HR ANALYTICS

CONTENTS
• Evolution of HRM
• HR Metrics and HR Analytics
• HRMS and Data Sources
• Forecasting HR costs : Workforce planning,
training and development requirements
• Optimising selection and promotion decisions
• Predictive HR Modelling : Employee Retention
and Turnover and Workforce Productivity
Evolution of HRM
 Evolution of HRM
• HRM was previously termed as PM or PA.
• It was evolved around 1970’s and its main focus
was for the welfare of workers in management for
business.
• Later government introduced HRM in public and
private sectors providing systematic procedures for
regulating employer and employee relationships.
• This term was coined around early 1800 BC which
was included in Babylonian Code of Hammurabi.
HR Metrics and HR Analytics
 HR ANALYTICS
• HR analytics is the process of collecting and
analyzing Human Resource (HR) data in order
to improve an organization’s workforce
performance.
• The process can also be referred to as talent
analytics, people analytics, or even workforce
analytics.
 Turnover
Employee turnover, or employee turnover rate, is the measurement of the
number of employees who leave an organization during a specified time
period, typically one year.
HR Analytics can:
• Collect and analyze past data on turnover to identify trends and patterns
indicating why employees quit.
• Collect data on employee behavior, such as productivity and engagement,
to better understand the status of current employees.
• Correlate both types of data to understand the factors that lead to
turnover.
• Help create a predictive model to better track and flag employees who
may fall into the identified pattern associated with employees that have
quit.
• Develop strategies and make decisions that will improve the work
environment and engagement levels.
• Identify patterns of employee engagement, employee satisfaction and
performance.
 Recruitment
HR Analytics can:
• Enable fast, automated collection of candidate data from multiple sources.
• Gain deep insight into candidates by considering extensive variables, like
developmental opportunities and cultural fit.
• Identify candidates with attributes that are comparable to the top-performing
employees in the organization.
• Avoid habitual bias and ensure equal opportunity for all candidates; with a
data-driven approach to recruiting, the viewpoint and opinion of one person
can no longer impact the consideration of applicants.
• Provide metrics on how long it takes to hire for specific roles within the
organization, enabling departments to be more prepared and informed when
the need to hire arises.
• Provide historical data pertaining to periods of over-hiring and under-hiring,
enabling organizations to develop better long-term hiring plans.
 How does HR Analytics work?

• HR Analytics is made up of several components that feed

into each other.
• To gain the problem-solving insights that HR Analytics
promises, data must first be collected.
• The data then needs to be monitored
and measured against other data, such as historical
information, norms or averages.
• This helps identify trends or patterns. It is at this point that
the results can be analyzed at the analytical stage.
• The final step is to apply insight to organizational decisions.
• Collecting data -Big data refers to the large quantity of information that
is collected and aggregated by HR for the purpose of analyzing and
evaluating key HR practices, including recruitment, training, and
performance.
• Collecting and tracking high-quality data is the first vital component of
HR analytics.
• Measurement - At the measurement stage, the data begins a process of
continuous measurement and comparison, also known as HR metrics.
• Analysis - The analytical stage reviews the results from metric reporting
to identify trends and patterns that may have an organizational impact.
• It might be descriptive(focused solely on understanding historical data
and what can be improved) , predictive (analyze historical data in order
to forecast future risks or opportunities) and prescriptive (predicts
consequences for forecasted outcomes)
• Application -Once metrics are analyzed, the findings are used as
actionable insight for organizational decision-making.
 What kind of data is collected?
• employee profiles
• performance
• data on high-performers
• data on low-performers
• salary and promotion history
• demographic data
• on-boarding
• training
• engagement
• retention
• turnover
• absenteeism
 HR metrics
• HR metrics are specific indicators that allow businesses to
measure performance, efficiency, and the impact of
business processes and changes.
• Metrics are essential in determining the value and
effectiveness of HR initiatives in a factual way, tracking and
presenting past data to influence future decision making.

For example, if a company is looking to understand more

about their employee turnover in a particular department,
it can be calculated as a percentage based on the
department’s staff count, turning that result into a metric.
14 HR Metrics
HRMS & Data Sources
 HRMS
• An HRMS (Human Resource Management
System) is a type of HR software that enables
the management of several HR functions
through the use of information technology.
• This, in turn, also frees up the HR team's time
which can then be used to address more
strategic, business-critical tasks.
 Cont.
• An HRMS (Human Resource Management System) is a type of HR
software that enables the management of several HR functions
through the use of information technology.
• An HRMS aims to improve the productivity and efficiency of the
business through the automation of manual and repetitive tasks. This,
in turn, also frees up the HR team’s time which can then be used to
address more strategic, business-critical tasks.
• An HRMS typically covers every element of an HRIS and include the
capabilities of human capital management system. The two popular
characteristics of a typical HRMS are Payroll and Time & Labor
Management (TLM).
• "Some of the HRMS vendors have [HRIS + (Payroll + TLM) =
HRMS] whereas few have [HCM + (Payroll + TLM)]"
 Cont.
• Human Resource Management (HRM, or simply
HR) is a function in every organization which is
designed to increase employee performance in
aligning with employer's strategic objectives.
• HR is primarily focused on how people are
managed within organizations, focusing on
systems and policies.
• HR involves the following sub-functions:
HRMS Functions
 DATA SOURCES
• HR data sources can be categorized into three groups.
– HRIS data. Data from the company’s 
Human Resources Information System, or HRIS, includes most of
the company’s data about its employees. Common examples of
HRIS systems include Workday, Oracle, and SAP.
– Other HR data. Some HR data is essential for data-driven decision
making but is not included in the HRIS. This data is often acquired
through surveys or other measurement techniques.
– Business data. Although it is impossible to cover business data
exhaustively, it plays an increasingly important role in 
people analytics. We will touch on the most essential business
data used for people analytics.
Forecasting HR Costs
 Forecasting HR
• Forecasting—whether it’s business forecasting, human resources
forecasting, or financial forecasting—is the process of using data,
insights, analytics, and experience to make predictions and
preparations to meet a specific business need.
• HR forecasting is the process of predicting demand and supply—
whether it’s the number of employees or types of skills that are
needed and available to get the job done.
• Basic forecasting techniques include:
– Yearly sales or production projections.
– Quantitative assessments, using mathematical calculations, that examine
how many employees are needed and when.
– Qualitative assessments, based on judgment, that determine culture-fit and
skill qualifications or desired personal and professional qualities.
 Forecasting HR costs

• Measuring Human Resource costs (HR costs,

also called Human Resource costing), is a key
component of HR accounting.
• Why measure Human Resource costs?
– Monitor departmental costs
– Measure impact and overall success
– Predict future costs
– Calculate a return of investment (ROI) = Net Profit /
Cost of Investment *100
 Workforce Planning
• Workforce planning refers to the process of ensuring an organization
has current and future access to the human capital it needs to
perform effectively.
• Strategic workforce planning is workforce planning that is aligned to
the organization's overall business objectives and the long-term vision.
• Effective workforce planning enables the organization to:
– Align workforce requirements directly to the agency’s strategic and annual
business plans.
– Develop a comprehensive picture of where gaps exist between competencies
the workforce currently possesses and future competency requirements.
– Identify and implement gap reduction strategies .
– Make decisions about how best to structure the organization and deploy the
workforce .
– Identify and overcome internal and external barriers to accomplishing
strategic workforce goals.
OPM developed a five-step workforce
planning model.
• Step 1: Set Strategic Direction This step involves linking the workforce planning process
with the agency’s strategic plan, annual performance/business plan, and work activities
required to carry out the goals and objectives of the strategic plan (long term) and
performance plan (short term).
• Step 2: Analyze Workforce, Identify Skill Gaps, and Conduct Workforce Analysis This
step involves:
– Determining what the current workforce resources are and how they will evolve over time through
turnover, etc.
– Developing specifications for the kinds, numbers, and location of workers and managers needed to
accomplish the agency’s strategic requirements.
– Determining what gaps exist between the current and projected workforce needs
• Step 3: Develop Action Plan This step involves the identification of strategies to close
gaps, plans to implement the strategies, and measures for assessing strategic progress.
These strategies could include such things as recruiting, training/retraining, restructuring
organizations, contracting out, succession planning, technological enhancements, etc.
• Step 4: Implement Action Plan This step involves ensuring that human and fiscal
resources are in place, roles are understood, and the necessary communication,
marketing, and coordination is occurring to execute the plan and achieve the strategic
objectives.
• Step 5: Monitor, Evaluate, and Revise. This step involves monitoring progress against
milestones, assessing for continuous improvement purposes, and adjusting the plan to
make course corrections and to address new workforce issues. z
RECRUITMENT
AND
SELECTION
 Recruitment
• Recruitment is a long process that involves a series
of activities.
• Recruitment can be defined as the process of
attracting, interviewing, selecting, and hiring
employees.
• Moreover, hiring can be either internal or external.
– Internal recruitment involves filling vacant positions with
existing employees from within an organization.
– External recruitment involves bringing in new
employees.
 Recruitment Steps
• Identifying the hiring need
• Devising a recruitment plan
• Write a job description
• Advertising the position
• Attracting interested candidates.
• Managing responses from applicants.
• Scrutinizing applications from interested applicants.
• Short listing the candidates
Sources of Recruitment
 Internal Recruitment 

• Internal sources of recruitment consist of

employees who are already on the payroll of a
firm.
• It also includes former employees who have
returned to work for the organization.
• Recruitment from internal sources is done to fill
up vacancies through promotion, re-hiring and
transferring employees within the company.
 Characteristics of Internal Recruitment 

• Quick process.
• Cheaper than the external recruitment
process.
• Works as a tool of motivation for the staff.
• The company’s choice is limited to existing
employees of the company.
• Hiring fresh employees is a lost prospect.
 Advantages and Disadvantages of Internal Recruitment

• Advantages:
– Cheaper and quicker to recruit
– People already familiar with the business and how it operates
– Provides opportunities for promotion with in the business – can
be motivating
– Business already knows the strengths and weaknesses of
candidates
• Disadvantages:
– Limits the number of potential applicants
– No new ideas can be introduced from outside
– May cause resentment amongst candidates not appointed
– Creates another vacancy which needs to be filled
 External Recruitment

• External sources of recruitment refer to the

sources that lie outside or exist external to the
organization.
 Sources of external recruitment include:

• People joining an organization, specifically through

recommendations.
• Employment agencies( e.g. naukri.com) or employment
exchanges.
• Advertising
• Institutes like colleges and vocational schools (e.g.
campus selection)
• Contractors
• List of applications
• Temporary workers.
Characteristics of External Recruitment

• Long and time-consuming process.

• It is an expensive process.
•  When external people are given opportunities
over them, then existing workers lose morale
• Hiring new employees can lead to the
introduction of new blood and thus the
introduction of a new set of skills and ideas.
 Advantages and Disadvantages of External
Recruitment
• Advantages:
– Outside people bring in new ideas
– Larger pool of workers from which to find the best candidate
– People have a wider range of experience
• Disadvantages:
– Longer process
– More expensive process due to advertising and interviews
required
– Selection process may not be effective enough to reveal the
best candidate
 Q&A
• Question: A company hired a software
engineer through a reference. Which of the
two types of recruitment process does this
come under?
 Selection
• In the hiring process, the selection is a part of the
recruitment process.
• Once recruiters have advertised the job and received
hundreds of applications, they have to shortlist few
candidates out of them.
• Selection is the process where a company picks a certain
number of applicants out of the hundreds of applicants,
they have received for the advertised vacancy.
• In other words, it is the process of choosing the right
candidate for the position. 
 Steps in Selection Process
• Screening applicants and removing
unqualified job applicants
• Offering tests such as intelligence tests,
personality test, aptitude test and
performance test to candidates
• Conducting interviews
• Verifying the job applicant’s references
• Conducting medical examinations
 Training and Development Requirements

• Training programs create more robust skill sets

• Training and development increases employee
confidence
• Employee training can enhance workplace morale
• Training programs provide growth opportunities
• Training programs develop a competitive edge
• Training options reduce employee turnover
• Development programs establish an industry
reputation
Optimizing Selection and
Promotion Decision
 How to Optimize Your Recruitment and Hiring Process

• Define the Position and Who You Need to Fill

it
• Ask Straightforward and Relevant Questions
• Test Your Candidates
• Develop a selection committee
•  Build a Workplace Culture That Attracts Full-
time and Contingent Workers
 How does HR make Promotion Decision?

• HR makes decision on the basis of :

– Management Feedback
– Performance Reviews
– Skills Assessment
– Certificate, Degrees and Professional Development
Predictive Modeling
PREDICTIVE MODELING
 What is predictive analytics?

• Predictive Analytics is the use of historical data to make

predictions about the future.
• This means you look at information from the past in order to
determine the likelihood of a future outcome.
• Let’s have a look at an example:
• Mrs. Jones has a thing for vintage designer bags. Every 4-5
months for the past 6 years she’s bought a unique creation and
logged the details of her vintage bag collection in an excel file.
With the help of the right predictive model, it’s possible to
predict for instance when Mrs. Jones is going to buy her next
designer bag and whether she’ll buy a clutch, a tote or a satchel.
 How does it work?

• Alright, since we’ve got the various types of

analytics covered now, it’s time to dive deeper
into the mechanics of PA.
• The basic concept of Predictive Analytics is as
follows:
• first, you collect – lots and lots of – data.
• Then you clean and
• analyze it and look for patterns to predict future
outcomes.
ILLUSTRATION
Predictive Cycle
1. Collect data
• Depending on what you want to know, you collect data from multiple sources. A
data source can be anything. If you track the amount of bags Mrs. Jones purchases
on a yearly basis, that’s a data source. If you measure the number of productive
hours per employee, that’s a data source too. If done right, the rule of thumb is
that the more (right) data sources you pick, the better your predictions get.
2. Pre-process data
• Once you’ve collected all the relevant data, it’s time for phase 2, also known as the
most time-consuming stage of the predictive cycle: the pre-processing stage. This is
when the data is cleaned, formatted, combined, sampled and what not. In short:
the data is being processed in such a way that it’s ready to be used in a ‘predictive
model’.
3. Establish the type of analysis
• Based on what you encounter during the pre-processing stage and the results
you’re looking for, you establish the type of analysis you want to run and you pick
a predictive model. There are tons of different predictive models out there with
different outcomes, think: decision trees, neural networks or random forests (who
knew data people where such nature-lovers).  Your go-to machine learning and
Data Analytics expert will know which one to use when.
4. Training of the predictive model
• Next up, the training phase. Just like you need to be trained to run 20
miles, a predictive model needs to be trained to be able to make
predictions. This means you let your model take a test drive with a big chunk
of data to see how it reacts. If you pour in enough data, you get
representative outcomes based on which you can make estimations for
future data.
• A simple example: After 10.000 candidates (= training data), 85% of them is
still in service after 3 months. You can now say with a high degree of
certainty that of the next 100 candidates, around 85 will still be in service
after three months.
5. Perform predictions
• This is when the fun begins. After all the collecting, pre-processing, analysis
establishing and training of the model, it’s future-telling time.
6. Act on insights
• Of course, it doesn’t stop after you’ve got your scores, graphs, and
percentages, the idea is for you to act on the insights you’ve gained. To use
them to optimize your process.
Employee Retention and Turnover
(Theories)
 Employee Retention & Turnover
• Business Dictionary defines employee
retention as “an effort by a business to
maintain a working environment which
supports current staff in remaining with the
company”.
• Employee turnover is the employee(s)
replacing an employee who is leaving.
Herzberg’s Two-Factor Theory
 Cont.
• Hygiene factor refers to factors which enable motivation at a workplace.
• Hygiene factors are the physiological needs that the employees expect to
be fulfilled. The absence of these factors leads to employee
dissatisfaction.
• The causes of employee dissatisfaction are lack of compensation, job
security, working conditions, quality of leadership and relationship
between supervisors and peers.
• Motivators.These factors motivate the employees to perform better.
• Some factors for satisfaction are responsibility, job satisfaction,
recognition, achievement, opportunities for growth, etc.
• These are also the factors for an employee to leave or stay at an
organization.
 Maslow’s Theory
• Many leaders fall into the trap of focusing on the
deliverables/task before building the relationships and focusing
on the people in the team.
• They create a 'task culture' which may well achieve early success
but a culture that isn't sustainable in terms of high performance.
• Before long the team is in conflict, poor performance occurs and
the team becomes affected by what is known as the 'dead body'
syndrome. A terrible place where people come to survive and
do the bare minimum. You have 'attendees' rather than 'high
performers'
• As leaders we need to avoid the 'dead body' syndrome.
Cont.
 ERG Theory
• Alderfer’s ERG Theory of Motivation is a simplified version
of Maslow’s hierarchy of needs.
• ERG theory is an acronym for Existence, Relatedness, and
Growth.
• These are the three basic needs that employees will try to
satisfy.
• In the model, as one need is filled, this will provide
motivation for the employee to want to fulfill another need.
• All three needs must be satisfied simultaneously in order for
an individual to feel motivated.
Cont.
 Existence (E)

• Existence refers to our basic survival needs as

humans.
• In this category are food and water, shelter,
good health, and feeling safe.
• These needs can be broadly described as our
basic physiological and safety needs.
 Relatedness (R)

• Relatedness refers to our need to relate to other

people, that is, it refers to the relationships we have.
• Having good relationships and interactions with
other humans is a need we all share, although
obviously, this need isn’t as strong as our basic
survival needs.
• To feel happy and content most humans need to
interact with others and for those interactions to be
positive in nature.
 Growth (G)

• Growth refers to our need for personal development,

to be creative and to perform meaningful work.
• Growth allows us to explore what our potential might
be within our current environment.
• It’s easy to see why you might lack motivation if you
are stuck doing the exact same job every day without
variety.
• Conversely, if your job provides interesting and varied
challenges, it’s easier to be motivated as you’re being
presented with growth opportunities each day.
 McClleland’s Three needs theory (nAch,
nAff,nPow)
• McClelland says that, regardless of our gender,
culture, or age, we all have three motivating
drivers, and one of these will be our dominant
motivating driver.
• This dominant motivator is largely dependent
on our culture and life experiences.
• Its aka Learned Needs Theory
 Achievement
• Has a strong need to set and accomplish
challenging goals.
• Takes calculated risks to accomplish their
goals.
• Likes to receive regular feedback on their
progress and achievements.
• Often likes to work alone.
 Affiliation
• Wants to belong to the group.
• Wants to be liked, and will often go along with
whatever the rest of the group wants to do.
• Favors collaboration over competition.
• Doesn't like high risk or uncertainty.
 Power
• Wants to control and influence others.
• Likes to win arguments.
• Enjoys competition and winning.
• Enjoys status and recognition.
 Theory X and Theory Y
• In the 1960s, social psychologist Douglas
McGregor developed two contrasting theories
that explained how managers' beliefs about
what motivates their people can affect their
management style.
• He labeled these Theory X and Theory Y.
• These theories continue to be important even
today.
 Theory X
• Theory X managers tend to take a pessimistic view of their people, and
assume that they are naturally unmotivated and dislike work.
• As a result, they think that team members need to be prompted, 
rewarded  or punished constantly to make sure that they complete
their tasks.
• Work in organizations that are managed like this can be repetitive, and
people are often motivated with a "carrot and stick" approach.
• Performance appraisals  and remuneration  are usually based on
tangible results, such as sales figures or product output.
• This style of management assumes that workers:
– Dislike their work.
– Avoid responsibility and need constant direction.
– Have to be controlled, forced and threatened to deliver work.
– Need to be supervised at every step.
– Have no incentive to work or ambition, and therefore need to be enticed by
rewards to achieve goals.
 Theory Y
• Theory Y managers have an optimistic, positive opinion of
their people.
• This encourages a more collaborative , trust-based
  relationship between managers and their team members.
• People have greater responsibility, and managers
encourage them to develop their skills and suggest
improvements.
• Appraisals are regular but, unlike in Theory X
organizations, they are used to encourage open
communication rather than control staff.
 Cont.
• Theory Y organizations also give employees frequent
opportunities for promotion.
• This style of management assumes that workers are:
– Happy to work on their own initiative.
– More involved in decision making.
– Self-motivated to complete their tasks.
– Enjoy taking ownership  of their work.
– Seek and accept responsibility, and need little direction.
– View work as fulfilling and challenging.
– Solve problems creatively and imaginatively.
 Comparison between Theory X and Theory Y
Basis for Comparison Theory X Theory Y
Meaning Theory X is a motivational Theory Y, is an advanced
theory, which involves high theory, wherein it is
supervision and control over assumed that the workers
the subordinates, and are self-directed and self-
greater degree of motivated, for growth and
centralization. development and takes
active part in decision
making.

Work Dislikes work Work is natural

Ambition Little or no ambition Highly ambitious
Responsibility Avoids responsibility. Accept and seek
responsibility.
Leadership style Autocratic Democratic
Direction Constant direction is Little or no direction is
required. required.
 Cont.
Basis for Comparison Theory X Theory Y
Control Tight Lenient
Authority Centralized Decentralized
Self motivation Absent Present
Focuses on Psychological needs and Social needs, esteem needs
Security needs and self-actualization
needs.
Motivation Models
 Theory of Motivation
• People take conscious decision about their job
decision.
• AKA as Process Theory of Motivation or Cognitive
Theory of Motivation
• Organisation must understand how an individual takes
decision and what efforts he puts in the job.
• There are 3 theory of motivation:
– Expectancy Theory
– Equity Theory
– Performance Satisfaction Model
 Expectancy Theory

• It was developed by Victor H. Vroom in 1964

• This theory emphasizes that people feel
motivated always if they perceive that their
effort will result in successful performance
and successful performance will ensure
desired results.
• Its aka Instrumentality Theory, Path-Goal
Theory and Valence-Instrumentality Theory
(VIE).
 Cont.
• V*L=M
• V is Valence which means strength of one’s desire
for something and varies from -1 to +1
• L is Expectancy which means probability of getting it
with a certain action and values may be 0 and 1
• M is Motivation which means strength of drive
towards an action
• Motivational strength = ƩV*I*E (Summation of the
valence including instrumentality and expectancies.
• Valence is the degree of desirability of certain outcomes. It is therefore, the strength
of an individual’s preference for a particular outcome, which may be a promotion,
pay raise, recognition, etc. after he successfully accomplishes the job. Since people
may have positive or negative preferences for an outcome, valence may be negative
or positive. Hence, valence may vary from -1 to + 1.
• Expectancy is the perceived possibility of a particular outcome that would follow
after an action. It is, therefore, the strength of belief that an act will be followed by
particular outcomes. The strength of expectations is based on past experiences.
People expect what will happen in the future on the basis of what has occurred in the
past. As expectancy is an action-outcome association, it may range from zero to one.
• If employees perceive no possibility of an outcome from certain acts, their
expectancy would be zero, while on the contrary, the value of expectancy would be
one, when they feel (from their experience of action-outcome relationship) that they
are likely to achieve something with certainty.
• Vroom has used one more term in between expectancy and valence, which is
usefulness or instrumentality.
• Instrumentality is the belief that the first-level outcome would lead to the second-
level outcome. For example, one may be motivated for superior level performance
for his desire to get promoted. Here, the first-level outcome (superior-level
performance) is seen as being instrumental for the second-level outcome
(promotion).
 Disadvantages
• It needs to be adequately tested in different
work environments.
• Employee may not always take conscious
decision.
• Link between efforts performance and
performance-rewards may not be linear. For
e.g. promotion may be on the basis of
seniority, educational background etc.
 Equity Theory
• IF U PAY PEANUTS, U GET MONKEYS.
• U SRATCH MY BACK, I’LL SCRATCH YOURS.
• Equity theory was first developed in 1963 by John Stacey
Adams.
• Adams' Equity Theory calls for a fair balance to be struck
between an employee's inputs and an employee's outputs.
• According to the theory, finding this fair balance serves to
ensure a strong and productive relationship is achieved
with the employee, with the overall result being contented,
motivated employees.
• Inputs typically include:
– Effort.
– Loyalty.
– Hard work.
– Commitment.
– Skill.
– Ability.
– Adaptability.
– Flexibility.
– Acceptance of others.
– Determination.
– Enthusiasm.
– Trust in superiors.
– Support of colleagues.
– Personal sacrifice.
• Outputs typically include:
– Financial rewards (such as salary, benefits, perks).
– Intangibles that typically include:
• Recognition.
• Reputation.
• Responsibility.
• Sense of achievement.
• Praise.
• Stimulus.
• Sense of advancement/growth.
• Job security.
 Disadvantages
• It is complex and difficult in application.
• Perceptions are difficult to measure or assess.
• Choosing a ‘comparison other’ may not be
always correct.
• A given factor may be input as well as
outcome.
• These studies is based on lab experiments
rather than real life situations.
 Performance Satisfaction Theory
• The Porter and Lawler theory of motivation is based on the
assumption that rewards cause satisfaction and that sometimes
performance produces reward.
• They hypothesize that the relationship between satisfaction and
performance is linked by another variable rewards.
• They see good- performance leading to reward which lead to
satisfaction. It is a multi-variable model and explains the complex
of relationship among motivation, performance and satisfaction.
• They argue that satisfaction does not always lead to performance.
• Rather is reverse is true, because people can become complacent
after having achieved satisfaction once.
• Performance can lead to satisfaction if the reward systems are
effective.
Porter and Lawler Motivation Model (Adapted from L.W. Porter and E.E. Lawler
Managerial Attitude and Performance, Richard D. Irwin, Homowoxi III, 1968, p. 195).
Porter and Lawler Theory of Motivation – Rewards

• The theory proposed two types of reward:

– Intrinsic rewards include things such as: personal
achievement, professional growth, sense of
pleasure and accomplishment. 
– Extrinsic Rewards: Extrinsic rewards are given by
the organization. They include such things as pay,
promotion, status, bonus, incentive , commission
and etc.