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MGT Chapter 10

This chapter focuses on managing employee motivation and performance, discussing its importance, historical perspectives, and various motivational strategies. It highlights the challenges of motivating employees in different contexts, such as during economic downturns, and examines the role of organizational reward systems. The chapter also features a case study on SAS, a company recognized for its effective employee motivation practices and low turnover rates.

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MGT Chapter 10

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C H A P T E R 10

Managing Employee Motivation

and Performance

Learning Outcomes
After studying this chapter, you should be able to:
10-1 Discuss the nature of motivation, including its importance and historical
perspectives.
10-2 Describe the major content perspectives on motivation.
10-3 Describe the major process perspectives on motivation.
10-4 Describe reinforcement perspectives on motivation.
10-5 Discuss popular motivational strategies.
10-6 Describe the role of organizational reward systems in motivation.

A s the business world gets increasingly complex, so too are the challenges in moti-
vating people to perform in various ways. For example, just a few years ago no one
would have predicted the complications of retaining talented employees when business
was booming and unemployment was extremely low, which was the case in 2019, followed
by the challenges of motivating people during a global pandemic and resulting economic
collapse as managers had to do in 2020. Regardless of the context, though, much of what
managers today deal with is motivating, engaging, and retaining their most valued employ-
ees, the subject of this chapter. We first examine the nature of employee motivation and
then explore major perspectives on motivation. Newly emerging approaches to motivating
employees are then discussed. We conclude with a description of rewards and their role in
motivation. Let’s start with a discussion of a firm that does a great job keeping its employ-
ees motivated and engaged.

Management in Action

What Makes SAS a Great Place to Work?

“95 percent of our assets drive out of the gate every evening”
—James Goodnight, CEO of SAS

SAS is a fixture among Fortune’s annual list of the “100 Best Places to Work
in America.” It’s also among the largest privately held software development
companies in the world. And it’s no surprise that the firm is in both groups. SAS
and its senior leadership team consistently go to unusual lengths to make sure
they attract a great workforce and then motivate those employees to work hard
and in the best interests of the company while also maintaining a good work–life
balance.

2 67

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268 PART 4 | Leading

SAS (originally called Statistical Analysis System) was formed in 1966 as a

consortium of eight universities. Its purpose was to develop and market software
that researchers could use to analyze data in an efficient, reliable, and accessible
manner. At the time, North Carolina State University (NCSU) had the most powerful
mainframe computer among the partners and was designated as the consortium
host; NCSU professors Jim Goodnight and Jim Barr were appointed as project leads.
The firm’s products quickly started to generate revenue and its employees saw
significant business opportunities. Within just a few years, operations outgrew the
offices at NCSU so the core team moved operations across the street to form SAS
Institute, Inc. and became an independent privately owned business. Goodnight
assumed the role of CEO while Barr focused on new product development.
By 1978, SAS had 21 employees and a growing customer base. From the very
beginning the founders recognized the importance of employee recognition. For
example, when the firm hit its first 100 customers Jim Goodnight bought pizza for
all of the firm’s employees and organized a Friday afternoon celebration. Everyone
was so appreciative that he continued that practice for every 100 new customers.
During this early stage of growth Goodnight also began placing bowls of M&Ms
around the office in case anyone wanted a quick treat.
In 1980, the headquarters moved from Raleigh to Cary, North Carolina, with
bowls of free M&M’s and breakfast goodies to welcome employees to the new
location. In keeping with their growing employee-centric practices, SAS opened
a corporate-sponsored daycare at the new headquarters office in 1981. Corporate
daycare was practically unheard of at the time, but SAS did not stop there. They
would later add a recreation and fitness center, health care center, and an on-site
gourmet café. Beyond these tangible benefits, though, SAS also developed a
reputation for treating its employees fairly. Collectively, all of these things resulted
in the firm winning its first “Best Places to Work” award.
With innovative products and a loyal and motivated workforce, SAS continued
to grow and prosper. The new headquarters in Cary expanded from one building
with offices for 50 employees to 18 buildings, and by the end of 1989, the company
had nearly 1,500 employees worldwide. By the end of the 1990s, the workforce for
SAS grew to over 7,000 employees worldwide supporting 3 million users in 120
countries. The firm had also established offices on every continent, in every major
United States city, and most international business centers.
The SAS operation in Australia was the first company unit outside of the United
States recognized as a “Best Place to Work” in 1999, clearly suggesting that SAS’s
culture was capable of making cross-country moves. The “Best Place to Work”
honors continued to roll in from places such as the United Kingdom, Mexico, Por-
tugal, Finland, China, the Netherlands, Belgium, Norway, and Sweden. Aside from
keeping employee satisfaction and engagement at the forefront, the company also
prioritized business expansion and celebrated 17 years of double-digit growth in
revenue from 1976 until 1999. From that time on, growth continued, albeit at a
slower pace. By the early 2000s, SAS was well established as a “Best Place to
Work” regardless of location. Indeed, its consistent recognition earned the com-
pany a place as one of the inaugural 22 members of the “Best Places to Work Hall
of Fame” introduced by Fortune in 2005.
During the onset of the 2008–2009 recession, employees at SAS were under-
standably nervous about potential layoffs and reductions in the workforce. The
firm’s competitors were already announcing massive layoffs, but CEO Jim Good-
night held a global webcast to announce that none of SAS’s 13,000 employees
would lose their jobs. Goodnight was effectively putting the firm’s track record of
annual profit increases on the line. But by keeping an eye on other areas for cost
reductions, the risk paid off and the company still had a year of growth in 2009.
Because they are paid an equitable salary, have great benefits, and are respected
and valued by SAS, the firm’s employees are incredibly loyal to the company and

highly motivated to continue to contribute. Beyond the recognition and continual

growth, for example, SAS has annual turnover that is a fraction of the turnover
experienced by other software development companies—SAS’s average turnover
is 2–3 percent while the industry average is 22 percent (and most of the turnover at
SAS is attributable to retirements rather than people leaving for other jobs).
SAS does not pay high salaries, with compensation only slightly above average.
However, it does offer a generous profit-sharing program. To help minimize the
stress and pressures coming from life outside work, the company also focuses on
employee health and well-being and providing resources for employees to thrive.
They emphasize employees having a work–life balance because they believe this
will “further encourage employee creativity.” Employees and their families have
free access to amenities such as work–life offices where eight social workers can
assist with drawing up wills, arranging elder care, providing counseling on work–
life balance, and so forth; an on-site health clinic staffed by 57 doctors, nurses,
physical therapists, nutritionists, and psychotherapists; and an on-site pharmacy.
SAS also offers the services of a company concierge to help employees plan spe-
cial family events.
There is a state-of-the-art gymnasium on the SAS campus featuring a weight
room, cardiovascular equipment, soccer and softball fields, tennis courts, tracks,
an aquatic center with a 75-foot pool, an aerobics studio, indoor basketball and
racquetball, and pool tables. They also have a hair salon, modern collaborative
workspaces, subsidized cafeterias, and art and sculptures decorating the build-
ing. The facilities also have common work areas and breakrooms on every floor,
routinely filled with snacks, treats, M&Ms, and built-in soda fountains. Finally, SAS
also provides generous time off and flexibility options because the company trusts
employees to set their own hours as needed to get their work done. Perhaps not
surprisingly, then, employees at SAS are uniformly motivated and engaged to do
their best every day.1

10-1 THE NATURE OF MOTIVATION

motivation Motivation is the set of forces that cause people to behave in certain ways.2 On any given day,
The set of forces that for instance, an employee may choose to work as hard as possible at a job, work at a moderate
cause people to behave in pace to meet performance expectations, do just enough to avoid a reprimand, or do as little
certain ways as possible. The goal for the manager is to maximize the likelihood of the first behavior
and minimize the likelihood of the last. This goal becomes all the more important when we
understand how important motivation is in the workplace.

10-1a The Importance of Employee Motivation in the Workplace

Individual performance is generally determined by three things: motivation (the desire to do
the job), ability (the capability to do the job), and work environment (the resources needed
to do the job). If an employee lacks ability, the manager can provide training or replace the
worker. If there is a resource problem, the manager can correct it. But if motivation is the
problem, the task for the manager is more challenging. 3 Individual behavior is a complex
phenomenon (as we saw in our last chapter), and the manager may be hard pressed to figure out
the precise nature of the problem and how to solve it. Thus, motivation is important because of
its significance as a determinant of performance and because of its intangible nature.4
The motivation framework in Figure 10.1 is a good starting point for understanding
how motivated behavior occurs. The motivation process begins with a need deficiency. For
example, when a worker feels that she is underpaid, she experiences a need for more income.
In response, the worker searches for ways to satisfy the need, such as working harder to try

Choice of
Need or Search for ways
behavior to
deficiency to satisfy need
satisfy need

Determination of
future needs and Evaluation of
search/choice for need satisfaction
satisfaction

F I G U R E 10 .1

The Motivation Framework

The motivation process progresses through a series of discrete steps. Content,
process, and reinforcement perspectives on motivation address different parts of this
process.

to earn a raise or seeking a new job. Next, she

chooses an option to pursue. After carrying out
the chosen option—working harder and putting
in more hours for a reasonable period of time,
for example—she then evaluates her success. If
her hard work results in a pay raise, she probably
feels good about things and will continue to
work hard. But if her increased performance is
not recognized and no raise is provided, she is
likely to try another option.

10-1b Historical Perspectives on
Motivation
A. R. Coster/Getty Images

To appreciate what we know about employee

motivation, it is helpful to first review earlier
approaches. The traditional, human relations,
and human resource approaches have each shed
partial (but incomplete) light on motivation.5
Frederick Taylor, an early management pioneer, advocated an incentive
pay system that would pay workers a set amount of money for each unit of The Traditional Approach The traditional
output they produced. One of his earliest projects was studying the craft of approach is best represented by the work of
brick laying, developing the most efficient steps to perform this job, teaching Frederick W. Taylor.6 As noted in Chapter 2,
workers his method, and then paying them based on the number of bricks Taylor advocated an incentive pay system. He
they laid each hour.
believed that managers knew more about the
jobs being performed than did workers, and
he assumed that economic gain was the primary thing that motivated everyone. Other
assumptions of the traditional approach were that work is inherently unpleasant for most
people and that the money they earn is more important to employees than the nature of the
job they are performing. Hence, people could be expected to perform any kind of job if they
were paid enough. Although the role of money as a motivating factor cannot be dismissed,
proponents of the traditional approach took too narrow a view of the role of monetary
compensation and failed to consider other motivational factors.
The Human Relations Approach The human relations approach was also summarized in
Chapter 2.7 Human relations advocates emphasized the role of social processes in the workplace.

Their basic assumptions were that employees

want to feel useful and important, that employees
have strong social needs, and that these needs
are more important than money in motivating
them. Advocates of the human relations approach
advised managers to make workers feel important
and allow them a minor degree of self-direction
and self-control in carrying out routine activities.
The illusion of involvement and importance was
expected to satisfy workers’ basic social needs
and result in higher motivation to perform. For
Syda Productions/Shutterstock.com

example, a manager might allow a work group to

participate in making a decision even though he
or she had already determined what the decision
would be. The symbolic gesture of seeming to allow
participation was expected to enhance motivation,
even though no real participation took place.
In contrast to the traditional approach, the human relations approach
suggests that social processes are of paramount importance in employee The Human Resource Approach The
motivation. Hence, these employees, who appear to like each other and enjoy human resource approach to motivation carries
working together, should presumably be motivated to perform at a high level. the concepts of needs and motivation one step
further. Whereas human relations advocates
believed that the illusion of contribution and
participation would enhance motivation, the human resource view assumes that the
contributions themselves are valuable to both individuals and organizations. It assumes
that people want to contribute and are able to make genuine contributions. Management’s
task, then, is to encourage participation and to create a work environment that makes full
use of the human resources available. This philosophy guides most contemporary thinking
about employee motivation. At Ford, Apple, Texas Instruments, and HP, for example, work
teams are used to solve a variety of problems and to make substantive contributions to the
organization.

Manager’s Managers need to appreciate the historical perspectives on employee motivation.

Checklist You should also be familiar with the various parts of the motivational cycle.

10-2 CONTENT PERSPECTIVES ON MOTIVATION

Content perspectives on motivation deal with the first part of the motivation process—needs
content perspectives and need deficiencies. More specifically, content perspectives address this question: What
Approach to motivation factor or factors in the workplace motivate people? Labor leaders often argue that workers
that tries to answer the can be motivated by more pay, shorter working hours, and improved working conditions.
question, What factor or Meanwhile, some experts suggest that motivation can be more effectively enhanced by
factors motivate people?
providing employees with more autonomy and greater responsibility.8 Both of these views
represent content views of motivation. The former asserts that motivation is a function of pay,
working hours, and working conditions; the latter suggests that autonomy and responsibility
are the causes of motivation. Two widely known content perspectives on motivation are the
needs hierarchy and the two-factor theory.

10-2a The Needs Hierarchy Approach

The needs hierarchy approach has been advanced by many theorists. Needs hierarchies
assume that people have different needs that can be arranged in a hierarchy of importance.
The two best known are Maslow’s hierarchy of needs and the ERG theory.

“Happiness lies not in the mere possession Maslow’s Hierarchy of Needs Abraham Maslow, a
of money; it lies in the joy of achievement, human relationist, argued that people are motivated to
satisfy five need levels.10 Maslow’s hierarchy of needs is
in the thrill of creative effort.” shown in Figure 10.2. At the bottom of the hierarchy are
—Franklin D. Roosevelt, Former U.S. President9 the physiological needs—things like food, sex, and air, which
represent basic issues of survival and biological function.
Maslow’s hierarchy of In organizations, these needs are generally satisfied by adequate wages and the work
needs environment itself, which provides restrooms, adequate lighting, comfortable temperatures,
Suggests that people and ventilation. Next are the security needs for a secure physical and emotional environment.
must satisfy five Examples include the desire for housing and clothing and the need to be free from worry
groups of needs in about money and job security. These needs can be satisfied in the workplace by job continuity
order—physiological,
(no layoffs), a grievance system (to protect against arbitrary supervisory actions), and an
security, belongingness,
adequate insurance and retirement benefit package (for security against illness and provision
self-esteem, and
self-actualization of income in later life).
Belongingness needs relate to social processes. They include the need for love and affection
and the need to be accepted by one’s peers. These needs are satisfied for most people by fam-
ily and community relationships outside of work and by friendships on the job. A manager
can help satisfy these needs by allowing social interaction and by making employees feel like
part of a team or work group.
Esteem needs actually comprise two different sets of needs: the need for a positive self-
image and self-respect and the need for recognition and respect from others. A manager can
help address these needs by providing a variety of extrinsic symbols of accomplishment, such
as job titles, nice offices, and similar rewards, as appropriate. At a more intrinsic level, the
manager can provide challenging job assignments and opportunities for the employee to feel
a sense of accomplishment.
At the top of the hierarchy are the self-actualization needs. These involve realizing one’s
potential for continued growth and individual development. The self-actualization needs

NEEDS
General Examples Organizational Examples

Self- Challenging
Achievement actualization job

Job
Status Esteem title
Friends
Friendship Belongingness at work
Pension
Stability Security plan
Base
Food Physiology salary

F I G U R E 10 . 2

Maslow’s Hierarchy of Needs

Maslow’s hierarchy suggests that human needs can be classified into five categories
and that these categories can be arranged in a hierarchy of importance. A manager
should understand that an employee may not be satisfied with only a salary and
benefits; he or she may also need challenging job opportunities to experience self-
growth and satisfaction.
Source: Adapted from Abraham H. Maslow, “A Theory of Human Motivation,”
Psychology Review, 1943, Vol. 50, pp. 370–396.

are perhaps the most difficult for a manager

to address. In fact, it can be argued that these
needs must be met entirely from within the
individual. But a manager can help by promoting
a culture wherein self-actualization is possible.
For instance, a manager could give employees a
chance to participate in making decisions about
their work and the opportunity to learn new
things.
Maslow suggests that the five need categories
constitute a hierarchy. A person is motivated first
Jelena Zelen/Shutterstock.com

and foremost to satisfy physiological needs. As

long as these remain unsatisfied, the person is
motivated to fulfill only them. When satisfaction
of physiological needs is achieved, they cease to act
as primary motivational factors, and the person
Abraham Maslow suggests that esteem needs play an important role in
moves “up” the hierarchy and becomes concerned
employee motivation. Esteem needs include the desire to be recognized with security needs. This process continues until
and respected by others. One avenue for satisfying esteem needs for some the person reaches the self-actualization level.
individuals is a large and impressive office such as this one. Maslow’s concept of the needs hierarchy has a
certain intuitive logic and has been accepted
by many managers. But research has revealed certain
“I wanted to do something with my life shortcomings and defects in the theory. Some research has
where I felt I was contributing. Somehow, found that five levels of need are not always present and that
selling more tacos and margaritas than the the order of12 the levels is not always the same as postulated
by Maslow. In addition, people from different cultures are
week before wasn’t.” likely to have different need categories and hierarchies.
—Cathey Gardner, Former Restaurant Manager, On
her Decision to Become a Nurse11 The ERG Theory In response to these and similar
criticisms, an alternative hierarchy of needs, called the ERG
ERG theory of motivation theory of motivation, was developed.13 This theory collapses the needs hierarchy developed
Suggests that people’s by Maslow into three levels. Existence needs correspond to the physiological and security
needs are grouped needs. Relatedness needs focus on how people relate to their social environment. In Maslow’s
into three possibly hierarchy, these would encompass both the need to belong and the need to earn the esteem of
overlapping categories—
others. Growth needs, the highest level in this schema, include the needs for self-esteem and
existence, relatedness,
self-actualization.
and growth
Although the ERG theory assumes that motivated behavior follows a hierarchy in some-
what the same fashion as suggested by Maslow, there are two important differences. First, the
ERG theory suggests that more than one level of need can cause motivation at the same time.
For example, it suggests that people can be motivated by a desire for money (existence), friend-
ship (relatedness), and the opportunity to learn new skills (growth) all at once. Second, the
ERG theory has what has been called a frustration-regression element. Thus, if needs remain
unsatisfied, the person will become frustrated, regress to a lower level, and begin to pursue
those things again. For example, a worker previously motivated by money (existence needs)
may have just been awarded a pay raise sufficient to satisfy those needs. Suppose that he then
tries to establish more friendships to satisfy relatedness needs. If for some reason he finds
that it is impossible to become better friends with others in the workplace, he eventually gets
frustrated and regresses to being motivated to earn even more money.
The basic premises of both Maslow’s hierarchy of needs and the ERG theory were clearly
illustrated by the events of 2019 and 2020. In 2019, the job market was robust, and many work-
ers had relatively secure jobs with reasonable wages, benefits, job security, and viable profes-
sional networks. As a result, most were probably focused largely on trying to satisfy esteem
and growth needs. However, as the impact of COVID-19 spread and the economy collapsed in
2020, many of these same workers feared losing their jobs, grew concerned about their health,
and worried about their financial future. They also experienced a loss of social interaction

due to various shelter-in-place and social-distancing requirements. As a result, esteem and

growth probably became less important while physiological, security, and relatedness needs
again became prominent.

10-2b The Two-Factor Theory

two-factor theory of Another popular content perspective is the two-factor theory of motivation.14 Frederick
motivation Herzberg developed his theory after interviewing 200 accountants and engineers. He asked
Suggests that people’s them to recall occasions when they had been satisfied and motivated and occasions when they
satisfaction and had been dissatisfied and unmotivated. Surprisingly, he found that different sets of factors
dissatisfaction are were associated with satisfaction and with dissatisfaction—that is, a person might identify
influenced by two
“low pay” as causing dissatisfaction but would not necessarily mention “high pay” as a cause
independent sets of
factors—motivation factors
of satisfaction. Instead, different kinds of factors—such as recognition or accomplishment—
and hygiene factors were cited as causing satisfaction and motivation.
This finding led Herzberg to conclude that the traditional view of job satisfaction was
incomplete. That view implicitly assumed that satisfaction and dissatisfaction are at opposite
ends of a single continuum. People might be satisfied, dissatisfied, or somewhere in between.
But Herzberg’s interviews had identified two different dimensions altogether: one ranging from
satisfaction to no satisfaction and the other ranging from dissatisfaction to no dissatisfaction.
This perspective, along with several examples of factors that affect each continuum, is
shown in Figure 10.3. Note that the factors influencing the satisfaction continuum—called
motivation factors—are related specifically to the work content. The factors presumed to cause
dissatisfaction—called hygiene factors—are related to the work environment.
Based on these findings, Herzberg argued that there are two stages in the process of
motivating employees. First, managers must ensure that the hygiene factors are not deficient.
Pay and security must be appropriate, working conditions must be safe, technical supervision
must be acceptable, and so on. By providing hygiene factors at an appropriate level, managers
do not necessarily stimulate motivation but merely ensure that employees are “not dissatisfied.”
Employees whom managers try to “satisfy” through hygiene factors alone will usually do
just enough to get by. Thus, managers should proceed to stage two—giving employees the
opportunity to experience motivation factors such as achievement and recognition. The
result is predicted to be higher levels of satisfaction and motivation. Herzberg also went a
step further than most other theorists and described exactly how to use the two-factor theory
in the workplace. Specifically, he recommended job enrichment, as discussed in Chapter 10.
He argued that jobs should be redesigned to provide higher levels of the motivation factors.

Motivation Factors Hygiene Factors

• Achievement • Supervisors
• Recognition • Working conditions
• The work itself • Interpersonal relations
• Responsibility • Pay and security
• Advancement and growth • Company policies and
administration

Satisfaction No satisfaction Dissatisfaction No dissatisfaction

F I G U R E 10. 3

The Two-Factor Theory of Motivation

The two-factor theory suggests that job satisfaction has two dimensions. A manager who tries to motivate
an employee using only hygiene factors, such as pay and good working conditions, will likely not succeed.
To motivate employees and produce a high level of satisfaction, managers must also offer factors such as
responsibility and the opportunity for advancement (motivation factors).

Although widely known among many managers, Herzberg’s two-factor theory is not with-
out its critics. One criticism is that the findings in Herzberg’s initial interviews are subject to
different explanations. Another charge is that his sample was not representative of the general
population and that subsequent research has often failed to uphold the theory.15 Herzberg’s
theory is not held in high esteem by researchers in the field today but it has had a major impact
on managers and has played a key role in increasing their awareness of motivation and its
importance in the workplace.

10-2c Individual Human Needs

In addition to these theories, research has focused on specific individual human needs that
are important in organizations. The three most important individual needs are achievement,
affiliation, and power.16
need for achievement The need for achievement, the best known of the three, is the desire to accomplish a goal
The desire to accomplish or task more effectively than in the past. People with a high need for achievement have a desire
a goal or task more to assume personal responsibility, a tendency to set moderately difficult goals, a desire for
effectively than in the specific and immediate feedback, and a preoccupation with their task. David C. McClelland,
past the psychologist who first identified this need, has argued that only about 10 percent of the
U.S. population truly have a high need for achievement while almost one-quarter of the
workers in Japan have a high need for achievement.
The need for affiliation is less well understood. Like
Maslow’s belongingness need, the need for affiliation
is a desire for human companionship and acceptance.
People with a strong need for affiliation are likely to
prefer (and perform better in) a job that entails a lot
of social interaction and offers opportunities to make
friends. One recent survey found that workers with one
or more good friends at work are much more likely to be
committed to their work. United Airlines, for instance,
allows flight attendants to form their own teams; those
who participate tend to form teams with their friends.17
Individuals with a strong need for affiliation may have
fizkes/Shutterstock.com

been more prone to anxiety and feelings of sadness

and loss during the social-distancing measures taken
during the COVID-19 pandemic in 2020. On the other
hand, people with a lower need for affiliation may have
The need for achievement is the desire to accomplish a goal or task adapted more easily.
more effectively than in the past. This man’s need for achievement has The need for power has also received considerable
motivated him to perform at the highest level possible, and his efforts attention as an important ingredient in managerial
are being recognized by his boss and acknowledged by his colleagues. success. The need for power is the desire to be
influential in a group and to control one’s environment.
need for affiliation Research has shown that people with a strong need for power are likely to be superior
The desire for human performers, have good attendance records, and occupy supervisory positions. One study found
companionship and that managers as a group tend to have a stronger power motive than the general population and
acceptance that successful managers tend to have stronger power motives than less successful managers.18
need for power
The need for power might explain why Mark Hurd, a former CEO of HP, took advantage of
The desire to be his power and role as head of the company several years ago. Hurd was forced to resign after a
influential in a group sexual harassment claim by a female contractor alleging that Hurd had used corporate funds
and to control one’s for personal gains in attempts to woo her. The former CEO had submitted personal receipts
environment ranging from $1,000 to $20,000 over a two-year period.19

10-2d Implications of the Content Perspectives

Managers should remember that Maslow’s needs hierarchy, the ERG theory, the two-factor
theory, and the needs for achievement, affiliation, and power all provide useful insights into
factors that cause motivation. What they do not do is shed much light on the process of
motivation. They do not explain why people might be motivated by one factor rather than by

another at a given level or how people might go about trying to satisfy their different needs.
These questions involve behaviors or actions, goals, and feelings of satisfaction—concepts that
are more effectively addressed by various process perspectives on motivation.

Managers need to remember that needs and need deficiencies are the catalyst in
Manager’s stimulating motivated behavior.
Checklist Managers should recognize, however, that different people have different needs.

Finally, you should also remember that any given person’s needs change over time.

10-3 PROCESS PERSPECTIVES ON MOTIVATION

Process perspectives are concerned with how motivation occurs. Rather than attempting to
process perspectives identify motivational stimuli, process perspectives focus on why people choose certain behav-
Approaches to motivation ioral options to satisfy their needs and how they evaluate their satisfaction after they have
that focus on why people attained these goals. Three useful process perspectives on motivation are the expectancy,
choose certain behavioral equity, and goal-setting theories.
options to fulfill their
needs and how they
evaluate their satisfaction
10-3a Expectancy Theory
after they have attained Expectancy theory suggests that motivation depends on two things—how much we want
these goals something and how likely we think we are to get it.20 Assume that you are approaching gradua-
tion and looking for a job as a management trainee. You see in the want ads that General Motors
is seeking a new vice president with a starting salary of $950,000 per year. Even though you might
expectancy theory aspire to have this type of job one day, you will not waste your time applying now because you
Suggests that motivation realize that you have no real chance of getting it. The next ad you see is for someone to scrape
depends on two things— bubble gum from underneath theater seats for a starting wage of $8 an hour. Even though you
how much we want could probably get this job, you do not apply because you do not want it. Then you see an ad for
something and how likely
a management trainee at a big company, with a starting salary of $65,000. You may apply for
we think we are to get it
this job because you want it and because you think you have a reasonable chance of getting it.
Expectancy theory rests on four basic assumptions. First, it assumes that behavior is
determined by a combination of forces in the individual and in the environment. Second,
it assumes that people make decisions about their own behavior in organizations. Third,
it assumes that different people have different types of needs, desires, and goals. Fourth, it
assumes that people make choices from among alternative plans of behavior, based on their
perceptions of the extent to which a given behavior will lead to desired outcomes.
Figure 10.4 summarizes the basic expectancy model. The model suggests that motivation
leads to effort and that effort, combined with employee ability and environmental factors,
results in performance. Performance, in turn, leads to various outcomes, each of which has an
associated value, called its valence. The most important parts of the expectancy model cannot
be shown in the figure, however. These are the individual’s expectation that effort will lead to
high performance, that performance will lead to outcomes, and that each outcome will have
some kind of value.
effort-to-performance
expectancy Effort-to-Performance Expectancy The effort-to-performance expectancy is the
The individual’s individual’s perception of the probability that effort will lead to high performance. When
perception of the the person believes that effort will lead directly to high performance, this expectancy will
probability that effort will be quite strong (close to 1.00). When the person believes that effort and performance are
lead to high performance unrelated, the effort-to-performance expectancy is very weak (close to 0). The belief that effort
performance-to-outcome is somewhat but not strongly related to performance carries with it a moderate expectancy
expectancy (somewhere between 0 and 1.00).
The individual’s
perception that Performance-to-Outcome Expectancy The performance-to-outcome expectancy is the
performance will lead to a individual’s perception that performance will lead to a specific outcome. For example, if
specific outcome the person believes that high performance will result in a pay raise, the performance-to-outcome

Outcome Valence

Environment Outcome Valence

Motivation Effort Performance Outcome Valence

Ability Outcome Valence

Outcome Valence

F I G U R E 10. 4

The Expectancy Model of Motivation

The expectancy model of motivation is a complex but relatively accurate portrayal of how motivation occurs.
According to this model, a manager must understand what employees want (such as pay, promotions, or status) to
begin to motivate them.

expectancy is high (approaching 1.00). The person who believes that high performance
may lead to a pay raise has a moderate expectancy (between 1.00 and 0). The person who
believes that performance has no relationship to rewards has a low performance-to-outcome
expectancy (close to 0).

Outcomes and Valences Expectancy theory recognizes that a person’s behavior results
outcomes in a variety of outcomes, or consequences, in an organizational setting. A high performer,
Consequences of for example, may get bigger pay raises, faster promotions, and more praise from the boss. On
behaviors in an the other hand, she may also be subject to more stress and incur resentment from coworkers.
organizational setting, Each of these five outcomes also has an associated value, or valence—an index of how much a
usually rewards person values a particular outcome. If the individual wants the outcome, its valence is positive;
if the individual does not want the outcome, its valence is negative; and if the individual is
valence indifferent to the outcome, its valence is zero.
An index of how much
It is this part of expectancy theory that goes beyond the content perspectives on motivation.
a person wants a
Different people have different needs, and they will try to satisfy these needs in different ways.
particular outcome; the
attractiveness of the For an employee who has a high need for achievement and a low need for affiliation, the pay
outcome to the individual raise and promotions that are outcomes of high performance might have positive valences,
the praise and resentment zero valences, and the stress a negative valence. For a different
employee, with a low need for achievement and a high need for affiliation, the pay raise,
promotions, and praise might all have positive valences, whereas both resentment and stress
could have negative valences.
For motivated behavior to occur, three conditions must be met. First, the effort-to-performance
expectancy must be greater than 0 (the person must believe that if effort is expended, high
performance will result). The performance-to-outcome expectancy must also be greater than 0
(the person must believe that if high performance is achieved, certain outcomes will follow). And
the sum of the valences for the outcomes must be greater than 0. (One or more outcomes may
have negative valences if they are more than offset by the positive valences of other outcomes. For
example, the attractiveness of a pay raise, a promotion, and praise from the boss may outweigh
the unattractiveness of more stress and resentment from coworkers.) Expectancy theory suggests
that when these conditions are met, the person is motivated to expend effort.

“When we’re productive and we’ve done something good

together (and we are recognized for it), we feel satisfied, not the
other way around.”
—J. Richard Hackman, Pioneer in Organizational Psychology 21

Starbucks credits its unique stock ownership program with maintaining a dedicated and
motivated workforce. Based on the fundamental concepts of expectancy theory, Starbucks
employees earn stock as a function of their seniority and performance. Thus, their hard work
helps them earn shares of ownership in the company.22

The Porter-Lawler Extension An interesting extension of expectancy theory has been

proposed by Porter and Lawler.23 Recall from Chapter 2 that the human relationists assumed
that employee satisfaction causes good performance. We also noted that research has not
consistently supported such a relationship. Porter and Lawler suggested that there may
indeed be a relationship between satisfaction and performance but that it goes in the opposite
direction—that is, high performance may lead to high satisfaction. Figure 10.5 summarizes
Porter and Lawler’s logic. Performance results in rewards for an individual. Some of these
are extrinsic (such as pay and promotions); others are intrinsic (such as self-esteem and
accomplishment). The person evaluates the equity, or fairness, of the rewards relative to the
effort expended and the level of performance attained. If the rewards are perceived to be
equitable, the person is satisfied.

10-3b Equity Theory

After needs have stimulated the motivation process and the person has chosen an action that is
expected to satisfy those needs, he or she assesses the fairness, or equity, of the resultant outcome.
equity theory Equity theory contends that people are motivated to seek social equity in the rewards they
Suggests that people are receive for performance.24 Equity is an individual’s belief that the treatment he or she is receiving
motivated to seek social is fair relative to the treatment received by others. According to equity theory, outcomes from
equity in the rewards they a job include pay, recognition, promotions, social relationships, and intrinsic rewards. To get
receive for performance these rewards, the individual makes inputs to the job, such as time, experience, effort, education,
and loyalty. The theory suggests that people view their outcomes and inputs as a ratio and then
compare it to someone else’s ratio. This other “person” may be someone in the work group or
some sort of group average or composite. The process of comparison looks like this:

Individual Inputs Other’s Inputs

5
Individual Outcomes Other’s Outcomes
Both the formulation of the ratios and comparisons between them are very subjective and
based on individual perceptions. Even so, however, as a result of comparisons three conditions
may result: The person may feel equitably rewarded, underrewarded, or overrewarded.
A feeling of equity will result when the two ratios are equal. This may occur even though
the other person’s outcomes are greater than the individual’s own outcomes—provided that
the other’s inputs are also proportionately greater. Suppose that Mark has a high school
education and earns $40,000. He may still feel equitably treated relative to Susan, who earns
$60,000 because she has a college degree and more experience.
People who feel underrewarded try to reduce the inequity. Such a person might decrease
her inputs by exerting less effort, increase her outcomes by asking for a raise, distort the origi-
nal ratios by rationalizing, try to get the other person to change her or his outcomes or inputs,
leave the situation, or change the object of comparison. An individual may also feel overre-
warded relative to another person. This is not likely to be terribly disturbing to most people,
but research suggests that some people who experience inequity under these conditions are
somewhat motivated to reduce it. Under such a circumstance, the person might increase his
inputs by exerting more effort, reduce his outcomes by producing fewer units (if paid on a per-
unit basis), distort the original ratios by rationalizing, or try to reduce the inputs or increase
the outcomes of the other person.

Intrinsic
rewards
(outcomes)

Perceived
Performance Satisfaction
equity

Extrinsic
rewards
(outcomes)

F I G U R E 10 . 5

The Porter-Lawler Extension of Expectancy Theory

The Porter-Lawler extension of expectancy theory suggests that if performance
results in equitable rewards, people will be more satisfied. Thus, performance can
lead to satisfaction. Managers must therefore be sure that any system of motivation
includes rewards that are fair, or equitable, for all.
Source: Edward E. Lawler III and Lyman W. Porter, “The Effect of Performance on Job
Satisfaction,” Industrial Relations, October 1967, Vol. 7, p. 23.

Managers today may need to pay even greater

attention to equity theory and its implications.
Many firms, for example, have moved toward
performance-based reward systems (discussed
later in this chapter) as opposed to standard or
across-the-board salary increases. Hence, they
must ensure that the bases for rewarding some
people more than others are clear and objective.
Beyond legal issues such as discrimination,
managers need to be sure that they are providing
fair rewards and incentives to those who do the
best work.25 Moreover, they must be sensitive to
tuaindeed/Shutterstock.com

cultural differences that affect how people may

perceive and react to equity and inequity.26

10-3c Goal-Setting Theory

Equity is the extent to which an individual feels fairly treated relative to others. The goal-setting theory of motivation assumes
Take these two women, for example. The woman at the second desk has that behavior is a result of conscious goals and
just received news that she is being promoted and is excited, engaged, and intentions.27 Therefore, by setting goals for people
highly motivated because she believes she deserves the promotion. The in the organization, a manager should be able to
woman at the first desk, though, now feels unhappy because she thought
influence their behavior. Given this premise, the
she would be getting the promotion.
challenge is to develop a thorough understanding
of the processes by which people set goals and then
“People have long memories. They’ll work to reach them. In the original version of goal-setting
remember whether they think they were theory, two specific goal characteristics—goal difficulty and
dealt with equitably.” goal specificity—were expected to shape performance.
—William Conaty, Former Director of HR Goal Difficulty Goal difficulty is the extent to which a
at General Electric28 goal is challenging and requires effort. If people work to
achieve goals, it is reasonable to assume that they will work harder to achieve more difficult
goals. But a goal must not be so difficult that it is unattainable. If a new manager asks her sales

force to increase sales by 300 percent, the group may become disillusioned because they see
no change of achieving such a huge increase. A more realistic but still difficult goal—perhaps
a 30 percent increase—would be a better incentive. A substantial body of research supports
the importance of goal difficulty. In one study, for example, managers at Weyerhaeuser set
difficult goals for truck drivers hauling loads of timber from cutting sites to wood yards.
Over a nine-month period, the drivers increased the quantity of wood they delivered by an
amount that would have required $250,000 worth of new trucks at the previous per-truck
average load.29

Goal Specificity Goal specificity is the clarity and precision of the goal. A goal of
“increasing productivity” is not very specific; a goal of “increasing productivity by 3 percent
in the next six months” is quite specific. Some goals, such as those involving costs, output,
profitability, and growth, are readily amenable to specificity. Other goals, however, such as
improving employee job satisfaction, morale, company image and reputation, ethics, and
socially responsible behavior, may be much harder to state in specific terms. Like difficulty,
specificity has been shown to be consistently related to performance. The study of timber
truck drivers just mentioned, for example, also examined goal specificity. The initial loads the
truck drivers were carrying were found to be 60 percent of the maximum weight each truck
could haul. The managers set a new goal for drivers of 94 percent, which the drivers were soon
able to reach. Thus, the goal was both specific and difficult.
Because the theory attracted so much widespread interest and research support from
researchers and managers alike, an expanded model of the
“Your vision is your destination, and small, goal-setting process was eventually proposed. The expanded
model, shown in Figure 10.6, attempts to capture more fully
manageable goals are the motor that will
the complexities of goal setting in organizations.
get you there. Without the vision you’re on The expanded theory argues that goal-directed effort is
a road to nowhere. Without the goals, you a function of four goal attributes: difficulty and specificity,
have a destination but no motor. They work as already discussed, and acceptance and commitment.Goal
acceptance is the extent to which a person accepts a goal
in tandem, and you need both.” as his or her own. Goal commitment is the extent to which
—Dr. Frank Murtha, Counseling Psychologist30 she or he is personally interested in reaching the goal. The

Organizational
Goal difficulty Goal acceptance Intrinsic Rewards
support

Goal-Directed Satisfaction
Performance
Effort

Individual abilities
Goal specificity Goal commitment Extrinsic Rewards
and traits

F I G U R E 10.6

The Expanded Goal-Setting Theory of Motivation

One of the most important emerging theories of motivation is goal-setting theory. This theory suggests that goal
difficulty, specificity, acceptance, and commitment combine to determine an individual’s goal-directed effort.
This effort, when complemented by appropriate organizational support and individual abilities and traits, results
in performance. Finally, performance is seen as leading to intrinsic and extrinsic rewards that, in turn, result in
employee satisfaction.
Source: Gary P. Latham and Edwin A. Locke, “A Motivational Technique That Works,” Organizational Dynamics,
Autumn 1979, Vol. 8, Issue 2, p. 79.

manager who vows to take whatever steps are necessary to cut costs by 10 percent has made
a commitment to achieve the goal. Factors that can foster goal acceptance and commitment
include participating in the goal-setting process, making goals challenging but realistic, and
believing that goal achievement will lead to valued rewards.
The interaction of goal-directed effort, organizational support, and individual abilities and
traits determines actual performance. Organizational support is whatever the organization
does to help or hinder performance. Positive support might mean making available adequate
talent, access to information and technology, and a sufficient supply of raw materials; negative
support might mean failing to fix damaged equipment, relying only on outdated technology,
and denying access to critical information. Individual abilities and traits are the skills and
other personal characteristics necessary for doing a job. As a result of performance, a person
receives various intrinsic and extrinsic rewards, which in turn influence satisfaction. Note
that the latter stages of this model are quite similar to the Porter and Lawler expectancy model
discussed earlier.31

10-3d Implications of the Process Perspectives

Expectancy theory can be useful for managers who are trying to improve the motivation
of their subordinates. A series of steps can be followed to implement the basic ideas of
the theory. First, figure out the outcomes each employee is likely to want. Second, decide
what kinds and levels of performance are needed to meet organizational goals. Then make
sure that the desired levels of performance are attainable. Also, make sure that desired
outcomes and desired performance are linked. Next, analyze the complete situation for
conflicting expectancies and ensure that the rewards are large enough. Finally, make sure
the total system is equitable (that is, fair to everyone). The single most important idea for
managers to remember from equity theory is that if rewards are to motivate employees,
they must be perceived as being equitable and fair. A second implication is that manag-
ers need to consider the nature of the “other” to whom the employee is comparing her- or
himself. Goal-setting theory can be used to implement both expectancy and equity theory
concepts.

Managers need to remember that people are motivated both by how much they
Manager’s want a particular outcome and by how likely they think it is that their performance
Checklist will lead to that outcome.

Managers should also recognize the importance of equity—employees’ feeling that

they are being treated and rewarded equitably.

You should also understand that goal difficulty and goal specificity can play a major
role in motivating employees.

10-4 REINFORCEMENT PERSPECTIVES
ON MOTIVATION
reinforcement theory A third element of the motivational process addresses why some behaviors are maintained
Approach to motivation over time and why other behaviors change. As we have seen, content perspectives deal with
that argues that behavior
needs, whereas process perspectives explain why people choose various behaviors to satisfy
that results in rewarding
needs and how they evaluate the equity of the rewards they get for those behaviors. Reinforce-
consequences is likely
to be repeated, whereas ment perspectives explain the role of those rewards as they cause behavior to change or remain
behavior that results in the same over time. Specifically, reinforcement theory argues that behavior that results in
punishing consequences rewarding consequences is likely to be repeated, whereas behavior that results in punishing
is less likely to be consequences is less likely to be repeated.32 The Leading the Way feature provides some inter-
repeated esting insights into reinforcement theory.

LEADING THE WAY

To Reward, or to Punish?. . . That Is the Question

Suppose you are the general manager of a supermarket department’s poor performance. Other factors might include
and you’ve just finished a department-by-department variations in competition, economic and market conditions,
year-end review of your managers’ performance. Every and decisions made by managers above him—all of which
department—meats, dairy, seafood, deli, bakery, and so are largely random and which will undoubtedly be different
forth—has performed up to or beyond expectations. All from one performance measurement to the next.
except one: Produce fell 12 percent short of your forecast. Now that you understand a little about the reality of
You decide to reward all your managers with healthy regression to the mean, compare your decision-making
bonuses except for your produce manager. In other words, model to a model that reflects reality:
you plan to use punishment in order to motivate your
produce manager and positive reinforcement to motivate • Manager’s department performs well → Department
all of your other managers. You congratulate yourself for probably does not perform as well
having reached a fair and logical decision. • Manager’s department performs poorly →
According to Daniel Kahneman, a psychologist who Department probably performs better
won the Nobel Prize in economics for his work on
behavioral and decision-making models, your decision is Your reinforcement decision will probably have little or
probably not fair (at least not altogether), and it’s certainly nothing to do with next year’s outcome in any of your
not logical—at least not when the reality of the situation store’s departments. And you’ve probably been unfair
is taken into consideration. Here’s how Kahneman sees to your produce manager. Kahneman isn’t inclined to be
your two-pronged decision-making model: overly critical of your mistaken belief that you’ve made a
logical, fair, and effective decision: “It’s very difficult for
• Manager’s department performs well → You reward people to detect their own errors,” he admits. “You’re too
manager → Department continues to perform well busy making a mistake to detect it at the same time.” He
• Manager’s department performs poorly → You punish does, however, reserve the right to be pessimistic: “The
manager → Department performs better failure to recognize the import of regression,” he warns,
The key to Kahneman’s perspective is called regression can have pernicious consequences. . . . We normally
to the mean—the principle that, from one performance reinforce others when their behavior is good and punish
measurement to the next, the change in performance will them when their behavior is bad. By regression alone
be toward the overall average level of performance. Say, [however], they are most likely to improve after being
for example, that you’re an average golfer and that par punished and most likely to deteriorate after being
for your course is 72. If you shoot 68 in one round, your rewarded. Consequently, we are exposed to a lifetime
next round will probably be in the direction of 72—not schedule in which we are most often rewarded for pun-
necessarily 72 exactly, which is your average, or 76, which ishing others and punished for rewarding [them].
would bring you exactly back to a two-round average of
72. Technically, regression to the mean is a law and not References: Bryan Burke, “Fighter Pilots and Firing Coaches,”
a rule: You could shoot a second round of 70 or even 67, Advanced NFL Stats, February 19, 2009, www.advancednflstats.
but most of the time, your second-round score won’t be com on May 8, 2020; David Hall, “Daniel Kahneman Interview,”
as good as your first-round score. New Zealand Listener, January 20, 2012, www.listener.co.nz on
Why does regression to the mean occur? Because a com- May 8, 2020; Steve Miller, “We’re Not Very Good Statisticians,”
Information Management, March 26, 2012, www.information-
plex combination of factors usually determines any outcome.
management.com on May 8, 2020; Galen Strawson, “Thinking,
And because this combination is complex, it’s not likely that Fast and Slow by Daniel Kahneman—Review,” The Guardian,
the same combination will repeat itself the next time you December 13, 2011, www.guardian.co.uk on May 8, 2020; and
measure the outcome. Which brings us back to your pro- Judgment under Uncertainty: Heuristics and Biases, eds. Daniel
duce manager: It’s not likely that his managerial performance Kahneman, Paul Slovic, and Amos Tversky (Cambridge, UK:
was the sole (or even necessarily the primary) factor in his Cambridge University Press, 1982).

10-4a Kinds of Reinforcement in Organizations

There are four basic kinds of reinforcement that can result from behavior—positive
positive reinforcement
A method of reinforcement, avoidance, punishment, and extinction.33 These are summarized in Table 10.1.
strengthening behavior Two kinds of reinforcement strengthen or maintain behavior, whereas the other two weaken
with rewards or positive or decrease behavior.
outcomes after a desired Positive reinforcement, a method of strengthening behavior, is a reward or a positive
behavior is performed outcome that an individual experiences after a desired behavior is performed. When a

avoidance manager observes an employee doing an especially good job and offers praise, the praise
Used to strengthen serves to positively reinforce the behavior of good work. Other positive reinforcers in orga-
behavior by avoiding nizations include pay raises, promotions, and awards tied to desired behaviors. Employees
unpleasant consequences who work at General Electric’s customer service center receive clothing, sporting goods,
that would result if
and even trips to Disney World as rewards for outstanding performance. The other method
the behavior were not
performed
of strengthening desired behavior is through avoidance. An employee may come to work
on time to avoid a reprimand. In this instance, the employee is motivated to perform
punishment
the behavior of punctuality to avoid an unpleasant consequence that is likely to follow
Used to weaken undesired
tardiness.
behaviors by using negative
outcomes or unpleasant Punishment is used by some managers to weaken the incidence of undesired behaviors.
consequences when the When an employee is loafing, coming to work late, doing poor work, or interfering with the
behavior is performed work of others, the manager might resort to reprimands, discipline, or fines. The logic is that
extinction the unpleasant consequence will reduce the likelihood that the employee will choose that
Used to weaken particular behavior again. Given the counterproductive side effects of punishment (such as
undesired behaviors by resentment and hostility), though, it is often advisable to use the other kinds of reinforcement
simply ignoring or not if at all possible. Extinction can also be used to weaken behavior, especially behavior that
reinforcing them has previously been rewarded. When an employee tells an inappropriate joke and the boss
laughs, the laughter reinforces the behavior and
the employee may continue to tell inappropriate
jokes. By simply ignoring this behavior and
not reinforcing it, however, the boss may cause
the behavior to subside and eventually become
“extinct.”

10-4b Providing Reinforcement
in Organizations
Not only is the kind of reinforcement important,
but so is when or how often it occurs. Various
fizkes/Shutterstock.com

strategies are possible for providing reinforcement.

These are also listed in Table 10.1. The fixed-
interval schedule provides reinforcement at
fixed intervals of time, regardless of behavior. A
Positive reinforcement is a reward or other desired outcome. This employee good example of this schedule is the weekly or
has just gotten assigned to a prestigious new project and is getting a pay monthly paycheck. This method provides the least
raise. Both serve as positive reinforcement (assuming, of course, that
incentive for good work because employees know
prestige and pay are both valuable to her).
they will be paid regularly regardless of their

Table 10.1 Elements of Reinforcement Theory

Arrangement of the Reinforcement Contingencies

1. Positive Reinforcement. Strengthens behavior by 3. Punishment. Weakens behavior by providing an
providing a desirable consequence. undesirable consequence.
2. Avoidance. Strengthens behavior by allowing
4. Extinction. Weakens behavior by ignoring it.
escape from an undesirable consequence.
Schedules for Applying Reinforcement
1. Fixed-Interval. Reinforcement is applied at fixed 1. Fixed-Ratio. Reinforcement is applied after a fixed
time intervals, regardless of behavior. number of behaviors, regardless of time.
2. Variable-Interval. Reinforcement is applied at 2. Variable-Ratio. Reinforcement is applied after a
variable time intervals. variable number of behaviors.
A manager who wants the best chance of reinforcing a behavior would likely offer the employee a positive reinforcement
after a variable number of behaviors (variable-ratio reinforcement). For example, the manager could praise the employee
after the third credit card application was received. Additional praise might be offered after the next five applications,
then again after the next three, the next seven, the next four, and so on.

fixed-interval schedule efforts. A variable-interval schedule also uses time as the basis for reinforcement, but the
Provides reinforcement time interval varies from one reinforcement to the next. This schedule is appropriate for praise
at fixed intervals of time, or other rewards based on visits or inspections. When employees do not know when their boss
such as regular weekly is going to drop by, they tend to maintain a reasonably high level of effort all the time.
paychecks
A fixed-ratio schedule gives reinforcement after a fixed number of behaviors, regardless
variable-interval schedule of the time that elapses between behaviors. This results in an even higher level of effort.
Provides reinforcement at For example, when Macy’s is recruiting new credit card customers, salespersons get a small
varying intervals of time, bonus for every fifth application returned from their department. Under this arrangement,
such as occasional visits motivation will be high because each application gets the person closer to the next bonus.
by the supervisor The variable-ratio schedule, the most powerful schedule in terms of maintaining desired
fixed-ratio schedule behaviors, varies the number of behaviors needed for each reinforcement. A supervisor who
Provides reinforcement praises an employee for her second order, the seventh order after that, the ninth after that,
after a fixed number of then the fifth, and then the third is using a variable-ratio schedule. The employee is motivated
behaviors regardless of to increase the frequency of the desired behavior because each performance increases the
the time interval involved, probability of receiving a reward. Of course, a variable-ratio schedule is difficult (if not
such as a bonus for every impossible) to use for formal rewards such as pay because it would be too complicated to
fifth sale keep track of who was rewarded when.
variable-ratio schedule
Managers wanting to explicitly use reinforcement theory to motivate their employees
Provides reinforcement generally do so with a technique called behavior modification, or OB Mod.34 An OB Mod
after varying numbers program starts by specifying behaviors that are to be increased (such as producing more units)
of behaviors are or decreased (such as coming to work late). These target behaviors are then tied to specific
performed, such as the forms or kinds of reinforcement. Although many organizations (such as Procter & Gamble
use of compliments by a and Ford) have used OB Mod, the best-known application was at Emery Air Freight (now a
supervisor on an irregular part of Consolidated Freightways). Management felt that the containers used to consolidate
basis small shipments into fewer, larger shipments were not being packed efficiently. Through a
behavior modification system of self-monitored feedback and rewards, Emery increased container usage from 45 to
(OB Mod) 95 percent and saved over $3 million during the first three years of the program.35
Method for applying
the basic elements of 10-4c Implications of the Reinforcement Perspectives
reinforcement theory in Reinforcement in organizations can be a powerful force for maintaining employee motivation.
an organizational setting Of course, for reinforcement to be truly effective, managers need to use it in a manner consistent
with the various types and schedules of reinforcement discussed above. In addition, managers
must understand that they may be inadvertently motivating undesired or dysfunctional
behaviors. For instance, if an employee routinely comes to work late but experiences no
consequences, both that worker and others will see that it is all right to be late for work.

Managers should be familiar with the basic kinds and schedules of reinforcement
Manager’s that are available to them.
Checklist Managers should also know the kinds of effects that are most likely to follow from
any given form of reinforcement.

10-5 POPULAR MOTIVATIONAL STRATEGIES

Although the various theories discussed thus far provide a solid explanation for motivation,
managers must use various techniques and strategies to actually apply them. Among the most
popular motivational strategies today are empowerment and participation and alternative
empowerment forms of work arrangements. Various forms of performance-based reward systems, discussed
The process of enabling in the next section, also reflect efforts to boost motivation and performance.
workers to set their
own work goals, make
decisions, and solve
10-5a Empowerment and Participation
problems within their Empowerment and participation represent important methods that managers can use to
sphere of responsibility enhance employee motivation. Empowerment is the process of enabling workers to set their
and authority own work goals, make decisions, and solve problems within their sphere of responsibility and

participation authority. Participation is the process of giving employees a voice in making decisions about
The process of giving their own work. Thus, empowerment is a somewhat broader concept that promotes partici-
employees a voice in pation in a wide variety of areas, including but not limited to work itself, work context, and
making decisions about work environment.36
their own work
The role of participation and empowerment in motivation can be expressed in terms of
both content perspectives and expectancy theory. Employees who participate in decision mak-
ing may be more committed to executing decisions properly. Furthermore, the successful
process of making a decision, executing it, and then seeing the positive consequences can help
satisfy one’s need for achievement, provide recognition and responsibility, and enhance self-
esteem. Simply being asked to participate in organizational decision making also may enhance
an employee’s self-esteem. In addition, participation should help clarify expectancies; that is,
by participating in decision making, employees may better understand the linkage between
their performance and the rewards they want most.

Areas of Participation At one level, employees

can participate in addressing questions and making
decisions about their own jobs. Instead of just telling
them how to do their jobs, for example, managers
can ask employees to make their own decisions about
how to do them. Based on their own expertise and
experience with their tasks, workers might be able to
improve their own productivity. In many situations,
Monkey Business Images/Shutterstock.com

they might also be well qualified to make decisions

about what materials to use, what tools are needed,
and so forth.
It might also be motivational to let workers make
decisions about administrative matters, such as work
schedules. If jobs are relatively independent of one
another, employees might decide when to change
shifts, take breaks, go to lunch, and so forth. A
Participation and empowerment are popular strategies for improving work group or team might also be able to schedule
employee motivation. This manager is giving his team autonomy to make
vacations and days off for all of its members.
an important decision—that is, he is empowering them.
Furthermore, employees are getting increasing
opportunities to participate in broader issues of
product quality. Such participation has become a hallmark of successful Japanese and other
international firms, and many U.S. companies have followed suit.
Techniques and Issues in Empowerment In recent years, many organizations have
actively sought ways to extend participation beyond the traditional areas. Simple techniques,
such as suggestion boxes and question-and-answer meetings, allow a certain degree of
participation, for example. The basic motive has been to better capitalize on the assets
and capabilities inherent in all employees. Thus, many managers today prefer the term
empowerment to participation because of its more comprehensive character.
One method used to empower workers is the use of work teams. Such teams are collections
of employees empowered to plan, organize, direct, and control their own work. Their
supervisor, rather than being a traditional “boss,” plays more the role of a coach. The other
method for empowerment is to change the team’s overall method of organizing. The basic
pattern is for an organization to eliminate layers from its hierarchy, thereby becoming much
more decentralized. Power, responsibility, and authority are subsequently delegated as far
down the organization as possible, placing control over work squarely in the hands of those
who actually do it.37
Regardless of the specific technique or method used, however, empowerment will
enhance organizational effectiveness only if certain conditions exist. First of all, the
organization must be sincere in its efforts to spread power and autonomy to lower levels of
the organization. Token efforts to promote participation in only a few areas are not likely
to succeed. Second, the organization must be committed to maintaining participation and
empowerment. Workers will be resentful if they are given more control, only to later have

it reduced or taken away altogether. Third, workers must truly believe that they and their
managers are working together in their joint best interests. In some factory settings, for
instance, high-performing workers have been found to routinely conceal the secrets of their
high output. They fear that if management learns those secrets, it will use them to ratchet
up performance expectations.38
In addition, the organization must be systematic and patient in its efforts to empower
workers. Turning over too much control too quickly can spell disaster. And finally, the
organization must be prepared to increase its commitment to training and development.
Employees given more freedom in how they work will quite likely need additional training to
help them exercise that freedom most effectively.39

10-5b Alternative Forms of Work Arrangements

Many organizations today have also been experimenting with a variety of alternative work
arrangements. These alternative arrangements are generally intended to enhance employee
motivation and performance by providing employees with greater flexibility in how and
when they work. Among the more popular alternative work arrangements are variable work
schedules, flexible work schedules, job sharing, and telecommuting.40
Variable Work Schedules Although there are many exceptions, of course, the traditional
work schedule starts at 8:00 or 9:00 in the morning and ends at 5:00 or so in the evening, five
days a week (and, of course, many managers work additional hours outside of these times).
Unfortunately, this schedule makes it difficult to attend to routine personal business—going to
the bank, seeing a doctor or dentist for a routine checkup, having a parent–teacher conference,
getting an automobile serviced, and so forth. At a surface level, then, employees locked into
this sort of arrangement may find it necessary to take a sick day or a vacation day to handle
these activities. At a more unconscious level, some people may also feel so powerless and
constrained by their job schedule as to feel increased resentment and frustration.
To help counter these problems, some businesses have
“These guidelines . . . effectively mean adopted a compressed work schedule, working a full 40-hour
that as long as they do their work, our week in fewer than the traditional five days.42 One approach
employees can work whenever they want, involves working 10 hours a day for four days, leaving an
extra day off. Another alternative is for employees to work
from wherever they want.” slightly less than 10 hours a day, but to complete the 40 hours
—Richard Branson, Founder of Virgin Group41 by lunch time on Friday (many medical practices use this
schedule). And a few firms have tried having employees work
compressed work 12 hours a day for three days, followed by four days off. Organizations that have used these
schedule forms of compressed workweeks include John Hancock, BP Amoco, and Philip Morris. One
Working a full 40-hour problem with this schedule is that when employees put in too much time in a single day, they
week in fewer than the tend to get tired and perform at a lower level later in the day.
traditional five days A schedule that some organizations have adopted is what they call a “nine-eighty” schedule.
Under this arrangement, employees work a traditional schedule one week and a compressed
schedule the next, getting every other Friday off. In other words, they work 80 hours (the
equivalent of two weeks of full-time work) in nine days. By alternating the regular and
compressed schedules across half of its workforce, the organization can be fully staffed at all
times, while still giving employees two full weekdays off each month. Shell Oil and BP Amoco
Chemicals are two of the firms that currently use this schedule.
flexible work schedule Flexible Work Schedules Another popular alternative work arrangement is flexible work
Work schedule in which schedule, sometimes called flextime. Flextime gives employees more personal control over the
employees have some times they work. The workday is typically broken down into two categories: flexible time and
control over the hours core time. All employees must be at their workstations during core time, but they can choose
they choose to work; also their own schedules during flexible time. Thus, one employee may choose to start work early
called flextime
in the morning and leave in midafternoon, another to start in the late morning and work until
late afternoon, and still another to start early in the morning, take a long lunch break, and
work until late afternoon. Organizations that have used the flexible work schedule method
for arranging work include HP, Microsoft, and Texas Instruments.

“I get to sit here and look out my window while I talk to

customers [by telecommuting]—and watch the leaves changing,
squirrels running around, and kids going off to school.”
—Walt Swanson, Customer Service Representative at Agilent Technologies
Job Sharing Yet another potentially useful alternative work arrangement in some settings
job sharing is job sharing. In job sharing, two part-time employees share one full-time job. One person
When two part-time may perform the job from 8:00 A.M. to noon and the other from 1:00 P.M. to 5:00 P.M. Job
employees share one sharing may be desirable for people who want to work only part time or when job markets
full-time job are tight. For its part, the organization can accommodate the preferences of a broader range
of employees and may benefit from the talents of more people.

Telecommuting An increasingly popular approach to alternative work arrangements is

telecommuting telecommuting—allowing employees to spend part of their time working offsite, usually
Allowing employees to at home. Another term for this approach is “alternative work locations.” By using digital
spend part of their time technology for remote connectivity, such as Zoom, Microsoft Meeting, and other remote
working offsite, usually at conferencing platforms, many employees can maintain close contact with their organization
home and still get just as much (or even more) work done at home as they would if they were in the
office. The increased power and sophistication of modern
communication technology are making telecommuting
easier and easier. One recent study found that nearly half
of the U.S. workforce (64 million workers) are in jobs that
allow for at least partial telecommuting.43 Nearly half of
AT&T’s employees have received mobile and remote access
technologies that provide them with the flexibility to work
from various locations. And 40 percent of IBM’s employees
currently telecommute. (In the case of IBM, not only are
employees more satisfied with the arrangement but the firm
has saved close to $2.9 billion in office space needs.44) There
was a surge in telecommuting during the 2020 COVID-19
imtmphoto/Shutterstock.com

pandemic as many workplaces shut down or restricted

access and people were encouraged or even required to work
remotely. For example, like their counterparts at many firms,
employees at Twitter were allowed to work remotely during
the pandemic. Even as businesses were reopening, though,
Telecommuting is a motivational technique that allows employees Twitter’s CEO, Jack Dorsey, saw the benefits of working
to spend part of their time working from home or some other remotely and so announced that everyone at the company
alternative workplace. This man is working from his home office.
could continue to work from home indefinitely.45

Managers need to know the role that employee empowerment and participation
Manager’s play in employee motivation.
Checklist You should also know the various work schedules used by organizations and how
those schedules can affect motivation.

10-6 USING REWARD SYSTEMS TO MOTIVATE

PERFORMANCE
reward system
The formal and informal Aside from these types of motivational strategies, an organization’s reward system is its
mechanisms by which most basic tool for managing employee motivation. An organizational reward system is the
employee performance is formal and informal mechanisms by which employee performance is defined, evaluated,
defined, evaluated, and and rewarded. Rewards that are tied specifically to performance, of course, have the greatest
rewarded impact on enhancing both motivation and actual performance.

Performance-based rewards play a number of roles and address a variety of purposes in

organizations. The major purposes involve the relationship of rewards to motivation and to
performance. Specifically, organizations want employees to perform at relatively high levels
and need to make it worth their effort to do so. When rewards are associated with higher
levels of performance, employees will presumably be motivated to work harder to achieve
those awards. At that point, their own self-interests coincide with the organization’s interests.
Performance-based rewards are also relevant regarding other employee behaviors, such as
engagement, retention, and citizenship.

10-6a Merit Reward Systems

Merit reward systems are among the most fundamental forms of performance-based rewards.46
merit pay Merit pay generally refers to pay awarded to employees on the basis of the relative value of
Pay awarded to their contributions to the organization. Employees who make greater contributions are given
employees on the basis higher pay than those who make lesser contributions. Merit pay plan, then, are compensation
of the relative value of plans that formally base at least some meaningful portion of compensation on merit.
their contributions to the The most general form of merit pay plan is to provide annual salary increases to employees
organization
based on their relative merit. Merit, in turn, is usually determined or defined based on
merit pay plan the person’s performance and overall contributions to the organization. For example, an
Compensation plan that organization using such a traditional merit pay plan might instruct its supervisors to give
formally bases at least all their employees an average pay raise of, say, 4 percent. But the individual supervisor is
some meaningful portion further instructed to differentiate among high, average, and low performers. Under a simple
of compensation on merit system, for example, a manager might give the top 25 percent of her employees a 6 percent
pay raise, the middle 50 percent a 4 percent or average pay raise, and the bottom 25 percent
a 2 percent pay raise.

10-6b Incentive Reward Systems

Incentive reward systems are among the oldest forms of performance-based rewards. For
example, some companies were using individual piece-rate incentive plans over 100 years
piece-rate incentive plan ago.47 Under a piece-rate incentive plan, the organization pays an employee a certain amount
Reward system wherein of money for every unit she or he produces. For example, an employee might be paid $1 for
the organization pays every dozen units of product that are successfully completed. But such simplistic systems fail
an employee a certain to account for such facts as minimum-wage levels and rely very heavily on the assumptions
amount of money for that performance is totally under a worker’s control and that the employee does a single task
every unit she or he
continuously throughout his or her work time. Thus, most organizations today that try to use
produces
incentive compensation systems use more sophisticated methodologies.
Some variations on a piece-rate system are, however, still fairly popular. Although many of
these still resemble the early plans in most ways, a well-known piece-rate system at Lincoln
Electric illustrates how an organization can adapt the traditional model to achieve better
results. For years, Lincoln’s employees were paid individual incentive payments based on
their performance. However, the amount of money shared (the incentive pool) was based on
the company’s profitability. There was also a well-organized system whereby employees could
make suggestions for increasing productivity. There was motivation to do this because the
employees received one-third of the profits (another third went to the stockholders, and the last
share was retained for improvements and seed money). Thus, the pool for incentive payments
was determined by profitability, and an employee’s share of this pool was a function of his or
her base pay and rated performance based on the piece-rate system. Lincoln Electric was most
famous, however, because of the stories (which were apparently typical) of production workers
receiving a year-end bonus payment that equaled their yearly base pay.48 In recent years,
Lincoln has partially abandoned its famous system for business reasons, but it still serves as a
benchmark for other companies seeking innovative piece-rate pay systems.

Incentive Pay Plans Generally speaking, individual incentive plans reward individual
performance on a real-time basis. In other words, rather than increasing a person’s base salary
at the end of the year, the worker instead receives some level of salary increase or financial

reward in conjunction with demonstrated outstanding performance in close proximity to

when that performance occurred. Individual incentive systems are most likely to be used in
cases in which performance can be objectively assessed in terms of number of units of output
or similar measures, rather than on a subjective assessment of performance by a superior.
WD-40 Company uses an individual incentive plan that covers almost its entire workforce.
The firm’s managers credit the incentive plan with motivating and engaging its employees to
perform at high levels during both good and bad times. For instance, even during the 2008–
2009 recession, the firm achieved record profits.49
Perhaps the most common forms of individual incentives today are sales commissions that
are paid to people engaged in sales work. For example, sales representatives for consumer
products firms and retail sales agents may be compensated under this type of commission
system. In general, the person might receive a percentage of the total volume of attained
sales as her or his commission for a period of time. Some sales jobs are based entirely on
commission, whereas others use a combination of base minimum salary with additional
commission as an incentive. Notice that these plans put a considerable amount of the
salespersons’ earnings “at risk.” In other words, although organizations often have drawing
accounts to allow the salesperson to live during lean periods (the person then “owes” this
money back to the organization), if he or she does not perform well, he or she will not be paid
much. The portion of salary based on commission is simply not guaranteed and is paid only
if sales reach some target level.

Other Forms of Incentive Occasionally

organizations may also use other forms of
incentives to motivate people. For example, a
nonmonetary incentive, such as additional time
off or a special perk, might be a useful incentive.
For example, a company might establish a sales
contest in which the sales group that attains the
highest level of sales increase over a specified
period of time will receive an extra week of paid
vacation, perhaps even at an prearranged place,
such as a tropical resort or a ski lodge, or on a
Adam Gregor/Shutterstock.com

cruise.50
A major advantage of incentives relative to
merit systems is that incentives are typically
a one-time reward and do not accumulate by
becoming part of the individual’s base salary.
Stated differently, a person whose outstanding
Sales commissions are among the most common forms of incentive pay performance entitles him or her to a financial
plans. This smartphone sales professional, for example, earns a base salary.
However, she also earns additional income based on the total volume of
incentive gets the incentive only one time, based
sales she generates each week. So, she is incentivized to sell as many on that level of performance. If the person’s
smartphones and related products and services as possible because doing performance begins to erode in the future,
so increases her own pay. then she or he may receive a lesser incentive
or perhaps no incentive in the future. As a
consequence, his or her base salary remains
the same or is perhaps increased at a relatively moderate pace; he or she receives one-time
incentive rewards as recognition for exemplary performance. Furthermore, because these
plans, by their very nature, focus on one-time events, it is much easier for the organization to
change the focus of the incentive plan. At a simple level, for example, an organization can set
up an incentive plan for selling one product during one quarter, but then shift the incentive
to a different product the next quarter, as the situation requires. Automobile companies like
Ford and GM routinely do this by reducing sales incentives for models that are selling very
well and increasing sales incentives for models that are selling below expectations or are
about to be discontinued.

DOING BUSINESS ON PLANET EARTH

M(otivation) p(er) G(allon)

Drivers for private truck fleets log about 20,000 miles a be underestimated. According to a report by Jones Lang
year. They drive 82 percent of all medium- and heavy-duty LaSalle (JLL), a professional-services and investment-
vehicles in the United States and account for 52 percent management company, many companies with active
of the total miles traveled by commercial motor vehicles efficiency programs are finding that further improvements
(CMVs). “The way these employees drive,” says veteran in sustainability can be achieved only by turning to the
industry journalist Mike Antich, “can either increase or people who are responsible for implementing those
decrease fuel economy and greenhouse gas emissions.”“If programs. “The low-hanging fruit has been plucked,”
you change driving behavior,” Antich argues, “you have a JLL’s Michael Jordan advises clients. “You now need the
direct impact on the amount of fuel consumed and the participation of humans.”
amount of emissions produced. Even small increases in Nussbaum Transportation, for example, has developed
mpg [miles per gallon]” can make a big difference, and a software program called Driver Excelerator, which
Antich points out that fuel-conscious fleet managers have collects and analyzes fuel-related data from various
reported up to 30 percent reductions in fuel consumption sources, including electronic control devices for capturing
by changing driver behavior. mpg numbers. Using the resulting data, managers award
How? By motivating drivers to comply with company points to drivers of the 230-truck fleet for beating the
sustainability policies. Unfortunately, of course, it’s not company’s mpg goal. If, for instance, a driver achieves an
that simple. Most drivers, according to Antich, “want to do average quarterly mpg of 8.5 against a goal of 6.5, he or
the right thing but don’t see sustainability as part of their she receives 200 points, which are allotted according to
job responsibilities. In fact, the No. 1 reason corporate a three-tier system: Bronze pays $0.50 per point, Silver
sustainability programs are not ‘sustainable’ is driver $5.00 per point, and Gold $8.00 per point. Some drivers
noncompliance. A successful sustainability initiative,” in the Gold tier earn an extra $1,600 every three months.
says Antich, “requires developing programs that motivate Illinois-based Nussbaum was careful to reject an “all-
employees to comply.” He goes on to argue that effective or-nothing” system in which drivers received a bonus
motivational programs often involve gainsharing — for meeting a target and nothing for falling short. “Our
programs designed to share company cost savings with experience,” says HR Director Jeremy Stickling, “shows
employees. that that’s a big de-motivator” because drivers who
Again, however, implementing the solution isn’t quite miss out tend to blame external circumstances such as
as easy as identifying it. Traditionally, observes Antich, weather or load weights. In fact, Nussbaum plans to make
gainsharing involves financial incentives, but he admits mileage-based performance rewards a bigger portion of
that “in today’s cost-constrained business environment, drivers’ base-pay rate. The idea is for drivers to get higher
offering financial incentives [may not be] a realistic option.” monthly checks instead of big quarterly bonus checks.
Consequently, many firms have found that individual “Guys want their money now,” notes Stickling.
recognition can be an effective alternative to financial
incentives: “Repeatedly,” says Antich, “respondents to References: Mike Antich, “Using ‘Gainsharing’ to Achieve
employee surveys rate ‘individual recognition’ as a key Sustainability Goals,” Automotive Fleet, April 2, 2014, www
factor that motivates them to want to excel or achieve .automotive-fleet.com on May 8, 2020; Jones Lang LaSalle,
“Employee Sustainability Engagement,” www.joneslanglasalle
corporate objectives.”
.com on May 8, 2020; American Transportation Research
Both scientific studies and the experiences of various Institute, “The Role of Truck Drivers in Sustainability,” http://
companies show that the importance of employee atri-online.org on May 8, 2020; and Aaron Huff, “Performance-
recognition—including financial rewards—should not Based Pay, Part 1: The Science of Scoring Drivers,” Commercial
be underestimated in sustainability efforts, primarily Carrier Journal, December 18, 2013, www.ccjdigital.com on
because the importance of individual behavior should not May 8, 2020.

10-6c Team and Group Incentive Reward Systems

The merit compensation and incentive compensation systems described in the preceding
sections deal primarily with performance-based reward arrangements for individuals.
There also exists a different set of performance-based reward programs that are targeted for
teams and groups. These programs are particularly important for managers to understand
today, given the widespread trends toward team- and group-based methods of work and
organization.51

Common Team and Group Reward Systems There are two commonly used types of
team and group reward systems. One type used in many organizations is an approach called
gainsharing programs gainsharing. Gainsharing programs are designed to share the cost savings from productivity
Designed to share improvements with employees. The underlying assumption of gainsharing is that employees
the cost savings and the employer have the same goals and thus should appropriately share in incremental
from productivity economic gains.52 The Doing Business on Planet Earth feature provides an interesting example
improvements with of an innovative gainsharing program.
employees
In general, organizations that use gainsharing start by measuring team- or group-level
productivity. It is important that this measure be valid and reliable and that it truly reflect
current levels of performance by the team or group. The team or work group itself is then given
the task of trying to lower costs and otherwise improve productivity through any measures
that its members develop and its manager approves. Resulting cost savings or productivity
gains that the team or group is able to achieve are then quantified and translated into dollar
values. A predetermined formula is then used to allocate these dollar savings between the
employer and the employees themselves. A typical formula for distributing gainsharing
savings is to provide 25 percent to the employees and 75 percent to the company.
One specific type of gainsharing plan is an approach called the Scanlon plan. This approach
Scanlon plan was developed by Joseph Scanlon in 1927. The Scanlon plan has the same basic strategy as
Similar to gainsharing, gainsharing plans, in that teams or groups of employees are encouraged to suggest strategies
but the distribution of for reducing costs. However, the distribution of these gains is usually tilted much more heavily
gains is tilted much more toward employees, with employees usually receiving between two-thirds and three-fourths
heavily toward employees of the total cost savings that the plan achieves. Furthermore, the distribution of cost savings
resulting from the plan is given not just to the team or group that suggested and developed
the ideas but across the entire organization.

Other Types of Team and Group Rewards Although gainsharing and Scanlon-type
plans are among the most popular group incentive reward systems, there are other systems
that are also used by some organizations. Some companies, for example, have begun to use
true incentives at the team or group level. Just as with individual incentives, team or group
incentives tie rewards directly to performance increases. And, like individual incentives, team
or group incentives are paid as they are earned rather than being added to employees’ base
salaries. The incentives are distributed at the team or group level, however, rather than at the
individual level. In some cases, the distribution may be based on the existing salary of each
employee, with incentive bonuses being given on a proportionate basis. In other settings, each
member of the team or group receives the same incentive pay.
Some companies also use nonmonetary rewards at the team or group level—most
commonly in the form of prizes and awards. For example, a company might visibly recognize
and celebrate the particular team in a plant or subunit of the company that achieves the
highest level of productivity increase, the highest level of reported customer satisfaction, or
a similar index of performance. The reward itself might take the form of additional time off,
as described earlier in this chapter, or a tangible award, such as a trophy or plaque. In any
event, the idea is that the reward is at the team level and serves as recognition of exemplary
performance by the entire team.
There are also other kinds of team- or group-level incentives that go beyond the
contributions of a specific work group. These are generally organizationwide kinds of
incentives. One longstanding method for this approach is profit sharing. In a profit-sharing
approach, at the end of the year some portion of the company’s profits is paid into a profit-
sharing pool that is then distributed to all employees. Either this amount is distributed at that
time or it is put into an escrow account and payment is deferred until the employee retires.
The basic rationale behind profit-sharing systems is that everyone in the organization
can expect to benefit when the company does well. But, on the other side of the coin, during
bad economic times, when the company is earning little or no profit, then there is little or no
contribution to the profit-sharing fund. This sometimes results in negative reactions from
employees, who have perhaps come to feel that profit sharing is really a part of their annual
compensation.

Employee stock ownership plans (ESOPs) also represent a group-level reward system that
some companies use. Under the employee stock ownership plan, employees are gradually
given a meaningful stake in ownership of a corporation. The typical form of this plan involves
the company taking out a loan, which is then used to buy a portion of its own stock in the open
market. Over time, company profits are then used to pay off this loan. Employees, in turn,
receive a claim on ownership of some portion of the stock held by the company, usually based
on their seniority and sometimes on their performance. Eventually, each individual becomes
an owner of the company. One study found that 20 percent of employees in the private sector
(25 million Americans) reported owning stock in their companies, with 10 percent holding
stock options.53

10-6d Executive Compensation

The top-level executives of most companies have
separate compensation programs and plans.
These are intended to reward these executives for
their performance and for the performance of the
organization.
Standard Forms of Executive Compen
sation Most senior executives receive their
compensation in two forms. One form is a base John Mantell/Shutterstock.com
salary. As with the base salary of any staff member
or professional member of an organization, the base
salary of an executive is a guaranteed amount of
money that the person will be paid. For example,
in 2019 General Motors paid its CEO, Mary Barra,
$2.1 million in base salary.54
Employee stock ownership plans are a group-level reward plan that Above and beyond this base salary, however,
some companies use. Publix is a Florida-based regional grocery most executives also receive one or more forms of
chain with around 193,000 employees and 1,239 locations across the
incentive pay. The traditional method of incen-
Southeast. Publix is jointly owned by the family of its founder (George
Jenkins) and current and former employees and is the largest employee-
tive pay for executives is in the form of bonuses.
owned company in the United States. In 2019 the firm was also number Bonuses, in turn, are usually determined by the
39 on Fortune’s list of the “100 Best Places to Work.” performance of the organization. Thus, at the end
of the year, some portion of a corporation’s profits
may be diverted into a bonus pool. Senior execu-
tives then receive a bonus expressed as a percentage of this bonus pool. The chief executive
officer and president are obviously likely to get a larger percentage bonus than a vice president.
The exact distribution of the bonus pool is usually specified ahead of time in the individual’s
employment contract. Some organizations intentionally leave the distribution unspecified, so
that the board of directors has the flexibility to give larger rewards to those deemed to be most
deserving. GM’s Mary Barra received a cash bonus of $2.73 million in 2019.55

Special Forms of Executive Compensation Beyond base salary and bonuses, many
executives receive other kinds of compensation as well. A form of executive compensation
that has received a lot of attention in recent years has been various kinds of stock and stock
stock option plan options. A stock option plan is established to give senior managers the option to buy company
Established to give senior stock in the future at a predetermined fixed price. The basic idea underlying stock option plans
managers the option to is that if the executives contribute to higher levels of organizational performance, then the
buy company stock in the company stock should increase in value. Then the executive will be able to purchase the stock
future at a predetermined at the predetermined price, which theoretically should be lower than its future market price.
fixed price
The difference then becomes profit for the individual. GM awarded Mary Barra $12.14 million
in direct stock payments and additional stock options with a potential value of $3.5 million.56
Stock and stock options continue to grow in popularity as a means of compensating top
managers. Options, especially, are seen as a means of aligning the interests of the manager with
those of the stockholders and, given that they do not cost the organization much (other than
some possible dilution of stock values), they will probably be even more popular in the future.

In fact, a recent study by KPMG Peat Marwick

indicates that for senior management whose
salary exceeds $250,000, stock options represent
the largest share of the salary mix (relative to
salary and other incentives). Furthermore, when
we consider all of top management (annual
salary over $750,000), stock options comprise a
full 60 percent of their total compensation. And
the Peat Marwick report indicates that even
among exempt employees at the $50,000-a-year
Tom Kuest - Fotograf/Shutterstock.com

level, stock options represent 13 percent of total

compensation.
But events in recent years have raised serious
questions about the use of stock options as
incentives for executives. For example, several
executives at Enron allegedly withheld critical
Top executives often get perquisites, or “perks,” in addition to their salary,
financial information from the markets, cashed in
bonuses, and stock options. Access to corporate planes is a common perk their stock options (while Enron stock was trading
in some companies. at $80 a share), and then watched as the financial
information was made public and the stock fell
to less than $1 a share. Of course, actions such as
these (if proven) are illegal, but they still raise questions in the public’s mind about the role
of stock options and about the way organizations treat stock options from an accounting
perspective. Most organizations have not treated stock options as liabilities, even though,
when exercised, they are exactly that. There is concern that by not carrying stock options
as liabilities, the managers are overstating the value of the company, which, of course, can
help raise the stock price. Finally, when stock prices fall below the option price, they become
essentially worthless.
Aside from stock option plans, other kinds of executive compensation are also used by
some companies. Among the more popular are such perquisites as memberships in private
clubs, access to company recreational facilities, and similar considerations. Some organiza-
tions also make available to senior executives low- or no-interest loans. These are often given
to new executives whom the company is hiring from other companies and serve as an incen-
tive for the person to leave his or her current job to join a new organization. GM’s Mary Barra
received $1.5 million in other compensation during 2019 for things such as perks, tax reim-
bursement, and payments for life insurance.57

Criticisms of Executive Compensation In recent years, executive compensation has

come under fire for a variety of reasons. One major reason is that the levels of executive
compensation attained by some managers seem simply too large for the average shareholder
to understand. It is not uncommon, for instance, for a senior executive of a major corporation
to earn total income from his or her job in a given year of well in excess of $1 million and
sometimes the income of chief executive officers can be substantially more than this. Mary
Barra’s total compensation from GM in 2019 was 203 times the compensation for the median
GM employee that year. Thus, just as the typical person may have difficulty comprehending
the income of some movie stars and sports stars, so, too, would the average person be surprised
at the astronomical salaries paid to some senior executives.
Compounding the problem created by perceptions of executive compensation is the
fact that there often seems to be little or no relationship between the performance of the
organization and the compensation paid to its senior executives.58 Certainly, if an organization
is performing at an especially high level and its stock price is increasing consistently, then most
observers would agree that the senior executives responsible for this growth should be entitled
to attractive rewards.59 However, it is more difficult to understand a case in which executives
are paid large salaries and other forms of rewards when their company is performing at only
a marginal level, yet this is fairly common today. For example, two years before his departure,

former General Electric CEO Jeffrey Immelt received stock options that increased his total
compensation to $28.5 million from a base salary of $9.8 million, an increase of 188 percent.
However, during that same year shareholder returns fell behind those of similar companies
(24.33 percent compared to 32.21 percent).60

10-6e New Approaches to Performance-Based Rewards

Some organizations have started to recognize that they can leverage the value of the
incentives they offer to their employees and to groups in their organization by allowing
those individuals and groups to have a say in how rewards are distributed. For example,
at the extreme, a company could go so far as to grant salary increase budgets to work
groups and then allow the members of those groups themselves to determine how the
rewards are going to be allocated among the various members of the group. This strategy
would appear to hold considerable promise if everyone understands the performance
arrangements that exist in the work group and everyone is committed to being fair and
equitable. Unfortunately, it can also create problems if people in a group feel that rewards
are not being distributed fairly.61
Organizations are also getting increasingly innovative in their incentive programs. For
example, some now offer stock options to all their employees, rather than just to top executives.
In addition, some firms are looking into ways to purely individualize reward s ystems. For
instance, a firm might offer one employee a paid three-month sabbatical every two years
in exchange for a 20 percent reduction in salary. Another employee in the same firm might
be offered a 10 percent salary increase in exchange for a 5 percent reduction in company
contributions to the person’s retirement account. Corning, General Electric, and Microsoft
are among the firms that have indicated potential interest in these kinds of options.62
Regardless of the method used, however, it is also important that managers in an
organization effectively communicate what rewards are being distributed and the basis for
that distribution. In other words, if incentives are being distributed on the basis of perceived
individual contributions to the organization, then members of the organization should be
informed of that fact. This will presumably better enable them to understand the basis on which
pay increases and other incentives and performance-based rewards have been distributed.

Managers need to know the essential elements of merit and incentive reward
Manager’s systems.
Checklist You should also be aware of the various issues associated with executive
compensation.

SUMMARY OF LEARNING OUTCOMES AND KEY POINTS

10-1. Discuss the nature of motivation, including its • Thinking about motivation has evolved from the
importance and historical perspectives. traditional view through the human relations
• Motivation is the set of forces that cause people approach to the human resource view.
to behave in certain ways. 10-2. Describe the major content perspectives on
• Motivation is an important consideration motivation.
for managers because, along with ability and • Content perspectives on motivation are
environmental factors, it determines individual concerned with what factor or factors cause
performance. motivation.

• Popular content theories include Maslow’s needs repeated, whereas behavior resulting in negative
hierarchy, the ERG theory, and Herzberg’s two- consequences is less likely to be repeated.
factor theory. • Reinforcement contingencies can be arranged in
• Other important needs are the needs for the form of positive reinforcement, avoidance,
achievement, affiliation, and power. punishment, and extinction, and they can be
provided on fixed-interval, variable-interval,
10-3. Describe the major process perspectives on
fixed-ratio, or variable-ratio schedules.
motivation.
• Process perspectives on motivation deal with 10-5. Discuss popular motivational strategies.
how motivation occurs. • Managers use a variety of motivational strategies
• Expectancy theory suggests that people are derived from the various theories of motivation.
motivated to perform if they believe that their • Common strategies include empowerment and
effort will result in high performance, that this participation and alternative forms of work
performance will lead to rewards, and that the arrangements, such as variable work schedules,
positive aspects of the outcomes outweigh the flexible work schedules, and telecommuting.
negative aspects.
10-6. Describe the role of organizational reward systems
• Equity theory is based on the premise that
in motivation.
people are motivated to achieve and maintain
social equity. • Reward systems also play a key role in
motivating employee performance.
• Attribution theory is a new process theory.
• Popular methods include merit reward systems,
10-4. Describe reinforcement perspectives on motivation. incentive reward systems, and team and group
• The reinforcement perspective focuses on how incentive reward systems.
motivation is maintained. • Executive compensation is also intended to
• Its basic assumption is that behavior that serve as motivation for senior managers but has
results in rewarding consequences is likely to be currently come under close scrutiny and criticism.

DISCUSSION QUESTIONS
Questions for Review under each of the theories. What differences do you see
between the theories in terms of their implications for
1. Each historical perspective on motivation built on
managers?
the earlier perspectives and differed from them in 2. Can factors from both the content and the process
some ways. Describe the similarities and differences perspectives be acting on a worker at the same time?
between the traditional approach and the human Explain why or why not. Whether you answered yes or
relations approach. Then describe the similarities and no to the previous question, explain the implications
differences between the human relations approach and for managers.
the human resource approach. 3. How do rewards increase motivation? What would
2. Compare and contrast content, process, and reinforce-
happen if an organization gave too few rewards? What
ment perspectives on motivation. would happen if it gave too many?
3. Explain how goal-setting theory works. How is goal set-
ting different from merely asking a worker to “do your
best”? Questions for Application
4. Describe some new forms of working arrangements.
1. Think about the worst job you have held. What
How do these alternative arrangements increase
approach to motivation was used in that organization?
motivation?
Now think about the best job you have held. What
approach to motivation was used there? Can you base
Questions for Analysis
any conclusions on this limited information? If so, what
1. Choose one theory from the content perspectives and are they?
one from the process perspectives. Describe actions that 2. Interview both a manager and a worker (or administrator
a manager might take to increase worker motivation and faculty member) from a local organization. What

views of or approaches to motivation seem to be in 3. Consider a class you have taken. Using just that one
use in that organization? Do the manager’s views class, offer examples of times when the professor used
differ from the worker’s? If so, how do you explain the positive reinforcement, avoidance, punishment, and
differing perceptions? extinction to manage students’ behavior.

BUILDING EFFECTIVE INTERPERSONAL SKILLS

Exercise Overview 4. ______ A job that’s routine without much change
Interpersonal skills refer to your ability to communicate from day to day
with, understand, and motivate both individuals and groups. 5. ______ Opportunity for advancement
This exercise gives you a chance to see whether the factors 6. ______ A nice title regardless of pay
that motivate you come primarily from you and your work 7. ______ Job responsibility that gives me the freedom to
itself or from factors that are external to you and the nature of do things my way
your work. 8. ______ Good working conditions (e.g., safe
environment, convenient cafeteria, etc.)
Exercise Task 9. ______ Opportunity to learn new things
10. ______ Emphasis on following rules, regulations,
Following is a list of 12 factors that contribute to job
procedures, and policies
satisfaction and motivation. To find out how important each
11. ______ A job that I can do well and succeed at
factor is to you, select a number from 1 to 5 according to the
12. ______ Job security; a job with one company
following scale:
1. ______ An interesting job that I enjoy doing 5 4 3 2 1
2. ______ A boss who treats everyone the same regardless Very Somewhat Important Not
of the circumstances Important Important
3. ______ Getting praise and other recognition and
appreciation for my work
Scoring: Next, the 12 factors are divided into two lists. For each factor, record the number (from 1 to 5) that you put in the
blank before it. Then add up each column (each column score should be from 6 to 30 points):

Which factors tend to be more important to you—internal

Motivating factor Maintenance factor (motivating) or external (maintenance)? The closer your col-
umn score to a total of 30, the more important that factor is
1. ______ 2. ______ to you.
3. ______ 4. ______
Adapted from Robert N. Lussier and Christopher F. Achua, Leadership:
5. ______ 6. ______ Theory, Application, and Skill Development, 4th ed. (Mason, OH: South-
7. ______ 8. ______ Western Cengage L earning, 2010), pp. 82–84.

9. 10.

11. ______ 12. ______
Totals ______ ______

BUILDING EFFECTIVE DECISION-MAKING SKILLS

Exercise Overview Exercise Background
Decision-making skills refer to the ability to recognize and Lee Iacocca started his career at Ford in 1946 in an entry-
define problems and opportunities correctly and then to level engineering job. By 1960 he was a vice president and in
select an appropriate course of action for solving problems charge of the group that designed the Mustang, and 10 years
or capitalizing on opportunities. This exercise allows you later he was a president of the firm. After being fired from
to build your decision-making skills while applying goal- Ford in 1978, he became president at Chrysler and eventually
setting theory to the task of planning your career. rose to the CEO spot, a job he held until he retired in 1992.

What’s really remarkable about Iacocca’s career arc—at least of clothing stores, partner in a law or accounting firm,
the upward trajectory—is the fact that he apparently had it or president of a university. Then again, it may be
all planned out, even before he finished college. something less lofty. Whatever it is, write it down.
The story goes that, while he was still an undergraduate, 2. Now describe a career path that will lead you toward
Iacocca wrote out a list of all the positions that he’d like to that goal. It may help to work “back”—that is, starting
hold during his career. Number one was “engineer at an auto with your final position and working backward in
maker,” followed by all the career steps that he planned to time to some entry-level job. If you aren’t sure about
take until he was a CEO. He also included a timetable for his the career path that will lead to your ultimate goal, do
climb up the corporate ladder. Then he put his list on a three- some research. Talk to someone in your selected career
by-five-inch card that he folded and stowed in his wallet, and field, ask an instructor who teaches in it, or go online.
we’re told that every time he took out that card and looked The website of the American Institute of Certified
at it, he gained fresh confidence and drive. He apparently Public Accountants, for example, has a section titled
reached the top several years ahead of schedule, but other- “Career Resources,” which includes information about
wise he followed his career path and timetable faithfully. As career paths and position descriptions for accounting.
you can see, Iacocca used goal-setting theory to motivate 3. Write down each step in your path on a card or a sheet
himself, and there’s no reason why you can’t do the same. of paper.
4. If, like Lee Iacocca, you were to carry this piece of paper
Exercise Task with you and refer to it often as you pursued your career
1. Consider the position that you’d like to hold at the goals, do you think it would help you achieve them?
peak of your career. It may be CEO, owner of a chain Why or why not?

SKILL-BUILDING PERSONAL ASSESSMENT

Assessing Your Needs 4. ______ I try to break away from restraints or
Introduction: Needs are one factor that influences moti- restrictions of any kind.
vation. The following assessment surveys your judgments 5. ______ I want to be the center of attention and enjoy
about some of your personal needs that might be partially having an audience.
shaping your motivation. 6. ______ I speak freely and tend to act on the spur of the
moment.
Instructions: Judge how descriptively accurate each of the 7. ______ I assist others whenever possible, giving
following statements is about you. You may find making sympathy and comfort to those in need.
a decision difficult in some cases, but you should force 8. ______ I believe in the saying that “there is a place for
yourself to make a choice. Record your answers next to each everything and everything should be in its
statement according to the following scale: place.” I dislike clutter.
9. ______ I express my opinions forcefully, enjoy the role
of leader, and try to control my environment as
Rating Scale much as I can.
5 Very descriptive of me 10. ______ I want to understand many areas of knowledge
and value synthesizing ideas and generalization.
4 Fairly descriptive of me
After responding to the questions, reflect on the kinds of
3 Somewhat descriptive of me
jobs and careers most and least likely to help you fulfill these
2 Not very descriptive of me needs.
Scoring: This set of needs was developed in 1938 by H. A.
1 Not descriptive of me at all
Murray, a psychologist, and operationalized by another
psychologist, I. W. Atkinson. Known as Murray’s Manifest
1. ______ I aspire to accomplish difficult tasks and main- Needs because they are visible through behavior, they are
tain high standards and am willing to work the following:
toward distant goals. 1. Achievement
2. ______ I enjoy being with friends and people in general 2. Affiliation
and accept people readily. 3. Aggression
3. ______ I am easily annoyed and am sometimes willing 4. Autonomy
to hurt people to get my way. 5. Exhibition

6. Impulsivity seem to have a different profile of needs underlying their

7. Nurturance motivations at different ages. The more any one or more
8. Order of these needs are descriptive of you, the more you see
9. Power that particular need as being active in your motivational
10. Understanding makeup.
For more information, see H. A. Murray, Explorations
To score your results, look at each question individually—
in Personality (New York: Oxford University Press,
the needs correspond one-to-one to the items on the assess-
1938); and J. W. Atkinson, An Introduction to Motivation
ment questionnaire.
(Princeton, NJ: Van Nostrand, 1964).
Although little research has evaluated Murray’s
theory, the different needs have been investigated. People

MANAGEMENT AT WORK
Engaged to Be Motivated
“I don’t mind people throwing darts at your odds of being engaged at work (and of thriving in your
well-being) have probably doubled. Have you had a job or
higher ed, but it doesn’t have to take the
internship that let you apply what you’ve been learning in
blame for everything.” college, worked on any projects that took a semester or more
—Philip D. Gardner, Director of Michigan to complete, or been involved in extracurricular activities? If
State University’s Collegiate Employment you’ve had the advantage of these forms of “experiential and
Research Institute deep learning,” you’re also twice as likely to be engaged and
thriving. Unfortunately, only 14 percent of graduates could
Fact 1: If you graduate from college, you’re more likely to answer yes to the first set of criteria and only 6 percent to the
get a full-time job than if you hadn’t. Fact 2: If you graduate second set. As for all six experiences, a mere 3 percent said
from college, you’ll probably enjoy higher lifetime earnings yes. On individual measures, although 63 percent said that
than if you hadn’t. Fact 3: If you graduate from college, a teacher had fired them up about a subject, only 32 percent
you’re less likely to be engaged in your work than if you had ever worked on a long-term project, and only 22 percent
hadn’t. had found mentors who encouraged them.
That’s right—less likely. To be fair, Fact 3 doesn’t reflect “It’s literally about higher education in general,” suggests
much of a difference: According to a Gallup survey released Busteed. “There’s something about the process and the
in 2018, only 28.3 percent of graduates are “involved in and experience that’s preventing graduates from getting to a
enthusiastic about” their work, compared to 32.7 percent place where they’re doing what they’re best at.” Busteed
of people who didn’t go beyond high school. Even so, suspects that, without strong mentorship, college students
Brandon Busteed of Gallup Education finds the survey fail to set clear career paths and, as a result, too many of
results “really stunning. Given that what we all expect out them fall into one of two traps: (1) getting stuck in jobs for
of college is something better,” he explains, “you’d think which they’re overqualified or (2) resorting to such “fall-
that college graduates are way more engaged in careers than back” career paths as law school and investment banking.
everybody else.” “I think we’re kind of caught up in preconceived notions
Does the apparent problem lie with colleges or with of what success should look like,” says Busteed, “and it’s
workplaces? Not surprisingly, the answer is both. Let’s start landing a lot of college graduates in the wrong place.”
with colleges. First of all, it doesn’t appear to make any Some educators agree. “The particular value of [the Gallup]
difference what kind of college a person went to—large or survey,” says Harold V. Hartley III, senior VP of the Counsel
small, public or private, prestigious or mid-tier public: The of Independent Colleges, “is that it looks at outcomes that
percentages not only of those engaged at work but of those are different from the outcomes that we typically look at—
“thriving” in all areas of personal “well-being” are roughly like did you get a job, what’s your salary, and those kinds
the same (with graduates of for-profit schools faring not of things.”
quite as well). Not surprisingly, however, many educators are
It would appear, then, that colleges of all types are failing unconvinced that colleges should bear the brunt of the
to provide the kinds of experiences that result in high levels survey’s findings. “There’s kind of a half-empty, half-
of workplace engagement. Have you, for example, encoun- full story here,” says Alexander McCormick, director of
tered a professor who cared about you personally, got you the National Survey of Student Engagement. He points
excited about learning, or encouraged you to pursue your out, for instance, that the survey classifies 55 percent
dreams? If so, you have been “emotionally supported,” and of the respondents as “not engaged” and argues that

although these people are not emotionally connected to succeed, and if it’s not there, no one can synthetically put
their workplaces, neither are they dissatisfied with them. it there.”
Philip D. Gardner, director of Michigan State University’s If a company wants to increase “motivation and engage-
Collegiate Employment Research Institute, adds that the ment in the workplace,” says the consultancy, it must “cre-
Gallup survey fails to account for differences in individual ate a climate or an environment in which people’s natural
goals and goal-oriented behavior. Highly educated people, abilities and internal motivations are allowed to come to the
he observes, don’t settle into jobs as quickly as most people, fore.” In fact, The Fortune Group operates on the assump-
and younger workers are less likely to consider work critical tion that “employees don’t perform because someone or
to their identities or well-being. something interferes with their desire or ability to per-
Mark Schneider, VP of the American Institutes for form.” Task interference, for example, “could be something
Research, a nonprofit organization that conducts social- the employee doesn’t have, such as proper resources, tools, or
science and behavioral research, contends that the Gallup training.” Another form of interference, consequence imbal-
survey reveals interesting correlations (between, for ance, occurs when employees are “doing the right things
example, college and workplace experiences) but falls short but aren’t getting recognition for it.” Like task interference,
in providing any causative explanations. Take, for example, it should be classified as “mismanagement” because it “cre-
a graduate who reports the following correlation: She had an ates an imbalance that interferes with people’s desire and/
internship at college and is engaged in her work. What if this or ability to perform.”63
graduate was personally motivated to find the internship
and is engaged in her work because she brings the same Case Questions
level of personal motivation to her job? The Gallup survey
1. Consider each of the following perspectives on moti-
suggests that there is a cause-and-effect relationship between
vation: needs hierarchy, two-factor theory, expectancy
the college experience (the internship) and the workplace
theory, equity theory, and goal-setting theory. How does
experience (engagement). The conclusion, however, does not
each of these perspectives depend on learned motiva-
necessarily follow because personal motivation may be the
tion? On personal motivation?
most significant factor in both experiences.
2. What about you? Which form of motivation—learned
A critical question, it would seem, remains unaddressed:
motivation or personal motivation—has played a greater
Which motivational behavior came first—acting on personal
role in your pursuit of your goals, whether in school, at
motivation (such as seeking the experience of the internship)
work, or in both areas? Given this assessment of your
or acting on learned motivation (such as applying the lessons
own experience with motivation, which of the motiva-
learned through the internship to the postgraduation
tional perspectives listed in Question 1 is most likely
workplace)? Even Busteed admits that the survey’s results
to help you in your work life? Whatever your answers
may suffer from a “chicken-and-egg problem.”
to these questions, be sure to give examples from your
Which brings us to the implications of the survey
own experience.
results for business. As we’ve already seen, the survey
3. The theory that too few students get the help they
is ultimately as much concerned with productivity and
need in setting clear career paths suggests that col-
motivation in the workplace as with workplace preparation
leges should provide more career counseling. However,
in college. According to Busteed, the survey’s findings
according to the National Survey of Student Engage-
provide “a formula for something that alters life and career
ment, only 43 percent of college seniors talked very often
trajectory. . . . It’s all actionable, by way of who we hire and
or often about career plans with a faculty member or
how we incentivize and reward.” The report thus suggests
adviser; 39 percent did sometimes, and 17 p ercent never
that colleges should do a better job of preparing students to
did. How about you? Have you sought career advice or
get jobs in workplaces in which they’ll be engaged—that is,
counseling from resources available at your school? Do
in which they’ll be working at something that they’re good
you plan to? Have you sought advice elsewhere? If so,
at and like for organizations that care about their work.
where elsewhere and why elsewhere?
Philip Gardner, for one, thinks that the problem reflects
4. The Gallup survey measured levels of engagement by
workplace experiences as much as higher-education experi-
asking respondents whether they agreed or disagreed
ences. “I don’t mind people throwing darts at higher ed, but
with several statements about postgraduation work
it doesn’t have to take the blame for everything,” he says, and
experiences. Here are six of those statements:
many researchers and consultants feel that employers should
focus more clearly on the personal motivation that each indi- • I have opportunities to learn and grow.
vidual brings to the workplace. According to The Fortune • My opinions seem to count.
Group, for instance, which provides personal-development • I have the opportunity to do what I do best every
training for businesses, “motivation is internal and personal. day.
Within each person, there has to be that drive or will to • I have the tools and resources I need to do my job.

• My supervisor encourages my development. [Note: One of these statements proved to be the stron-
• I know what is expected of me. gest predictor of workplace engagement among all of the
List these six statements in their order of importance to statements in the survey. Your instructor can tell you
you as probable factors in your satisfaction with a job. Be which one it is after you’ve drawn up and discussed your
prepared to discuss your priorities. list.]

You Make the Call

What Makes SAS a Great Place to Work?

1. Consider each of the following perspectives on motiva- 3. Consider the benefits that help make SAS a great place
tion: needs hierarchy, two-factor theory, and reinforce- to work in terms of incentive reward systems. In what
ment theory. How would each of these perspectives sense, for instance, can benefits be regarded as an
contribute to an understanding of why employees at incentive reward system, whether as an incentive pay
SAS are motivated and engaged? plan or as some other form of incentive? What, if any,
2. Note that all but one of the perspectives in Question 1 advantages does it have over the various types of incen-
fall into the content category. What about process per- tive reward systems mentioned in the text? What disad-
spectives—expectancy theory, equity theory, and goal-set- vantages does it share?
ting theory? Answering the same question with regard to 4. In both this chapter and previous chapters we have
process perspectives would probably prove a little more examined firms that consistently make various lists
difficult. Why? In other words, explain what this exer- of “best place to work.” What strategic advantages do
cise might tell us about some basic differences between these firms enjoy? Why don’t more firms pursue this
content and process perspectives. kind of recognition?

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