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Motivation & Rewards (THEORIES OF MOTIVATION (NEED THEORIES
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Motivation & Rewards
Motivation: a factor inducing a person to act in a particular way; enthusiasm (Oxford English Dictionary, 1999)
- a set of variables that explain: direction, amplitude, persistence (Campbell & Pritchard, 1976)
intrinsic motivation: behaviours engaged for their very own sakeextrinsic motivation: behaviour engaged by the prospect of a gain/loss
CONNECTION TO PERF
Performance = f (ability X motivation)
ability = aptitude, skill, and understanding of task
motivation = choice to expend effort, choice of degree of effort to expend, choice to persist
(*SANCHEZ-RUNDE & STEERS, 2003)
- cultural differences are fundamental contextual variables that influence both individual and env't characteristics that can influence work values, motivation and job attitudes
- motivation theories do apply across culture but they vary due to contextual differences
Cultural diffs have strong influence on motivation:
- individual need
- cognitive processes governing effort determination
- interpretation and responses to incentive
- output restriction mechanisms
MECHANISMS
Incentive effect:
- motivates EEs to increase their effort
- based on motivation theories, esp expectancy, goal setting and reinforcement theory # #
Sorting effect:
- attracts and retains high performers
- low performers tend to leave
- attracts EEs who have high need for achievement and low risk aversion
THEORIES OF MOTIVATION
NEED THEORIES
- describe universal categories of needs
- people are motivated to fulfil those needs
Maslow's Hierarchy (Maslow, 1954)
Physiological - Safety - Social - Esteem - Self-actualization
(Alderfer, 1972)
Existence - Relatedness - Growth
CRITIQUES
- does not allow for individual differences (assumes everyone has same needs and that everyone will react to factors in the same way)
- lack of empirical support for Maslow's hierarchy - only empirical support for 3 levels, and no support for hierarchy
CONTRIBUTION
- identified specific needs and motivators
REINFORCEMENT THEORY
(Skinner)
- internal processes are not important
- behaviour is trained through reinforcement
Stimulus -->
a) Desirable response -- Reinforcement
b) Undesirable response -- Punishment
CRITIQUES
- cannot make accurate prediction of behaviour if ignore cognition (Landy & Becker, 1987)
e.g. ppl change behaviour in anticipation of new reinforcement; ppl maintained changed behaviour after aware is eliminated
- may only be useful for training non-conscious, discrete behaviour
e.g. habits vs. conscious choice, tardiness vs turnover
CONTRIBUTION
- demonstrated behaviour can be modified through reinforcement (developed reinforcement schedules and other useful practices)
EXPECTANCY THEORY (VIE)
(VROOM, 1964)
- ppl are motivated by valued outcomes and their ability to obtain them
Valence: is the reward valuable to me?
Instrumentality: belief that perf will be rewarded
Expectancy: belief that effort will result in good perf #
CONTRIBUTION
- introduced "expectancy" and "valence"
- rejected behaviourist view - suggested that ppl can act contrary to reinforcement theory if valence is high enough #
CRITIQUES
- predictor variables (VIE) are highly complex and poorly understood
- model cannot predict behaviour when there is not time to make the calculations or when many courses of action are available
EQUITY THEORY
(ADAMS, 1965)
- ppl are motivated to est. equity b/w themselves and others
- compare their ratio of inputs/outcomes to that of others
- outcome can be tangible or intangible (e.g. recognition, salary)
- referent other can be person, group of ppl or category
All variables are based on EE's own perceptions
Possible actions to restore equity:
- alter inputs, alter outcomes, cognitively distort input/outcomes, leave the exchange relationships, take actions to change input/outcome of referent other, change referent other
CONTRIBUTION
- introduced social comparison theory to motivation theory
Social Comparison Theory
- in the absence of objective standards, ppl use social comparisons to evaluate their own opinions and abilities
CRITIQUES
- unclear how ppl choose their referent
- unable to predict which inequity-reducing action a person will take
- prediction for overpayment not supported by research
GOAL SETTING THEORY
(Locke & Latham)
- ppl are motivated by the goals they set
Goals --> Action --> Perfgoal: desired outcomes in terms of perf to be attained on a task
- must specify level of perf to be attained, must be specific and difficult, must be accepted by EE #
CONTRIBUTION
- identified a factor that is easily managed and has clear associations to overall perf
CRITIQUES
- goal setting can inhibit the person's own initiative (Staw & Boettger, 1990)
- goal setting can reduce extra-role behaviour, such as spontaneous helping esp when goals are difficult and rewarded by pay (Wright et al, 1993)
PAY
variable pay: amt based on perf (e.g. bonus, commission) - Pay for perf (PFP) of Perf-related pay (PRP) #
Individual PFP
- individual incentives: pay based on objective outcome (piece rate, sales commission)
- merit pay: base salary increase based on perf review; skill-base pay
Strengths
- clear line of sight can strengthen incentive effect, attractive to high performers
Weaknesses
- reduces group perf by reducing cooperation/cohesion by increasing competition
(*MARSDEN & RICHARDSON, 1994)
- purpose was to assess if perf pay scheme impacted EE motivation + perf
- fewer than 15% perceive any positive change; widely judged to be unfair
Why?
- expectancy theory - 3 conditions were not all met for a large number of staff
- goal setting theory - 31% believe the nature of their job made it hard for them to ever achieve high ratings & 46% said they have insufficient control over work to make PFP sensible; no commitment to new and more appropriate goals
--> stronger motivation doesn't always translate to better perf - other impediments: poor mgt, inadequate training or obsolete equipment
Group PFP
- gain-sharing: bonus based on meeting specific objectives (e.g. profits, safety levels, customer sat)
- profit-sharing: at org level, based on meeting profitability targets
- stock-plans: stock purchase, stock options
Strengths
- improves group perf by encouraging cooperation and citizenship behaviour
Weaknesses
- unclear line of sight can reduce incentive effect, not attractive to high performers, benefits diminish as group gets larger
MYTHS (*PFEFFER, 1998)
- labour rates (wages/time) ≠ labour costs (wage/ production)
- you can cut labour costs but cutting labour rate (questionable quality/productivity)
- labour costs are sig portion of total costs
- low labour costs are a sustainable competitive strat (might neglect quality, service, delivery, innovation)
- individual incentives is most effective motivation method
- ppl primarily work for $ (e.g. SAS - no bonuses but stocks, family-friendly env't, good benefits, good equipment)
- argues against individual incentives and for collective pay systems
- highlights the importance to focus on what ppl do/produce, rather than on what you pay
- pay cannot substitute a working env't high on trust, fun, and meaning
base pay (e.g. salary, hourly rate)
PERFORMANCE FOR PAY
OBJECTIVE perf measures
e.g. items produced, sales madeStrengths
- objective and reliable, high incentive intensity (high instrumentality and expectancy)
Weaknesses
- not avail. for most jobs, deficient measure, unintended consequences (e.g. increased production but lower quality) #
SUBJECTIVE perf measures
e.g. perf rating scaleStrengths
- rating scales can be developed for any job, can measure wide range of desirable behaviours
Weaknesses
- low inter-rater reliability, often little variance --> so no clear link w/ reward, forced distribution is imperfect
CHALLENGES
- higher bonus does not always lead to better perf
- researchers found that ppl receiving a higher bonus performed worse than those with a lower (only when task required cognitive vs. mechanical skill)
--> concluded high bonus was stressful and distraction
(*CERASOLI et al, 2014)
- Self-determination theory - dominant theory of intrinsic motivation - if you enjoy a task, you will have direction, intensity, and persistence
- intrinsic motivation related to perf, and is strong for quality perf
- relation is moderated by incentives; stronger with indirectly perf- salient incentives than directly perf-salient incentives
- extrinsic motivation applies best w/ quantity based work
.: orgs should take a balance approach to motivational intervention #
(*RYNES et la, 2004)
- discrepancies b/w what ppl say and do
- pay has strong motivational potential however is dependent on individual (personality + perf level) & situational factors (what others are being paid)+ how it is administered
- pay more important for extroverts
- PFP scheme most imp to high academic achievers, high perf EE, high self-efficacy + high need for achievement
#
TAKEAWAYS
- motivation is broad, ill-defined concept, which is best tested w/ multiple middle-range theories
- reward systems must be carefully designed to be effective
- financial rewards are not the only way to attract and retain
4 Principles
- variability in pay options
- motivational effect of money is not linear ($100 more motivating for lower earners)
- ppl judge fairness of pay by relative terms
- importance of pay differs based on objective (attraction, retention, performance)
.: use multiple motivators (e.g. perf based pay and challenging work
- take complaints seriously
- do not fall below market
- need strong PFP relationships
- exec pay should move in same direction and proportionate rates
- monitor responses and evaluate current systems, turnover rates of high performers