© pearson education limited 201511-1 chapter 11 motivating and rewarding employees

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© Pearson Education Limited 2015 11-1 Chapte r 11 Motivating and Rewarding Employees

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  • Pearson Education Limited 201511-*Chapter11Motivating and Rewarding Employees

    Pearson Education Limited 2015

  • Learning OutcomesDefine and explain motivation. Compare and contrast early theories of motivation.Compare and contrast contemporary theories of motivation. Discuss current issues in motivating employees.

    Pearson Education Limited 201511-*

    Pearson Education Limited 2015

  • Pearson Education Limited 201511-*11.1Define and explain motivation.

    Pearson Education Limited 2015

  • What is Motivation?EnergyDirectionPersistence Pearson Education Limited 201511-*

    Pearson Education Limited 2015

  • Pearson Education Limited 201511-*11.2Compare and contrast early theories of motivation.

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  • Maslows Hierarchy of Needs Pearson Education Limited 201511-*

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  • McGregors Theory X and Theory YTheory X:Little ambitionDislike workAvoid responsibilityMust be closely controlled

    Theory Y:Enjoy workSeek and accept responsibilityExercise self-direction Pearson Education Limited 201511-*

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  • Herzbergs Two-Factor Theory Pearson Education Limited 201511-*

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  • Satisfaction vs. Dissatisfaction Pearson Education Limited 201511-*

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  • McClellands Three-Needs Theory Pearson Education Limited 201511-*Three acquired needs are work motives:Need for achievementNeed for powerNeed for affiliation

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  • Pearson Education Limited 201511-*11.3Compare and contrast contemporary theories of motivation.

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  • Goal-Setting Theory Pearson Education Limited 201511-*

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  • Influences on Job Performance Pearson Education Limited 201511-*FeedbackGoal commitmentAdequate self-efficacyNational culture

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  • Job Characteristics Model Pearson Education Limited 201511-*

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  • Job Design and Motivation Pearson Education Limited 201511-*Internal rewards are obtained when an employee learns that he or she personally has performed well on a task he or she cares about.

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  • Guidelines for Job Redesign Pearson Education Limited 201511-*

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  • Equity Theory Pearson Education Limited 201511-*

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  • Expectancy Theory Pearson Education Limited 201511-*

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  • Integrating Motivation Theories Pearson Education Limited 201511-*

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  • A Closer Look at the Model Pearson Education Limited 201511-*

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  • Pearson Education Limited 201511-*11.4Discuss current issues in motivating employees.

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  • Current Issues Pearson Education Limited 201511-*

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  • Country Culture and Motivation Pearson Education Limited 201511-*Managers cant assume that motivational programs that work in one geographic location are going to work in others.

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  • Cross-Cultural Differences & Consistencies Pearson Education Limited 201511-*

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  • Unique Groups of Workers Pearson Education Limited 201511-*Motivating:Diverse employeesProfessionalsContingent workers

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  • Unique Groups of Workers (cont.) Pearson Education Limited 201511-*Motivating:Diverse employeesProfessionalsContingent workers

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  • Designing Appropriate Rewards Programs Pearson Education Limited 201511-*

    Open-book managementEmployee recognition programs

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  • Pay-for-Performance Pearson Education Limited 201511-*

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  • Low-Cost Rewards Program Pearson Education Limited 201511-*Clarify role in organizationKeep communication openShow individual company cares

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  • 11-* Pearson Education Limited 2015

    Pearson Education Limited 2015

    *After studying this chapter, you will be able to:

    Define and explain motivation. Compare and contrast early theories of motivation. Compare and contrast contemporary theories of motivation. Discuss current issues in motivating employees.

    **Employees want to love what they do.

    All managers need to be able to motivate their employees, which requires understanding what motivation is. Lets begin by saying that motivation is not a personal trait that some people have and others dont.

    Motivation refers to the process by which a persons efforts are energized, directed, and sustained toward attaining a goal. Individuals differ in motivational drive and their overall motivation varies from situation to situation.

    Motivation has three key elements: The energy element is a measure of intensity or drive where the quality of the effort is considered along with its intensity.

    High levels of effort lead to favorable job performance when the effort is directed toward, and consistent with, organizational goals.

    Finally, motivation includes a persistence dimension where employees keep putting forth effort to achieve those goals.

    Motivating high levels of employee performance is an important organizational concern, as demonstrated by a Gallup poll that found that 73 percent of U.S. employees arent excited about their work.**During the 1950s and 1960s, four theories of motivation were formulated. They include the hierarchy of needs theory, theories X and Y, the two-factor theory, and the three-needs theory. Its important to know these early theories because: (1) They represent the foundation from which contemporary theories grew and (2) they are still used by practicing managers to explain employee motivation.

    Abraham Maslows Hierarchy of Needs theory, seen here in Exhibit 11-1, is one of the most widely known theories of motivation. Maslow was a psychologist who proposed that within every person is a hierarchy of five needs:Physiological needs such as food, drink, shelter, sex, sleep, and other physical requirementsSafety needs such as security and protection from harm as well as assurance that physical needs will continue to be metSocial needs including affection, belongingness, acceptance, and friendshipEsteem needs, which include internal esteem factors such as self-respect, autonomy, and achievement, and external esteem factors such as status, recognition, and attention; andSelf-actualization needs that include growth and achieving ones potential.

    Maslow argued that each level must be substantially satisfied before the next need becomes dominant; an individual moves up the hierarchy from one level to the next. Lower-order need are satisfied predominantly externally, while higher-order needs are satisfied internally.

    Managers will do things to satisfy employees needs. But remember: Once a need is substantially satisfied, it no longer motivates. This theory is widely popular among practicing managers probably because its easy to understand and intuitive. However, there is no empirical support provided for theory; other studies could not validate it.*Douglas McGregor from the MIT Sloan School of Management is best known for proposing two assumptions about human nature: Theory X and Theory Y. Simply put Theory X is a negative view of people and Theory Y is a positive view.

    McGregor believed that Theory Y assumptions should guide management practice and proposed that participation in decision making, responsible and challenging jobs, and good group relations would maximize employee motivation.

    Unfortunately, no evidence confirms that either set of assumptions is valid or that being a Theory Y manager is the only way to motivate employees.

    Here we see Berkshire Hathaway Chairman and CEO Warren Buffet, a Theory Y manager, participating in the companys annual shareholders meeting.*Frederick Herzbergs two-factor theory (or motivation-hygiene theory) proposes that intrinsic factors are related to job satisfaction while extrinsic factors are associated with job dissatisfaction. It was popular from the 1960s to the early 1980s, but its criticized for being too simplistic. However, it did influence todays approach to job design.

    Herzberg wanted to know when people felt exceptionally good (satisfied) or bad (dissatisfied) about their jobs; these findings are shown in Exhibit 11-2. He concluded from peoples responses that certain characteristics were consistently related to job satisfaction (as seen on the left side of the exhibit), and other characteristics were related to job dissatisfaction (factors on the right side). When people feel good about their work, they tend to cite intrinsic factors arising from the job itself, such as achievement, recognition, and responsibility. But when they are dissatisfied, they tend to cite extrinsic factors arising from the job context, such as company policy, administration, supervision, interpersonal relationships, and working conditions.*Herzberg also concluded that the traditional view that the opposite of satisfaction was dissatisfactionwas wrong.

    He stated that removing dissatisfying characteristics from a job would not necessarily make that job more satisfying (or motivating). As shown here in Exhibit 11-3, Herzberg proposed that a dual continuum existed: The opposite of satisfaction is no satisfaction and the opposite of dissatisfaction is no dissatisfaction.

    Herzberg believed that the factors that led to job satisfaction were separate and distinct from those that led to job dissatisfaction. Therefore, managers who sought to eliminate factors that created job dissatisfaction could keep people from being dissatisfied, but this would not necessarily lead to satisfaction and motivation.

    To motivate people, Herzberg suggested emphasizing motivators, the intrinsic factors having to do with the job itself.

    *David McClelland and his associates proposed the three-needs theory, which says three acquired (not innate) needs are major motives in work.

    These three needs include: The need for achievement (nAch), which is the drive to succeed and excel in relation to a set of standards The need for power (nPow), which is the need to make others behave in a way that they would not behave otherwise, and The need for affiliation (nAff), which is the desire for friendly and close interpersonal relationships.

    People with a high need for achievement strive for personal achievement rather than rewards. They have a desire to do something better or more efficiently than its been done before. They prefer jobs that offer personal responsibility for finding solutions, like to receive rapid and unambiguous performance feedback to tell whether theyre improving, and to set moderately challenging goals. High achievers avoid what they perceive to be very easy or very difficult tasks.

    A high need to achieve doesnt necessarily lead to being a good manager because high achievers focus on their own accomplishments while good managers emphasize helping others accomplish their goals.

    McClelland showed that employees can be trained to stimulate their achievement need by being in situations where they have personal responsibility, feedback, and moderate risks.

    The other two needs in this theory havent been researched as extensively, but we do know that the best managers tend to be high in the need for power and low in the need for affiliation.**The theories well look at now represent current employee motivation approaches that are supported by research. They include goal-setting theory, job design theory, equity theory, and expectancy theory.

    Substantial research support has been established for goal-setting theory, which says that specific goals increase performance and that difficult goals result in higher performance than easy goals. That means that: (1) Working toward a goal is a major source of job motivation and (2) specific and challenging goals are superior motivating forces.

    The specificity of the goal itself acts as an internal stimulus. For instance, when a sales rep commits to making eight sales calls daily, he has a specific goal to try to attain. Interestingly, setting ones own goals sometimes elicited superior performance; in other cases, individuals performed better when their manager assigned goals. However, when employees might resist accepting difficult challenges, participation in goal setting is probably more effective than assigning goals.

    Lastly, people do better if they get feedback on how well theyre progressing toward their goals because it helps identify discrepancies between what theyve done and what they want to do.*All feedback isnt equally effective. Self-generated feedbackin which an employee monitors his or her own progresshas been shown to be a more powerful motivator than feedback coming from someone else.

    In addition to feedback, three other contingencies influence goal performance:

    Goal-setting theory assumes that an individual is committed to the goal. Goal commitment is most likely when goals are made public, when the individual has an internal locus of control, and when the goals are self-set rather than assigned.

    Self-efficacy refers to an individuals belief that he or she is capable of performing a task. In difficult situations, people with low self-efficacy are likely to reduce their effort or give up altogether, whereas those with high self-efficacy will try harder to master the challenge. Also, individuals with high self-efficacy seem to respond to negative feedback with increased effort and motivation, whereas those with low self-efficacy are likely to reduce their effort.

    The value of goal-setting theory also depends on the national culture. Its well adapted to North American countries because its main ideas align reasonably well with those cultures. It assumes that subordinates will be reasonably independent (not a high score on power distance), that people will seek challenging goals (low in uncertainty avoidance), and that performance is considered important by both managers and subordinates (high in assertiveness). Managers cannot expect goal setting to lead to higher employee performance in countries with cultural characteristics different from these.*Job design refers to the way tasks are combined to form complete jobs. Managers should design jobs deliberately and thoughtfully to reflect the demands of the changing environment, the organizations technology, and employees skills, abilities, and preferences. When jobs are designed this way, employees are motivated to work hard.

    The job characteristics model (JCM) seen here was developed by J. Richard Hackman and Greg R. Oldham. This model can help managers design jobs that motivate. According to Hackman and Oldham, any job can be described in terms of the following five core job dimensions:Skill variety is the degree to which the job requires a variety of activities, allowing the worker to use a number of different skills and talents.Task identity is the degree to which the job requires completion of a whole and identifiable piece of work.Task significance is the degree to which the job affects the lives or work of other people.Autonomy refers to the freedom, independence, and discretion given to the individual for scheduling the work and for determining the procedures to be used in carrying it out.Feedback is the degree to which carrying out the work activities required by the job results in the individuals obtaining direct and clear information about the effectiveness of his or her performance.

    Notice in Exhibit 11-5 how the first three dimensionsskill variety, task identity, and task significancecombine to create meaningful work, which means if these three characteristics exist in a job, we can predict that the person will view her job as being important, valuable, and worthwhile. Note, too, that jobs that possess autonomy give the employee a feeling of personal responsibility for the results and that if a job provides feedback the employee will know how effectively he or she is performing.


    Task significance characterizes the job of Dina Lipowich, director of medical nursing and inpatient geriatrics at a community hospital. She experienced meaningfulness by helping develop a new program for older patients that pairs them with volunteers who act as buddies they can talk to and who lift their spirits.

    From a motivational point of view, the JCM suggests that internal rewards are obtained when an employee learns that he or she personally has performed well on a task that he or she cares aboutthe central column of the JCM in Exhibit 11-5. The more these three conditions characterize a job, the greater the employees motivation, performance, and satisfactionand the lower the employees absenteeism and likelihood of resigning.

    As the model shows, the links between the job dimensions and the outcomes are moderated by the strength of the individuals growth need (that is, the persons desire for self-esteem and self-actualization). Individuals with a high growth need are more likely to experience the critical psychological states and respond positively when their jobs include the core dimensions than individuals with a low growth need are.

    This distinction may explain the mixed results with job enrichment, the vertical expansion of a job by adding planning and evaluation responsibilities. Individuals with low growth need dont tend to achieve high performance or satisfaction by having their jobs enriched.

    *The JCM provides significant guidance to managers for job design for both individuals and teams. The suggestions shown in Exhibit 11-6, which are based on the JCM, specify the types of changes in jobs that are most likely to improve each of the five core job dimensions.*The term equity is the concept of fairness and comparable treatment when compared with others who behave in similar ways. Theres considerable evidence that employees compare themselves to others and that inequities influence how much effort they exert.

    Equity theory, developed by J. Stacey Adams, proposes that employees compare what they get from a job (outcomes) to what they put into it (inputs) and then compare their inputs-outcomes ratio with the inputs-outcomes ratios of relevant others, as illustrated in Exhibit 11-7. If an employee perceives her ratio to be equitable in comparison to those of relevant others, theres no problem. However, if the ratio is perceived to be inequitable, she views herself as underrewarded or overrewarded.

    When inequities occur, employees attempt to do something about it. The result might be lower or higher productivity, improved or reduced quality of output, increased absenteeism, or voluntary resignation.

    The referent the other persons, systems, or selves individuals compare themselves against in order to assess equityis an important variable in equity theory. Each of the three referent categories is important. 1. Persons category includes others with similar jobs, friends, neighbors, etc.2. System category includes organizational pay policies, procedures, and allocation,3. Self category refers to past personal experiences and contacts

    Originally, equity theory focused on distributive justice, which is the perceived fairness of the amount and allocation of rewards among individuals and which has a greater influence on employee satisfaction. More recent research has focused on issues of procedural justice, which is the perceived fairness of the process used to determine the distribution of rewards and tends to affect an employees organizational commitment, trust in his or her boss, and intention to quit.

    Based on the evidence, managers should consider openly sharing information on how allocation decisions are made, follow consistent and unbiased procedures, and engage in similar practices to increase the perception of procedural justice. *The most comprehensive explanation of how employees are motivated is Victor Vrooms expectancy theory, which 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.

    Its three variables or relationships are seen in Exhibit 11-8: Expectancy or effort-performance linkage is the probability perceived by the individual that exerting a given amount of effort will lead to a certain level of performance. Instrumentality or performance-reward linkage is the degree to which the individual believes that performing at a particular level is instrumental to attaining the desired outcome. Valence or attractiveness of reward is the importance that the individual places on the potential outcome or reward that can be achieved on the job. Valence considers both the goals and needs of the individual.

    This explanation of motivation can be summed up in the following questions: How hard do I have to work to achieve a certain level of performance, and can I actually achieve that level? What reward will performing at that level get me? How attractive is the reward to me, and does it help me achieve my own personal goals?

    Whether you are motivated to work hard at any given time depends on your goals and your perception of whether a certain level of performance is necessary to attain those goals.

    The key to expectancy theory is understanding an individuals goals and the links between effort and performance, between performance and rewards, and between rewards and individual goal satisfaction.

    *Exhibit 119 presents a model that integrates much of what we know about motivation. Its basic foundation is the expectancy model.

    The individual effort box has an arrow leading into it. This arrow flows from the individuals goals. Consistent with goal-setting theory, this goals-effort link illustrates that goals direct behavior. Expectancy theory predicts that an employee will exert a high level of effort if he or she perceives a strong relationship between effort and performance, performance and rewards, and rewards and satisfaction of personal goals. Each of these relationships is, in turn, influenced by certain factors.

    You can see from the model that the level of individual performance is determined not only by the level of individual effort but also by the individuals ability to perform and by whether the organization has a fair and objective performance evaluation system. The performance-reward relationship will be strong if the individual perceives that it is performance (rather than seniority, personal favorites, or some other criterion) that is rewarded. The final link in expectancy theory is the rewards-goal relationship.

    The traditional need theories come into play at this point. Motivation would be high to the degree that the rewards an individual receives for his or her high performance satisfy the dominant needs consistent with his or her individual goals.

    *A closer look at the model also shows that it considers the achievement-need, reinforcement, equity, and JCM theories. The high achiever isnt motivated by the organizations assessment of his or her performance or organizational rewards; hence the jump from effort to individual goals for those with a high nAch.

    Reinforcement theory is seen in the model where the organizations rewards reinforce the individuals performance. Rewards also play a key part in equity theory. Individuals compare the rewards (outcomes) they have received from the inputs or efforts they have made with the inputs-outcomes ratio of relevant others. If inequities exist, the effort expended may be influenced.

    Finally, the JCM is seen in this integrative model. Task characteristics (job design) influence job motivation in two areas. First, jobs that are designed around the five job dimensions are likely to lead to higher actual job performance because the individuals motivation will be stimulated by the job itself and because there will be a clear link between effort and performance. Second, jobs that are designed around the five job dimensions also increase an employees control over key elements in his or her work.

    Thus, jobs that offer autonomy, feedback, and similar task characteristics help to satisfy the individual goals of employees who desire greater control over their work.**Current studies of employee motivation are influenced by some significant workplace issuesmotivating in tough economic circumstances, managing cross-cultural challenges, motivating unique groups of workers, and designing appropriate rewards programs.

    Managers have come to realize that in an uncertain economy they have to be creative in keeping their employees efforts energized, directed, and sustained toward achieving goals. Relatively inexpensive ways to motivate employees include holding meetings with employees to keep the lines of communication open; getting employee input on issues; establishing a common goal, such as maintaining excellent customer service, to keep everyone focused; creating a community feel so employees can see that managers care about them and their work; and giving employees continuing opportunities to learn and grow. *In todays global business environment, managers cant assume that motivational programs that work in one geographic location are going to work in others. Most current motivation theories were developed in the United States by Americans and about Americans.

    Lets look at the cross-cultural transferability of some of the motivation theories weve talked about thus far. Maslows need hierarchy argues that people start at the physiological level and then move progressively up the hierarchy in order. In countries such as Japan, Greece, and Mexico, where uncertainty avoidance characteristics are strong, security needs would be on top of the need hierarchy. Countries that score high on nurturing characteristicssuch as Denmark, Sweden, Norway, the Netherlands, and Finlandwould have social needs on top.

    Another motivation concept that clearly has an American bias is the achievement need. The view that a high achievement need acts as an internal motivator presupposes two cultural characteristics: a willingness to accept a moderate degree of risk and a concern with performance. This combination is found in the United States, Canada, and Great Britain but is rare in countries such as Chile and Portugal.

    Crew member Chrislyn Hamilton won a $25,000 prize in a singing contest sponsored by McDonalds for restaurant employees throughout the world. In addition to this recognition program, McDonalds motivates its diverse work force with flexible work hours, low-stress jobs, and opportunities for advancement.

    *Equity theory has a relatively strong following in the United States, which is not surprising given that U.S.style reward systems are based on the assumption that workers are highly sensitive to equity in reward allocations. However, recent evidence suggests that in collectivist cultures, especially in the former socialist countries of Central and Eastern Europe, employees expect outcomes to be greater than their inputs, which suggests that U.S.style pay practices may need to be modified to be perceived as fair by employees.

    Despite these cross-cultural differences in motivation, a number of cross-cultural consistencies exist. For instance, the desire for interesting work seems important to almost all workers, regardless of their national culture. Similarly, in a study comparing job-preference outcomes among graduate students in the United States, Canada, Australia, and Singapore, growth, achievement, and responsibility were rated as the top three outcomes and had identical rankings. Both studies suggest that intrinsic factors identified by Herzberg in his two-factor theory are to some degree universal. *To maximize motivation among todays diverse workforce, managers need to think in terms of flexibility. For instance, studies tell us that:Men place more importance on having autonomy in their jobs than women do. The opportunity to learn, convenient and flexible work hours, and good interpersonal relations are more important to women than to men.Having the opportunity to be independent and to be exposed to different experiences is important to Gen Y employees, whereas older workers may prefer highly structured work opportunities.

    A diverse array of rewards is needed to motivate employees with such diverse needs. Many of the work-life balance programs that organizations have implemented are a response to the varied needs of a diverse workforce. But do flexible work arrangements motivate employees? Although such arrangements might seem highly motivational, both positive and negative relationships have been found. For example, one study of the impact of telecommuting on job satisfaction found that job satisfaction initially increased as the extent of telecommuting increased, but as the number of hours spent telecommuting increased, job satisfaction started to level off, decreased slightly, and then stabilized.

    *Motivating professionals is different from motivating nonprofessionals. Professionals have a strong and long-term commitment to their field of expertise, they need to keep current and regularly update their knowledge, and, because of their commitment to their profession, they work beyond a 40-hour week.

    Money and promotions tend to be low motivators for professionals, but job challenge tends to rank high. Professionals chief reward is the work itself but they value support and want others to think that what theyre working on is important. Professionals tend to be focused on their work as their central life interest, whereas nonprofessionals typically have outside interests that can compensate for needs not met on the job.

    Theres no simple solution for motivating contingent employeestemporary part-time and contract workers who dont have security or stability, dont identify with the organization, dont display the commitment that other employees do, and receive few or no benefits such as health care or pensions. For the most part, temporary employees are not temporary by choice. Therefore, an involuntarily temporary employee might be motivated by the opportunity to become a permanent employee or an opportunity for training. *Some of todays more popular rewards programs include open-book management, employee recognition, and pay-for-performance.

    Many organizations of various sizes involve their employees in workplace decisions by opening up the financial statements (the books) so that employees will be motivated to make better decisions about their work and be better able to understand the implications of what they do, how they do it, and the ultimate impact on the bottom line. This approach is called open-book management.

    Employee recognition programs can motivate employees by providing personal attention and expressions of interest, approval, and appreciation for a job well done. A survey of organizations found that 84 percent had some type of program to recognize worker achievements and that employees respond well to such programs.

    Consistent with reinforcement theory, rewarding a behavior with recognition immediately following that behavior is likely to encourage its repetition. You can personally congratulate an employee in private or public for a good job or send a handwritten note or email message acknowledging something positive that the employee has done.

    *Pay-for-performance programs are variable compensation plans that pay employees on the basis of some performance measure. Piece-rate pay plans, wage incentive plans, profit-sharing, and lump sum bonuses are examples. These performance measures might include such things as individual productivity, team or work group productivity, departmental productivity, or the overall organizations financial performance.

    From a motivation perspective, making some or all an employees pay conditional on some performance measure focuses his or her attention and effort toward that measure and then reinforces the continuation of the effort with a reward. If the employee, team, or organizations performance declines, so does the reward.

    Some 80 percent of large U.S. companies have some form of variable pay plan; 30 percent of Canadian companies and 22 percent of Japanese companies have company-wide pay-for-performance plans.

    Managers need to ensure that theyre specific about the relationship between an individuals pay and his or her expected level of performance and understand exactly how performancetheirs and the organizationstranslates into dollars on their paychecks.

    The photo shows employees of British retailer John Lewis Partnership celebrate receiving an annual bonus of 18 percent of their salary based on the companys 20 percent increase in profits. A bonus is one example of a pay-for-performance program, a compensation plan that pays employees on the basis of some performance measure.*During times of economic and financial uncertainty, managers abilities to recognize and reward employees are often severely constrained. Its difficult to keep employees productive during challenging times even though its especially critical.

    A recent study by the Corporate Executive Board found that declining employee engagement has decreased overall productivity by 3 to 5 percent, but managers can take actions to maintain and maybe even increase employees motivation levels. Clarify each persons role in the organization and show them how their efforts are contributing to improving the companys overall situation. Keep communication lines open and use two-way exchanges between top-level managers and employees to allay fears and concerns.Continually show workers that the company cares about them and give employees a reason to want to come to work.**