Unit 9.

Motivating employees

9.1 Individual Needs and Motivation

9.2 Content Theories of Motivation
a) Maslow`s Hierarchy of Needs
b) ERG Theory
c) Herzberg`s Two-Factor Theory
d) Acquired Needs Theory
9.3 Process Theories of Motivation
a) Goal Setting Theory
b) Equity Theory
c) Expectancy Theory
9.4 Innovative Ideas for Motivating
a) Empowering Employees
b) Employee Engagement
c) The Making Progress Principle

9.1 Individual Needs and Motivation

Motivation refers to the forces either within or external to a person that arouse
enthusiasm and persistence to pursue a certain course of action. Employee motivation affects
productivity, and part of a manager’s job is to channel motivation toward the accomplishment of
organizational goals. Studies have found that high employee motivation goes hand in hand with
high organizational performance and profits. It is the responsibility of managers to find the right
combination of motivational techniques and rewards to satisfy employees’ needs and
simultaneously encourage great work performance. A simple model of human motivation is
illustrated in Exhibit 1. People have needs—such as for recognition, achievement, or monetary
gain—that translate into an internal tension that motivates specific behaviors with which to fulfill
various needs. To the extent that the behavior is successful, the person is rewarded because the
need is satisfied. The reward also informs the person that the behavior was appropriate and can
be used again in the future.
Exhibit 1. A Simple Model of Motivation

Intrinsic and Extrinsic Rewards

Managers who understand the motives that compel people to initiate, alter, or continue a
desired behavior are more successful as motivators. Exhibit 2 illustrates four categories of
motives based on two criteria. The vertical dimension contrasts intrinsic versus extrinsic
rewards. The horizontal dimension contrasts behaviors that are driven by fear or pain versus
those driven by growth or pleasure. Intrinsic rewards are the satisfactions that a person receives
in the process of performing a particular action. The completion of a complex task may bestow a
pleasant feeling of accomplishment, or solving a problem that benefits others may fulfill a
personal mission. Extrinsic rewards are given by another person, typically a manager, and
include promotions, praise, and pay increases. They originate externally, as a result of pleasing
others.
 Exhibit 2. Four Categories of Motives Managers Can Use

Effective managers want people to receive both extrinsic and intrinsic rewards to meet
their needs. Google, for example, which is built on the philosophy of creating the “happiest, most
productive workplace in the world,” provides some of the most amazing extrinsic rewards in
corporate America—free breakfast, lunch, and dinner; subsidized massages; free yoga and
Pilates classes; fitness centers; free snacks, beverages, and candy all day. The headquarters
includes play areas, cafes, coffee bars, and cozy conversation areas, as well as conference rooms
and offices, many with desks that engineers were allowed to design for themselves. Yet the
strongest employee motivation seems to come from the sense of community and support that
these lavish perks create rather than from the perks themselves. Google analyzes data on
everything to see how people are interacting because creativity requires “serendipitous
interaction.
The four quadrants represent four differing approaches for motivating people. Quadrants
1 and 2 are both negative approaches to motivating. Quadrant 1 uses negative, extrinsic methods,
such as threats or punishments, to get people to perform as desired. For example, some
companies have found that penalizing employees for smoking or being overweight by charging
extra for health insurance is an effective way to change behaviors and lower company health care
costs. The practice is growing, with leaders citing behavioral science research showing that
people typically respond more strongly to a potential loss (such as a financial penalty for not
losing weight), referred to as loss aversion, than to an expected gain (such as a financial reward
for losing weight).
Quadrant 2 methods attempt to motivate people by tapping into their self-doubts or
anxieties. For example, a manager might motivate people to work hard by emphasizing the weak
economy and high unemployment rate. Quadrant 1 and 2 methods can indeed be effective, as
fear is a powerful motivator. However, using fear to motivate people in organizations almost
always has negative consequences for employee development and long-term performance.
Quadrants 3 and 4 are positive motivational approaches.
Quadrant 3 methods attempt to influence behavior by using extrinsic rewards that create
pleasure. When people aren’t expecting a reward, it can have a disproportionate psychological
impact. This positive motivational approach is useful but limited. External rewards are
important, but they can lose their power as motivational tools over time.
The most effective managers also emphasize Quadrant 4 techniques that tap into deep-
seated employee energy and commitment by helping people get intrinsic rewards from their
work. For example, in a bossless workplace where no one is telling people what to do and
keeping tabs on whether they do it, managers need people who can act based on their own
motivation.

9.2 Content Perspectives on Motivation

Content theories emphasize the needs that motivate people. At any point in time, people
have a variety of needs. These needs translate into an internal drive that motivates specific
behaviors in an attempt to fulfill the needs. In other words, our needs are like a hidden catalog of
the things that we want and will work to get. To the extent that managers understand employees’
needs, they can design reward systems to meet them and direct employees’ energies and
priorities toward attaining organizational goals.

The Hierarchy of Needs

Probably the most famous content theory was developed by Abraham Maslow. Maslow’s
hierarchy of needs theory proposes that people are motivated by multiple needs and that these
needs exist in a hierarchical order, as illustrated in Exhibit 3.

Exhibit 3. Maslow`s Hierarchy of Needs

Maslow identified five general types of motivating needs, listed in order of ascendance:
1. Physiological needs. These most basic human physical needs include food, water, and
oxygen. In the organizational setting, they are reflected in the needs for adequate heat, air, and
base salary to ensure survival.
2. Safety needs. These needs include a safe and secure physical and emotional environment and
freedom from threats—that is, for freedom from violence and for an orderly society. In the
workplace, safety needs reflect the needs for safe jobs, fringe benefits, and job security.
3. Belongingness needs. These needs reflect the desire to be accepted by one’s peers, have
friendships, be part of a group, and be loved. In the organization, these needs influence the desire
for good relationships with coworkers, participation in a work group, and a positive relationship
with supervisors.
4. Esteem needs. These needs relate to the desire for a positive self-image and to receive
attention, recognition, and appreciation from others. Within organizations, esteem needs reflect a
motivation for recognition, an increase in responsibility, high status, and credit for contributions
to the organization.
5. Self-actualization needs. These needs include the need for self-fulfillment, which is the
highest need category. They concern developing one’s full potential, increasing one’s
competence, and becoming a better person. Self-actualization needs can be met in the
organization by providing people with opportunities to grow, be creative, and acquire training for
challenging assignments and advancement.
According to Maslow’s theory, low-order needs take priority—they must be satisfied
before higher-order needs are activated. The needs are satisfied in sequence: Physiological needs
come before safety needs, safety needs before belongingness needs, and so on. A person desiring
physical safety will devote his or her efforts to securing a safer environment and will not be
concerned with esteem needs or self-actualization needs. Once a need is satisfied, it declines in
importance, and the next higher need is activated.

ERG Theory
Clayton Alderfer proposed a modification of Maslow’s theory in an effort to simplify it
and respond to criticisms of its lack of empirical verification. His ERG theory identified three
categories of needs:
1. Existence needs. The needs for physical wellbeing
2. Relatedness needs. The needs for satisfactory relationships with others
3. Growth needs. The needs that focus on the development of human potential and the desire for
personal growth and increased competence
The ERG model and Maslow’s needs hierarchy are similar because both are in
hierarchical
form and presume that individuals move up the hierarchy one step at a time. However, Alderfer
reduced the number of need categories to three and proposed that movement up the hierarchy is
more complex, reflecting a frustration-regression principle: namely, that failure to meet a high-
order need may trigger a regression to an already fulfilled lower-order need. Thus, a worker who
cannot fulfill a need for personal growth may revert to a lowerorder need and redirect his or her
efforts toward making a lot of money. The ERG model therefore is less rigid than Maslow’s
needs hierarchy, suggesting that individuals may move down as well as up the hierarchy,
depending on their ability to satisfy needs. Needs hierarchy theories explain why organizations
find ways to recognize employees, encourage their participation in decision making, and give
them opportunities to make significant contributions to the organization and society.
Many companies are finding that creating a humane work environment that allows people
to achieve a balance between work and personal life is also a great high-level motivator. Some
companies go even further with job flexibility. Although not all managers would be comfortable
working in an environment where employees come and go as they please, there is some evidence
that people who have greater control over their work schedules are significantly less likely to
suffer job burnout and are more highly committed to their employers.

A Two-Factor Approach to Motivation

Frederick Herzberg developed another popular theory of motivation called the two-factor
theory. Herzberg interviewed hundreds of workers about times when they were highly motivated
to work and other times when they were dissatisfied and unmotivated. His findings suggested
that the work characteristics associated with dissatisfaction were quite different from those
pertaining to satisfaction, which prompted the notion that two factors influence work motivation.
The two-factor theory is illustrated in Exhibit 4. The center of the scale is neutral,
meaning that workers are neither satisfied nor dissatisfied. Herzberg believed that two entirely
separate dimensions contribute to an employee’s behavior at work. The first, called hygiene
factors, involves the presence or absence of job dissatisfiers, such as working conditions, pay,
company policies, and interpersonal relationships. When hygiene factors are poor, work is
dissatisfying. However, good hygiene factors simply remove the dissatisfaction; they do not in
themselves cause people to become highly satisfied and motivated in their work.
 The second set of factors does influence job satisfaction. Motivators focus on high level
needs and include achievement, recognition, responsibility, and opportunity for growth.
Herzberg believed that when motivators are absent, workers are neutral toward work, but when
motivators are present, workers are highly motivated and satisfied. Thus, hygiene factors and
motivators represent two distinct factors that influence motivation. Hygiene factors work only in
the area of dissatisfaction. Unsafe working conditions or a noisy work environment will cause
people to be dissatisfied, but their correction will not lead to a high level of motivation and
satisfaction. Motivators such as challenge, responsibility, and recognition must be in place before
employees will be highly motivated to excel at their work.

Exhibit 4. Herzberg`s Two-Factor Theory

There is a growing realization among managers of the importance of employee

recognition,
perhaps because tough economic conditions have made it more difficult for them to reward
people with large pay increases.
The implication of the two-factor theory for managers is clear. On one hand, providing
hygiene factors will eliminate employee dissatisfaction but will not motivate workers to high
achievement levels. On the other hand, recognition, challenge, and opportunities for personal
growth are powerful motivators and will promote high satisfaction and performance. The
manager’s role is to remove dissatisfiers—that is, to provide hygiene factors sufficient to meet
basic needs—and then to use motivators to meet higher-level needs and propel employees
toward greater achievement and satisfaction.

Acquired Needs
The acquired needs theory, developed by David McClelland, proposes that certain types
of needs are acquired during the individual’s lifetime. In other words, people are not born with
these needs but may learn them through their life experiences. The three needs most frequently
studied are these:
● Need for achievement. The desire to accomplish something difficult, attain a high standard of
success, master complex tasks, and surpass others
● Need for affiliation. The desire to form close personal relationships, avoid conflict, and
establish warm friendships
● Need for power. The desire to influence or control others, be responsible for others, and have
authority over others
Early life experiences typically determine whether people acquire these needs. If children
are encouraged to do things for themselves and receive reinforcement, they will acquire a need to
achieve. If they are reinforced for forming warm human relationships, they will develop a need
for affiliation. If they get satisfaction from controlling others, they will acquire a need for power.
For more than 20 years, McClelland studied human needs and their implications for
management. People with a high need for achievement are frequently entrepreneurs. People who
have a high need for affiliation are successful integrators, whose job is to coordinate the work of
several departments in an organization. Integrators include brand managers and project managers
who must have excellent people skills. A high need for power often is associated with successful
attainment of top levels in the organizational hierarchy.
In summary, content theories focus on people’s underlying needs and label those
particular needs that motivate behavior. The hierarchy of needs theory, the ERG theory, the two-
factor theory, and the acquired needs theory all help managers understand what motivates
people. In this way, managers can design work to meet needs and hence elicit appropriate and
successful work behaviors.

9.3 Process Perspectives on Motivation

Process theories explain how people select behavioral actions to meet their needs and
determine whether their choices were successful. Important perspectives in this area include
goal-setting, equity theory, and expectancy theory.

Goal Setting
Numerous studies have shown that specific, challenging targets significantly enhance
people’s motivation and performance levels. You have probably noticed in your own life that
you are more motivated when you have a specific goal, such as making an A on a final exam,
losing 10 pounds before spring break, or earning enough money during the summer to buy a used
car.
Goal-setting theory, described by Edwin Locke and Gary Latham, proposes that
managers can increase motivation and enhance performance by setting specific, challenging
goals, and then helping people track their progress toward goal achievement by providing timely
feedback. Exhibit 5 illustrates key components of goal-setting theory.

Exhibit 5. Criteria for Motivational Goals

● Goal specificity refers to the degree to which goals are concrete and unambiguous. Specific
goals, such as “Visit one new customer each day” or “Sell $1,000 worth of merchandise a week,”
are more motivating than vague goals, such as “Keep in touch with new customers” or “Increase
merchandise sales.” A lack of clear, specific goals is cited as a major cause of the failure of pay-
for-performance incentive plans in many organizations. Vague goals can be frustrating for
employees.
● In terms of goal difficulty, hard goals are more motivating than easy ones. Easy goals provide
little challenge for employees and don’t require them to increase their output. Highly ambitious
but achievable goals ask people to stretch their abilities and provide a basis for greater feelings
of accomplishment and personal effectiveness. A study in Germany found that, over a three-year
period, only employees who perceived their goals as difficult reported increases in positive
emotions and feelings of job satisfaction and success.
● Goal acceptance means that employees have to “buy into” the goals and be committed to
them. Having people participate in setting goals is a good way to increase acceptance and
commitment.
● Finally, the component of feedback means that people get information about how well they are
doing in progressing toward goal achievement. It is important for managers to provide
performance feedback on a regular, ongoing basis. However, self-feedback, where people are
able to monitor their own progress toward a goal, has been found to be an even stronger
motivator than external feedback.
Goals also energize behavior because people feel compelled to develop plans and
strategies that keep them focused on achieving the targets. Specific, difficult goals provide a
challenge and encourage people to put forth high levels of effort. In addition, when goals are
achieved, pride and satisfaction increase, contributing to higher motivation and morale.

Equity Theory
Equity theory focuses on individuals’ perceptions of how fairly they are treated compared
with others. Developed by J. Stacy Adams, equity theory proposes that people are motivated to
seek social equity in the rewards that they receive for performance.
According to equity theory, if people perceive their compensation as equal to what others
receive for similar contributions, they will believe that their treatment is fair and equitable.
People evaluate equity by a ratio of inputs to outcomes. Inputs to a job include education,
experience, effort, and ability. Outcomes from a job include pay, recognition, benefits, and
promotions. The input-to-outcome ratio may be compared to that of another person in the work
group or to a perceived group average. A state of equity exists whenever the ratio of one person’s
outcomes to inputs equals the ratio of another’s outcomes to inputs. Inequity occurs when the
input-to-outcome ratios are out of balance, such as when a new, inexperienced employee
receives the same salary as a person with a high level of education or experience. Interestingly,
perceived inequity also occurs in the other direction. Thus, if an employee discovers that he or
she is making more money than other people who contribute the same inputs to the company, the
employee may feel the need to correct the inequity by working harder or getting more education.
Scientific studies indicate that the human brain seems programmed to dislike inequity, even
when we benefit from it. Moreover, people get less satisfaction from money they receive without
having to earn it than they do from money they work to receive. Perceived inequity creates
tensions within individuals that motivate them to bring equity into balance. The most common
methods for reducing a perceived inequity are these:
● Change work effort. A person may choose to increase or decrease his or her inputs to the
organization. Individuals who believe that they are underpaid may reduce their level of effort or
increase their absenteeism. Overpaid people may increase their effort on the job.
● Change outcomes. A person may change his or her outcomes. An underpaid person may
request a salary increase or a bigger office. A union may try to improve wages and working
conditions to be consistent with a comparable union whose members make more money.
● Change perceptions. Research suggests that people may change perceptions of equity if they
are unable to change inputs or outcomes. They may increase the status attached to their jobs
artificially or distort others’ perceived rewards to bring equity into balance.
● Leave the job. People who feel inequitably treated may decide to leave their jobs rather than
suffer the inequity of being underpaid or overpaid. In their new jobs, they expect to find a more
favorable balance of rewards.
The implication of equity theory for managers is that employees indeed evaluate the
perceived equity of their rewards compared to others’. Many big law firms are reducing the
compensation of 10 to 30 percent of their partners each year in order to free up money to hire
and reward “star performers,” rejecting the traditional practice of paying partners relatively
similar amounts. The change fits with the strategy of rewarding people who generate more
business, but it is having a damaging effect on the morale and motivation of other partners, who
perceive the new compensation scheme as inequitable. Inequitable pay puts pressure on
employees that is sometimes almost too great to bear. They attempt to change their work habits,
try to change the system, or leave the job.

Expectancy Theory
Expectancy theory suggests that motivation depends on individuals’ expectations about
their ability to perform tasks and receive desired rewards. Expectancy theory is associated with
the work of Victor Vroom, although a number of scholars have made contributions in this area.
Expectancy theory is concerned not with identifying types of needs, but with the thinking
process that individuals use to achieve rewards. Expectancy theory is based on the relationship
among the individual’s effort, the individual’s performance, and the desirability of outcomes
associated with high performance. These elements and the relationships among them are
illustrated in Exhibit 6. The keys to expectancy theory are the expectancies for the relationships
among effort, performance, and the value of the outcomes to the individual.

Exhibit 6. Major Elements of Expectancy Theory

 E → P expectancy involves determining whether putting effort into a task will lead to
high performance. For this expectancy to be high, the individual must have the ability, previous
experience, and necessary equipment, tools, and opportunity to perform.
P → O expectancy involves determining whether successful performance will lead to the
desired outcome or reward. If the P → O expectancy is high, the individual will be more highly
motivated. If the expectancy is that high performance will not produce the desired outcome,
motivation will be lower.
Valence is the value of outcomes, or attraction to outcomes, for the individual. If the
outcomes that are available from great effort and good performance are not valued by
employees, motivation will be low. Likewise, if outcomes have a high value, motivation will be
higher.
Expectancy theory attempts not to define specific types of needs or rewards, but only to
establish that they exist and may be different for every individual. One employee might want to
be promoted to a position of increased responsibility, and another might have high valence for
good relationships with peers. Consequently, the first person will be motivated to work hard for a
promotion and the second for the opportunity of a team position that will keep him or her
associated with a group. Studies substantiate the idea that rewards need to be individualized to be
motivating.

9.4 Innovative Ideas for Motivating

Organizations are increasingly using various types of incentive compensation as a way to

motivate employees to higher levels of performance. Variable compensation and forms of “at
risk” pay such as bonus plans are key motivational tools that are becoming more common than
fixed salaries at many companies. Incentive programs can be effective if they are used
appropriately and combined with motivational ideas that also provide people with intrinsic
rewards and meet higher-level needs. The most effective motivational programs typically
involve much more than money or other external rewards in order to create an environment in
which people thrive. Three important approaches are empowerment, engagement, and making
progress, as described in the following sections.

Empowering People to Meet Higher Needs

One significant way that managers can meet higher motivational needs is to shift power
down from the top of the organization and share it with employees to enable them to achieve
goals. Empowerment is power sharing, the delegation of power and authority to subordinates in
an organization. Increasing employee power heightens motivation for task accomplishment
because people improve their own effectiveness, choosing how to do a task and using their
creativity. Empowering employees involves giving them four elements that enable them to act
more freely to accomplish their jobs: information, knowledge, power, and rewards.
1. Employees receive information about company performance. In companies where employees
are fully empowered, all employees have access to all financial and operational information.
2. Employees have knowledge and skills to contribute to company goals. Companies use
training programs and other development tools to help people acquire the knowledge and skills
that they need to contribute to organizational performance.
3. Employees have the power to make substantive decisions. Empowered employees have the
authority to influence work procedures and organizational performance directly, such as through
quality circles or self-directed work teams.
4. Employees are rewarded based on company performance.
Organizations that empower workers often reward them based on the results shown in the
company’s bottom line. Organizations may also use other motivational compensation programs
described in Exhibit 16.9 to tie employee efforts to company performance.

Giving Meaning to Work Through Engagement

Employee engagement means that people enjoy their jobs and are satisfied with their
work conditions, contribute enthusiastically to meeting team and organizational goals, and feel a
sense of belonging and commitment to the organization. Fully engaged employees care deeply
about the organization and actively seek ways to serve the mission. Active disengagement means
that people are actively undermining their organization’s success. Exhibit 7 illustrates the three
elements that create employee engagement: a sense of meaningfulness, a sense of connection,
and a sense of growth. When managers organize the workplace in such a way as to create these
feelings, employee engagement grows, leading to high motivation and high organizational
performance.

Exhibit 7. Employee Engagement Model

● People feel that they are working toward something important. When employees have a
chance to accomplish something that provides real value, they feel a sense of meaningfulness.
Good managers help people understand the purpose of their work, which contributes to feelings
of pride and dignity.
● People feel connected to the company, to one another, and to their managers. The behavior
of managers makes the biggest difference in whether or not people feel engaged at work.
Managers promote engagement when they listen to employees, genuinely care about their
concerns, and help them develop positive relationships with colleagues.
● People have the chance to learn, grow, and advance. To be fully engaged, people need not
only to feel that they are competent to handle what is asked of them, but also that they have the
chance to learn and expand their potential. Good managers help employees understand their own
unique set of talents, skills, interests, attitudes, and needs; put people in jobs where they can
make their best contribution and receive intrinsic rewards every day; and make sure that people
have what they need to perform well. In addition, they give people the chance to work on
challenging projects, offer high-quality training and learning programs, and provide
opportunities for advancement within the organization.

The Making Progress Principle

Sometimes what makes the biggest difference is a relatively “small” thing. Recent
research
points to the importance of making progress toward goals as a key to high motivation. The
making progress principle is the idea that the single most important factor that can boost
motivation, positive emotions, and perceptions during a workday is making progress toward
meaningful goals. People are most motivated when they have the opportunity to experience
achievement. Providing feedback on how well people are progressing and giving them a way to
track their progress toward goals provides a renewable energy that fuels motivation. Knowing
that they are making everyday progress, even in small steps, can make all the difference in how
motivated people feel to continue pursuing a course of action.