Leadership and Management Module - W10

LECTURE 10
MOTIVATING EMPLOYEES
Lecturer: Andrea Dezi
Content
◦1. What is motivation?
◦2. Theories of Motivations
◦3. Motivation and rewards
◦4. Motivation and job design
◦5. Alternative work schedules
1. What is motivation?
◦Motivation is defined as forces within the individual
that account for the direction, level,
and persistence of a person’s effort expended at work.
◦Motivation is defined as forces within the
individual that account for the direction, level,
Direction refers to an individual’s choice when presented

with a number of possible alternatives (e.g., whether to
pursue quality, quantity, or both in one’s work)
Level refers to the amount of effort a person puts forth
(e.g., to put forth a lot or very little)

Persistence refers to the length of time a person sticks with a given action (e.g., to
keep trying or to give up when something proves difficult to attain)
Type of motivation
◦ Intrinsic rewards are positively valued work outcomes that the individual receives directly as a result of
task performance.
◦ Extrinsic rewards are positively valued work outcomes that are given to an individual or a group by
some other person or source in the work setting
2. Theories of motivation
2.1. Types of motivation theories
2.2. Need theories of motivation
2.3. Equity theory of motivation
2.4. Expectancy theory of motivation
2.5. Goal setting theory of motivation

There are 2 types of motivation theories: Need theories and process theories
◦ The content theories of motivation focus primarily on individual needs— physiological or psychological deficiencies that we feel a compulsion to
reduce or eliminate
◦ The content theories try to explain work behaviors based on path- ways to need satisfaction and on blocked needs.
◦ Example: Maslow’s hierarchy of needs theory, Alderfer’s ERG theory, McClelland’s acquired needs theory, and Herzberg’s two-factor theory.
◦ The process theories of motivation focus on how cognitive processes as thoughts and decisions within the minds of people influence their behavior.
◦ Whereas a content approach may identify job security as an important individual need, a process approach would probe further to identify why the
decision to seek job security results in certain work behaviors
◦ Example: Equity theory, expectancy theory, and goal-setting theory
2.2. Needs theories of motivation
Hierarchy of Needs
ERG Theory
Theory
Acquired Needs Theory Two-Factor Theory

2.2. Needs
theories of
motivation
◦ Abraham Maslow’s
hierarchy of needs
theory,
Basic Human Needs
◦ Food
◦ Air
◦ Water
◦ Sleep
◦ Clothing
◦ Sex ?
Physiological Needs
Safety and Security
◆ Protection
◆ Stability
◆ Pain Avoidance
◆ Routine/Order
Safety Needs
Love and Belonging
◆ Affection
◆ Acceptance
Social Needs ◆ Inclusion
Esteem
Esteem Needs ◆ Self-Respect
◆ Self-Esteem
◆ Respected by
Others
Self-Actualization
◆ Achieve full potential
◆ Fulfillment
Summary Self-Actualization
Esteem
Belonging
Safety
Physiological
Hierarchy of Needs
ERG Theory
Theory

◦ ERG Theory : Clayton Alderfer’s ERG theory is also based on needs, but it differs from Maslow’s theory in
three main respects
◦ ERG theory collapses Maslow’s five needs categories into three: existence needs, desires for
physiological and material well-being; relatedness needs, desires for satisfying interpersonal
relationships; and growth needs, desires for continued personal growth and development
◦ ERG theory emphasizes a unique frustration-regression component. An already satisfied lower-level
need can become activated when a higher-level need cannot be satisfied. If a person is continually
frustrated in his or her attempts to satisfy growth needs relatedness needs can again surface as key
motivators
◦ ERG theory contends that more than one need may be activated at the same time.
ERG theory was developed by

Clayton Alderfer. Alderfer
proposed the ERG Theory to bring
Maslow’s need hierarchy theory
of motivation in synchronization
with empirical research.
Alderfer advocated three need patterns of an

individual as against five steps proposed by
Maslow.
Alderfer recommended that all the needs may be

operative at any one time.
If gratification of higher need is stifled, the desire to satisfy

the lower level need may increase.
Alderfer recategorized Maslow’s hierarchy of needs into three simpler and

broader classes of needs, which are ERG.
In Alderfer’s ERG Theory, ERG stands for:
Existence
E
Relatedness
R
Growth
G
Relatedness
Relatedness
Relatedness needs: These include the aspiration that
individual’s have for maintaining significant interpersonal
relationships, be it with family, peers or superiors, getting
public fame and recognition. These are related to Maslow's
social and external component of esteem or extrinsic self
esteem like status, recognition and attention.
Relationship between Maslow’s Hierarchy to ERG Theory
Highest-order
Self-Actualizat
Needs
ion
Esteem Growth
Social Relatedness
Safety
Most essential
Needs Physiological Existence
Maslow's Need Hierarchy Alderfer's Need Hierarchy

Categories Categories
Diagrammatic Representation of Alderfer’s ERG Theory
Hierarchy of Needs
ERG Theory
Theory

Acquired Needs Theory
Need for Need for

Affiliation Achievement
(n-affil) (n-ach)
He comes across ‘McClelland’s Theory of

Need for Power or Through this theory, Liam
Needs’.
Authority
understands that each individual is different
(n-pow)
and has various different needs that motivate
him.
Acquired Needs Theory
t u s l e a r n about
Le
c C le l la n d ’s
‘ M
Need for Need for e o r y o f N e eds’
Th
Affiliation Achievement in detail.
(n-affil) (n-ach)
Need for Power or Hence, you can see that ‘McClelland’s Theory
Authority
of Needs’ can prove to be a useful concept
(n-pow)
that needs to be understood and applied by
managers for motivating their subordinates.
Who is David McClelland?
David Clarence McClelland

(1917-98) was an American. He
achieved a doctor’s degree in
Psychology at Yale in 1941. He
then worked as a Professor at
Wesley University. He also
became a lecturer at Harvard in
1956. While at Harvard,
McClelland along with his
colleagues studied motivation
particularly the ‘achievement
need’ for almost twenty years.
McClelland’s Theory of Needs
The three types of motivational needs identified by McClelland are as follows:
Need for Achievement or

Achievement Motivation (n-ach)
Need for Power or

Authority/Power Motivation (n-pow)
Need for Affiliation or

Affiliation Motivation (n-affil)
Let us look at each in detail.

Benefits of McClelland’s Theory of Needs
McClelland’s Theory of Needs is a motivation theory model. It can be used to
motivate people and to put them in action. McClelland’s Theory of Needs and
the motivation it provides is very important because of
the following benefits it provides:
• Puts human resources into action
• Improves level of efficiency of people
• Leads to achievement of organizational or

individual goals
• Builds friendly relationship due to internal

satisfaction
Hierarchy of Needs
ERG Theory
Theory

Two-Factor Theory
2. Theories of motivation
2.2. Need theories of motivation

Equity and Social Comparisons
◦ Equity theory is proposed by Adam 1963
◦ The basic foundation of equity theory is social comparison
◦ Adams argues that this logic applies equally well to the motivational consequences of rewards we
receive at work
◦ He believes that motivation is a function of how one evaluates rewards received relative to efforts
made, and as compared to the rewards received by others relative to their efforts made
◦ Any feelings of unfairness or perceived inequity are uncomfortable; they create a state of mind we are
motivated to eliminate.
Equity Theory Predictions and Findings
◦ Perceived inequity is feeling under-rewarded or over-rewarded in comparison with others.
◦ The basic equity comparison can be summarized as follows:
◦ Felt negative inequity exists when an individual feels that he or she has received relatively less than others have in proportion to work inputs
◦ Felt positive inequity exists when an individual feels that he or she has received relatively more than others have
◦ When either feeling exists, the theory states that people will be motivated to act in ways that remove the discomfort and restore a sense of equity to
the situation
◦ In the case of perceived negative inequity, for example, a sense of equity might be restored by engaging in one or more of the following behaviors:
◦ Reduce work inputs (e.g., don’t do anything extra in future).
◦ Change the outcomes received (e.g., ask for a bigger raise).
◦ Leave the situation (e.g., quit).
◦ Change the comparison points (e.g., compare to a different co-worker).
◦ Psychologically distort things (e.g., rationalize the inequity as temporary).
◦ Try to change the efforts of the comparison person (e.g., get a teammate to
◦ accept more work).
◦ In the case of perceived negative inequity, for example, a sense of equity
might be restored by engaging in one or more of the following behaviors:
◦ Reduce work inputs (e.g., don’t do anything extra in future).
◦ Change the outcomes received (e.g., ask for a bigger raise).
◦ Leave the situation (e.g., quit).
◦ Change the comparison points (e.g., compare to a different co-worker).
◦ Psychologically distort things (e.g., rationalize the inequity as temporary).
◦ Try to change the efforts of the comparison person (e.g., get a teammate to accept more work).
◦ Research on equity theory indicates that people who feel they are over- paid (perceived positive
inequity) are likely to try to increase the quantity or quality of their work, whereas those who feel they
are underpaid (perceived negative inequity) are likely to try to decrease the quantity or quality of their
work
Equity and Organizational Justice
Organizational justice concerns how fair and equitable people view workplace
practices.
Justice notions may enter social comparisons in four ways: Organizational
justice, Procedural justice, Distributive justice, Interactional justice,
Commutative justice.
Procedural justice is the degree to which rules are always
properly followed to implement policies.
Distributive justice is the degree to which all people are treated the
same under a policy, regardless of race, ethnicity, gender, age, or
any other demographic characteristic.
Interactional justice is the degree to which the people affected by a
decision are treated with dignity and respect
Commutative justice is the degree to which exchanges and
transactions among parties is considered free and fair
◦ Victor Vroom’s expectancy theory
◦ A person is motivated to the degree that he or she believes that: (1) effort will
yield acceptable performance (expectancy), (2) performance will be rewarded
(instrumentality), and (3) the value of the rewards is highly positive (valence).
Each of the key terms is defined as follows
◦ Expectancy is the probability assigned by an individual that work effort will be followed by a given level
of achieved task performance. Expectancy would equal zero if the person felt it were impossible to
achieve the given performance level; it would equal one if a person were 100 percent certain that the
performance could be achieved.
◦ Instrumentality is the probability assigned by the individual that a given level of achieved task
performance will lead to various work outcomes. Instrumentality also varies from 0 to 1. Strictly
speaking, Vroom’s treatment of instrumentality would allow it to vary from -1 to +1. We use the
probability definition here and the 0 to + range for pedagogical purposes; it is consistent with the
instrumentality notion.
◦ Valence is the value attached by the individual to various work outcomes. Valences form a scale from -1
(very undesirable outcome) to +1 (very desirable outcome).
Expectancy Implications
◦ Expectancy logic argues that managers should always try to create work situations to maximize work
expectancies, instrumentalities, and valences that support organizational objectives.
◦ To influence expectancies, the advice is to select people with proper abilities, train them well,
support them with needed resources, and identify clear performance goals
◦ To influence instrumentality, the advice is to clarify performance–reward relationships, and then live
up to them when rewards are actually given for performance accomplishments
◦ To influence valences, the advice is to identify the needs that are important to each individual and
adjust available rewards to match these needs.
Goal setting is the process of developing,
negotiating, and formalizing the targets or
objectives that a person is responsible for
accomplishing.
Goal-Setting Guidelines
◦ Difficult goals are more likely to lead to higher performance than are less difficult ones
◦ Specific goals are more likely to lead to higher performance than are no goals or vague or very
general ones
◦ Task feedback, or knowledge of results, is likely to motivate people toward higher performance by
encouraging the setting of higher performance goals
◦ Goals are most likely to lead to higher performance when people have the abilities and the feelings
of self-efficacy required to accomplish them.
◦ Goals are most likely to motivate people toward higher performance when they are accepted and
there is commitment to them
Goal Setting and the Management Process
◦ Management by objectives is a process of joint goal setting between a supervisor and a subordinate.
Content
◦ 1. What is motivation?
◦ 2. Theories of Motivations
◦ 3. Motivation and rewards
◦ 4. Motivation and job design
◦ 5. Alternative work schedules
3. Motivation and reward
3.1. Pay for Performance 3.2. Performance Management

Process
3.1. Pay for performance
◦ Pay is not only an important extrinsic reward; it is an especially complex one.
When pay functions well it can help an organization attract and retain highly
capable workers.
◦ It can also help satisfy and motivate these workers to work hard to achieve
high performance.
◦ Pay dissatisfaction is often reflected in bad attitudes, increased absenteeism,
intentions to leave and actual turnover, poor organizational citizenship, and
even adverse impacts on employees’ physical and mental health.
◦ The research of scholar and consultant Edward Lawler generally concludes
that pay only serves as a motivator when high levels of job performance are
viewed as the paths through which high pay can be achieved
◦ The essence of performance-contingent pay is that you earn more when you
produce more and earn less when you produce less.
Merit pay
◦ Merit pay links an individual’s salary or wage increase directly to measures of
performance accomplishment. Although the concept of merit pay is compelling, a
survey by the Hudson Institute demonstrates that it is more easily said than done.
When asked if employees who do perform better really get paid more, only 48
percent of managers and 31 percent of nonmanagers responded with agreement
◦ To work well, a merit pay plan should create a belief among employees that the way
to achieve high pay is to perform at high levels. This means that the merit system
should be based on realistic and accurate measures of work performance
Criticism of Merit Pay
◦ Although well supported in theory, merit pay is also subject to criticisms. For
example, merit pay plans may cause problems when they emphasize
individual achievements and fail to recognize the high degree of task
interdependence that is common in many organizations today
◦ if they are to be effective, merit pay systems must be consistent with overall
organization strategies and environmental challenges.
◦Bonuses are extra pay awards for special performance
accomplishments.
◦ Gain sharing rewards employees in some proportion to productivity gains
◦ Gain sharing plans are supposed to create a greater sense of personal
responsibility for organizational performance improvements and increase
motivation to work hard
◦ They are also supposed to encourage cooperation and teamwork to increase
productivity
◦ Profit sharing rewards employees in some proportion to changes in organizational profits.
◦ The more profits made, the more money that is available for distribution to employees through profit
sharing.
◦ One criticism of the approach is that profit increases and decreases are not always a direct result of
employees’ efforts
Stock Options and Employee Stock Ownership
Stock options give the right to purchase shares at a fixed price in
the future.
Employee stock ownership plans give stock to employees or
allow them to purchase stock at special prices
Skill-Based Pay
Skill-based pay rewards people for acquiring and developing job-relevant skills
Pay systems of this sort pay people for the mix and depth of skills they have, not for the particular job
assignment they hold
Some advantages of skill-based pay are employee cross- training—workers learn to do one another’s jobs;
fewer supervisors—workers can provide more of these functions themselves; and more individual control
overcompensation—workers know in advance what is required to receive a pay raise.
A possible disadvantage is that higher pay and training costs are not offset by greater productivity
3.2. Motivation and performance
Performance Management
managementProcess
Performance Measurement
Methods
Performance Measurement
Errors
Performance management process
Why
◦ Performance management serves an evaluation purpose when it lets people know where their actual
performance stands relative to objectives and standards
◦ Performance management serves a developmental purpose when it provides insights into individual
strengths and weaknesses.
Performance management process
What
◦ Output measures of performance assess what is accomplished in respect to
concrete work results
◦ Activity measures of performance assess work inputs in respect to activities
tried and efforts expended. These are often used when output measures are
difficult and in cases where certain activities are known to be good predictors
of eventual performance success
Performance Measurement Methods
◦ Comparative Methods
◦ Rating Scales
◦ Critical Incident Diary
◦ 360 Degree Evaluation
Comparative method
Comparative methods of performance measurement seek to identify one
worker’s standing relative to others
Comparative methods include Ranking, paired comparison, forced distribution
Ranking in performance appraisal orders each person from best to worst
Paired comparison in performance appraisal compares each person with every
other
Forced distribution in performance appraisal forces a set percentage of persons
into predetermined rating categories
Rating Scales
◦ Graphic rating scales list a variety of
performance dimensions that an individual is
expected to exhibit
Rating Scales
◦ Behaviorally anchored rating scale adds
more sophistication by linking ratings to
specific and observable job-relevant
behaviors. These include descriptions of
superior and inferior performance.
Rating scale
Critical Incident Diary
Critical incident diaries record actual examples of positive and negative work behaviors and results.
The incidents are typically recorded in a diary-type log that is kept daily or weekly under predetermined
dimensions
This approach is excellent for employee development and feedback
But because it consists of qualitative statements rather than quantitative ratings, it is more debatable as
an evaluation tool. This is why the critical incident technique is often used in combination with one of the
other methods.
Rating scale
360-degree Evaluation
A 360 - degree evaluation gathers evaluations from a jobholder’s bosses, peers, and subordinates, as well
as internal and external customers and self-ratings.
Performance Measurement Errors
Regardless of the method being employed, any performance measurement sys-
tem should meet two criteria:
◦ reliability—providing consistent results each time it is used for the same
person and situation,
◦ validity—actually measuring dimensions with direct relevance to job
performance
Performance Measurement Errors
The following are examples of measurement errors
Halo error—results when one person rates another person on several different dimensions and gives a
similar rating for each dimension.
Leniency error—just as some professors are known as “easy A’s,” some managers tend to give relatively
high ratings to virtually everyone under their supervision; the opposite is strictness error—giving
everyone a low rating.
Central tendency error—occurs when managers lump everyone together around the average, or
middle, category; this gives the impression that there are no very good or very poor performers on the
dimensions being rated.
Recency error—occurs when a rater allows recent events to influence a performance rating over earlier
events; an example is being critical of an employee who is usually on time but shows up one hour late
for work the day before his or her performance rating.
Personal bias error—displays expectations and prejudices that fail to give the jobholder complete
respect, such as showing racial bias in ratings.
Content
4. Motivation and job design
When it comes to motivation, we might say that nothing beats a good person–job fit. This means that the
job requirements fit well with individual abilities and needs.
Person + Good Job Fit = Motivation

◦ Job design is the process through which managers plan and specify job tasks and the work
arrangements that allow them to be accomplished.
Scientific Management
The history of scholarly interest in job design can be traced in part to Frederick Taylor’s work with
scientific management in the early 1900s
1. Develop a “science” for each job that covers rules of motion, standard work tools, and supportive
work conditions.
2. Hire workers with the right abilities for the job.
3. Train and motivate workers to do their jobs according to the science.
4. Support workers by planning and assisting their work using the job science.
Scientific Management
Job simplification standardizes work to create clearly defined and highly specialized tasks.
The term job simplification is used to describe a scientific management approach to job design that
standardizes work procedures and employs people in routine, clearly defined, and highly specialized tasks
Job Enlargement and Job Rotation
Although job simplification makes the limited number of tasks easier to master, the
repetitiveness can reduce motivation.
Job enlargement increases task variety by combining into one job two or more tasks that were
previously assigned to separate workers.
Job rotation increases task variety by periodically shifting workers among jobs involving
different tasks
Job Enrichment
◦Job enrichment builds
high-content jobs that involve
planning and evaluating duties
normally done by supervisors.
Job Characteristics Model
Core Characteristics
Psychological Empowerment
Moderator variables
Job characteristic model
Core Characteristics
Skill variety—the degree to which a job includes a variety of different activities and involves the
use of a number of different skills and talents
Task identity—the degree to which the job requires completion of a “whole” and identifiable
piece of work, one that involves doing a job from beginning to end with a visible outcome
Task significance—the degree to which the job is important and involves a meaningful
contribution to the organization or society in general
Autonomy—the degree to which the job gives the employee substantial freedom,
independence, and discretion in scheduling the work and determin- ing the procedures used in
carrying it out
Job feedback—the degree to which carrying out the work activities provides direct and clear
information to the employee regarding how well the job has been done
Psychological empowerment is a sense of personal fulfillment and purpose that arouses one’s
feelings of competency and commitment to work
◦ (1) experienced meaningfulness of the work,
◦ (2) experienced responsibility for the outcomes of the work, and
◦ (3) knowledge of actual results of the work.
Moderator variable
◦ Growth-need strength, or the degree to which a person desires the opportunity for
self-direction, learning, and personal accomplishment at work
◦ Knowledge and skill. People whose capabilities fit the demands of enriched jobs are predicted
to feel good about them and perform well
◦ Context satisfaction, or the extent to which an employee is satisfied with aspects of the work
setting such as salary levels, quality of supervision, relationships with co-workers, and working
conditions
Content
5. Alternative work schedules
◦ A compressed workweek allows a full-time job to be completed in fewer than the standard five days.
◦ Flexible working hours gives individuals some amount of choice in scheduling their daily work hours.
◦ In job sharing one full-time job is split between two or more persons who divide the work according to
agreed- upon hours.
◦ Work sharing is when employees agree to work fewer hours to avoid layoffs
◦ Telecommuting is work done at home or from a remote location using computers and advanced
telecommunications.
◦ Part-Time Work:
◦ Temporary part-time work an employee works only when needed and for less than the standard
40-hour workweek
◦ permanent part-time work is considered a “permanent” member of the workforce, although still
working fewer hours than the standard 40-hour week.

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LECTURE 10

Direction refers to an individual’s choice when presented

◦Motivation is defined as forces within the individual

2.2. Need theories of motivation

2.3. Equity theory of motivation

2.4. Expectancy theory of motivation

2.5. Goal setting theory of motivation

Acquired Needs Theory Two-Factor Theory

Acquired Needs Theory Two-Factor Theory

ERG theory was developed by

Alderfer advocated three need patterns of an

Alderfer recommended that all the needs may be

If gratification of higher need is stifled, the desire to satisfy

Alderfer recategorized Maslow’s hierarchy of needs into three simpler and

Maslow's Need Hierarchy Alderfer's Need Hierarchy

Acquired Needs Theory Two-Factor Theory

Need for Need for

He comes across ‘McClelland’s Theory of

David Clarence McClelland

Need for Achievement or

Need for Power or

Need for Affiliation or

Let us look at each in detail.

• Puts human resources into action

• Improves level of efficiency of people

• Leads to achievement of organizational or

• Builds friendly relationship due to internal

Acquired Needs Theory Two-Factor Theory

2.2. Need theories of motivation

2.3. Equity theory of motivation

2.4. Expectancy theory of motivation

2.5. Goal setting theory of motivation

3.1. Pay for Performance 3.2. Performance Management

Person + Good Job Fit = Motivation

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