ENG Motivation in Organizastion

MOTIVATION IN
Uncorrected page proofs

Motivation in
organisations
ORGANISATIONS
16
Learning objectives
After studying this chapter, you should be able to:
CHAPTER
◗ define motivation and explain the difference between current approaches and traditional approaches
to motivation
◗ identify and describe content theories of motivation based on employee needs
◗ identify and explain process theories of motivation
◗ describe reinforcement theory and explain how it can be used to motivate employees
◗ discuss major approaches to job design and explain how job design influences motivation
◗ discuss how empowerment heightens employee motivation.
Chapter outline
◗ The concept of motivation ◗ Keeping staff motivated in Australia
◗ Foundations of motivation ◗ Job design for motivation
• Traditional approach • Job simplification
• Human relations approach • Job rotation
• Human resource approach • Job enlargement
• Contemporary approaches • Job enrichment
◗ Content perspectives on motivation • Job characteristics model
• Hierarchy of needs theory ◗ Empowerment and other motivational
• Two-factor theory programs
• Acquired needs theory
◗ Process perspectives on motivation
• Equity theory
• Expectancy theory
◗ Reinforcement perspective on motivation
• Reinforcement tools
• Schedules of reinforcement
MANAGEMENT PROBLEM ‘! ’
After 13 years at Sandstrom Products, a manufacturer of paints and coatings, Leo Henkelman was
thinking about quitting. He’d started as a paint runner, the lowest job in the plant, and worked
his way up to a mill operator position. Henkelman spent his days mixing paints in a giant blender,
following formulas supplied by the lab. As he gained knowledge and experience, he came up with a
lot of good ideas for improving formulas, yet the guys in the lab continually ignored his
suggestions. ‘It was like they hired me from the neck down’, he said. ‘Warm body, strong back,
weak mind.’ Increasing pressure from quality-conscious customers multiplied the frustration he
shared with most of the operators, who felt powerless to change anything. Some workers,
including Henkelman, just stopped caring. Finding no challenge at work, he would show up with a
hangover and just put in time until he could clock out and hit the bottle again. Top management
knew the company had problems – for one thing, Sandstrom was haemorrhaging cash, losing
money for the third year out of the last five. Things had to change or Sandstrom would go broke.1
If you were the CEO of Sandstrom Products,

how would you motivate employees like Leo
Henkelman to give their all to the company?
Is high motivation even possible in this kind
of routine manufacturing operation?
‘?’
524 Part Five Leading

The problem for Sandstrom Products is that unmotivated employees do the minimum amount
of work, causing product quality to suffer and the company to lose its competitive edge. One
secret for success in small and medium-sized businesses is motivated and enthusiastic employees.
The challenge for Sandstrom Products and other organisations is to keep employee motivation
consistent with organisational goals. Motivation is a challenge for managers because motiva-
tion arises from within employees and typically differs for each employee. For example, Janice
Rennie makes a staggering $350 000 a year selling residential real estate; she attributes her suc-
cess to the fact that she likes to listen carefully to clients and then find a house to meet their
needs. Greg Storey is a skilled machinist who is challenged by writing programs for numerically
controlled machines. After dropping out of university, he swept floors in a machine shop and
was motivated to learn to run the machines. Frances Blais sells World Book Encyclopedia. She is
a top salesperson, but she does not care about the $50 000-plus commissions: ‘I’m not even
thinking money when I’m selling. I’m really on a crusade to help children read well.’ In stark
contrast, Rob Michaels gets sick to his stomach before he goes to work. Rob is a telephone sales-
person who spends all day trying to get people to buy products they do not need, and the
rejections are painful. His motivation is money; he earned $120 000 in the past year and cannot
make nearly that much doing anything else.2
Rob is motivated by money, Janice by her love of listening and problem solving, Frances by
the desire to help children read, and Greg by the challenge of mastering numerically controlled
machinery. Each person is motivated to perform, yet each has different reasons for performing.
With such diverse motivations, it is a challenge for managers to motivate employees towards
common organisational goals.
This chapter reviews theories and models of employee motivation. First, we will review
several perspectives on motivation and cover models that describe the employee needs
and processes associated with motivation. Then, we will discuss the way job design – changing
the structure of the work itself – can affect employee satisfaction and productivity. Finally, we
will examine the trend of empowerment, where authority and decision making are delegated
to employees to increase employee motivation.
The concept of motivation

Most of us get up in the morning, go to school, university or work, and behave in ways that are
predictably our own. We respond to our environment and the people in it with little thought
about why we work hard, enjoy certain classes or find some recreational activities so much fun.
motivation Yet all these types of behaviour are motivated by something. Motivation refers to the forces
The arousal, direction and persistence of
behaviour. either within or external to a person that arouse enthusiasm and persistence to pursue a certain
course of action. Employee motivation affects productivity, and part of a manager’s job is to
channel motivation towards the accomplishment of organisational goals.3 The study of
motivation helps managers understand what prompts people to initiate action, what influences
their choice of action and why they persist in that action over time.
A simple model of human motivation is illustrated in Exhibit 16.1. People have basic needs
– such as need for food, achievement or monetary gain – which translate into an internal
tension that motivates specific behaviour with which to fulfil the need. To the extent that
the behaviour is successful, the person is rewarded in the sense that the need is satisfied. The
reward also informs the person that the behaviour was appropriate and can be used again in
the future.
Chapter 16 Motivation in organisations 525

EXHIBIT 16.1
A simple model of motivation
NEED Creates desire to fulfill needs (food, BEHAVIOUR Results in REWARDS Satisfy needs;
friendship, recognition, achievement) actions to fulfill needs intrinsic or extrinsic rewards
FEEDBACK Reward informs person whether behavior was appropriate and should be used again
Rewards are of two types: intrinsic and extrinsic. Intrinsic rewards are the satisfactions a intrinsic reward
The satisfaction received in the process of
person receives in the process of performing a particular action. The completion of a complex performing an action.
task may bestow a pleasant feeling of accomplishment, or solving a problem that benefits others
may fulfil a personal mission. For example, Frances Blais sells encyclopedias for the intrinsic
reward of helping children read well. Extrinsic rewards are given by another person, typically extrinsic reward
A reward given by another person.
a manager, and include promotions and pay increases. They originate externally, as a result of
pleasing others. Rob Michaels, who hates his sales job, nevertheless is motivated by the extrinsic
reward of high pay.
The importance of motivation as illustrated in Exhibit 16.1 is that it can lead to behaviour
that reflects high performance within organisations. One recent study found that high employee
motivation goes hand-in-hand with high organisational performance and profits.4 Managers
can use motivation theory to help satisfy employees’ needs and simultaneously encourage high
work performance. Particularly in today’s era of low unemployment, with many organisations
scrambling to find and keep qualified workers, managers are searching for the right combina-
tion of motivational techniques and rewards to keep workers happy and productive. Workers
at many of today’s leading organisations say they are motivated by factors such as a fun,
challenging work environment, flexibility that provides a balance between work and personal
life, and the potential to learn, grow and be creative in their jobs.5 The Diversity box describes
how one company is rethinking work to keep female employees productive and motivated.
LEADING THE REVOLUTION: DIVERSITY

Motivating women workers at Ernst & Young
Ernst & Young managers are trying to change the way the firm operates The firm’s efforts to rethink work grew out of a 1996 critique by
to improve female professionals’ motivation and decrease turnover. To Catalyst, a research group on corporate women, which underscored the
begin with, workers are told not to check their e-mail or voice mail on firm’s gender-related problems. Although Ernst & Young hired male and
weekends and holidays. But what if a report is delayed or a client has to female entry-level professionals in equal numbers, only 8 per cent of the
wait for an important piece of information? Top managers say, ‘So be it.’ firm’s partners were women. In addition, only 27 per cent of Ernst &
It is one small step in a widespread effort to lessen the demands on Ernst Young’s women staff reported that becoming partner was a ‘realistic
& Young’s professional employees. Although the intense work environ- goal’, compared with 59 per cent of their male counterparts. The firm
ment – with long hours and constant travel – affects men as well as was losing 22 per cent of its female professionals annually, costing
women, top executives believe women generally feel a greater strain around US$150 000 per job to hire and train replacements.
because of greater commitments outside work. They decided that only a Ernst & Young Chairman Philip A. Laskaway created an ‘Office of
complete overhaul of how people think about work could decrease the Retention’ and hired Deborah K. Holmes, the young lawyer who had
strain on female employees and root out systemic biases towards men headed the Catalyst study, to find ways to turn things around. One of the
at the firm. first problems Holmes and her team identified was that biases towards

men served to demotivate female employees. One woman, for example, assessing a client’s profitability to the firm. They work with each client
had her expense report rejected after she took a client for a manicure. If before a project begins to come to clear, mutual expectations about
it had been a golf game or one of a few other traditionally male diver- what will be required of staff members. A ‘utilisation committee’, made
sions, it would have readily been approved. To solve the problem, a task up of employees from all levels, meets regularly to reconcile client
force worked on broadening the range of acceptable entertaining activi- demands with employees’ personal needs.
ties for clients, including family-friendly activities such as picnics and Most partners at Ernst & Young support the new ideas, but Holmes
baseball games. knows the company has a long way to go in changing attitudes and
The firm also is developing ways to avoid forcing employees to com- structures to provide greater motivation and job satisfaction for female
promise their personal lives in order to meet preformed business professionals. ‘There’s no silver bullet for work–life balance’, she says.
expectations, including incorporating elements such as a casual-dress Maybe telecommunications-free weekends are a good place to start.
policy and flexible work schedules. In addition, there are efforts to hire www.ey.com
more administrative staff who can assume some of the duties once han-
dled by professionals. One unique program is called ‘client triage’. SOURCE: Keith H. Hammonds with Gabrielle Saveri, ‘Accountants Have Lives, Too,
Partners now routinely consider the demands on their employees in You Know’, Business Week, 23 February 1998, pp. 88, 90.
Foundations of motivation
A manager’s assumptions about employees’ motivation and his or her use of rewards depend on
his or her perspective on motivation. Three distinct perspectives on employee motivation are:
the traditional approach, the human relations approach and the human resources approach.6
The most recent theories about motivation represent a fourth perspective, referred to as
contemporary approaches.
Traditional approach
The study of employee motivation really began with the work of Frederick W. Taylor on
scientific management. Recall from Chapter 2 that scientific management relates to the
systematic analysis of an employee’s job for the purpose of increasing efficiency. Economic
rewards are provided to employees for high performance. The emphasis on pay evolved into
the perception of workers as economic people – people who would work harder for higher pay.
This approach led to the development of incentive pay systems, in which people were paid
strictly on the quantity and quality of their work outputs.
Human relations approach

The economic man was gradually replaced by a more sociable employee in managers’ minds.
Beginning with the landmark Hawthorne studies at a Western Electric plant, described in
Chapter 2, non-economic rewards, such as congenial work groups that met social needs, seemed
more important than money as a motivator of work behaviour.7 For the first time, workers were
studied as people, and the concept of social man was born.
Human resource approach

The human resource approach carries the concepts of economic man and social man further to
introduce the concept of the whole person. Human resource theory suggests that employees
are complex, and motivated by many factors. For example, the work by McGregor on Theory
X and Theory Y, described in Chapter 2, argued that people want to do a good job and that
work is as natural and healthy as play. Proponents of the human resource approach believed

that earlier approaches had tried to manipulate employees through economic or social rewards.
By assuming that employees are competent and able to make major contributions, managers
can enhance organisational performance. The human resource approach laid the groundwork
for contemporary perspectives on employee motivation.
Contemporary approaches
Contemporary approaches to employee motivation are dominated by three types of theories,
each of which will be discussed in the following sections. The first are content theories, which content theories
A group of theories that emphasise the needs
stress the analysis of underlying human needs. Content theories provide insight into the needs that motivate people.
of people in organisations and help managers understand how needs can be satisfied in the
workplace. Process theories concern the thought processes that influence behaviour. They
focus on how employees seek rewards in work circumstances. Reinforcement theories focus on
employee learning of desired work behaviour. In Exhibit 16.1, content theories focus on the
concepts in the first box, process theories on those in the second, and reinforcement theories
on those in the third.
Content perspectives on motivation

Content theories emphasise the needs that motivate people. At any point in time, people have
basic needs such as those for food, achievement or monetary reward. These needs translate into
an internal drive that motivates specific behaviour in an attempt to fulfil the needs. An indi-
vidual’s needs are like a hidden catalogue of the things he or she wants and will work to get.
To the extent that managers understand worker needs, the organisation’s reward systems can
be designed to meet them and reinforce employees for directing energies and priorities towards
attainment of organisational goals.
Hierarchy of needs theory

Probably the most famous content theory was developed by Abraham Maslow.8 Maslow’s
hierarchy of needs theory proposes that humans are motivated by multiple needs and that hierarchy of needs theory
A content theory that proposes that people are
these needs exist in a hierarchical order as illustrated in Exhibit 16.2. Maslow identified five motivated by five categories of needs —
general types of motivating needs in order of ascendance: physiological, safety, belongingness, esteem
and self-actualisation — that exist in a
1 Physiological needs. These are the most basic human physical needs, including food, water hierarchical order.
and sex. In the organisational setting, these are reflected in the needs for adequate heat, air
and a base salary to ensure survival.
2 Safety needs. These are the needs for a safe and secure physical and emotional environment
and freedom from threats – that is, for freedom from violence and for an orderly society. In
an organisational workplace, safety needs reflect the needs for safe jobs, fringe benefits and
job security.
3 Belongingness needs. These needs reflect the desire to be accepted by one’s peers, have
friendships, be part of a group and be loved. In the organisation, these needs influence the
desire for good relationships with co-workers, participation in a work group and a positive
relationship with supervisors.
4 Esteem needs. These needs relate to the desire for a positive self-image and to receive
attention, recognition and appreciation from others. Within organisations, esteem needs
reflect a motivation for recognition, an increase in responsibility, high status and credit for
contributions to the organisation.

EXHIBIT 16.2
Maslow’s hierarchy of needs
Fulfilment off the job Needs hierarchy Fulfilment on the job
Education, religion, hobbies, Self-actualisation Opportunities for training, advancement,

personal growth needs growth, and creativity
Approval of family, friends, Recognition, high status,

Esteem needs
community increased responsibilities
Work groups, clients, coworkers,

Family, friends, community groups Belongingness needs
supervisors
Freedom from war, pollution, violence Safety needs Safe work, fringe benefits, job security
Food, water, sex Physiological needs Heat, air, base salary
5 Self-actualisation needs. These represent the need for self-fulfilment, which is the highest
need category. They concern developing one’s full potential, increasing one’s competence
and becoming a better person. Self-actualisation needs can be met in the organisation by
providing people with opportunities to grow, be creative, and acquire training for challenging
assignments and advancement.
According to Maslow’s theory, low-order needs take priority – they must be satisfied before
higher-order needs are activated. The needs are satisfied in sequence: physiological needs come
before safety needs, safety needs before social needs, and so on. A person desiring physical safety
will devote his or her efforts to securing a safer environment and will not be concerned with
esteem needs or self-actualisation needs. Once a need is satisfied, it declines in importance and
the next higher need is activated.
CASE STUDY
CASE STUDY
Acer Group Computers: coping with fierce competition in the world’s PC markets. http://aac.acer.com
Stan Shih built the Acer Group from scratch into a large battle. Its approach has been to under-price the major
computer manufacturer and distributing company. He is now companies’ products by about 20 per cent through gains in
facing much tougher competition than he has ever seen purchasing and assembling efficiency. However, Dell, IBM
before. Acer Computers operates 34 factories in over and Hewlett-Packard–Compaq are now opening plants in
25 countries around the world. It has built significant market Malaysia, China and other low-cost countries in order to
share in developing countries around Latin America and compete head on through having a local presence in these
Asia. For example, it has built factories and stayed very close markets.
to its customers in Thailand, Malaysia and Mexico. However, Stan Shih has a strategy in mind, which is also tied up in
as the world’s major computer makers such as Dell, Hewlett- his management philosophy. He intends to achieve
Packard–Compaq and IBM increasingly address their motivation in his employees by splitting his company into
attention to these developing nations because their developed nearly 20 subsidiaries, and floating each of these on the local
country markets have become mature, Acer faces a tough stock exchanges in each of the major countries in which he

operates. Further, he will distribute 30 per cent of the shares global, act local.’ He will achieve global scale in product
in those companies to the employees of those companies and design, research and development, but keep manufacturing,
keep less than half of the ownership in his central parent marketing, sales and distribution enmeshed in the local
company. The intention is to make the Acer Group agile and environments. Although Acer will have to face competition
to keep local ownership and motivation high. As Shih says, that is fiercer than ever before, its cost structure and brand
‘A team of dragons does not need a head.’ Shih’s strategy reputation in developing markets are such that it is well
involves the implementation of the philosophy: ‘Think placed to combat its US-based, giant competitors.
ERG theory Clayton Alderfer proposed a modification of Maslow’s theory in an effort to

simplify it and respond to criticisms of its lack of empirical verification.9 His ERG theory ERG theory
A modification of the needs hierarchy theory
identified three categories of needs: that proposes three categories of needs:
1 Existence needs. These are the needs for physical well-being. existence, relatedness and growth.
2 Relatedness needs. These relate to the need for satisfactory relationships with others.
3 Growth needs. These focus on the development of human potential and the desire for
personal growth and increased competence.
The ERG model and Maslow’s need hierarchy are similar because both are in hierarchical
form and presume that individuals move up the hierarchy one step at a time. However, Alderfer
reduced the number of need categories to three and proposed that movement up the hierarchy
is more complex, reflecting a frustration–regression principle – namely, that failure to meet frustration–regression principle
The idea that failure to meet a high-order need
a high-order need may trigger a regression to an already fulfilled lower-order need. Thus, a may cause a regression to an already satisfied
worker who cannot fulfil a need for personal growth may revert to a lower-order need and redi- lower-order need.
rect his or her efforts towards making a lot of money. The ERG model therefore is less rigid
than Maslow’s need hierarchy, suggesting that individuals may move down as well as up the
hierarchy, depending on their ability to satisfy needs.
Need hierarchy theory helps explain why organisations find ways to recognise employees and
encourage their participation in decision making. Fine Host Corporation, a US food service
company in Greenwich, Connecticut, regularly gives quality awards and posts workers’ names
in company buildings to recognise their good work. Employees receive framed certificates when
they complete training courses. According to president Richard Kerley, ‘Though there may be
economic restraints on what we pay them, there are no restraints on the recognition we give
them.’10 The importance of filling higher-level belongingness and esteem needs on the job was
illustrated by a young manager who said, ‘If I had to tell you in one sentence why I am moti-
vated by my job, it is because when I know what is going on and how I fit into the overall
picture, it makes me feel important.’ Many organisations are finding that ‘fun’ is also a great,
high-level motivator, particularly for today’s young, well-educated, computer-savvy workers
who are in high demand and can command high salaries wherever they go. At Vantage One
Communications Group, a marketing firm, employees regularly take breaks by playing foosball
in the company’s recreation room. Such diversions lighten up the daily routine and create a
feeling of belongingness and community. An employee of GoldMine Software, where the
refrigerator is regularly stocked with drinks and snacks, puts it this way: ‘It’s like the coolest
house I lived in at university; everyone behaves as an individual – everyone’s totally different
– but we all get along so well.’11
CASE STUDY
CASE STUDY
Cochlear looks after its workers www.cochlear.com
Cochlear is an Australian-based company that leads the important. Cochlear spends a lot of time and effort ensuring
world in the design and manufacture of implant systems, and that the workplace is fitted to its workers’ needs.
in particular the well-known ‘bionic ear’. Based in Sydney, In addition, the company has two work breaks each day in
Cochlear was founded in 1982 and works hard at ensuring which workers stop work and engage in stretching and
that staff who do repetitive processing work are not adversely callisthenics. These exercises of stretching and bending
affected in their health. Cochlear has made significant prevent the strain and cramping associated with the
investments in ergonomic work benches and chairs, which demanding and precise work of assembling miniaturised
are aimed specifically at reducing the impacts on staff, and products such as the bionic ear. Workers leave their work
making the work environment both more productive and benches and spend 10 minutes exercising with aerobic-style
healthy. Since many Cochlear employees spend a lot of time music running the beat. The results have been substantial
looking through microscopes and assembling very small decreases in stress and work-related injuries and a healthier,
componentry, the ergonomics of the workplace is critically happier and hence more productive workforce for Cochlear.
Two-factor theory
Frederick Herzberg developed another popular theory of motivation called the two-factor
theory.12 Herzberg interviewed hundreds of workers about times when they were highly
motivated to work and other times when they were dissatisfied and unmotivated at work.
His findings suggested that the work characteristics associated with dissatisfaction were quite
different from those pertaining to satisfaction, which prompted the notion that two factors
influence work motivation.
The two-factor theory is illustrated in Exhibit 16.3. The centre of the scale is neutral,
meaning that workers are neither satisfied nor dissatisfied. Herzberg believed that two entirely
hygiene factors separate dimensions contribute to an employee’s behaviour at work. The first, called hygiene
Factors that involve the presence or absence
of job dissatisfiers, including working factors, involves the presence or absence of job dissatisfiers, such as working conditions, pay,
conditions, pay, company policies and company policies and interpersonal relationships. When hygiene factors are poor, work is
interpersonal relationships.
dissatisfying. However, good hygiene factors simply remove the dissatisfaction; they do not
in themselves cause people to become highly satisfied and motivated in their work.
motivators The second set of factors does influence job satisfaction. Motivators are high-level needs
Factors that influence job satisfaction based
on fulfilment of high-level needs such as and include achievement, recognition, responsibility and opportunity for growth. Herzberg
achievement, recognition, responsibility and believed that when motivators are absent, workers are neutral towards work, but when moti-
opportunity for growth.
vators are present, workers are highly motivated and satisfied. Thus, hygiene factors and
motivators represent two distinct factors that influence motivation. Hygiene factors work only
in the area of dissatisfaction. Unsafe working conditions or a noisy work environment will cause
people to be dissatisfied; their correction will not lead to a high level of motivation and satis-
faction. Motivators such as challenge, responsibility and recognition must be in place before
employees will be highly motivated to excel at their work.
The implication of the two-factor theory for managers is clear. Providing hygiene factors will
eliminate employee dissatisfaction but will not motivate workers to high achievement levels.
On the other hand, recognition, challenge and opportunities for personal growth are powerful

Content perspectives on motivation
EXHIBIT 16.3
Highly
Herzberg’s two-factor theory
satisfied Motivators
Area of satisfaction
influence level
of satisfaction
Neither
satisfied nor
dissatisfied
Area of dissatisfaction Hygiene factors
influence level of
dissatisfaction
Highly
dissatisfied
motivators and will promote high satisfaction and performance. The manager’s role is to remove
dissatisfiers – that is, to provide hygiene factors sufficient to meet basic needs – and then use
motivators to meet higher-level needs and propel employees towards greater achievement and
satisfaction. Consider the manager’s role at Outback Steakhouse.
CASE STUDY
CASE STUDY
Outback Steakhouse www.outback.com
With their years of experience in the restaurant business, working week give managers and staff time for a life outside
Robert Basham, Timothy Gannon and Chris Sullivan, the restaurant, which cuts down on employee turnover. Each
founders of Outback Steakhouse, were acutely aware of the server handles only three tables at a time, ensuring first-class
hygiene factors in the food-service industry. Outback is an service to customers and higher tips for servers.
Australian-themed restaurant in the USA that deliberately To motivate managers, Outback provides ownership. After
adopts an Australian theme, sells Australian menu items and making a US$25 000 investment and signing a five-year con-
is decorated with Australian artefacts. While the average tract, Outback managers receive 10 per cent of the earnings of
restaurant is designed to maximise the number of customers their restaurants each month. This provides the average man-
at the expense of the food preparation area, Outback puts the ager with a total income of about US$118 600 per year, far
emphasis on providing the best possible spaces for servers and above the rest of the industry. In addition, managers receive
kitchen staff to do their jobs effectively, even at peak business about 4000 shares that vest at the end of five years. Regular
times. Outback’s dinner-only policy and maximum five-day staff also participate in a share ownership plan.

Managers are further motivated by the level of 210 Outbacks, with revenues estimated at US$544 million,
responsibility Outback bestows on them. Restaurant managers up from US$347.5 million the year before. As Timothy
have the authority to make their own decisions rather than Gannon put it, ‘We believe if you treat employees as if you
merely implement decisions dictated by headquarters. were one of them and give them the right environment, they
Has Outback’s motivational approach worked? In will blow you away with their performance.’13
December 1994, six years after its launch, there were
Acquired needs theory

The final content theory was developed by David McClelland. The acquired needs theory
proposes that certain types of needs are acquired during the individual’s lifetime. In other words,
people are not born with these needs but may learn them through their life experiences.14
The three needs most frequently studied are these:
1 Need for achievement. These are the desire to accomplish something difficult, attain a high
standard of success, master complex tasks and surpass others.
2 Need for affiliation. These are the desire to form close personal relationships, avoid con-
flict and establish warm friendships.
3 Need for power. These are the desire to influence or control others, be responsible for others
and have authority over others.
Early life experiences determine whether people acquire these needs. If children are
encouraged to do things for themselves and receive reinforcement, they will acquire a need
to achieve. If they are reinforced for forming warm human relationships, they will develop a
need for affiliation. If they get satisfaction from controlling others, they will acquire a need
for power.
For more than 20 years, McClelland studied human needs and their implications for
management. People with a high need for achievement tend to be entrepreneurs. They like to
do something better than competitors and take sensible business risks. On the other hand,
people who have a high need for affiliation are successful ‘integrators’, whose job is to coordi-
nate the work of several departments in an organisation.15 Integrators include brand managers
and project managers, who must have excellent people skills. People with a high need for
affiliation are able to establish positive working relationships with others.
A high need for power often is associated with successful attainment of top levels in the
organisational hierarchy. For example, McClelland studied managers at AT&T for 16 years and
found that those with a high need for power were more likely to follow a path of continued
promotion over time. More than half of the employees at the top levels had a high need for
power. In contrast, managers with a high need for achievement but a low need for power tended
to peak earlier in their careers, and at a lower level. The reason is that achievement needs can
be met through the task itself, but power needs can be met only by ascending to a level at which
a person has power over others.
In summary, content theories focus on people’s underlying needs and label those particular
needs that motivate people to behave. The hierarchy of needs theory, the ERG theory, the two-
factor theory and the acquired needs theory all help managers understand what motivates
people. In this way, managers can design work to meet needs and hence elicit appropriate and
successful work behaviour.

Process perspectives on motivation
Process theories explain the way workers select behavioural actions to meet their needs and process theories
A group of theories that explain how
determine whether their choices were successful. There are two basic process theories: equity employees select behaviours with which to
theory and expectancy theory. meet their needs and determine whether their
choices were successful.
Equity theory
Equity theory focuses on individuals’ perceptions of how fairly they are treated compared with equity theory
A process theory that focuses on individuals’
others. Developed by J. Stacy Adams, equity theory proposes that people are motivated to seek perceptions of how fairly they are treated
social equity in the rewards they expect for performance.16 relative to others.
According to equity theory, if people perceive their compensation as equal to what others
receive for similar contributions, they will believe that their treatment is fair and equitable.
People evaluate equity by a ratio of inputs to outcomes. Inputs to a job include education,
experience, effort and ability. Outcomes from a job include pay, recognition, benefits and
promotions. The input-to-outcome ratio may be compared to another person in the work
group or to a perceived group average. A state of equity exists whenever the ratio of one equity
A situation that exists when the ratio of one
person’s outcomes to inputs equals the ratio of another’s outcomes to inputs. person’s outcomes to inputs equals that of
Inequity occurs when the input–outcome ratios are out of balance – as when a person with another’s.
a high level of education or experience receives the same salary as a new, less educated
employee. Perceived inequity also occurs in the other direction. Thus, an employee who
discovers he or she is making more money than other people who contribute the same inputs
to the company may feel the need to correct the inequity by working harder, getting more
education or considering lower pay. Perceived inequity creates tensions within individuals
Circuit City managers are using expectancy
that motivate them to bring equity into balance.17 theory principles to help meet employees’
The most common ways to reduce a perceived inequity are to: needs while attaining organisational goals.
By creating an incentive program that is a
• Change inputs. A person may choose to increase or decrease his or her inputs to the organ- commission-based plan designed to provide
isation. For example, underpaid individuals may reduce their level of effort or increase their the highest compensation to sales counsellors
who are committed to serving every
absenteeism. Overpaid people may increase effort on the job. customer, Circuit City achieves its volume
• Change outcomes. A person may change his or her outcomes. An underpaid person may and profitability objectives. The incentive
program is also used in other areas such as
request a salary increase or a bigger office. A union may try to improve wages and working distribution, where employees are recognised
conditions in order to be consistent with a comparable union whose members make more for accomplishments in safety, productivily
and attendance.
money.
• Distort perceptions. Research suggests that people may distort perceptions of equity if they
are unable to change inputs or outcomes. They may artificially increase the status attached
to their jobs or distort others’ perceived rewards to bring equity into balance.
• Leave the job. People who feel inequitably treated may decide to leave their jobs rather than
suffer the inequity of being underpaid or overpaid. In their new jobs, they expect to find a
more favourable balance of rewards.
The implication of equity theory for managers is that employees do evaluate the perceived [artwork to come]
equity of their rewards compared to others. An increase in salary or a promotion will have no
motivational effect if it is perceived as inequitable relative to that of other employees. Some
organisations, for example, have created a two-tier wage system to reduce wage rates. New
employees make far less than experienced ones, which creates a basis for inequity. Flight atten-
dants at some airlines are determined to topple the two-tier structure under which they are paid.
Chris Boschert, who sorts packages for United Parcel Service in the USA, was hired after the
two-tier wage system took effect. ‘It makes me mad’, Boschert said. ‘I get $9.68 an hour, and

the guy working next to me makes $13.99 doing exactly the same job.’18 Inequitable pay puts
pressure on employees that is sometimes almost too great to bear. They attempt to change their
work habits, try to change the system or leave the job.19
Smart managers try to keep feelings of equity in balance in order to keep their workforces
motivated.
Expectancy theory
expectancy theory Expectancy theory suggests that motivation depends on individuals’ expectations about their
A process theory that proposes that motivation
depends on individuals’ expectations about their ability to perform tasks and receive desired rewards. Expectancy theory is associated with the
ability to perform tasks and receive desired work of Victor Vroom, although a number of scholars have made contributions in this area.20
rewards.
Expectancy theory is concerned not with identifying types of needs but with the thinking
process that individuals use to achieve rewards. Consider Robert Bradley, a university student
with a strong desire for a distinction (D) in his accounting course. Robert has a credit average
and one more exam to take. His motivation to study for that last exam will be influenced by:
(1) the expectation that hard study will lead to a high distinction (HD) on the exam; and
(2) the expectation that an HD on the exam will result in a D for the course. If Robert believes
he cannot get an HD on the exam or that receiving an HD will not lead to a D for the course,
he will not be motivated to study exceptionally hard.
Expectancy theory is based on the relationship between the individual’s effort, the
individual’s performance and the desirability of outcomes associated with high performance.
These elements and the relationships among them are illustrated in Exhibit 16.4. The keys
to expectancy theory are the expectancies for the relationships between effort, performance and
outcomes, with the value of the outcomes to the individual.
E – P expectancy E – P expectancy involves whether putting effort into a task will lead to high performance.
Expectancy that putting effort into a given task
will lead to high performance.
For this expectancy to be high, the individual must have the ability, previous experience and
necessary machinery, tools and opportunity to perform. For Robert Bradley to get a D in the
accounting course, the E – P expectancy is high if Robert truly believes that with hard work,
he can get an HD on the final exam. If Robert believes he has neither the ability nor the oppor-
tunity to achieve high performance, the expectancy will be low, and so will be his motivation.
P – O expectancy P – O expectancy involves whether successful performance will lead to the desired out-
Expectancy that successful performance of a
task will lead to the desired outcome. come. In the case of a person who is motivated to win a job-related award, this expectancy
concerns the belief that high performance will truly lead to the award. If the P – O expectancy
EXHIBIT 16.4 E P Expectancy

Major elements of expectancy Valence value of outcome
theory Probability that effort will
lead to desired performance
Outcomes
Effort Performance (pay, recognition,
other rewards)
P O Expectancy
Probability that performance
will produce desired outcome

is high, the individual will be more highly motivated. If the expectancy is that high perform-
ance will not produce the desired outcome, motivation will be lower. If an HD on the final
exam is likely to produce a D in the accounting course, Robert Bradley’s P – O expectancy will
be high. Robert may talk to the professor to see whether an HD will be sufficient to earn him
the D in the course. If not, he will be less motivated to study hard for the final exam.
Valence is the value of outcomes, or attraction for outcomes, for the individual. If the out- valence
The value or attraction an individual has for an
comes that are available from high effort and good performance are not valued by employees, outcome.
motivation will be low. Likewise, if outcomes have a high value, motivation will be higher.
Expectancy theory attempts not to define specific types of needs or rewards, but only to
establish that they exist and may be different for every individual. One employee may want to
be promoted to a position of increased responsibility, and another may have high valence for
good relationships with peers. Consequently, the first person will be motivated to work hard
for a promotion and the second for the opportunity for a team position that will keep him
or her associated with a group.
A simple sales department example will explain how the expectancy model in Exhibit 16.4
works. If Jane Anderson, a salesperson at the Diamond Gift Shop, believes that increased selling
effort will lead to higher personal sales, we can say she has a high E – P expectancy. Moreover,
if Jane also believes that higher personal sales will lead to a promotion or pay raise, we can say
that she has a high P – O expectancy. Finally, if Jane places a high value on the promotion or
pay raise, valence is high and she will have a high motivational force. On the other hand, if
either the E – P or P – O expectancy is low, or if the money or promotion has low valence for
Jane, the overall motivational force will be low. For an employee to be highly motivated, all
three factors in the expectancy model must be high.21
Implications for managers The expectancy theory of motivation is similar to the path–goal
theory of leadership described in Chapter 15. Both theories are personalised to employees’ needs
and goals. Managers’ responsibility is to help employees meet their needs and at the same time
attain organisational goals. Managers must try to find a match between an employees’s skills and
abilities and the job demands. To increase motivation, managers can clarify individuals’ needs,
define the outcomes available from the organisation, and ensure that each individual has the
ability and support (namely, time and equipment) needed to attain outcomes.
Some organisations use expectancy theory principles by designing incentive systems that
identify desired organisational outcomes and give everyone the same shot at getting the rewards.
The trick is to design a system that fits with employees’ abilities and needs. Consider the
following example from the restaurant industry.
CASE STUDY
CASE STUDY
Katzinger’s Delicatessen
When Steve and Diane Warren, co-owners of Katzinger’s their workers were young and mobile, not committed to a
Delicatessen, instituted open-book management, they hoped long-term career with the company, the vague long-range
it would help them cut costs and save money. The Warrens goals and rewards did not provide a high degree of
trained employees in how to read the financials and told motivation. Many of them felt that they could do little to
them Katzinger’s would share the rewards with employees if improve overall performance and that doing so was the job of
financial performance improved. However, because most of managers anyway. Thus, both E – P expectancy and P – O

expectancy were low. The Warrens needed a simple, short- cooperate to decrease food costs because they knew everyone
term goal as a way to energise their young workers. They would benefit from the savings. Since anyone could look at the
proposed a simple plan: if workers would help reduce food financials, workers could actually track their progress towards
costs to below 35 per cent of sales without sacrificing food meeting the goal. At the end of the first month, food costs had
quality or service, they would be rewarded with half the fallen nearly 2 per cent and employees took home about
savings. US$40 each from the savings. Later monthly payouts were as
Katzinger’s workers were well-trained and knew they had high as US$95 per employee. By the end of the year, food
the skills and ability to meet the goal if they all worked consistency and service had improved and Katzinger’s had
together; thus, the E – P expectancy was high. Workers indeed reduced its food costs to below 35 per cent of total sales,
immediately began proposing ideas to reduce waste, such as saving the company US$30 000. The Warrens gladly
matching perishable food orders more closely to expected sales. distributed US$15 000 of that amount to their workers for
The P – O expectancy was also high because of the level of helping to meet the goal. Now, the Warrens are working out
trust at the company; workers were highly motivated to a similar plan to increase sales at Katzinger’s.22
Reinforcement perspective on motivation

The reinforcement approach to employee motivation sidesteps the issues of employee needs
reinforcement theory and thinking processes described in the content and process theories. Reinforcement theory
A motivation theory based on the relationship
between a given behaviour and its
simply looks at the relationship between behaviour and its consequences. It focuses on changing
consequences. or modifying the employees’ on-the-job behaviour through the appropriate use of immediate
rewards and punishments.
Reinforcement tools
behaviour modification Behaviour modification is the name given to the set of techniques by which reinforcement
The set of techniques by which reinforcement
theory is used to modify human behaviour. theory is used to modify human behaviour.23 The basic assumption underlying behaviour mod-
law of effect ification is the law of effect, which states that behaviour that is positively reinforced tends to
The assumption that positively reinforced be repeated, and behaviour that is not reinforced tends not to be repeated. Reinforcement is
behaviour tends to be repeated and
unreinforced or negatively reinforced behaviour defined as anything that causes a certain behaviour to be repeated or inhibited. The four rein-
tends to be inhibited. forcement tools are positive reinforcement, avoidance learning, punishment and extinction.
reinforcement Each type of reinforcement is a consequence of either a pleasant or unpleasant event being
Anything that causes a given behaviour to be
repeated or inhibited. applied or withdrawn following a person’s behaviour. The four types of reinforcement are
summarised in Exhibit 16.5.
Positive reinforcement Positive reinforcement is the administration of a pleasant and
rewarding consequence following desired behaviour. A good example of positive reinforcement
is immediate praise for an employee who arrives on time or does a little extra in his or her work.
The pleasant consequence will increase the likelihood of the excellent work behaviour
occurring again. As another example, Frank Bohac, CEO of Computer Systems Development,
has rewarded his employees with computers, holidays and even horses for meeting personal as
well as organisational goals.24 Studies have shown that positive reinforcement does help to
improve organisational performance. In addition, non-financial rewards, such as positive
feedback, are often as effective as financial incentives.25
Avoidance learning Avoidance learning is the removal of an unpleasant consequence
following desired behaviour. Avoidance learning is sometimes called negative reinforcement.

EXHIBIT 16.5
Changing behaviour with reinforcement
Positive reinforcement
Praise employee
Increases likelihood that
Recommend pay raise
behavior will be repeated
Employee increases work rate
Avoidance learning
Avoid reprimands,
Increases likelihood that
negative statements
Slow work rate
Supervisor requests faster work
Extinction
Withhold raises, merit
Reduces likelihood that
pay, praise
Employee continues slow work
Punishment
Reprimand employee
Reduces likelihood that
Make negative statements
SOURCE: Based on Richard L. Daft and Richard M. Steers, Organizations: A Micro/Macro Approach, Scott, Foresman: Glenview, Ill., 1986, p. 109.
Employees learn to do the right thing by avoiding unpleasant situations. Avoidance learning
occurs when a supervisor stops criticising or reprimanding an employee once the incorrect
behaviour has stopped.
Punishment Punishment is the imposition of unpleasant outcomes on an employee.
Punishment typically occurs following undesirable behaviour. For example, a supervisor may
berate an employee for performing a task incorrectly. The supervisor expects that the negative
outcome will serve as a punishment and reduce the likelihood of the behaviour recurring. The use
of punishment in organisations is controversial and often criticised, because it fails to indicate the
correct behaviour. However, almost all managers report finding it necessary to occasionally impose
forms of punishment ranging from verbal reprimands to employee suspensions or firings.26
Extinction Extinction is the withdrawal of a positive reward, meaning that behaviour is no
longer reinforced and hence is less likely to occur in the future. If a perpetually tardy employee
fails to receive praise and pay raises, he or she will begin to realise that the behaviour is not pro-
ducing desired outcomes. The behaviour will gradually disappear if it is not continually reinforced.
Some executives use reinforcement theory very effectively to shape employees’ behaviour.
Jack Welch, when chairman of General Electric, always made it a point to reinforce behaviour.
As an up-and-coming group executive, Welch reinforced purchasing agents by having someone
telephone him whenever an agent got a price concession from a vendor. Welch would stop
whatever he was doing and call the agent to say, ‘That’s wonderful news; you just knocked a
nickel a ton off the price of steel.’ He would also sit down and scribble out a congratulatory
note to the agent. The effective use of positive reinforcement and the heightened motivation
of purchasing employees marked Jack Welch as executive material in the organisation.27
Schedules of reinforcement
A great deal of research into reinforcement theory suggests that the timing of reinforcement
schedule of reinforcement
has an impact on the speed of employee learning. Schedules of reinforcement relate to the The frequency with which and intervals over
frequency with which and intervals over which reinforcement occurs. A reinforcement which reinforcement occurs.

schedule can be selected to have maximum impact on employees’ job behaviour. There are five
basic types of reinforcement schedules: continuous reinforcement and four types of partial
reinforcement.
continuous reinforcement schedule Continuous reinforcement With a continuous reinforcement schedule, every occurrence
A schedule in which every occurrence of the
desired behaviour is reinforced.
of the desired behaviour is reinforced. This schedule can be very effective in the early stages of
learning new types of behaviour, because every attempt has a pleasant consequence.
Partial reinforcement However, in the real world of organisations, it is often impossible to
partial reinforcement schedule reinforce every correct behaviour. With a partial reinforcement schedule, the reinforcement
A schedule in which only some occurrences
of the desired behaviour are reinforced.
is administered only after some occurrences of the correct behaviour. There are four types of
partial reinforcement schedules:
1 Fixed-interval schedule. The fixed-interval schedule rewards employees at specified time
intervals. If an employee displays the correct behaviour each day, reinforcement may occur
every week. Regular paycheques or quarterly bonuses are examples of a fixed-interval
reinforcement. At Leone Ackerly’s Mini Maid franchise, workers are rewarded with an
attendance bonus each pay period if they have gone to work every day on time and in
uniform.28
2 Fixed-ratio schedule. With a fixed-ratio schedule, reinforcement occurs after a specified
number of desired responses – say, after every fifth. For example, paying a field hand $9 for
picking 10 kilograms of capsicums is a fixed-ratio schedule. Most piece-rate pay systems are
fixed-ratio schedules.
3 Variable-interval schedule. With a variable-interval schedule, reinforcement is adminis-
tered at random times that cannot be predicted by the employee. An example would be a
random inspection by the manufacturing supervisor of the production floor, at which time
he or she commends employees on their good behaviour.
4 Variable-ratio schedule. The variable-ratio schedule is based on a random number of
instances of the desired behaviour, rather than on variable time periods. Reinforcement may
occur sometimes after five, 10, 15 or 20 displays of behaviour. One example is the attraction
of poker machines for gamblers. People anticipate that the machine will pay a jackpot after
a certain number of plays, but the exact number of plays is variable.
The schedules of reinforcement available to managers are illustrated in Exhibit 16.6.
Continuous reinforcement is most effective for establishing new learning, but behaviour is
EXHIBIT 16.6
Schedules of reinforcement
Schedule of Nature of Effect on behaviour Effect on behaviour Example

reinforcement reinforcement when applied when withdrawn
Continuous Reward given after each Leads to fast learning Rapid extinction Praise
desired behavior of new behavior
Fixed-interval Reward given at fixed Leads to average and Rapid extinction Weekly pay
time intervals irregular performance
Fixed-ratio Reward given at fixed Quickly leads to very high Rapid extinction Piece-rate pay system
amounts of output and stable performance
Variable-interval Reward given at variable Leads to moderately high Slow extinction Performance appraisal and awards
times and stable performance given at random times each month
Variable-ratio Reward given at variable Leads to very high Slow extinction Sales bonus tied to number
amounts of output performance of sales calls, with random checks

vulnerable to extinction. Partial reinforcement schedules are more effective for maintaining
behaviour over extended time periods. The most powerful is the variable-ratio schedule,
because employee behaviour will persist for a long time due to the administration of reinforce-
ment only after a long interval.29
One example of a small business that successfully uses reinforcement theory is Parsons Pine
Products.
CASE STUDY
CASE STUDY
Parsons Pine Products
Parsons Pine Products has only 75 employees, but it is the 4 Profit pay. All company earnings above 4 per cent after
world’s largest manufacturer of slats for louvred doors and taxes go into a bonus pool, which is shared among
shutters. Managers have developed a positive reinforcement employees.
scheme for motivating and rewarding workers. The plan The plan for reinforcing correct behaviour has been
includes the following: extraordinarily effective. Parsons’s previous accident rate had
1 Safety pay. Every employee who goes for a month been 86 per cent above the state average; today it is 32 per
without a lost-time accident receives a bonus equal to cent below it. Turnover and tardiness are minimal, and
four hours’ pay. absenteeism has dropped to almost nothing. The plan works
2 Retro pay. If the company saves money when its worker’s because the reinforcement schedules are strictly applied, with
compensation premiums go down because of a lower no exceptions. Owner James Parsons has said, ‘One woman
accident rate, the savings are distributed among employees. called to say that a tree had fallen, and she couldn’t get her
3 Well pay. Employees receive monthly well pay equal to car out. She wanted me to make an exception. If I did that,
eight hours’ wages if they have been neither absent nor I’d be doing it all the time.’30
tardy.
Reinforcement also works at such organisations as Mars Corporation (which owns Uncle
Ben’s, Australia’s dominant pet food manufacturer), Campbell Soup Company, Emery Air
Freight and General Electric, because managers reward appropriate behaviour. They tell
employees what they can do to receive reinforcement, tell them what they are doing wrong,
distribute rewards equitably, tailor rewards to behaviour, and keep in mind that failure to reward
deserving behaviour has an equally powerful impact on employees.
Reward and punishment moti-
vational practices dominate
organisations, with as many as
94 per cent of organisations
reporting that they use practices
that reward performance or merit Staff from Emery Airfreight, recipients of
the 2002 Raymond F. O’Brien Award of
with pay.31 However, despite the excellence. CNF Inc, which owns Emery
testimonies of numerous organisa- Airfreight and several other companies,
regularly makes awards for achievement of
tions that enjoy successful incentive excellence. Employees are nominated by their
programs, there is growing criticism colleagues, and five nominees from each
company are assessed by a final selection
of these so-called carrot-and-stick committee. Such recognition systems, when
methods, as discussed in the designed and implemented well, can become
part of a culture of positive reinforcement that
Manager’s Shoptalk box. motivates staff to perform at high levels.

MANAGER’S SHOPTALK ‘! ’
The carrot-and-stick controversy
Everybody thought Rob Rodin was crazy when he decided to wipe out When employees are focused only on the reward, they lose interest
all individual incentives for his sales force at Marshall Industries, a large in their work. Without personal interest, the potential for exploration,
distributor of electronic components based in El Monte, California. He creativity and innovation disappears. While the current deadline or
did away with all bonuses, commissions, holidays, and other awards goal may be met, better ways of working will not be discovered.
and rewards. All salespeople would receive a base salary plus the 3 Extrinsic rewards assume people are driven by lower-level
opportunity for profit sharing, which would be the same percentage of needs. Rewards such as bonuses, pay increases and even praise
salary for everyone, based on the entire company’s performance. Six presume that the primary reason people initiate and persist in
years later, Rodin says productivity per person has tripled at the com- behaviour is to satisfy lower-level needs. However, particularly
pany, but still he gets questions and criticism about his decision. among today’s knowledge workers, behaviour also is based on
Rodin is standing right in the middle of a big controversy in modern yearnings for self-expression, and on feelings of self-esteem and
management. Do financial and other rewards really motivate the kind self-worth. Offers of an extrinsic reward do not encourage the
of behaviour organisations want and need? A growing number of numerous types of behaviour that are motivated by people’s need
critics say no, arguing that carrot-and-stick approaches are a to express themselves and realise their higher needs for growth
holdover from the Industrial Age and are inappropriate and ineffective and fulfilment.
in today’s economy. Today’s workplace demands innovation and
As Rob Rodin discovered at Marshall Industries, today’s organisa-
creativity from everyone – behaviour that is rarely inspired by money
tions need employees who are motivated to think, experiment and
or other financial incentives. Reasons for criticism of carrot-and-stick
continuously search for ways to solve new problems. Alfie Kohn, one
approaches include the following:
of the most vocal critics of carrot-and-stick approaches, offers the
1 Extrinsic rewards diminish intrinsic rewards. When people are following advice to managers regarding how to pay employees:
motivated to seek an extrinsic reward, whether it be a bonus, an ‘Pay well, pay fairly, and then do everything you can to get money
award, or the approval of a supervisor, generally they focus on the off people’s minds.’ Indeed, there is some evidence that money is not
reward rather than on the work they do to achieve it. Thus, the primarily what people work for. Managers should understand the
intrinsic satisfaction people receive from performing their jobs actu- limits of extrinsic motivators and work to satisfy employees’ higher, as
ally declines. When people lack intrinsic rewards in their work, their well as lower, needs. To be motivated, employees need jobs that offer
performance stays just adequate to achieve the reward offered. In self-satisfaction in addition to a yearly pay raise.
the worst case, employees may cover up mistakes, such as hiding
an on-the-job accident in order to win a safety award. SOURCE: Alfie Kohn, ‘Incentives Can Be Bad for Business’, Inc., January 1998, pp. 93–4;
A. J. Vogl, ‘Carrots, Sticks, and Self-Deception’ (an interview with Alfie Kohn),
2 Extrinsic rewards are temporary. Offering outside incentives may Across the Board, January 1994, pp. 39–44; and Geoffrey Colvin, ‘What Money Makes
ensure short-term success, but not long-term high performance. You Do’, Fortune, 16 August 1998, pp. 213–14.
Keeping staff motivated in Australia

At a time when many organisations are retrenching their staff, how do Australian organisations
achieve and maintain high levels of motivation in those who remain? Garry Adams, general
manager of Cullen Egan Dell in Sydney, claims that nearly half of Australian executives who
earn over A$100 000 a year have some incentive component in their remuneration. This follows
trends in both the USA and Europe of hard-wiring managers’ and executives’ wallets to the per-
formance outcomes of their organisation. Australian executives are working increasingly longer
hours, often between 60 and 80 hours per week, and are expected to perform at high levels for all
of that time. This is why some are bailing out and starting their own businesses.
Job design for motivation

A job in an organisation is a unit of work that a single employee is responsible for performing.
A job could include writing tickets for parking offenders in Sydney or doing long-range plan-
ning for ABC television. Jobs are important because performance of their components may

provide rewards that meet employees’ needs. An assembly line worker may install the same bolt
again and again, but an emergency room surgeon will give each trauma victim different treat-
ment. Managers need to know what aspects of a job provide motivation, as well as how to
compensate for routine tasks that have little inherent satisfaction. Job design is the applica- job design
The application of motivational theories to the
tion of motivational theories to the structure of work for improving productivity and structure of work for improving productivity and
satisfaction. Approaches to job design are generally classified as job simplification, job rotation, satisfaction.
job enlargement and job enrichment.
Job simplification
Job simplification pursues task efficiency by reducing the number of tasks one person must do. job simplification
A job design whose purpose is to improve
Job simplification is based on principles drawn from scientific management and industrial engi- task efficiency by reducing the number of
neering. Tasks are designed to be simple, repetitive and standardised. As complexity is stripped tasks a single person must perform.
from a job, the worker has more time to concentrate on doing more of the same routine task.
Workers with low skill requirements can perform the job, and the organisation achieves a high
level of efficiency. Indeed, workers are interchangeable, because they need little training or skill
and exercise little judgement. As a motivational technique, however, job simplification has
failed. People dislike routine and boring jobs and react in a number of negative ways, including
sabotage, absenteeism and unionisation. Job simplification is compared with job rotation and
job enlargement in Exhibit 16.7.
Job rotation
Job rotation systematically moves employees from one job to another, thereby increasing the job rotation
A job design that systematically moves
number of different tasks an employee performs without increasing the complexity of any one employees from one job to another to provide
job. For example, a car factory worker may install windshields one week and front bumper bars them with variety and stimulation.
the next. Job rotation still takes advantage of engineering efficiencies, but it provides variety
and stimulation for employees. Although employees may find the new job interesting at first,
the novelty soon wears off as the repetitive work is mastered.
Companies such as Toyota in its Altona plant in Melbourne and Motorola have built on the
notion of job rotation to train a flexible workforce. As organisations break away from ossified
job categories, workers can perform several jobs, thereby reducing labour costs. One employee
might move among the jobs of drill operator, punch operator and assembler, depending on the
company’s need at the moment. Some unions have resisted the idea, but many now accept it,
realising that it helps the company be more competitive.32
EXHIBIT 16.7
Types of job design
Job simplification Job rotation Job enlargement
Worker A Worker B Worker C Worker C Worker A Worker B Worker A
Task Task Task Task Task Task Task Task Task

1 2 3 1 2 3 1 2 3

Job enlargement
job enlargement Job enlargement combines a series of tasks into one new, broader job. This is a response to
A job design that combines a series of tasks
into one new, broader job to give employees
the dissatisfaction of employees with oversimplified jobs. Instead of only one job, an employee
variety and challenge. may be responsible for three or four and will have more time to do them. Job enlargement pro-
vides job variety and a greater challenge for employees. At Maytag, jobs were enlarged when
work was redesigned such that workers assembled an entire water pump rather than doing each
part as it reached them on the assembly line. In General Motors’ new assembly plants, the
assembly line is gone. In its place is a freewheeling, motorised carrier that transports each car
independently through the assembly process. The carrier moves to a work-station, where it stops
for a group of workers to perform a coordinated block of tasks, such as installing an engine and
its accessories. Thus the workers perform an enlarged job on a stationary automobile, rather
than a single task on a series of automobiles moving past them.
Job enrichment
Recall the discussion of Maslow’s need hierarchy and Herzberg’s two-factor theory. Rather than
job enrichment just changing the number and frequency of tasks a worker performs, job enrichment incor-
A job design that incorporates achievement,
recognition and other high-level motivators into
porates high-level motivators into the work, including job responsibility, recognition, and
the work. opportunities for growth, learning and achievement. In an enriched job, employees have con-
trol over the resources necessary for performing it, make decisions on how to do the work,
experience personal growth and set their own work pace. Many companies, including Fletcher
Challenge in New Zealand, Telstra, Procter & Gamble and Motorola, have undertaken job
enrichment programs to increase employees’ motivation and job satisfaction. At
Quad/Graphics, described in the Learning Organisation box, managers have incorporated job
enrichment ideas to help meet employees’ higher-level needs.
LEADING THE REVOLUTION: THE LEARNING ORGANISATION

The social experiment at Quad/Graphics
Harry V. Quadracci, founder of the US$600 million printing giant average annual growth rates near 40 per cent in an industry that is
Quad/Graphics in, has been called revolutionary because he wanted to struggling to maintain double-digit growth.
help his employees, mostly high school graduates, ‘become something The Quad/Graphics system takes a lot of trust, but managers agree
more than what they ever hoped to be.’ Quad/Graphics doesn’t use with Quadracci’s belief that ‘if you trust your employees, they’ll trust you,
organisational charts, strategic plans or even budgets. Top executives and they’ll rise to your level of belief in them’. Managers celebrate
run the company with a minimum of rules and a maximum of indoctrina- employee mistakes, particularly what Quadracci called ‘perfect failures’.
tion with values. For example, Quadracci believed organisational charts An example of a perfect failure is when two technicians spent a year and
limit people’s responsibility, and thus their motivation and job satisfac- almost US$800 000 developing a paper-folding machine that didn’t
tion. At Quad/Graphics, if you see something that needs to be done, you work. The company celebrated afterwards, and even gave the workers a
do it. There is no separation between management and labour. There are bonus for having the courage to try. Quad/Graphics top managers
supervisors, but they wear the same uniform as their charges and do the believe that when employees are afraid to make mistakes, the business
same work. People and relationships are highly valued. is doomed. This belief has made Quad/Graphics a certifiable success,
Quadracci once said that all of business is an experiment: ‘You try racing ahead of its competitors. Managers continue to look for ways
something and if it works, it works. If it doesn’t work, you try something to give employees opportunities to grow financially and personally, to
else. Quad Graphics is a social experiment because we’ve ... just tried to continue to ‘become something more than what they ever hoped to be’.
experiment with the way we can interact in the workplace as individuals
and as responsible citizens.’ Quad/Graphics managers may do things SOURCE: ‘Harry V. Quadracci’, an interview with Craig Cox, Business Ethics, May–June 1993,
differently, but their approach has enabled the company to boast pp. 19–21.

Job characteristics model
One significant approach to job design is the job characteristics model developed by Richard
Hackman and Greg Oldham.33 Hackman and Oldham’s research concerned work redesign, work redesign
The altering of jobs to increase both the
which is defined as altering jobs to increase both the quality of employees’ work experience and quality of employees’ work experience and
their productivity. Hackman and Oldham’s research into the design of hundreds of jobs yielded their productivity.
the job characteristics model, which is illustrated in Exhibit 16.8. The model consists of three job characteristics model
A model of job design that comprises core job
major parts: core job dimensions, critical psychological states and employee growth-need dimensions, critical psychological states and
strength. employee growth-need strength.
Core job dimensions Hackman and Oldham identified five dimensions that determine a
job’s motivational potential:
1 Skill variety is the number of diverse activities that compose a job and the number of skills
used to perform it. A routine, repetitious, assembly line job is low in variety, whereas an
applied research position that entails working on new problems every day is high in variety.
2 Task identity is the degree to which an employee performs a total job with a recognisable
beginning and ending. A chef who prepares an entire meal has greater task identity than a
worker on a cafeteria line who ladles mashed potatoes.
3 Task significance is the degree to which the job is perceived as important and having impact
on the organisation or consumers. People who distribute penicillin and other medical
supplies during times of emergencies would feel they have significant jobs.
4 Autonomy is the degree to which the worker has freedom, discretion and self-determination
in planning and carrying out tasks. A house painter can determine how to paint the house;
a spray painter on an assembly line has little autonomy.
5 Feedback is the extent to which doing the job provides information back to the employee
about his or her performance. Jobs vary in their ability to let workers see the outcomes of
their efforts. A football coach knows whether the team won or lost, but a basic research
scientist may have to wait years to learn whether a research project was successful.
The job characteristics model says that the more these five core characteristics can be
designed into the job, the more the employees will be motivated and the higher will be
performance quality and satisfaction.
EXHIBIT 16.8
The job characteristics model
Core job dimensions Critical psychological states Personal and work outcomes
SOURCE: Adapted from J. Richard Hackman and G. R. Oldham, ‘Motivation through the Design of Work: Test of a Theory’, Organizational Behavior and
Human Performance, 16, 1976, p. 256.

Critical psychological states The model posits that core job dimensions are more rewarding
when individuals experience three psychological states in response to job design. In
Exhibit 16.8, skill variety, task identity and task significance tend to influence the employee’s
psychological state of experienced meaningfulness of work. The work itself is satisfying and
provides intrinsic rewards for the worker. The job characteristic of autonomy influences the
worker’s experienced responsibility. The job characteristic of feedback provides the worker
with knowledge of actual results. The employee thus knows how he or she is doing and can
change work performance to increase desired outcomes.
Personal and work outcomes The impact of the five job characteristics on the psychological
states of experienced meaningfulness, responsibility and knowledge of actual results leads to the
personal and work outcomes of high work motivation, high work performance, high
satisfaction, and low absenteeism and turnover.
Employee growth-need strength The final component of the job characteristics model is
called employee growth-need strength, which means that people have different needs for
growth and development. If a person wants to satisfy low-level needs, such as safety and
belongingness, the job characteristics model has less effect. When a person has a high need for
growth and development, including the desire for personal challenge, achievement and
challenging work, the model is especially effective. People with a high need to grow and
expand their abilities respond very favourably to the application of the model and to
improvements in core job dimensions.
One application of the job characteristics model that worked extremely well took place at
Sequins International Inc.
CASE STUDY
CASE STUDY
Sequins International Inc. www.sequins.com
Sequins International Inc. faces tough global competition, Because many workers have poor English skills, the
particularly from factories in China and India, where women company offers English lessons during lunch hours three times
and children hand-sew sequins for meagre wages, producing a week. Classes in mathematics and statistical process control
US$100 million in wholesale goods annually. To compete, are also available to train workers for a variety of new tasks.
Sequins uses machines that were first developed in the 1940s. Two teams, one for product satisfaction and the other for
The machines save labour but create other problems: the customer support, monitor quality control and machine
repetitive motions used in the process produce an array of maintenance as part of the production process, as well as
muscle pains as well as mind-numbing boredom. Sequins provide operators with ongoing feedback and training.
International redesigned the machines to reduce the physical These improvements in job design and motivation
stresses experienced by sequin makers. At the same time, skill dramatically increased worker satisfaction. As a result,
variety was increased, as inspection jobs that were once absenteeism is down two-and-a-half times in some areas.
performed separately were integrated into the manufacturing In addition, Sequins International has reduced the cost of
process. This gave workers increased task identity and a producing a unit of goods by 30 per cent and realised
greater stake in quality control. 30 per cent cuts in cycle time, inventory and overhead.34

Empowerment and other motivational programs
Despite the controversy over carrot-and-stick motivational practices discussed in the Manager’s
Shoptalk box earlier in this chapter, many organisations continue to use various types of incen-
tive compensation as a way to motivate employees to higher levels of performance. Exhibit 16.9
summarises several methods of incentive pay. These programs can be effective if they are used
appropriately and combined with motivational ideas that provide employees with intrinsic
rewards and meet higher-level needs. Effective organisations do not use incentive pay plans as
the sole basis of motivation.
EXHIBIT 16.9
New motivational compensation programs
Program name Purpose
Pay for performance Rewards individual employees in proportion to their performance

contributions. Also called merit pay.
Gain sharing Rewards all employees and managers within a business unit when
predetermined performance targets are met. Encourages teamwork.
Employee stock Gives employees part ownership of the organisation, enabling them
ownership plan (ESOP) to share in improved profit performance.
Lump-sum bonuses Rewards employees with a one-time cash payment based on performance.
Pay for knowledge Links employee salary with the number of task skills acquired.
Workers are motivated to learn the skills for many jobs, thus increasing
company flexibility and efficiency.
Flexible work schedule Flextime allows workers to set their own hours. Job sharing allows
two or more part-time workers to jointly cover one job. Telecommuting,
sometimes called flex-place, allows employees to work from home or
an alternate workspace.
Team-based compensation Rewards employees for behavior and activities that benefit the team,
such as cooperation, listening, and empowering others.
The newest trend in motivation is empowerment, the delegation of power or authority to empowerment
The delegation of power and authority to
employees in an organisation.35 Increasing employee power heightens motivation for task employees.
accomplishment because people improve their own effectiveness, choosing how to do a task
and using their creativity.36 Most people come into an organisation with the desire to do a good
job, and empowerment releases the motivation that is already there.
Ralph Stayer, CEO of Johnsonville Foods, believes a manager’s strongest power comes from
committed and motivated employees: ‘Real power comes from giving it up to others who are
in a better position to do things than you are.’37 The manager who shares power with employees
receives motivation and creativity in return.
Empowering employees means giving them four elements that enable them to act more freely
to accomplish their jobs:38
1 Employees receive information about organisation performance. In organisations where
employees are fully empowered, such as Com-Corp Industries, no information is secret. At
Com-Corp, every employee has access to all financial information, including executive
salaries.
2 Employees have knowledge and skills to contribute to organisation goals. Organisations use
training programs to help employees acquire the knowledge and skills they need to contribute

to organisational performance. At Tellabs Inc., a maker of sophisticated telephone equipment,
CEO Grace Pastiak personally leads workshops for about a dozen factory workers each month,
enabling them to solve problems and make quality improvements on their own.39
3 Employees have power to make substantive decisions. Workers have authority to directly
influence work procedures and organisational performance, often through quality circles or
self-directed work teams. At Compaq Computer (now HP–Compaq), salespeople worked out
of their homes and set their own schedules. The company provided a fully equipped networked
computer so workers could share information with colleagues and access comprehensive data-
bases. Under the system, Compaq’s sales force set new records for productivity.40
4 Employees are rewarded based on organisation performance. Organisations that empower
workers often reward them based on the results shown in the organisation’s bottom line.
Johnsonville Foods instituted a ‘company performance share’ – a fixed percentage of pre-tax
profits to be divided every six months among employees. Individual shares are based on a
performance appraisal system designed and administered by a volunteer team of line
workers.41 Organisations may also use other motivational programs described in Exhibit 16.9
to tie employee efforts to organisation performance.
Many of today’s organisations are implementing empowerment programs, but they are
empowering workers to varying degrees. At some organisations, empowerment means encour-
aging workers’ ideas while managers retain final authority for decisions; at others it means giving
employees almost complete freedom and power to make decisions and exercise initiative and
imagination.42 Current methods of empowerment fall along a continuum, as illustrated in
Exhibit 16.10. The continuum runs from a situation in which frontline workers have almost
EXHIBIT 16.10 High Self-management

A continuum of empowerment
gy ion
ate is
str dec
Self-directed teams
nd for
s a le
es ib
oc ns
pr spo
e
er
Cross-functional teams Ar
cis e
s
de Mak
ion
Quality circles
Participation groups
Degree of
cis te
empowerment
de ipa
s
ion
in artic
P
Suggestion
programs
ut
inp
SOURCES: Based on Robert C. Ford and

ve
Periodic
Gi
Myron D. Fottler, ‘Empowerment: A Matter of

briefings
Degree’, Academy of Management Executive, 9:3
1995, pp. 21–31; Lawrence Holpp, ‘Applied
on on
Empowerment’, Training, February 1994,

eti isi
cr ec
pp. 39–44; and David P. McCaffrey,

dis no d
Sue R. Faerman and David W. Hart, ‘The Appeal

ve
Ha
and Difficulties of Participative Systems’,

Organization Science, 6:6 November–December
Low
1995, pp. 603–27.

no discretion – as on a traditional assembly line – to full empowerment, where workers even
participate in formulating organisational strategy. An example of full empowerment is a self-
directed team that is given authority to hire, discipline and dismiss team members and to set
compensation rates. Few organisations have moved to this level of empowerment. One that has
is W. L. Gore and Associates, which operates with no titles, hierarchy or any of the conven-
tional structures associated with a company of its size. Gore’s culture emphasises teamwork,
mutual support, freedom, intrinsic motivation, independent effort, and commitment to the
total organisation rather than to narrow jobs or departments. With empowerment, workers are
motivated because they are intellectually challenged, provided with opportunities to use their
minds and imaginations, and given the power to make decisions that affect their work. Research
indicates that most people have a need for self-efficacy, which is the capacity to produce results
or outcomes, to feel that they are effective.43 By meeting higher-level needs, empowerment can
provide powerful motivation.
These forms of motivation are increasingly important in the modern business world, in
which the key drivers of globalisation and e-business mean that workers are often no longer
supervised directly by their boss. At Sausage Software, the Australian-based e-business company
that provides solutions to organisations’ electronic commerce needs, rapid and frequent
organisational restructures and change mean that people must primarily be self-motivated.
People operate in a low-structure environment at Sausage, with decisions being made at high
speed, and the culture of high excitement achieves the motivation without coercive structures
and managers as supervisors.
CASE STUDY
CASE STUDY
AD Coote & Company www.adcoote.com.au
AD Coote & Company is the largest Australian-owned columns are designed with software programs that were
lighting column manufacturer and the market leader in developed over several years. Investment runs into millions of
Australia. What are the secrets of its success? First is excellent dollars, and the company has a new administration building
design. Second is a full range of products. Third is a quality at Welshpool. Research and development ranks high, and
assurance system handled by motivated staff, which leads to AD Coote & Company has developed many new products.
exceptional customer service. A profit-sharing plan returns A person using their website can design their own lighting
part of the profits each year to the staff, and the result is a column installation without reference to the manufacturer.
lean organisation with lower overheads than their When the client is ready, AD Coote responds to the e-mail
competitors – hence its Australia-wide demand and the same day with prices, delivery details, and so on. The
competitive edge. system works: many good orders are received from the eastern
The company has also developed export markets. They states and from overseas. The company gets as many as
recently designed and supplied columns and floodlights to 10 inquiries daily from around the world.
Brunei, where Shell Oil floodlit two soccer pitches. It has Turnover has increased about 15 per cent annually, and
supplied equipment to South America and handled a big runs into millions of dollars, with a staff of 50. Management
coal mine expansion in Indonesia. Recently it supplied solar has created a corporate culture with workers who are
lighting columns to Mauritius. committed, empowered and responsible. The future for the
The company’s computer design program is probably the organisation is bright indeed.
most comprehensive of its type in the world. The lighting
SUMMARY SUMMARY
This chapter introduced a number of important ideas about the successful application of motivational ideas occurred for factory
motivation of people in organisations. The content theories of workers at Sandstrom Products.
motivation focus on the nature of underlying employee needs. Recall from the chapter opening case that Leo Henkelman was an
Maslow’s hierarchy of needs, Alderfer’s ERG theory, Herzberg’s two- alienated mill operator considering quitting. When top management
factor theory and McClelland’s acquired needs theory all suggest that empowered workers by implementing open-book management,
people are motivated to meet a range of needs. Process theories Henkelman was given the opportunity to take on more responsibility,
examine the way people go about selecting rewards with which to learn new skills and make improvements. He learned his own
meet needs. Equity theory says that people compare their strengths and limitations in the process. While serving as a
contributions and outcomes with others, and are motivated to temporary plant manager, he found that delegation was not his
maintain a feeling of equity. Expectancy theory suggests that people strength – doing was. When a technician job opened up in the lab,
calculate the probability of achieving certain outcomes. Managers can he applied. Although he lacked the educational background normally
increase motivation by treating employees fairly and by clarifying required, the lab director gave him a chance. Now, using his
employee paths towards meeting their needs. Still another experience, Henkelman guides the manufacturing process from
motivational approach is reinforcement theory, which says that beginning to end, working with customers to develop new products
employees learn to behave in certain ways based on the availability and refine old ones. As his skills and responsibilities increased, so
of reinforcements. did his pay, thanks to a proficiency pay system that based his pay on
The application of motivational ideas is illustrated in job design his skills and accomplishments and a gain-sharing plan that allowed
and other motivational programs. Job design approaches include job him to share in the company’s profits. By trusting and empowering
simplification, job rotation, job enlargement, job enrichment and the workers, Sandstrom gave them a reason to care about the company,
job characteristics model. Managers can change the structure of work and the knowledge and power to make personal contributions to
to meet employees’ high-level needs. The recent trend towards organisational performance. Results were staggering as Sandstrom
empowerment motivates by giving employees more information and rebounded from a loss of US$100 000 to profits of almost US$800 000
authority to make decisions in their work while connecting two years later. Surprisingly, the turnaround occurred while sales
compensation to the results. Other motivational programs include pay stayed the same, without new product lines or new customers. Cost
for performance, gain sharing, lump-sum bonuses, pay for knowledge, cutting and improvements instituted by an empowered workforce
flexible work schedules and team-based compensation. A very made the difference.44
DISCUSSION QUESTIONS
DISCUSSION QUESTIONS
548
1 Low-paid service workers are a motivational problem for many 3 Campbell Soup Company reduces accidents with a lottery. Each
organisations. Consider the ill-trained and poorly motivated X-ray worker who works 30 days or more without losing a day for a job-
machine operators trying to detect weapons in airports. How related accident is eligible to win prizes in a raffle drawing. Why
might these people be motivated to reduce boredom and increase has this program been successful?
their vigilance? 4 One executive argues that managers have too much safety
2 One small company recognises an employee of the month, who is because of benefit and retirement plans. He rewards his managers
given a parking spot next to the CEO’s space near the front door. for taking risks and has removed many guaranteed benefits.
What theories would explain the positive motivation associated Would this approach motivate managers? Why?
with this policy?

5 If an experienced secretary discovered that she made less money 9 Many organisations use sales contests and motivational speakers
than a newly hired cleaner, how would she react? What inputs to motivate salespeople to overcome frequent rejections and
and outcomes might she evaluate to make this comparison? turn-downs. How would these devices help motivate salespeople?
6 Would you rather work for a supervisor high in need for 10 What characteristics of individuals determine the extent to which
achievement, need for affiliation or need for power? Why? work redesign will have a positive impact on work satisfaction
What are the advantages and disadvantages of each? and work effectiveness?
7 A survey of teachers found that two of the most important 11 Do you think an empowerment program of increased employee
rewards were the belief that their work was important and a authority and responsibility would succeed without being tied
feeling of accomplishment. Is this consistent with Hackman and to a motivational compensation program, such as gain sharing?
Oldham’s job characteristics model? Discuss.
8 The teachers in question 7 also reported that pay and benefits
were poor, yet they continued to teach. Use Herzberg’s two-factor
theory to explain this finding.
MANAGEMENT IN PRACTICE: EXPERIENTIAL CHALLENGE MANAGEMENT IN PRACTICE

What motivates you? 4 The opportunity for independent thought and action in that job.
Indicate how important each characteristic is to you. Answer 1 2 3 4 5 6 7
according to your feelings about the most recent job you had or 5 The feeling of security in that job.
about the job you currently hold. Circle the number on the scale that 1 2 3 4 5 6 7
represents your feeling – 1 (very unimportant) to 7 (very important). 6 The feeling of self-fulfilment a person gets from being in that
When you have completed the questionnaire, score it as follows: position (that is, the feeling of being able to use one’s own
unique capabilities, realising one’s potential).
Rating for question 5 = __. Divide by 1 = __ security.
1 2 3 4 5 6 7
Rating for questions 9 and 13 = __. Divide by 2 = __ social.
7 The prestige of the job outside the company (that is, the regard
Rating for questions 1, 3 and 7 = __. Divide by 3 = __ esteem.
received from others not in the company).
Rating for questions 4, 10, 11 and 12 = __. Divide by 4 = __
1 2 3 4 5 6 7
autonomy.
8 The feeling of worthwhile accomplishment in that job.
Rating for questions 2, 6 and 8 = __. Divide by 3 = self-
1 2 3 4 5 6 7
actualisation.
9 The opportunity in that job to give help to other people.
The instructor has national norm scores for presidents, vice- 1 2 3 4 5 6 7
presidents, and upper middle-level, lower middle-level and lower-level 10 The opportunity in that job for participation in the setting of
managers with which you can compare your mean importance scores. goals.
How do your scores compare with the scores of managers working in 1 2 3 4 5 6 7
organisations? 11 The opportunity in that job for participation in the determination
of methods and procedures.
1 The feeling of self-esteem a person gets from being in that job.
1 2 3 4 5 6 7
1 2 3 4 5 6 7
12 The authority connected with the job.
2 The opportunity for personal growth and development in that job.
1 2 3 4 5 6 7
1 2 3 4 5 6 7
13 The opportunity to develop close friendships in the job.
3 The prestige of the job inside the company (that is, regard
1 2 3 4 5 6 7
received from others in the company). SOURCE: Lyman W. Porter, Organizational Patterns of Managerial Job Attitudes,
1 2 3 4 5 6 7 American Foundation for Management Research: New York, 1964, pp. 16, 19.
MANAGEMENT IN PRACTICE: ETHICAL CHALLENGE MANAGEMENT IN PRACTICE

Compensation showdown Lebeau felt her temper rising. After all their hard work, she was
When Suzanne Lebeau, human resources manager, received a call from not going to sit by and watch the employees be disappointed
Bert Wilkes, financial controller of Farley Glass Works, she expected because the accounting department had not structured the employee
to receive good news to share with the Wage and Bonus Committee. bonus plan to work with the executive plan. She was afraid they
She had already seen numbers to indicate that the year-end bonus would undo all the good that the bonus plan had done in motivating
plan, which was instituted by her committee in lieu of the traditional the plant workers. They had kept their end of the bargain, and the
guaranteed raises of the past, was going to exceed expectations. company’s high profits were common knowledge in the plant.
It was a relief to her, because the plan, devised by a committee What do you do?
representing all levels of the workforce, had taken 11 months to 1 Ask to appear before the executive committee to argue that the
complete. It had also been a boost to morale at a low point in the year-end bonus plan for workers be honoured. Executives could
company’s history. Workers at the glass shower production plant were defer their bonuses until the problem in the structure of the
bringing new effort and energy to their jobs, and Lebeau wanted to compensation plan is resolved.
see them rewarded. 2 Go along with the financial controller. It isn’t fair for the
She was shocked to see Wilkes’ face so grim when she arrived for executives to lose so much money. Begin to prepare the workers
her meeting. ‘We have a serious problem, Suzanne’, Wilkes said to to not expect much this first year of the plan.
open the meeting. ‘We ran the numbers from our third quarter to 3 Go to the board of directors and ask for a compromise plan that
project our end-of-year figures and discovered that the executive splits the bonuses between the executives and the workers.
bonus objectives, which are based on net operating profit, would not
SOURCE: Based on Doug Wallace, ‘Promises to Keep, What Would You Do?’, Business Ethics,
be met if we paid out the employee bonuses first. The executive II, July–August 1993, pp. 11–12. Reprinted with permission from Business Ethics
bonuses are a major source of their income. We can’t ask them to do magazine, PO Box 8439, Minneapolis, MN 55408 (612) 879-0695.
without their salary to ensure a bonus for the workers.’
LEARNING FROM THE INTERNET LEARNING FROM THE INTERNET

1 Motivation. Go to the Recognition-Plus website (www.recogni- write a one- to two-page summary of what you learned about
tion-plus.com/ideas/motivation-tips.htm) and print out the page rewarding and recognising employees that you believe would be
‘Motivation: Fact vs Fallacy’. For each of the 10 points, think of a most useful for managers.
personal or work-related example that illustrates the point being 3 Motivational compensation programs. The Foundation for
made. If you disagree with any of the 10 points, be prepared to Economic Development (www.fed.org) provides a 10-question quiz
give your reasons during a class discussion on motivation. that allows you to test your knowledge of employee ownership as
2 Employee rewards and recognition. Bob Nelson, author of two a means of motivating employees. After completing and scoring
best-selling books on motivation, 1001 Ways to Reward Employees the quiz, explore the links provided to learn more about
and 1001 Ways to Energize Employees, provides many excellent employee ownership. In addition, check out the links on the
resources at his website (www.nelson-motivation.com). Look at main page, which provide articles, case studies and research on
the page titled ‘Bob Nelson’s Guide to the Best Employee Rewards such topics as ‘Employee Motivation and Empowerment’ and
and Recognition Sites on the Web’. After looking at several sites, ‘Trends in Employee Ownership’.
CASE STUDY
CASE STUDY
Bloomingdale’s is at the forefront of a quiet revolution sweeping
Bloomingdale’s
necessary for salespeople to earn their previous salary and even to
department store retailing. Thousands of hourly sales employees are keep their jobs. In previous years, the practice of commission pay
being converted to commission pay. Bloomingdale’s hopes to use was limited to big-ticket items such as furniture, appliances and
commissions to motivate employees to work harder, to attract better men’s suits, where extra sales skill pays off. The move into small-item
salespeople, and to enable them to earn more money. For example, purchases may not work as well, but Bloomingdale’s and other stores
under the old plan, a Bloomingdale’s salesclerk in women’s wear are trying anyway.
would earn about US$16 000 a year, based on $7 per hour and One question is whether Bloomingdale’s can create more customer-
0.5 per cent commission on $500 000 sales. Under the new plan, the oriented salespeople when they work on commission. They may be
annual pay would be $25 000 based on 5 per cent commission on reluctant to handle complaints, make returns and clean shelves,
$500 000 sales. preferring instead to chase customers. Moreover, it cost
John Palmerio, who works in the men’s shoe salon, is enthusiastic Bloomingdale’s about $1 million per store to install the commission
about the changeover. His pay has increased an average of $165 per system because of training programs, computer changes and
week. But in women’s lingerie, employees are less enthusiastic. increased pay in many departments. If the overall impact on service
A target of $1600 in sales per week is difficult to achieve, but is negative, the increased efficiency may not seem worthwhile.
QUESTIONS
1 What theories about motivation underlie the switch from salary SOURCES: Based on Francine Schwadel, ‘Chain Finds Incentives a Hard Sell’,
Wall Street Journal, 5 July 1990, p. B4; and Amy Dunkin, ‘Now Salespeople Really Must
to commission pay? Sell for Their Supper’, Business Week, 31 July 1989, pp. 50–2.
2 Are high-level needs met under the commission system?
3 As a customer, would you prefer to shop where employees are
motivated to make commissions?

ENDNOTES
1 David Whitford, ‘Before & After’, Inc., June 1995, pp. 44–50. 23 Alexander D. Stajkovic and Fred Luthans, ‘A Meta-Analysis of the Effects
2 David Silburt, ‘Secrets of the Super Sellers’, Canadian Business, January of Organizational Behavior Modification on Task Performance, 1975–95’,
1987, pp. 54–9; ‘Meet the Savvy Supersalesmen’, Fortune, 4 February Academy of Management Journal, October 1997, pp. 1122–1149;
1985, pp. 56–62; Michael Brody, ‘Meet Today’s Young American Worker’, H. Richlin, Modern Behaviorism (San Francisco: Freeman, 1970); and
Fortune, 11 November 1985, pp. 90–8; and Tom Richman, ‘Meet the B. F. Skinner, Science and Human Behavior, Macmillan: New York, 1953.
Masters. They Could Sell You Anything ...’, Inc., March 1985, pp. 79–86. 24 Fred Goodman, ‘Suite Smarts’, Success, January 1998, p. 11.
3 Richard M. Steers and Lyman W. Porter (eds), Motivation and Work 25 Stajkovic and Luthans, ‘A Meta-Analysis of the Effects of Organizational
Behavior, 3rd edn, McGraw-Hill: New York, 1983; Don Hellriegel, Behavior Modification on Task Performance, 1975–95’.
John W. Slocum, Jr. and Richard W. Woodman, Organizational Behavior, 26 Kenneth D. Butterfield and Linda Klebe Trevino, ‘Punishment from the
7th edn, West: St. Paul, Minn., 1995, p. 160; and Jerry L. Gray and Manager’s Perspective: A Grounded Investigation and Inductive Model’,
Frederick A. Starke, Organizational Behavior: Concepts and Applications,
Academy of Management Journal, 39:6, December 1996, pp. 1479–512; and
4th edn, Macmillan: New York, 1988, pp. 104–5.
Andrea Casey, ‘Voices from the Firing Line: Managers Discuss Punishment
4 Linda Grant, ‘Happy Workers, High Returns’, Fortune, 12 January 1998, in the Workplace’, Academy of Management Executive, 11:3, 1997,
p. 81. pp. 93–4.
5 Anne Fisher, ‘The 100 Best Companies to Work for in America’, Fortune, 27 Tom Peters and Nancy Austin, A Passion for Excellence: The Leadership
12 January 1998, pp. 69–70. Difference, Random House: New York, 1985, p. 267.
6 Steers and Porter, Motivation and Work Behavior. 28 Roberta Maynard, ‘How to Motivate Low-Wage Workers’.
7 J. F. Rothlisberger and W. J. Dickson, Management and the Worker, 29 L. M. Sarri and G. P. Latham, ‘Employee Reaction to Continuous and
Harvard University Press: Cambridge, Mass.: 1939. Variable Ratio Reinforcement Schedules Involving a Monetary Incentive’,
8 Abraham F. Maslow, ‘A Theory of Human Motivation’, Psychological Journal of Applied Psychology, 67, 1982, pp. 506–8; and R. D. Pritchard,
Review, 50, 1943, pp. 370–96. J. Hollenback and P. J. DeLeo, ‘The Effects of Continuous and Partial
9 Clayton Alderfer, Existence, Relatedness and Growth, Free Press: New York, Schedules of Reinforcement on Effort, Performance, and Satisfaction’,
1972. Organizational Behavior and Human Performance, 25, 1980, pp. 336–53.
10 Roberta Maynard, ‘How to Motivate Low-Wage Workers’. 30 ‘Creating Incentives for Hourly Workers’, Inc., July 1986, pp. 89–90.
11 Nina Munk, ‘The New Organization Man’, Fortune, 16 March 1998, 31 A. J. Vogl, ‘Carrots, Sticks, and Self-Deception’ (an interview with
pp. 62–74. Alfie Kohn), Across the Board, January 1994, pp. 39–44.
12 Frederick Herzberg, ‘One More Time: how Do You Motivate Employees?’ 32 Norm Alster, ‘What Flexible Workers Can Do’, Fortune, 13 February 1989,
Harvard Business Review, January–February 1968, pp. 53–62. pp. 62–6.
13 Jay Finegan, ‘Unconventional Wisdom’, Inc., December 1994, pp. 44–58. 33 J. Richard Hackman and Greg R. Oldham, Work Redesign, Addison-
Wesley: Reading, Mass., 1980; and J. Richard Hackman and Greg
14 David C. McClelland, Human Motivation, Scott, Foresman: Glenview, Ill.,
1985. Oldham, ‘Motivation through the Design of Work: Test of a Theory’,
Organizational Behavior and Human Performance, 16, 1976, pp. 250–79.
15 David C. McClelland, ‘The Two Faces of Power’, in D. A. Colb,
I. M. Rubin and J. M. McIntyre (eds), Organizational Psychology, 34 Barbara Ettorre, ‘Retooling People and Processes’, Management Review,
Prentice-Hall: Englewood Cliffs, N.J. 1971, pp. 73–86. June 1995, pp, 19–23.
16 J. Stacy Adams, ‘Injustice in Social Exchange’, in L. Berkowitz (ed.), 35 Edwin P. Hollander and Lynn R. Offermann, ‘Power and Leadership in
Advances in Experimental Social Psychology, 2nd edn, Academic Press: Organizations’, American Psychologist, 45, February 1990, pp. 169–89.
New York, 1965; and J. Stacy Adams, ‘Toward an Understanding of 36 Jay A. Conger and Rabindra N. Kanungo, ‘The Empowerment Process:
Inequity’, Journal of Abnormal and Social Psychology, November 1963, Integrating Theory and Practice’, Academy of Management Review, 13,
pp. 422–36. 1988, pp. 471–82.
17 Ray V. Montagno, ‘The Effects of Comparison to Others and Primary 37 Thomas A. Stewart, ‘New Ways to Exercise Power’, Fortune, 6, November
Experience on Responses to Task Design’, Academy of Management Journal, 1989, pp. 52–64.
28, 1985, pp. 491–8; and Robert P. Vecchio, ‘Predicting Worker 38 David E. Bowen and Edward E. Lawler III, ‘The Empowerment of Service
Performance in Inequitable Settings’, Academy of Management Review, 7, Workers: What, Why, How, and When’, Sloan Management Review, Spring
1982, pp. 103–10. 1992, pp. 31–9; and Ray W. Coye and James A. Belohav, ‘An Exploratory
18 ‘The Double Standard That’s Setting Worker against Worker’, Analysis of Employee Participation’, Group and Organization Management,
Business Week, 8 April 1985, pp. 70–1. 20:1, March 1995, pp. 4–16.
19 James E. Martin and Melanie M. Peterson, ‘Two-Tier Wage Structures: 39 John Holusha, ‘Grace Pastiak’s ‘Web of Inclusion’, New York Times,
Implications for Equity Theory’, Academy of Management Journal, 30, 1987, 5 May 1991, F1, F6.
pp. 297–315.
40 Arno Penzias, ‘New Paths to Success’, Fortune, 12 June 1995, pp. 90–4.
20 Victor H. Vroom, Work and Motivation, Wiley: New York, 1964; B. S.
41 Ralph Stayer, ‘How I Learned to Let My Workers Lead’, Harvard Business
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21 Richard L. Daft and Richard M. Steers, Organizations: A Micro/Macro 9:3, 1995, pp. 21–31.
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Business, January 1998, pp. 21–2. 44 Whitford, ‘Before & After’.

ENG Motivation in Organizastion

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MOTIVATION IN

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If you were the CEO of Sandstrom Products,

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The concept of motivation

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LEADING THE REVOLUTION: DIVERSITY

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Human relations approach

Human resource approach

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Content perspectives on motivation

Hierarchy of needs theory

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Education, religion, hobbies, Self-actualisation Opportunities for training, advancement,

Approval of family, friends, Recognition, high status,

Work groups, clients, coworkers,

Food, water, sex Physiological needs Heat, air, base salary

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ERG theory Clayton Alderfer proposed a modification of Maslow’s theory in an effort to

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Acquired needs theory

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EXHIBIT 16.4 E P Expectancy

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Reinforcement perspective on motivation

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Employee increases work rate

Employee continues slow work

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Schedule of Nature of Effect on behaviour Effect on behaviour Example

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Keeping staff motivated in Australia

Job design for motivation

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Job simplification Job rotation Job enlargement

Worker A Worker B Worker C Worker C Worker A Worker B Worker A

Task Task Task Task Task Task Task Task Task

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LEADING THE REVOLUTION: THE LEARNING ORGANISATION

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Program name Purpose

Pay for performance Rewards individual employees in proportion to their performance

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EXHIBIT 16.10 High Self-management

SOURCES: Based on Robert C. Ford and

Myron D. Fottler, ‘Empowerment: A Matter of

Empowerment’, Training, February 1994,

pp. 39–44; and David P. McCaffrey,

Sue R. Faerman and David W. Hart, ‘The Appeal

and Difficulties of Participative Systems’,

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MANAGEMENT IN PRACTICE: EXPERIENTIAL CHALLENGE MANAGEMENT IN PRACTICE

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MANAGEMENT IN PRACTICE: ETHICAL CHALLENGE MANAGEMENT IN PRACTICE