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1.1 Evolution of the HRM function
1.2 Role of the HR function
1.3 Models of HRM
1.4 HRM and personnel management
1.5 HRM and management theory


• Explain the meaning and evolution of HRM
• Identify the factors that have shaped modern HRM in organizations

HRM practices emerged during the industrial revolution in the 18th century when factories
employed a large number of people to operate machines. Recruitment, payment and training
became specialized activities, which required specialized people to do them for the

Since then, the HRM function has evolved both in its functions, roles and even in terminologies.
For example:
- Personnel administration
- Manpower management
- Personnel management
- Human resource management
- Strategic human resource management

This change in terminologies is a reflection of the paradigm shifts in business life.

“A paradigm refers to a particular way of thinking about, seeing and doing things”

Kathryn McKee, cited in Brewster (2000), has identified four periods in the evolution of HRM
1) Mechanistic period – This is the period from the 1900’s – 1950’s when manufacturing
was the driving force in industry. The main focus was on administrative functions such as
recruiting, dismissing, paying, dealing with labour unions and keeping records.
Management of people was guided by the principles and ideas of scientific management
advocated by Fredrick Taylor and Henri Fayol. As such efficiency was more important
than human relations

2) Legalistic period – This is the 1960’s – 1970’s which was characterized by legislation in
the civil, social, political and employment areas. This involved regulation of the
employment and labour markets through laws and policies such as Africanization and
Kenyanization in Kenya, Equal Opportunities Acts in the USA and many others to
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regulate labour unions and employment contracts. This period also ushered the
computerization of HR information.
3) Organistic Period –This is the period of organizational change associated with the
1980’s. Globalization as a result of technological change led to mergers, acquisitions,
downsizing and rightsizing of organizations. Workforce became more diverse as a result
of immigration, expansion of cross-border businesses, more educated workers with
increased awareness. These changes required specialist personnel systems.
4) Strategic period – 1990’s – This is a period of more complicated organizations with
complex structures and networks. The hallmarks of this period are increased competition
due to globalization hence the need for survival. Organizations adopted strategic
planning. The role of HR was elevated to the highest level in the organization reporting to
the CEO and the Board of Directors.

The future in the 21st century is predicted to be catalytic (a catalyst for change and the key for
competitive advantage due to:
- Cross border employment
- Cultural mix
- Use of part time workers
- Innovative compensation practices
- Flexi time
- Team work

Reasons for Growth of Human Resource Management

Technical factors:
• Industrial revolution – changes in the methods and techniques of production, which
required new principles, and methods of dealing with them.
• New experiments of social scientists - parallel work by social scientists, anthropologists
and psychologists e.g. Taylor, Fayol, Mayo and McGregor influenced how industries
managed workers.
• Growth in the size of organizations – increased production, number of workers needed
specialized departments to handle worker’s issues.
• Labour Unions – after World War 1, trade unions developed in response to poor working
conditions, exploitation, politics etc. Organizations were forced to cooperate.

Cultural and social /political factors:

• Better workers’ education
• Immigration – rural-urban, inter - country.
• Labour mobility- across industries and organizations
• Composition of labour in terms of gender, racial and age
• Liberation/democratic movements e.g. independence, welfare states e.g. Russia
(communist countries

• Change in managerial outlook – seeing labour as a partner rather than an enemy.
• Change in form of business organization, mergers, acquisitions, MNC

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• More complex production techniques.
• New policies, strategies etc due to globalization, competition etc.
• Contribution of the social sciences – views and theories on human relations have been


Relationship between personnel management and other organization’s functions

• Distinguish between line and staff functions
• Explain the staff functions of the personnel department
• Discuss the sources of conflict between line and staff managers
• Suggest how such conflicts may be overcome

Line Functions
Refers to those functions that contribute directly to the accomplishment of the basic objectives of
the firm. For example in a manufacturing firm, production, quality control and procurement may
be seen as line functions.

Staff functions
Refers to those functions of the organization that help the line to work most effectively in
accomplishing the primary objectives of the organization. These may include HRM, research and
development, purchasing and supplies, public relations and finance.

The relationship between staff functions and other organizational functions is advisory and
consultative. They investigate, research, and give advice and guidance. It is important to note
that within even a staff department there are line authorities – manager- subordinate. Hence a
staff function also has line authority within it. Staff function occurs only in relation to other
functions/departments in the organization.

Importance of understanding line and staff Authority

• Staff sells ideas, persuades, advocates, and acts as change agents. e.g.
auditors or economists who advice the CEO
• Line managers make decisions, command and issue instructions
through the chain of command.

Roles of the HRM function

The overall role of the HR function is to provide support and services to line management to
enable the organization achieve its core objectives. These roles should be performed without
appearing to usurp or police line management. HR should not force findings, ideas or
suggestions on unwilling line managers but should sell, market, persuade and consult by acting
as consultants.

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Role of the HR professional

The HR specialist functions as a business partner, delivers effective people strategies, upholds
ethical standards, manages change and is committed to continuing professional development.
Some roles are: enabling role, guidance role, support role, facilitating role, empowering
role, interventionist role, business partner, strategist role, innovation role and internal
consultancy role.

Activity: What are the likely sources of conflict between line and staff employees?


At the end of this topic you should be able to:
 State and explain the models of HRM
 Discuss the relationship between Guest’s soft and hard HRM approaches and the Michigan
and Harvard models of HRM

HRM models
Scholars in HRM have developed various models or theories to explain the concept and practice
of HRM. Some of these models are:

(i) The matching model of HRM by Fombrun et al (1984) also known as the
Michigan Model
(ii) The Harvard Model by Beer et al (1985)
(iii) The soft and hard models by Guest (1987)

The Matching Model of HRM (Fombrun et al 1984)

In this model the writers propose that HR systems and the organization structure should be
managed in such a way that they are congruent or match with the organizational strategy – hence
the name matching model. The writers suggest that the HRM function should be linked to the
line functions by doing the following:
• Providing the business line with HR information
• Ensuring that HR mangers give HR issues equal attention with other functions
• Measuring the contribution of the HR function at the strategic managerial and operational
• Match available HR to existing jobs
• Appraise performance
• Reward good performance
• Develop high quality employees
• This model is instrumental and calculative and emphasis is on the term ‘resource’
• Aligned to the ideas of Fredrick Taylor on productivity and cost effectiveness

The Harvard Model

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Beer et al (1984) developed this model at the Harvard school. The model is based on the belief
• People must be seen as potential assets rather than merely as a variable cost
• HRM belongs to line managers
• HRM involves all management decisions
• Line managers should accept more responsibility for ensuring the alignment of
competitive strategy and HR policies
• Recognizes the importance of trade offs between the interest of employers and employees
• The context of HRM includes employee influence and participation
• HRM is composed of policies that promote mutuality of goals, influence, respect,
rewards and responsibility
• HRM outcomes are commitment, congruence and cost-effectiveness.

The soft and Hard HRM Models

Guest (1987) identified two versions of HRM which he referred to as soft and hard.

Soft HRM
This model proposes that:
• Employees are not like any other resource because they think and react
• Employees should participate in decision making
• Employees need opportunities for personal growth and advancement
• Employees needs for empowerment and influence should be consistent with the overall
business strategy and management philosophy
• HRM should encourage high employee commitment to the organization
• There should be high workforce flexibility and adaptability

From the foregoing soft HRM is more developmental oriented with a humanistic focus based on
explicit statements about the value of employees. Employees are seen as active partners who are
creative and innovative rather than passive inputs. An organization practicing soft HRM would
be expected to stress the importance of employee commitment, trust and loyalty. The values of
soft HRM are consistent with the Harvard model.

The Hard HRM Model

The hard HRM model is more consistent with the Michigan Model developed by Fombrun et al
(1984) which emphasizes matching employees with the organizations
business strategies. Legge (1995) refers to it as strategic HRM. The model proposes that:
• Employees are just like any other factor of production in the input – output equation
• Need to improve employee utilization by using them cost effectively
• Employee interests are the same those of the organization (unitarism)
• Concerned with developing direct links with individuals rather than trade unions
• Employees are more involved in improvement of quality and productivity rather than
business decision making

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• Emphasis is on the term resource which implies the deployment of HR in a calculative
and instrumental way for economic gain
• Hard HRM is associated with efficiency seeking devices such as assessment of HR and
performance related pay
• Investment in training and development must fit with the firms business strategy
• Hard HRM assumes that the needs of the firm are paramount and increasing productivity
is the managements’ principle reason for improving efficiency. It also assumes that
organizational needs come first.

The Michigan Model or matching model is consistent with the hard HRM model because it is
based on strategic control and systems fro managing people.


At the end of this topic you should be able to:
 Identify the practices, beliefs and values that distinguish personnel management and HRM

Writers have debated the difference between personnel management and HRM. While both
concepts are concerned about the management of people in organizations, there are fundamental
differences in their beliefs, values and practices. Many writers have asked if there is a
difference between HRM and personnel management (Guest 1989; Guest and Sisson, 1993;
Armstrong, 2000). Armstrong (1999) for instance observes that although HRM has been
perceived just as another term for personnel management, it has the virtue of emphasizing
treating people as a key resource and the way they are managed is seen as a direct concern of top
management and part of the strategic planning processes of the firm.

Torrington (1989) argues that HRM are similar but only to some extent in that both are derived
from the organization’s overall strategy, they both provide guidance and support to line
management and they develop people and match them to the right jobs. Personnel management
has even been described as same as the soft version of HRM. However, that appears to be where
the similarity ends.

The differences are highlighted in the table below:

Personnel Management Human Resource Management

• Is instrumental, utilitarian and • HRM has a strategic approach
practical where employees needs are
• Mostly concerned with the integrated with the firm’s overall
administration and implementation corporate strategy
of policies and procedures • It is proactive by constantly seeking
• Tends to be reactive and diagnostic to discover new ways of HR
by responding to changes in utilization and giving the
employment law, labour market organization a competitive edge
conditions and trade union actions • Recruitment and selection strategies
• Imposes compliance with company are designed to get people who can

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rules and procedures rather than fit in with the firm’s strategies
loyalty and commitment to the firm • Head of the HRM function sits on
• It has short-term perspectives the board of directors
• Is concerned primarily with hourly, • HR managers are expected to
operational and clerical employees contribute to productivity, quality
• Has a pluralistic frame of reference improvement and stimulate creative
where conflicts of interest are thinking among employees
inevitable and management seeks • Seeks to encourage flexible work
ways to resolve, negotiate and attitudes and the acceptance of new
balance demands of various groups techniques
• Establishes an organizational
culture conducive to employee
commitment, trust and cooperation
• HRM has long-term perspectives- it
seeks to integrate all human aspects
with the organization goals
• HRM has a unitaristic approach
where direct communication with
individuals is preferred over the
• Enhancement of teamwork and
participation in decision making
• Encouragement of employees to
acquire long term capabilities rather
than only competence at current


• Explain the contribution of management theory to HRM

The development of management thought can be classified into:

• Scientific management movement
• Human relations movement

The practice of management can be traced to the beginning of man. Egyptian, Greek, Roman
and Chinese civilizations all have records indicating the importance of management. (The
writings of Sun Tzu on the ‘Art of War’, written 2500 years ago are a lesson on strategic

In Greece, Socrates the famous philosopher observed that the management of private affairs such
as households is not different from the conduct of public affairs except in magnitude.

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The biblical Moses used the Principle of delegation and hierarchy of command to manage the
Israelites during the exodus. (Exodus 18: 1-27).

The Roman Catholic Church over the centuries has effectively used the principles of division of
labor and hierarchy of authority. The Roman empire colonized many parts of the world for many
centuries by effectively using basic management ideas such as scalar principle and delegation of

Niccolo Machiavelli in ‘The Prince’ gives relevant ideas on how to develop and use management
skills. He suggests to ‘The Prince’ ideas on – consent of the majority, inspiration of people to
greater achievement, offer of rewards and incentives as well as manipulation and taking
advantage of all opportunities.


The above early practices of management, however, do not give much insight
into the principles of management as they are not organized and the relationships
among various variables are not explained. The knowledge is based on trial and
error and on experience rather than organized scientific knowledge.

Scientific Management

Changes in economic and production patterns during the industrial revolution led to a few
practicing managers to examine the causes of inefficiency in production. It is these basic studies
that led to a system of management known as scientific management.

The Thoughts of Frederick Taylor (1856-1917)

Taylor, an engineer in an American steel firm was concerned about the best methods of doing
jobs. He saw the main problem as efficiency of workers in production. He believed there is one
best way of doing a job.

His findings were:

• Workers deliberately restricted production in their daily work due to fear of
unemployment and lack of piece rate system.
• Lack of work rationalization, hence overlapping of jobs. The method of working was also
too complicated.
• Due to poor remuneration, workers formed themselves into groups and labour unions to
press for better wages.

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• Management left the initiative of working methods to the ingenuity of workers (rule of

To solve the above problems, Taylor suggested the following principles to guide management.
• Each worker should have a clearly defined daily task.
• Establish standard conditions to ensure the task is more easily accomplished e.g. work-
study and motion studies
• High payment for successful completion of tasks and none or lower payment when
standards are down. He believed money was a major motivator. (Incentives)

For management, he suggested: -

• The scientific selection, education and development of workers.
• Friendly, close cooperation between management and workers.
• Managers should take more supervisory responsibility, arguing that
workers preferred to be given a definite task with clear-cut standards.

 He emphasized planning and greater control by managers (management
 He believed adoption of scientific approach to managing would lead to
prosperity for both managers and workers (performance management?)
 He believed conflict about how to divide profits was retrogressive and
unproductive (unitarism?)
 Wages should be scientifically determined and should not be left to the whims
of managers or power of trade unions (job analysis and job evaluation ?)

The concepts/ideas advanced by Taylor are not far from the fundamental beliefs
of the modern manager. A number of post Taylor studies are found in the literature e.g. The
Hilbreths, Gault, Emerson, and Filene. They all attempted to improve on Taylor’s ideas.

Contribution of Scientific Management to HRM

• What are the benefits and weaknesses of scientific management?
• To what extent has scientific management contributed to our understanding of HRM

Benefits of scientific management

• Its rational approach to organization of work enabled tasks to be
measured with accuracy (structures, systems and procedures)
• Task measurement and processes provided useful information on
which to base improvement on working methods (job analysis and
job evaluation)

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• Enabled employees to be paid by results and to take advantage of
incentive schemes (performance management)
• Stimulated management into adopting a more positive role in
leadership at the factory level (management control)
• Contributed to major improvements in physical working conditions.
• It provided the foundations on which modern work study and other
quantitative techniques are based.
• Improvement of working methods brought enormous increases in

Weaknesses of Scientific Management

• Reduced the role of workers to that of rigid adherence to methods and
procedures over which they have no discretion.
• Led to fragmentation of work because of emphasis on analysis and
organization of individual operations, hence boring and repetitive jobs.
• Generated a ‘carrot and stick’ approach to the motivation of employees
enabling pay to be geared tightly to output.
• It put the planning and control of workplace activities exclusively in
the hands of management, alienating workers.
• Ruled out any realistic bargaining about wage rates since every job
was measured, timed and rated scientifically.

Human relations school of thought

• Explain the contribution of Elton Mayo to the development of HRM
• Discuss the application of McGregor’s theory Y and theory X to the management of
• Discuss the role of motivation theories to HRM

While the scientific management theorists were more concerned with the mechanics and
structure of organization, the human relations school of thought was more concerned with the
human factor i.e. people and their relationship with the organization, fellow workers and the

The emergence of industrial psychology in 1913 provided the impetus in the studies on human
problems in organizations.

The works of Elton Mayo (1880 – 1949)

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Elton was an Australian practicing psychologist at Harvard University. He carried out
experiments at the Hawthorne Plant of Western Electric over a period of time and his findings
can be summarized as follows:-

• Individual workers cannot be treated in isolation but must be seen as members of a group.
• The need to belong to a group and have status within it is more important than monetary
incentives or good working conditions.
• Informal groups at work exercise a strong influence over the behaviour of workers.
• Supervisors need to be aware of these social needs and cater for them if workers are to
collaborate with the official/formal organization rather than work against it.

The studies proved that interpersonal and group values are superior to
managerial and individual values. Managers who do not have the
enthusiastic support of the groups they supervise will be unable to motivate
individual members to a significant degree.

Assumptions about people

To understand the human factor in organizations, assumptions made about people need to be
understood especially in the superior-subordinate relationship.

Douglas McGregor (1967)

McGregor’s theory X and theory Y are a set of assumptions about people. After observing the
actual practice of managers, he proposed that they were operating on two levels.

Theory X
 The average person has an inherent dislike for work and will avoid it if
 Because of dislike for work, people must be coerced, controlled, directed and
threatened with punishment to get them to work.
 The average human being prefers to be directed, wishes to avoid
responsibility, has limited ambition and wants security above all else.

Theory Y
• The use of physical and mental effort in work is as natural as play or rest.
• People will exercise self-direction and self control in the service of objectives to
which they are committed.
• Commitment to objectives is a function of the rewards associated with
• The average human being learns under proper conditions not only to accept but to
seek responsibility.

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• The capacity to exercise a relatively high degree of imagination, ingenuity and
creativity in the solution of organizational problems is widely and not narrowly
• Under conditions of modern industrial life, the intellectual potentialities of the
average human being are only partially utilized.


The theories of motivation can be classified into content and process theories.
Content or needs theories: These are the theories that focus explicitly on the content of
motivation in the form of fundamental human needs. They are more concerned with the
quantitative aspects of motivation i.e. what motivates people and what people seek in their work.
 Maslow’s Hierarchy of needs theory
 Herzberg’s two-factor theory
 McClellands three basic needs
Process or contemporary theories of motivation: These are the theories which attempt to
develop understanding of the psychological processes involved in motivation. They are more
concerned with the qualitative aspects and the dynamics of motivation i.e. how people are
motivated and how rewards influence behaviour. They focus on the why and how of motivation.
o Latham and Locke’s goal-directed theory
o Porter and Lewler’s expectancy theory
o Adams equity theory
o Bandura’s self-efficacy theory

Maslow’s Hierarchy of Needs (1943)

Maslow was a psychologist and his theory has found wide application in many fields including
management. He proposed that:
 Behaviours of human beings are motivated by needs.
 Individual needs can be classified into 5 broad categories.
 These 5 categories operate in a hierarchical manner, flowing from low
order to high order needs as shown below:

High order needs

Social status

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Physiological needs
Low order needs

Physiological, safety and social needs are referred to as lower order or deficiency needs, because
the absence of them make individuals deficient and existence as a human being is threatened. On
the other hand, esteem and self-actualization are referred to as high order needs or growth needs
as these make an individual become better at doing what they are expected to do: gain control
and mastery over their environment in terms of technology, services etc.

Maslow’s theory of motivation therefore states that: “when a lower order need is satisfied, the
next highest becomes dominant and the individuals attention is turned to satisfying this higher
need.” The most difficult need to satisfy is that of self-fulfillment. Psychological development
takes place as people move up the hierarchy of needs, but not necessarily in a straightforward
progression. The lower needs still exist even if temporarily dormant as motivators, and
individuals constantly return to previously satisfied needs.

The lowest unsatisfied need in the hierarchy is the one that motivates behaviour e.g. a deprived
individual without basic needs will be directed towards finding food. The need for safety is
dormant at that time. A satisfied need does not motivate behaviour. Once satisfied, it ceases to
be a motivator, instead the next higher level need becomes active and motivates behaviour.

Application of Maslow’s Hierarchy of Needs Theory.

Physiological needs : Involves mainly payment of wages and salaries to enable people
pay for their basic needs of food shelter and clothing.

Safety needs: Provision of protective clothing, insurance and medical cover, pension
schemes, housing and transport (in relation to safety), and job security.

Social needs: Promoting family feeling, intimacy and closeness, use of first names, to
break formality and reduce social distance, sharing facilities e.g.
cafeterias, sports club etc, casual dressing to identify with each other and
recognition of trade unions.

Esteem needs: Supporting education, delegation of responsibility, titles and other status
symbols, fringe benefits e.g. Cars; bonus; shares; office size and

Self fulfillment needs: This is the apex of human needs and involves the need for
realizing ones potentialities, continued self-development, feelings of
accomplishment and attainment and being creative in the broadest sense

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possible. Organizations can facilitate and create an environment in which
individuals can realize their potentialities e.g. writing, inventions,
occupying important positions etc.


 There are limits to how much organizations can provide to meet these needs as
they are limited by resources
 Esteem needs are mainly applicable to managers as they sometimes make
important business deals informally through informal networks such as clubs.
As such, status symbols become important. It is also notable that as one moves
up the ladder, fewer people benefit.

Research findings have shown that:

 Managers generally have high order needs compared to those at lower
 Employees in developed countries generally have higher order needs than
those in poor countries.

It appears however, that Maslow never considered the above dimensions as he was
concerned with individual employees.


Herzberg (1959) conducted a study, which focused on job satisfaction primarily to find out the
factors associated with job satisfaction. He collected data from a sample of 203 accountants and
engineers based in Pittsburg, USA.

From these findings he proposed that human beings have two basic needs;
 The need to avoid pain and survive.
 The need to grow, develop and learn.
He also found that factors associated with feelings of happiness or satisfaction were concerned
with the job itself while those associated with dissatisfaction were related to the environment in
which the job was done.

He came up with two sets of factors from which the theory was coined. Different
terminologies have been used to refer to this theory.

Satisfaction-related factors

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• Satisfiers
• Motivators Motivators
• Job content factors
• Intrinsic factors

Dissatisfaction related factors

• Dissatisfiers
• Hygiene factors Hygiene or maintenance
• Job Context factors
• Maintenance
• Extrinsic factors

Herzberg’s findings showed that motivation can be explained by two factors:

A group of needs which he called hygiene or maintenance needs as they serve to

remove dissatisfaction. They are related to the job context e.g.

Supervision, company policy and administration, peer relations, working, conditions, status, job
security, pay, status, job title and job security. He explained that if these factors exist, then there
is no dissatisfaction, if they do not then dissatisfaction results, but they are not motivators as

A second group of needs he called satisfiers or motivators and these are related to the job
content. They tend to increase job satisfaction e.g. achievement, recognition, work itself,
responsibility, advancement and possibility of growth.

Application of Herzberg’s two-factor theory- Job enrichment and job enlargement

Herzberg suggested that jobs should be made more interesting and challenging so as to motivate
employees. A great deal of interest has been directed at job satisfaction over the last decades as
a popular technique for increasing employee’s motivation. The concept of job enrichment has
been found to provide employees with an opportunity to:

 Perform more challenging and meaningful work.

 Utilize knowledge and skills more fully.
 Assume more authority and responsibility for planning, organizing,
directing and controlling of work.
 Receive feedback on performance.
 Grow and develop

Principles of Job Enrichment.

 Removing controls while retaining accountability

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 Giving a complete unit of work
 Giving more authority
 Giving regular feedback to employees
 Giving new, difficult and challenging tasks


This theory assumes that employees are only motivated by enriched jobs and that every
employee desires an enriched job.
 In your view are these assumptions true?
 What are the limitations of job enrichment as a motivator?

Limitations of Job Enrichment

Research findings have shown that not all employees are motivated by job enrichment as some:
• Are unable to tolerate responsibility.
• Dislike complex duties.
• Uncomfortable with group work.
• Dislike relearning new skills.
• Prefer security and stability.
• Uncomfortable with supervisory authority
• Skills are not adaptable.
• Prefer to quit their jobs.

For organizations, enriched jobs may result in the following problems

• Supervisor’s roles may be reduced because of shared responsibility hence causing
• Enriched jobs may increase pay dissatisfaction because of increased responsibility.
• Costs in terms of training and development, new technology and more equipment e.g.
computers may increase.
• Unions may oppose some job enrichment efforts for fear of loss of employment or
decreased membership due to reduced desire to join unions by satisfied employees.


Process theories of motivation were proposed as alternatives and to fill the gaps not explained by
the content theories. Process theories are more concerned with the cognitive antecedents that go
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into the motivation process. This include: expectancy theory by Victor Vroom (1964) and the
Porter-Lawler Model (1968); Equity theory by Stacy Adams and Attribution theories and others.
In this section we shall only discuss a few of these.

Expectancy Theory of Motivation

Victor Vroom developed this theory in 1964 as an alternative to the content theories of
motivation. It refers to any situation or context where people have expectations from whatever
they do. It states that “motivated behaviour is increased if a person perceives a positive
relationship between effort and performance – i.e. the outcome.

Based on this theory, extrinsic financial motivation works only when if the link between effort
and reward is clear and the value of the reward is worth the effort.

Managerial Implications of Expectancy Theory.

 Strengthen employees effort and performance expectations by providing resources
such as training, that enable employees to perform.
 Strengthen performance–outcome–rewards by linking performance with reward
e.g. pay. Managers should be consistent and transparent about criteria used for
 Match rewards with employee’s performances.
 Recognize employee’s ability and ensure that it is used optimally.
 Provide employees with opportunity to perform e.g. enabling environment,
resources, etc.
 Develop appropriate procedures for evaluating employee performance by
measuring actual performance, aptitude and criteria for promotion.

Equity Theory of Motivation

This is a process theory advanced by Stacy Adams (1968). Equity refers to perception of
fairness and justice in the treatment of people. If people feel that they are not being treated
equitably, they feel aggrieved and this grief will affect their levels of motivation in different

In the workplace, employees compare themselves with their peers in terms of their contribution
to the organization and in relation to what they get from the organization. They compare their
ratio of inputs and outcomes with that of another person.

Inputs: refer to the contributions made by an individual e.g. effort – both physical and mental,
time, education, training, experience, loyalty, useful contacts age, gender etc..
Outcome: refers to what is received in return for effort e.g. salary, fringe benefits, travel
allowances, medical insurance cover, status symbols, autonomy, recognition, friendly
environment etc.

Examples of ratios of outcomes to inputs

(i) Outcomes of ‘A’ = Outcomes of ‘B Satisfaction

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Inputs of ‘A’ Inputs of ‘B’ = (Equity)

(ii) Outcomes of ‘A’ < Outcomes of ‘B’ = Underpayment

Inputs of ‘A’ Inputs of ‘B’ (Inequity)

(iii) Outcomes of ‘A’ > Outcomes of ‘B’ = Overpayment

Inputs of ‘A’ Outcomes of ‘B’ (Inequity)

Reactions of ‘A’

 In situation (ii), ‘A’ will act on outcomes to restore equity i.e. where there is perception
of underpayment by stealing from the organization, taking kickbacks, undermining ‘B’,
joining trade unions or reducing effort.

 In (iii) ‘A’ will attempt to restore balance by decreasing or increasing effort, e.g. working
longer hours, producing quality work, being loyal and committed to organization etc, or
by rationalizing or justifying the higher outcomes on the basis of experience, educational
levels etc. (resorting to subjective distortation of ‘A’s or ‘B’s inputs).
 In situation (i), there is perception of equity, hence no problems.


• Equity is taken seriously by employees and management decisions and actions

must be seen to be fair
• The striving to restore the outcome/input ratio to equity is used as the
explanation of work motivation.
• Workers prefer equitable payment to over-payment. Research has shown
workers on a piece rate system who felt overpaid reduced their productivity to
restore equity.

Goal Theory (Latham and Locke, 1979)

It states that motivation and performance are higher when:
• Individuals are set specific goals
• Goals are difficult but accepted
• There is feedback on performance

Goal theory is aligned to the concept of management by objectives (MBO) and it forms the
foundation for performance management process.


(Further reading- Armstrong, 2001, page 168-169)

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Money: It is an important motivator as it reflects on other motivators e.g.

status, esteem, achievement etc. Hence it is complicated as it is entangled
with other needs.
• Money has symbolic power – its value comes from what it can buy.
• To increase the motivational value of money, an incentive plan/system
should be introduced, as the extra money is usually spent on high-value
‘extra’ items.
• Equitable salary structures in organizations lessens the importance of
money as a motivator, hence Herzberg’s contention that money is a
hygiene, not a motivator.

Positive reinforcement: This idea was advocated by B.F. Skinner. He suggests that individuals
can be motivated by designing their jobs well, praising good performance so that it can be
repeated and removing barriers to performance and good communication.
Participation: Having knowledge of what is happening and being asked to participate in solving
problems is motivating to employees as it appeals to the need for recognition, affiliation and
acceptance and it gives people a sense of accomplishment.
Job Enrichment: Involves making a job more challenging and important by increasing scope of
authority and responsibility. These can be achieved by:
• giving workers more say in deciding about work methods, task sequencing
• encouraging subordinate participation and interaction among workers.
• Giving workers a feeling of personal responsibility for their tasks.
• Ensuring that people see the contribution of their tasks in the overall
• Giving feedback on performance.


Job enrichment appeals mainly to higher level needs such as status, esteem
and self-fulfillment.

Other strategies of motivation may include; promotion to higher responsibility, personal interest
by manager, status symbols, training and development, monitoring, leadership style etc.
Negative reinforcement or punishment: These should be avoided as it has the tendency of
stimulating anger, hostility, aggression, and rebellion in workers. The motivational effects are
only short term.


In your view to what extent do you think money can be used as a motivation


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Motivation is a psychological and a social process. Although the theoretical concepts appear
simple and straightforward, they are difficult to implement in real life because of the following:-

Differences among people: People differ in their expectations, hence require different types of
incentives. For example, while scientists, engineers and other professionals may have a stronger
need for achievement, managers and politicians have a stronger need for power. Needs also
differ because of demographic characteristics of employees such as gender, age, race,
education, personal ambition, cultural background, occupation etc.
Social and economic change: Changes that impact on peoples lifestyles, such as increased
education, tastes and preferences, cross-cultural interactions mean that motivating techniques
which worked a decade ago may not work today.
Employees personal problems: Motivation can be effective only to a limited extent as people
may have problems that are beyond management and cannot be solved by motivation.
Lack of resources: Organizations may be willing to motivate its employees, but may lack the
resources to do so. This is especially so for financial motivators.
Motivation is an internal instinct: motivation by nature is an internalized process that comes
from within the individual. Reinforcements are only needed to activate it. Thus a manager can
give only encourage it, but the actual and effective motivation will depend upon the internal will
of the employee.
Motivation is situation oriented: Variables in motivation situation are, the motivator, the
motivated, the motivational technique and the motivational circumstances all of which affect the
motivational outcome. To achieve a positive outcome, all four must be in congruence- which
almost impossible.

note Given the complexity of motivation in the light of varying

personalities and situations it is clear that risks of failure exist when any group of
motivators are applied without taking into account all the variables.

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