Chapter 11 – Motivating and Rewarding Employees
CHAPTER
11
MOTIVATING
AND
REWARDING
EMPLOYEES
LEARNING OUTCOMES
After reading this chapter, students should be able to:
11-1. Define and explain motivation.
11-2. Compare and contrast early theories of motivation.
11-3. Compare and contrast contemporary theories of motivation.
11-4. Discuss current issues in motivating employees.
Management Myth
Myth: Motivation is all about “show me the money.”
Truth: There are many options available to managers, aside from money, for improving
employee motivation. The secret to being effective is understanding an individual’s unique
needs.
Teaching Tips:
When students hear that companies like Google give such great benefits, they immediately think,
‘I’d like to work there!’ To get students thinking about how motivation works, ask the following
questions:
1. Ask students to identify what motivates them. Is it money? Is it time off?
2. Do you think that motivation theories and practices that motivate individuals at a U.S. based
company would be effective in explaining and generating motivation in other countries? If
so, which countries? If not, why? (Most motivation theories are U.S. based and are culture
bound.)
I. WHAT IS MOTIVATION
A. Definition
1. Many incorrectly view motivation as a personal trait.
2. Motivation is the result of the interaction between the individual and the situation.
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a) Individuals differ in motivational drive.
b) An individual’s motivation varies from situation to situation.
3. Motivation refers to the process by which a person’s efforts are energized,
directed, and sustained toward attaining a goal.
4. Three key elements: energy, direction, and persistence.
a The energy element is a measure of intensity.
1 When someone is motivated, he or she puts forth effort and tries hard.
2 Quality and intensity must be measured.
b The effort must be channeled in a direction that benefits the organization.
(1) Effort directed toward, and consistent with, the organization’s goals.
b) Persistence is the third key element.
(1) We want employees to persist in putting forth effort to achieve those goals.
5. A recent Gallup poll found that a large majority of U.S. employees—some 64
percent—are not excited about their work.
II FOUR EARLY THEORIES OF MOTIVATION (1950s & 1960s)
A. Introduction
1. Students should know these theories because:
a) They represent the foundation from which contemporary theories grew.
b) Practicing managers regularly use these theories to explain employee
motivation.
B. What Is Maslow’s Hierarchy of Needs Theory?
1. The best-known theory of motivation.
2. Within every human being, there exists a hierarchy of five needs.
a) Physiological needs.
b) Safety needs.
c) Social needs.
d) Esteem needs.
e) Self-actualization needs.
3. As each need is substantially satisfied, the next need becomes dominant. (Exhibit
11-1.)
4. Lower-order needs are satisfied predominantly externally and higher-order needs
are satisfied internally.
5. No need is ever fully gratified, a substantially satisfied need no longer motivates.
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6. To motivate, you need to understand where that person is in the hierarchy and
focus on satisfying needs at or above that level.
7. Widely recognized, particularly among practicing managers, its popularity can be
attributed to the theory’s intuitive logic and ease of understanding.
8. Research does not generally validate the theory.
9. Maslow had no empirical substantiation for his theory, and several studies found
no support.
C. What Is McGregor’s Theory X and Theory Y?
1. Douglas McGregor proposed two distinct views of the nature of human beings.
a) A basically negative view, labeled Theory X.
(1) Assumes that workers have little ambition, dislike work, want to avoid
responsibility, and need to be closely controlled to work efficiently.
b) A basically positive view, labeled Theory Y.
(1) Assumes that employees enjoy work, seek out and accept responsibility, and
exercise self-direction.
2. To maximize employee motivation, use Theory Y practices – allow employees to
participate in decisions, create responsible and challenging jobs, and encourage
good group relations.
3. No evidence to confirm either set of assumptions or that being a Theory Y manager
is the only way to motivate employees.
D. What Is Herzberg’s Two-Factor Theory?
1. Frederick Herzberg’s two-factor theory (also called motivation-hygiene theory) –
intrinsic factors are related to job satisfaction, while extrinsic factors are associated
with job dissatisfaction.
a) Popular theory from the 1960s to the early 1980s.
b) Criticized for being too simplistic.
c) Influenced today’s approach to job design.
2. Research focus: When people felt exceptionally good (factors on the left side of
Exhibit 11-2) or bad about their jobs (factors on the right side of Exhibit 11-2).
3. Replies show these were two very different factors.
a) When people felt good about their work, they tended to cite intrinsic factors
arising from the job content, such as achievement, recognition, and
responsibility.
b) When they were dissatisfied, they tended to cite extrinsic factors arising from
the job context, such as company policy and administration, supervision,
interpersonal relationships, and working conditions.
4. The opposite of satisfaction is not dissatisfaction, as was traditionally believed.
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a) Removing dissatisfying characteristics does not necessarily make the job
satisfying.
b) Exhibit 11-3, the opposite of “satisfaction” is “no satisfaction,” and the
opposite of “dissatisfaction” is “no dissatisfaction.”
E. What Is McClelland’s Three-Needs Theory?
1. David McClelland and others have proposed the three-needs theory.
2. Need for achievement (nAch)—the drive to excel, to achieve in relation to a set
of standards, to strive to succeed.
a) Striving for personal achievement rather than for the rewards of success per se
(nAch).
b) The desire to do something better or more efficiently than it has been done
before.
c) High achievers differentiate themselves from others by their desire to do things
better.
d) They seek situations in which they can attain personal responsibility for finding
solutions to problems, in which they can receive rapid and unambiguous
feedback, and in which they can set moderately challenging goals.
e) They avoid what they perceive to be very easy or very difficult tasks.
f) A high nAch doesn’t necessarily lead to being a good manager, especially in
large organizations. Why? Because high achievers focus on their own
accomplishments, while good managers emphasize helping others accomplish
their goals.
g) Employees can be trained to stimulate their nAch by being in situations where
they have personal responsibility, feedback, and moderate risks.
3. Need for power (nPow)—the need to make others behave in a way that they
would not have behaved otherwise.
4. Need for affiliation (nAff)—the desire for friendly and close interpersonal
relationships.
5. The best managers tend to be high in nPow and low in nAff.
III HOW DO CONTEMPORARY THEORIES EXPLAIN MOTIVATION
A. What is Goal-Setting Theory? (See Exhibit 11-4.)
1. Goal-setting theory – says that specific goals increase performance and that
difficult goals, when accepted, result in higher performance than do easy goals.
2. Working toward a goal is a major source of job motivation.
3. Specific and challenging goals are superior motivating forces.
4. The specificity of the goal itself acts as an internal stimulus.
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5. In some cases, participatively set goals elicit superior performance; in other cases,
individuals performed best when their manager assigned goals. Participation is
probably preferable to assigning goals when employees might resist accepting
difficult challenges.
6. People will do better if they get feedback on how well they’re progressing toward
their goals because feedback helps identify discrepancies between what they’ve
done and what they want to do.
7. Self-generated feedback—where an employee monitors his or her own progress—
has been shown to be a more powerful motivator than feedback coming from
someone else.
8. Three other contingencies influence the goal-performance relationship:
a) 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.
b) Self-efficacy – refers to an individual’s belief that he or she is capable of
performing a task. The higher your self-efficacy, the more confidence you have
in your ability to succeed in a task.
c) National culture – 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).
9. Overall conclusion, the intention to work toward hard and specific goals is a
powerful motivating force.
From the Past to the Present
Managers have always been concerned about how tasks should be performed. Early
management experts were interested in the ‘one best way’ to arrange work and jobs. Later,
researchers created the now famous Hawthorne Studies to unravel the patterns of human
behavior in the workplace. From his work in the 1950s, Herzberg wanted to know the
importance of attitudes toward work and the employees’ experiences, both good and bad, that
workers reported. The fact that job dissatisfaction and job satisfaction were the results of
different aspects of the work environment was an important finding.
What Herzberg discovered changed the way we view job design. The Job Characteristics
model built upon Herzberg’s findings in identifying the five core job dimensions, especially
autonomy. As managers and organizations continue to search for work designs that will
energize and engage employees, Hertzberg’s study of when people felt good and felt bad at
work continues as a classic.
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Discuss This:
Why do you think jobs need to be “designed”?
How can job design contribute to employee motivation?
Teaching Tip:
It’s always good to have a couple of students in class who have experienced the role of a
manager. These students can be encouraged to give examples of things they’ve done that have
worked well to motivate employees (and things that have worked not so well). For students
who have never experienced management responsibilities, they should think about jobs that
they have had and address the following questions: Were there times when they were
motivated to perform their best? Were there times when work just seemed to drag on and on?
How could these jobs been improved?
B. How Does Job Design Influence Motivation?
1. Job design refers to the way tasks are combined to form complete jobs.
2. Managers can design motivating jobs by using the job characteristics model
(JCM) developed by J. Richard Hackman and Greg R. Oldham. This model helps
managers describe any job in terms of five core job dimensions.
a) Skill variety.
b) Task identity.
c) Task significance.
d) Autonomy.
e) Feedback.
3. Exhibit 11-5 presents the model.
a) The first three dimensions—skill variety, task identity, and task significance—
combine to create meaningful work.
b) Jobs that possess autonomy give the job incumbent a feeling of personal
responsibility for the results.
c) If a job provides feedback, the employee will know how effectively he or she is
performing.
4. JCM suggests that internal rewards are obtained when an employee learns
(knowledge of results through feedback) that one personally (experienced
responsibility through autonomy of work) has performed well on a task that one
cares about (experienced meaningfulness through skill variety, task identity, and/or
task significance).
a) The links between the job dimensions and the outcomes are moderated or
adjusted by the strength of the individual’s growth need (the person’s desire for
self-esteem and self-actualization).
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5. Individuals with a high growth need are more likely to experience the
psychological states when their jobs are enriched than are their counterparts with a
low growth need.
6. Job enrichment – vertical expansion of a job by adding planning and evaluation
responsibilities. Individuals with low growth need don’t tend to achieve high
performance or satisfaction by having their jobs enriched.
7. Exhibit 11-6 depicts guidelines for job redesign based on the JCM.
C. What is Equity Theory?
1. Employees make comparisons.
2. There is considerable evidence that employees compare themselves to others and
that inequities influence the degree of effort that employees exert.
3. Equity theory was developed by J. Stacey Adams; equity theory says that
employees perceive what they get from a job situation (outcomes) in relation to
what they put into it (inputs) and then compare their input-outcome ratio with the
input-outcome ratio of relevant others. (See Exhibit 11-7.)
a) If they perceive their ratio to be equal to those of the relevant others with
whom they compare themselves, a state of equity exists.
b) If the ratios are unequal, inequity exists; that is, workers view themselves as
under-rewarded or over-rewarded.
4. The referent is an important variable in equity theory.
5. There are three referent categories: “persons,” “system,” and “self.”
a) Persons includes other individuals with similar jobs in the same organization
and also includes friends, neighbors, or professional associates.
b) The system considers organizational pay policies and procedures and the
administration of that system.
c) Self refers to input-outcome ratios that are unique to the individual. It reflects
past personal experiences and contacts.
6. Whenever employees perceive inequity, they will act to correct the situation.
7. Distributive justice – is the perceived fairness of the amount and allocation of
rewards among individuals.
8. More recent research has focused on looking at issues of procedural justice,
which is the perceived fairness of the process used to determine the distribution of
rewards.
9. This research shows that distributive justice has a greater influence on employee
satisfaction than procedural justice, while procedural justice tends to affect an
employee’s organizational commitment, trust in his or her boss, and intention to
quit.
A Question of Ethics
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A scary thing is happening. Workers facing extraordinary work demands are turning to ADHD
drugs to boost their energy. These pills are amphetamine-based stimulants that give users a boost
of energy. Although some students may use these when studying for exams or putting the final
touches on a research paper/presentation, experts now say that stimulant abuse is moving into the
workplace. Many young workers using the drugs to increase their productivity say that “these
drugs are not used to get high, but hired.” Such seemingly harmless abuse can lead to serious
consequences.
Discuss This:
What do you think? Is this a problem of/for employee motivation? Explain.
Why is this a potential ethical issue? How might managers address this?
Teaching Tips:
Many of today’s students have grown up with brothers/sisters/friends with ADHD and may see
the drugs used to treat the disorder as being more along the lines of acetaminophen, something
that helps the individual in everyday life. Here are a couple of questions to get the ball rolling:
Is it drug abuse when the goal is better performance and not simply to get high?
Can companies limit the use of the drugs for some people, but not for others?
D. How Does Expectancy Theory Explain Motivation?
1. The most comprehensive explanation of motivation is Victor Vroom’s expectancy
theory.
2. It states that an individual tends to act on the basis of the expectation that the act
will be followed by a given outcome and the attractiveness of that outcome to the
individual.
3. It includes three variables or relationships (See Exhibit 11-8).
a) Expectancy or effort-performance linkage—the probability perceived by the
individual that exerting a given amount of effort will lead to performance.
b) Instrumentality or performance-reward linkage—the degree to which the
individual believes that performing at a particular level will lead to the
attainment of a desired outcome.
c) Valence or attractiveness of reward—the importance that the individual places
on the potential outcome or reward that can be achieved on the job.
4. It can be summed up in the following questions:
a) How hard do I have to work to achieve a certain level of performance, and can
I actually achieve that level?
b) What reward will performing at that level get me?
c) How attractive is this reward to me, and does it help achieve my goals?
5. How does expectancy theory work?
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a) Exhibit 11-8 shows a very simple version of expectancy theory.
b) The strength of a person’s motivation to perform (expectancy/effort) depends
on how strongly that individual believes that he or she can achieve what is
being attempted.
c) If this goal is achieved (instrumentality/performance), will he or she be
adequately rewarded by the organization?
d) If so, will the reward satisfy his or her individual goals?
(valence/attractiveness)
E. How Can We Integrate Contemporary Motivation Theories?
1. There is a tendency to view the motivation theories independently even though
many of the ideas underlying the theories are complementary.
2. Exhibit 11-9 presents a model that integrates much of what we know about
motivation.
a) Its basic foundation is the simplified expectancy model.
3. The individual effort box has an arrow leading into it that flows out of the
individual’s goals.
4. The goals-effort loop is meant to remind us that goals direct behavior.
a) 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.
b) Traditional need theories tell us that motivation would be high to the degree
that the rewards an individual received for his or her high performance satisfied
the dominant needs consistent with his or her individual goals.
5. The model considers the need for achievement, reinforcement theory, equity, and
the job characteristics model.
6. Finally, we can see the JCM in exhibit11-9. Task characteristics (job design)
influence job motivation at two places.
a) First, jobs that score high in motivating potential are likely to lead to higher
actual job performance since the employee’s motivation is stimulated by the
job itself.
b) Second, jobs that score high in motivating potential also increase an
employee’s control over key elements in his or her work.
(1) Jobs that offer autonomy, feedback, and similar task characteristics help to
satisfy the individual goals of employees who desire greater control over their
work.
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