Motivation Notes

1
Motivation Notes

• July 30, 2003
• Mgmt 505

2
Porter Lawlers Model
Perceived Equitable Rewards
Value of Reward
Abilities Traits
Effort
Performance
Rewards
Satisfaction
Perceived Effort-Reward Probability
Role Perceptions
3
Procedural Justice Rules (After Leventhal, 1980)

• The Consistency Rule- over time and across people
• The Bias-Suppression Rule
• The Accuracy Rule- use good information
• Record Keeping- archival audit trail
• The Correctability Rule- modifications can be
  made
• The Representativeness Rule- no favoratism

4
Distributional Justice Rules(After Leventhal,
1980)

• Distribute rewards according to contributions
  (classical equity theory, production theory)
• Distribute rewards according to needs (classical
  Marxist principle)
• Distribute rewards to achieve equality (classical
  social-democratic principle)

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Justice and Employee Contributions
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Extrinsic Incentive Control of Motivation for
Risk Averse Workers

• Informativeness Principle Include any measures
  of performance that reduce error measurements of
  employee performance
• Incentive Intensity Principle
• 1. Increase intensity if profit increases are
  tied to
• employee effort increases
• 2. Increase intensity if measurement accuracy
  increases
• 3. Decrease intensity if employee risk aversion
  increases
• 4. Increase intensity if employees can respond
  to the increases (when they have more discretion
  over outcomes)

7
Pay for Performance

• Many wage plans come down to paying a fixed
  salary, a, plus a variable incentive component
  based on measured performance, by
• Y is a noisy measure that contains employee
  effort, e, and a random noise variable, n.
• B is a proportionality constant called INTENSITY
• The question is how to set b in order to maximize
  employee-employer total value.
• To complicate matters, the employee is risk averse