: Warren Buffett's Philanthropy: An anecdote illustrating potential motivations (belief in the work of a foundation).