Part I Individuals in Organizations

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Part IIndividuals in Organizations

• Chapter 5
• Achieving Motivation
• in the Workplace

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Chapter Objectives

• The Basic Motivation Process
• Motivating Employees Through Meeting Human Needs
• Hierarchy of Needs Theory - Maslow
• Achievement Motivation Model Three Needs Theory
• Motivating Employees Through Work Design
• Motivation-Hygiene Theory
• Job Redesign Job Enlargement Enrichment
  (Handout)
• Motivating Employees Through Performance
  Expectations
• Expectancy Model
• Motivating Employees Through Equity
• Equity Theory
• Motivating Employees Through Goal Setting
• Goal Setting Theory

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Introduction

• Human capital is the most valuable asset in any
  organization.
• Motivation is the force that, when generated, can
  transform the performance level of any work
  force.
• An individuals performance at work is a function
  of his ability and motivation levels.
• These chapters present several explanations of
  why some people exert more effort on their jobs
  than others.

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MotivationDefinition

• Motivation is the willingness to do something and
  is conditioned by this actions ability to
  satisfy some need for the individual.
• Motivation is different from performance.
• Job Performance is a function of employee ability
  and motivation. This explains why an employee
  with less abilities may perform better than on
  with higher abilities (over qualification
  problem)
• A need is a physiological or psychological
  deficiency that makes certain outcomes appear
  attractive.

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MotivationThe Basic Motivational Process
Unsatisfied Need
Tension
Drives
Search Behavior
Satisfied Needs
Reduction of Tension

• Unsatisfied needs create tension that
  stimulates a drive to generate a search to find
  goals which if attained will achieve a
  satisfaction of the need and a reduction of
  tension.

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MotivationFour Different Approaches

• Meeting basic human needs
• Designing jobs that motivate people
• Enhancing the belief that desired rewards can be
  achieved
• Treating people equitably

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Motivating Employees through Meeting Human Needs
Hierarchy of Needs Theory

• Abraham Maslows hierarchy of needs is one of the
  best known approaches to motivation
• He hypothesized that within every human there
  exists a hierarchy of 5 needs
• Lower-Order Needs Higher-Order
  Needs
• Physiological Needs Social Needs
• Safety Needs Self-Esteem Needs
• Self Actualization Needs

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Motivating Employees through Meeting Human Needs
Hierarchy of Needs Theory
Higher Order Needs satisfied internally
Lower Order Needs satisfied externally
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Motivating Employees through Meeting Human Needs
Achievement Motivation Model (Three-Needs
McClelland)

• Need for Achievement (nAch)
• The drive to excel, to achieve in relation to
  a set of standards, to strive to succeed.
• Need for Power (nPow)
• The need to make others behave in a way they
  would not have behaved otherwise.
• Need for Affiliation (nAff)
• The desire for friendly and close
  interpersonal relationships

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Motivating Employees through Meeting Human Needs
Achievement Motivation Model (Three-Needs
McClelland)
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Motivating Employees through Meeting Human Needs
Achievement Motivation Model (Three-Needs
McClelland)

• High achievers (nAch) have three characteristics
• They like to set their own goals
• Are selective of the goals they accept.
• Prefer to work at the problem not succeed just by
  chance or luck
• Prefer jobs that offer personal responsibility.
  If they succeed they want the credit. If they
  fail they will accept the blame.
• They prefer moderate goals
• Set moderately challenging goal (avoid very easy
  or very difficult tasks)
• They prefer tasks that provide immediate clear
  feedback.
• Financial incentives have a complex effect on
  nAch

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Motivating Employees through Meeting Human Needs
Achievement Motivation Model (Three-Needs
McClelland)

• Management Implications
• nAch do not necessarily make good managers since
  their focus is on their achievements while
  managers emphasis should be on helping others
  achieve their goals
• Best managers tend to have high nPow and low nAff.

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Motivating Employees through Job Design
Motivator-Hygiene Theory (Two Factor Theory)

• Motivator Factors (intrinsic factors) directly
  related to the job and are largely internal to
  the individual.
• These factors are related to an individuals
  positive feelings about the job and to the
  content of the job itself.
• They includes the work itself, recognition,
  advancement, and responsibility.

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Motivating Employees through Job Design
Motivator-Hygiene Theory (Two Factor Theory)

• Hygiene Factors (extrinsic factors) factors
  associated with an individuals negative feelings
  about the job and are related to the environment
  in which the job is performed.
• Include the company policy, administration,
  salary, benefits, working conditions, and
  interpersonal relations.

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Motivating Employees through Job Design
Motivator-Hygiene Theory (Two Factor Theory)
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Motivating Employees through Job Design
Motivator-Hygiene Theory (Two Factor Theory)
Traditional View
Satisfaction Dissatisfaction
Herzbergs View
Motivators
Hygienes
Satisfaction No Satisfaction
No Dissatisfaction Dissatisfaction
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Motivating Employees through Job Design
Designing Motivating Jobs

• Job Design
• The way tasks are combined to form complete jobs.
• Historically, concentrated on making jobs more
  specialized
• Job Enlargement - horizontal expansion of job
• job scope - the number of different tasks
  required in a job and the frequency with which
  these tasks are repeated
• provides few challenges, little meaning to
  workers activities
• only addresses the lack of variety in
  specialized jobs
• Job Enrichment - vertical expansion of job
• job depth - degree of control employees have
  over their work
• empowers employees to do tasks typically
  performed by their managers

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Motivating Employees through Expectations
Expectancy Model

• Expectancy theory theory states that an
  individual tends to act in a certain way based on
  the expectation that the act will be followed by
  a given outcome and on the attractiveness of that
  outcome to the individual
• Expectancy (effort-performance linkage) -
  perceived probability that exerting a given
  amount of effort will lead to a certain level of
  performance
• Instrumentality (performance-reward linkage) -
  strength of belief that performing at a
  particular level is instrumental in attaining an
  outcome
• Valence - attractiveness or importance of the
  potential outcome

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Motivating Employees through Expectations
Expectancy Model
The basic assumption is that employees are
rational people. It also assumes that people are
not inherently motivated or unmotivated but
motivation depends on the situations that
individuals
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Motivating Employees through Equity Equity Model

• Equity Model proposes that employees perceive
  what they get from a job (outcomes) in relation
  to what they put into it (inputs). Employees
  compare their input/outcome ratio with the ratios
  of relevant others.
• If the input/outcome ratio in comparison to the
  ratios of relevant others is
• equity - ratio is equal to that of relevant
  others
• inequity - ratio is unequal to that of relevant
  others

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Motivating Employees through Equity Equity Model

• when inequities are perceived, employees act to
  correct the situation
• distort either their own or others inputs or
  outputs
• behave in a way to induce others to change their
  inputs
• or outputs
• behave in a way to change their own inputs or
  outputs
• choose a different comparison person
• quit their jobs

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Motivating Employees through Job Design Equity
Model
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Goal-Setting Performance

• Working toward a goal is a major source of job
  motivation
• Specific, moderately challenging goals increase
  performance
• difficult goal, when accepted, results in higher
  performance than does an easy goal
• specific hard goals produce a higher level of
  output than does the generalized goal of do your
  best
• participation in goal setting is useful (MBO)
• reduces resistance to accepting difficult goals
• increases goal acceptance

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Goal-Setting PerformanceModerators

• Ability
• Performance levels off as the limits of a
  persons ability are approached. For those who
  are Learning Goal Oriented, they believe that
  they have the ability to acquire new
  competencies.
• Goal Commitment
• Refers to an individuals determination to
  reach a goal, regardless of whether that goal was
  set by the person or someone else. It becomes
  stronger if you make it public, if you have a
  strong nAch, if you believe that you can control
  the activities that will help you reach that goal.

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Goal-Setting PerformanceModerators

• Feedback
• Feedback provides information to the employee
  and others about outcomes and the degree of
  employee performance.
• Task Complexity

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Part IIndividuals in Organizations

• Chapter 6
• Motivation From Theory
• to Application

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Chapter Objectives

• Management By Objectives (MBO)
• Variable-Pay Programs
• Profit-Sharing Programs
• Gain-Sharing Programs
• Skill-Based Pay
• Flexible Benefit Plans

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Motivation From Concepts to ApplicationsIntroduc
tion

• Up till now we have covered a lot of theories
  about motivation. How do managers actually get
  to apply these theories to real life practice.
• In this section we will review motivation
  techniques and programs that have gained varying
  degrees of acceptance in practice. We will also
  address how each of these builds on one or more
  of the motivation theories covered.

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Management by Objectives (MBO)(Based on Goal
Setting Theory)

• Goal Setting theory has an impressive base of
  research support. But as a manager, how do you
  apply this theory in the work place? Install a
  MBO program.
• MBO emphasizes participatively set goals that are
  tangible, verifiable, and measurable.
• It enables managers to use goals to motivate
  people not control them.
• MBO devices a process by which objectives cascade
  down through the organization. The
  organizations overall objectives are translated
  into specific objectives for each succeeding
  level.
• MBO works from bottom-up as well as top-down

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Management by Objectives (MBO)Ingredients

• Goal Specificity
• Objectives used in MBO should be specific,
  measurable, attainable and clear. Example,
  cutting costs by 7 in the coming 5 months
• Participative Decision Making
• The objectives in MBO are not unilaterally set
  by the boss and then assigned to employees. MBO
  replaces imposed goals with participative goals
  setting. Together the manager and the employee
  choose the goals and agree on how they will be
  measured.

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Management by Objectives (MBO)Ingredients

• Explicit Time Period
• Each objective has a specific time period
  in which it is to be completed.
• Performance Feedback
• Continuous feedback on progress towards
  goals so that individuals can monitor and correct
  their own actions.

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Management by Objectives (MBO)Link MBO to Goal
Setting Theory

• Goal setting theory demonstrates that hard goals
  result in a higher level of individual
  performance than do easy goals, that specific
  hard goals result in higher levels of performance
  than do no goals at all or the generalized goal
  of do your best.
• In comparison, MBO directly advocates specific
  goals feedback. MBO implies, rather than
  explicitly states, that goals must be perceived
  as feasible. Consistent with goal setting MBO
  would be most effective when the goals are
  difficult enough to require the person to do some
  stretching.
• The only area of conflict between MBO
  Goal-Setting theory is related to the issue of
  participation. MBO strongly advocates it, whereas
  Goal-Setting demonstrates that assigning goals to
  individuals works just as well.

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Management by Objectives (MBO)MBO in Practice

• MBO is heavily used in many businesses.
• MBOs popularity should not be constructed to
  mean that it always works.
• MBO fails in a lot of cases but not because of
  problems in the basic components of the program
  but because of problems in implementations lack
  of top management commitment, unrealistic
  expectations, an inability or unwillingness to
  allocate rewards.
• MBO provides management with a vehicle for the
  implementation Goal-Setting theory.

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Variable-Pay ProgramsIntroduction

• The main advantage of these programs is that a
  person is paid not only for time on the job or
  seniority a portion of an employees pay is based
  on some individual or organizational measure of
  performance.
• This fluctuation in pay is very attractive to
  management because it increases variable costs
  not fixed costs (can be removed during recession
  or poor performance)
• Four of the more widely used of the variable pay
  programs are Piece-rate plans, bonuses,
  profit-sharing and gain-sharing.

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Variable-Pay ProgramsPiece-Rate Pay Plans

• These have been used for the past century.
• In piece-rate pay plans, workers are paid a fixed
  sum for each unit of production completed.
• Have long been popular as a means for
  compensating production workers.
• Many organizations use a modified piece-rate
  plan, in which employees earn a base hourly wage
  plus a piece-rate differential.

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Variable-Pay ProgramsBonuses

• Bonuses can be paid only to executives or to all
  employees.
• Example, Steve Jobs, CEO at Apple Computers
  received a 90 million bonus in 2000 for his
  success in turning the companys financial
  fortunes around.

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Variable-Pay ProgramsProfit-Sharing Plans

• Profit-Sharing Plans distribute a portion of the
  companys profits to all employees.
• It may have a limited impact since employees may
  feel they can do little to affect the
  organizations overall profitability.
• Company profits are influenced by many factors
  (competitor products, state of the economy,
  inflation rate) that are well beyond the control
  of employees and yet determine their pay.

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Variable-Pay ProgramsGain-Sharing Plans

• Gain-Sharing is designed to share with employees
  the savings from productivity improvements.
• The underlying assumption of gain-sharing is that
  employees and the employer have similar goals and
  thus should share in economic gains.
• Regular cash bonuses are provided to employees
  for increasing productivity, reducing costs, or
  improving quality.

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Variable-Pay ProgramsGain-Sharing Plans

• In general, gain-sharing plans are better suited
  to small organizations with a good market, simple
  measure of performance and production costs
  controllable by employees.
• Top management should support the plan and the
  employees should be interested in and
  knowledgeable about gain sharing.
• The difference between Profit-Sharing and
  Gain-Sharing is that Gain-sharing focuses on
  productivity gains (cost decrease) which are
  factors in the employees control. Employees may
  end up making gains even if the firm itself does
  not make profits.

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Variable-Pay ProgramsVariable-Pay Programs in
Practice

• Variable pay is a concept, that is rapidly
  replacing the annual cost-of-living raise. One
  reason is its motivational power without
  increasing fixed costs of permanent salary
  boosters.
• Pay-for-performance has been used heavily in the
  past for compensating managers. The new trend is
  expanding this practice to non-managerial
  employees.

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Skill-Based Pay PlansDefinition

• Organizations hire people for their skills, then
  typically put them in jobs and pay them on the
  basis of their job title or rank.
• Skill-based pay is an alternative to job-based
  pay plans
• Skill-based pay sets pay levels on the basis of
  how many skills employees have or how many jobs
  they can do.

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Skill-Based Pay PlansAdvantages

• The advantages of this pay plan lies in its
  flexibility.
• Filling staffing needs is easier when employees
  skills are interchangable. Especially with
  organizations today cutting down on employee
  levels. Downsizing requires more generalists and
  fewer specialists.
• Skill-based pay encourages employees to acquire a
  broad range of skills.
• It facilitates communication throughout the
  organization because people gain a better
  understanding of others jobs.
• Lessens the dysfunctional protection of
  territory behavior and the common phrase, Its
  not my job!
• It also meets the needs of ambitious employees
  who confront minimal advancement opportunities.
  These can increase their earnings and knowledge
  without a promotion in job title.

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Skill-Based Pay PlansProblems

• Top out learning all the skills the program
  includes.
• Topping out can frustrate employees after they
  have become challenged by an environment of
  learning, growth, and continual pay raises.
• Skills can also become obsolete.
• Skill-based plans do not address level of
  performance only whether someone can perform the
  skill or not.

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Skill-Based Pay PlansLinking Skill-Based Plans
to Motivations Theories

• Skill-based plans are consistent with several
  motivation theories. Because they encourage
  employees to learn, expand their skills, grow,
  they are consistent with Maslows Hierarchy of
  Needs.
• Paying people to expand their skill levels is
  also consistent with the Achievement Need. High
  achievers have a compelling drive to do things
  better or more efficiently. By learning new
  skills or improving their skills they already
  hold, high achievers will find their jobs more
  challenging.
• Skill-based theory also has its implications on
  on equity. When employees make their
  inputoutcome comparison, skills may provide a
  fairer input criterion for determining pay than
  factors as seniority or education. It may
  increase the perception of equity and thus help
  motivate employees.

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Skill-Based Pay PlansSkill-Based Pay Plans in
Practice

• A number of studies have investigated the use and
  effectiveness of skill-based pay. The overall
  conclusion is that use of skill-based pay is
  expanding and that it generally leads to higher
  employee performance and satisfaction.
• Skill-based pay appears to be an idea whose time
  has come. Slowly, but surely, were becoming a
  skill-based society where your market value is
  tied to what you can do and what your skill set
  is.
• In this new world where skills and knowledge are
  what really counts, it doesnt make sense to
  treat people as jobholders. It makes sense to
  treat them as people with specific skills and to
  pay them for those skills.

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Flexible Benefit Plans

• Flexible benefit plans allow employees to choose
  the benefits they want, rather than having
  management choose for them.
• Also referred to as Cafeteria-Style Benefit
  Plans
• Benefits are usually about 36 of an
  organizations total employee compensation package
  which is a huge cost.
• They have three advantages
• They allow employees to decide about their
  personal finances to match employees needs
  with their benefit plans
• Help organizations control their costs (health
  plans particularly)
• Highlight the economic value of many benefits to
  employees. Most employees have not idea of the
  cost of benefits

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Flexible Benefit Plans

• Among the problems associated with administering
  flexible benefit plans are
• Because different employees choose different
  benefit packages, record keeping becomes more
  complicated
• Accurately predicting the number of employees
  that might choose each benefit is difficult. That
  may affect the rates for life insurance or
  medical insurance as the costs of these plans are
  dependent on the number of people adopting them.

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From Theory to Practice