Chapter 5 Motivation in the Workplace

5
MOTIVATION IN THE WORKPLACE

LEARNING OBJECTIVES
After reading this chapter, students should be able to:
Compare and contrast Maslow’s needs hierarchy theory with Alderfer’s ERG theory.
Describe Lawrence and Nohria’s four innate drives and explain how these drives influence
motivation and behaviour.
Summarize McClelland’s learned needs theory, including the three needs he studied.
Discuss the practical implications of needs-based motivation theories.
Diagram the expectancy theory model and discuss its practical implications for motivating
employees.
Describe the characteristics of effective goal setting and feedback.
Summarize the equity theory model, including how people try to reduce feelings of inequity.
Identify the factors that influence procedural justice, as well as the consequences of
procedural justice.

CHAPTER GLOSSARY

360-degree feedback Performance feedback received equity theory Theory that explains how people
from a full circle of people around an employee. develop perceptions of fairness in the distribution and
exchange of resources.
distributive justice The perceived fairness in
outcomes we receive relative to our contributions and ERG theory Alderfer’s motivation theory of three
the outcomes and contributions of others. instinctive needs arranged in a hierarchy, in which
people progress to the next higher need when a lower
effort-to-performance (E-to-P) expectancy The
one is fulfilled, and regress to a lower need if unable to
individual’s perceived probability that his or her effort
fulfill a higher one.
will result in a particular level of performance.
equity sensitivity One’s outcome– input preferences
and reaction to various outcome–input ratios.

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executive coaching A helping relationship using
behavioural methods to assist clients in identifying and
achieving goals for their professional performance and
personal satisfaction.
existence needs A person’s physiological and
physically related safety needs, such as the need for
food, shelter, and safe working conditions.
expectancy theory The motivation theory based on the
idea that work effort is directed toward behaviours that
people believe will lead to desired outcomes.
feedback Any information that people receive about
the consequences of their behaviour.
frustration-regression process A process whereby a
person who is unable to satisfy a higher need becomes
frustrated and regresses to the next lower need level.
goal setting The process of motivating employees and
clarifying their role perceptions by establishing
performance objectives.
goals The immediate or ultimate objectives that
employees are trying to accomplish from their work
effort.
growth needs A person’s needs for self-esteem through
personal achievement as well as for self-actualization.
management by objectives (MBO) A participative
goal-setting process in which organizational objectives
are cascaded down to work units and individual
employees.
motivation The forces within a person that affect his or
her direction, intensity, and persistence of voluntary
behaviour. (2, 5)
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need for achievement (nAch) A learned need in
which people want to accomplish reasonably
challenging goals through their own efforts, like to be
successful in competitive situations, and desire
unambiguous feedback regarding their success.
need for affiliation (nAff) A learned need in which
people seek approval from others, conform to their
wishes and expectations, and avoid conflict and
confrontation.
need for power (nPow) A learned need in which
people want to control their environment, including
people and material resources, to benefit either
themselves (personalized power) or others (socialized
power).
needs Deficiencies that energize or trigger behaviours
to satisfy those needs.
needs hierarchy theory Maslow’s motivation theory
of five instinctive needs arranged in a hierarchy,
whereby people are motivated to fulfill a higher need
as a lower one becomes gratified.
performance-to-outcome (P°˜O) expectancy The
perceived probability that a specific behaviour or
performance level will lead to specific outcomes.
procedural justice The fairness of the procedures used
to decide the distributions of resources.
relatedness needs A person’s needs to interact with
other people, receive public recognition, and feel
secure around other people.
satisfaction-progression process A process whereby
people become increasingly motivated to fulfill a
higher need as a lower need is gratified.
valence The anticipated satisfaction or dissatisfaction
that an individual feels toward an outcome.

CHAPTER SYNOPSIS
Motivation refers to the forces within a person that
affect his or her direction, intensity, and persistence of
voluntary behaviour in the workplace. As a new
generation of employees enters the workplace and as
globalization creates a more diverse workforce,
companies need to rethink their motivational practices.
Two motivation theories -- Maslow’s needs
hierarchy and Alderfer’s ERG theory – propose how
employee needs change over time through a needs
hierarchy. Maslow’s theory groups needs into a
hierarchy of five levels and states that the lowest needs
are initially most important, but higher needs become
more important as the lower ones are satisfied.
Alderfer’s ERG theory groups needs into a hierarchy of
three levels: existence, relatedness, and growth. It also
suggests that those who are unable to satisfy a higher
need become frustrated and regress back to the next
lower need level. Both Malsow’s and Alderfer’s
theories are popular, but many scholars are now
doubtful that people have an inherent hierarchy of
needs.
Paul Lawrence and Nitkin Nohria proposed an
evolutionary psychology theory involving four innate
drives – the drive to acquire, bond, learn, and defend.
These drives create emotional markers that indicate the
relevance and strength of perceived information about
our environments and thereby motivate us to act on
those conditions. McClelland’s learned needs theory
argues that people have secondary needs or drives that
are learned rather than instinctive, including need for
achievement, need for power, and need for affiliation.
The practical implications of needs-based
motivation theories is that corporate leaders need to
balance the demands and influences of the different
innate drives. They must also recognize that different
people have different needs at different times. These
theories also warn us against relying too heavily on
financial rewards as a source of employee motivation.
Expectancy theory states that work effort is
determined by the perception that effort will result in a
particular level of performance (E-->P expectancy), the
perception that a specific behaviour or performance
level will lead to specific outcomes (P-->O
expectancy), and the valences that the person feels for
those outcomes. The E-->P expectancy increases by
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Chapter 5 Motivation in the Workplace
improving the employee’s ability and confidence to
perform the job. The P-->O expectancy increases by
measuring performance accurately, distributing higher
rewards to better performers, and showing employees
that rewards are performance based. Outcome valences
increase by finding out what employees want and using
these resources as rewards.
Goal setting is the process of motivating employees
and clarifying their role perceptions by establishing
performance objectives. Goals are more effective when
they are specific, relevant, challenging, have employee
commitment, and accompanied by meaningful
feedback. Participative goal setting is important in
some situations. Effective feedback is specific, relevant,
timely, credible, and sufficient frequent (which depends
on the employee’s knowledge/experience with the task
and the task cycle). Two increasingly popular forms of
feedback are multisource (360-degree) assessment and
executive coaching. Feedback from non-social sources
is also beneficial.
Organizational justice consists of distributive justice
(perceived fairness in the outcomes we receive relative
to our contributions and the outcomes and
contributions of others) and procedural justice (fairness
of the procedures used to decide the distribution of
resources). Equity theory, which considers the most
common principle applied in distributive justice, has
four elements: outcome/input ratio, comparison other,
equity evaluation, and consequences of inequity. The
theory also explains what people are motivated to do
when they feel inequitably treated. Equity sensitivity is
a personal characteristics that explains why people
react differently to varying degrees of inequity.
Procedural justice is influenced by both structural
rules and social rules. Structural rules represent the
policies and practices that decision makers should
follow, of which giving employees “voice” in the
decision process is the most commonly identified.
Social rules refer to standards of interpersonal conduct
between employees and decision makers and are noted
by showing respect and providing accountability for
decisions. Procedural justice is as important as
distributive justice, and influences organizational
commitment, trust, various withdrawal and aggression
behaviours.
Part 2 Individual Behaviour and Processes

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LECTURE OUTLINE (with PowerPoint® slides)

MOTIVATION IN THE WORKPLACE

Motivation in the
Workplace
Slide 1

OPENING VIGNETTE: MOTIVATION AT KRAVE’S

CANDY (CLODHOPPERS)
Chris Emery and Larry Finnson have entrepreneurial drive that has
Motivation at Krave’s
Candy helped the Winnipeg-based company become successful
Slide 2

Motivation -- the internal forces that affect the direction, intensity, and
persistence of voluntary behaviour
More challenging today because:
1. Employee needs are changing – diverse employees with
diverse values, young employees have different needs
Challenges of Motivating 2. Layoffs, restructuring have damaged employee trust
Employees
Slide 3
3. Flatter organizations -- not enough supervisors to practice
‘command-and-control’ management

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NEEDS-BASED THEORIES OF MOTIVATION

Needs -- deficiencies that energize behaviours to satisfy those needs

1. Needs hierarchy theory (Maslow)

• Five basic human needs in a hierarchy of importance
- physiological, safety, belongingness, esteem, and self-
actualization
• Satisfaction-progression hypothesis
Needs Hierarchy Theory - as a need level is satisfied, move to next level up the
Slide 4 hierarchy
- self-actualization is the exception -- people desire more
of this need
• Problem: Needs hierarchy theory lacks empirical support
- too rigid for dynamics of human needs
- needs do not cluster around Maslow’s categories

2. ERG theory (Alderfer)

• Three need categories: existence, relatedness, and growth
• Applies both satisfaction-progression and frustration-
regression process—people shift to a lower need if a higher
need is blocked
ERG Theory -- Behaviour is motivated to meet more than one need
Slide 5 level simultaneously
• Provides good representation of need dynamics
-- less rigid, more accurate than needs hierarchy theory,
however, scholars question whether human beings have
an inherent needs hierarchy

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3. Innate human drives theory

• Innate drives are “hard-wired” into our genes and
manifested as conscious emotions that influence our
behaviour and decisions
Four fundamental drives
-- Drive to acquire – to seek, take control, and retain
objects and personal experiences; includes need for
Innate Drives Theory status and recognition; foundation of competition
Slide 6 -- Drive to bond – to form social relationships; motivates
people to cooperate
-- Drive to learn – to satisfy one’s curiosity, to know and
understand ourselves and our environment; related to higher
order needs of growth and self-actualization
-- Drive to defend – to protect ourselves physically and
socially; ‘fight or flight’ response; includes defending our
relationships and belief systems; always reactive i.e.
triggered by threat
Innate drives influence on motivation
• People process information both emotionally and rationally.
Innate Drives and • Innate drives speed up decision-making -- trigger emotional
Motivation markers which become the conscious sources of motivation
Slide 7

4. McClelland’s theory of learned needs

• Secondary needs – learned and reinforced rather than
instinctive. Several learned needs can motivate us at the
same time.
Learned Needs Theory • Need for achievement (nAch)
Slide 8 -- High nAch people need to reach goals, take
responsibility, prefer working alone, comfortable with
moderate risk, desire recognition
-- Low nAch people work better when money is an
incentive; leaders should have a somewhat lower nAch
because they need to build involvement
-- entrepreneurs have high achievement need

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• Need for affiliation (nAff)

-- want others’ approval, avoid conflict, conform to their
wishes and expectations and avoid conflict and
confrontation
-- effective executives -- low affiliation need, less affected
by need for approval, otherwise appear indecisive
• Need for power (nPow)
-- want to control one’s environment, concerned about
maintaining leadership position
-- socialized (help others) vs. personal power need
(personal gain)
-- Corporate and political leaders -- need high nPow in
order to influence others; need socialized power to
achieve organizational goals
• Training programs can strengthen learned needs

Implications of needs-based theories

• Organizations need to support employees to achieve a
balance of their innate needs e.g. offer financial and other
rewards that emphasize both individual achievement and
Implications of Needs- teamwork
Based Theories
Slide 9
• People have different needs at different times – so increase
motivation by matching job content and rewards with
employee needs
• Offer employees a choice of rewards -- a flexible reward
system
• Do not rely too heavily on financial rewards as a source of
employee motivation – there are potentially more powerful
sources of motivations such as challenging work, learning
opportunities etc.

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EXPECTANCY THEORY OF MOTIVATION

• Rational process to direct work effort toward behaviours
believed to lead to desired outcomes
• Effort -- a person’s actual exertion of energy
Employee motivation is influenced by all 3 components:
Expectancy Theory of
Motivation 1. Effort—>performance (E-to-P) expectancy
Slide 10 • Individual’s perception that his/her effort will result in a
particular performance level
• Ranges from 0.0 (no chance) to 1.0 (certainty)

2. Performance—>outcome (P-to-O) expectancy

• Perceived probability that a specific behaviour or
performance level will lead to specific outcomes—we don’t
consider all outcomes—just those that are of interest to us
at any given time.
• Developed from previous learning. Ranges from 0.0 (no
chance) to 1.0 (certainty)
3. Outcome valences
• Anticipated satisfaction/dissatisfaction toward each
outcome that you consider
• Range from negative to positive feelings about outcome and
is influenced by our personal values

EXPECTANCY THEORY IN PRACTICE

1. Increasing the E-to-P expectancy
• Provide training
Expectancy Theory in • Select qualified applicants
Practice • Provide sufficient resources
Slide 11 (build)
• Clarify role perceptions
• Increase self-efficacy -- coaching, feedback, shaping

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2. Increasing the P-to-O expectancy

• Measure performance accurately -- give higher rewards to
better performers
• Communicate the performance-based reward system
• Explain how rewards are based on past performance
• Provide examples of other employees whose good
performance has resulted in higher rewards
3. Increasing outcome valences
• Distribute rewards that employees value
• Individualize rewards
• Minimize the presence of countervalent outcomes e.g. peer
pressure to reduce work effort
Does expectancy theory fit reality?
• Predicts work effort well
• Works across cultures,
• Problem -- expectancy theory ignores the role of emotion in
employee effort and behaviour

GOAL SETTING AT CDW COMPUTER CENTRES

CDW Computer Centres has become a leading direct marketer of
computers and peripherals by setting specific, challenging goals for
Goal Setting at CDW
its employees. “We set BHAGS – which are big, hairy, aggressive
Computer Centres goals,” says CEO, John A. Edwardson.
Slide 12

GOAL SETTING
Goal setting is one of the most effective theories of motivation in
organizations. Process of motivating employees and clarifying their role
perceptions by establishing performance objectives
• Goals -- objectives that employees try to accomplish from
their work effort
• Improves motivation and role perceptions
Management-by-objectives
• A formal goal-setting process in which organizational
objectives are cascaded down to work units and employees.

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Characteristics of Effective Goals

• Specific goals -- measurable change over specific time
• Relevant goals
- relevant to the individual’s job and within his/her control
Effective Goal Setting
• Challenging goals
Slide 13 - greater effort and persistence than easier goals
- fulfil need for achievement or growth needs
- stretch goals effective when employees have necessary
resources
• Goal commitment
- employees must be committed to the goal
- need to find optimal level of goal difficulty
Effect of Goal Difficulty on • Goal Participation (sometimes)
Performance
- may improve goal quality and commitment
Slide 14
- today’s workforce increasingly expects to be involved
• Goal feedback
- need to know whether the goal achieved or effort is
properly directed

CHARACTERISTICS OF EFFECTIVE FEEDBACK

Information that people receive about the consequences of their
behaviour
Characteristics of
• Improves role perceptions, ability and motivation
Effective Feedback • Corrective feedback – identifies performance errors and
Slide 15 helps to correct them
• Feedback motivates future behaviour

1. Specific – connected to the details of the goal; focuses on the

task e.g. “You exceeded your sales quota by 5% this month.”
2. Relevant – Relates to the individual’s behaviour
3. Timely – Available as soon as possible; clear association between
behaviour and consequences
4. Sufficiently frequent – based on contingencies of employees
knowledge/experience; task cycle
5. Credible – more acceptable from trustworthy source

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Feedback Sources
Social Sources – supervisors, clients, co-workers, etc.—tend to seek out
positive feedback from social sources
• Multisource feedback (360-degree feedback)
Multi-source (360-degree) -- anonymous
Feedback
Slide 16
-- received from a full circle of people around the employee
-- provides more complete and accurate information
• Challenges
-- expensive and time-consuming
-- can produce ambiguous and conflicting feedback
-- peers may inflate feedback
• Executive coaching
-- a helping relationship with an outside consultant
-- clarify and achieve goals
-- thought partners
-- effective way to improve emotional intelligence,
interpersonal skills etc.
• Challenges – treats symptoms, need to ensure consultant is
credible
Non-Social Sources – the job itself or results
• prefer non-social feedback to learn about progress toward goal
accomplishment
• considered more accurate, protects self-esteem
Applications and Limitations of Goal Setting and Feedback:
• When goals are tied to monetary incentives, employees tend
to select easy rather than difficult goals
• Cannot apply goal setting to every performance dimension of
a job – may focus employees on narrow, short-term goals

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ORGANIZATIONAL JUSTICE
To maximize employee motivation, satisfaction and organizational
commitment employees need to be treated fairly
 Distributive justice – perceived fairness in outcomes we
receive relative to our contributions and the outcomes and
contributions of others
 Procedural justice – fairness of the procedures used to decide the
distribution of resources

EQUITY THEORY
• How people develop perceptions of fairness in the
distribution and exchange of resources
• What employees are motivated to do when they feel
inequitably treated

Elements of Equity Theory

1. Outcome/input ratio
• Inputs -- what employee contributes (e.g. skills, efforts, time
Elements of Equity Theory worked, results, etc.)
Slide 17
• Outcomes – what employee receives (e.g. pay, promotions,
recognition, etc.)
• Inputs and outcomes weighted by importance – unique to
each person
2. Comparison other
• Compare situation with others
• Comparison other is not easily identifiable – may be
someone in the same job, another job, or another company,
even yourself in the past
3. Equity comparison
• Compare outcome/input ratio with comparison other
• Result is – equity, underreward inequity or overreward
inequity

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Equity Evaluation:
• Equity condition – you and the comparison other have the
same outcome/input ratios
• Underreward inequity – comparison other has a higher ratio
than your ratio – more valuable outcomes proportional to
Overreward vs inputs
Underreward Inequity • Overreward inequity – you seem to have a higher ratio than
Slide 18
the comparison other’s ratio – you received more valuable
outcomes proportional to inputs

Inequity Consequences – Motivation to Reduce Inequity

Consequences of Inequity
Slide 19
1. Change inputs – reduce effort corrects underreward
2. Change outcomes – ask for pay increase corrects
underreward
3. Change perceptions – if overrewarded, perceive more
value of one’s experiences, skills, etc.
4. Leave the field – transfer to more equitable environment
5. Act on the comparison other – if underrewarded
employee encourages comparison other to work more
6. Change comparison other – better O/I ratio

Equity Sensitivity – Individual Difference in Equity

• Outcome/input preferences and reaction to various
outcome/input rations
• Benevolents
Equity Sensitivity
Slide 20
-- tolerant of being underrewarded
-- tend to have higher internal locus of control,
conscientiousness, and agreeableness
• Equity Sensitives
-- want ratio be equal to the comparison other
-- applies standard equity model
• Entitleds
-- prefer receiving proportionately more than others

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Problems with Equity Theory

• Not specific enough to predict employee motivation and
behaviour -- inputs/outputs/comparison other are vague
• Assumes people are individualistic, rational and selfish
• Equity theory explains only some of our feelings of fairness
or justice in the workplace -- also need to consider
procedural justice

PROCEDURAL JUSTICE
People seek justice for its own sake, not just as a means to improve their
pay
Procedural justice may be as important as distributive justice in
Components of
Organizational Justice explaining employee attitudes, motivation and behaviour
Slide 21
Two sets of influences on procedural justice:
1. Structural rules – policies and practices that decision makers
should follow
-- voice – employees want a voice in decision process
-- unbiased decision maker
-- knowledgeable decision maker
Procedural Justice
Structural rules -- rules applied consistently
Slide 22 -- decision maker listen to all views
-- decision is appealable
2. Social rules – standards of personal conduct between
employees and decision makers – interactional justice e.g.
respect and accountability
Consequences of Procedural Injustice:
• Aggression (sabotage, theft, conflict, acts of violence)
• Withdrawal (reduced compliance with higher authorities,
lower motivation to attend work, engage in organizational
citizenship and perform to a high standard)
Organizational Justice in Practice
• Continually treat people fairly in the distribution of rewards
• Create a fair decision-making process in the workplace

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TRANSPARENCY MASTERS
Transparency 5-1: Challenges of Motivating Employees
Transparency 5-2: Needs Hierarchy Theory
Transparency 5-3: ERG Theory
Transparency 5.4: Innate Drives Theory
Transparency 5.5: Innate Drives and Motivation
Transparency 5.6: Learned Needs Theory
Transparency 5-7: Implications of Needs-based Theories
Transparency 5.8: Expectancy Theory of Motivation
Transparency 5.9: Expectancy Theory in Practice
Transparency 5.10: Effective Goal Setting
Transparency 5.11: Effect of Goal Difficulty on Performance
Transparency 5.12: Characteristics of Effective Feedback
Transparency 5.13: Multisource (360-degree) Feedback
Transparency 5.14: Elements of Equity Theory
Transparency 5.15: Overreward vs. Underreward Inequity
Transparency 5.16: Consequences of Inequity
Transparency 5.17: Equity Sensitivity
Transparency 5.18: Components of Organizational Justice
Transparency 5.19: Procedural Justice Structural Rules

SOLUTIONS TO DISCUSSION QUESTIONS

1. Identify three reasons why motivating employees
is becoming increasingly challenging.
Most employers—92 percent of them, according to
one recent survey—agree that motivating
employees has become more challenging. The
beginning of this chapter identifies three reasons
why it is currently very challenging to motivate
employees. One concern is that globalization has
dramatically changed the jobs that people perform
resulting in corporate restructuring and
downsizing. These actions have significantly
damaged the levels of trust and commitment
necessary for employees Components to put out
effort beyond the minimum requirements. Some
organizations have completely given up on
motivation from the heart and, instead, rely on
pay-for-performance and layoff threats. These
strategies may have some effect (both positive and
negative), but they do not capitalize on the
employee’s motivational potential.
A second problem is that organizations have
flattened their hierarchies to reduce costs.
Consequently, there aren’t enough supervisors
around to practice the old ‘command-and-control’
methods of motivating employees. This is probably
just as well, because direct supervision is
incompatible with the values of today’s educated
work force. Still, many businesses have not
discovered other ways to motivate employees.
Third, the work force is changing. Younger
generations of employees are bringing different
needs and expectations to the workplace than their
baby-boom counterparts. Meanwhile, baby
boomers needs are shifting as they enter new
stages of their life. In addition, workforce
diversity and globalization have added to this
complexity because diverse employees typically
have diverse values. These values influence what
we want, what we need, and what organizations
should and should not do to fulfil those needs.
Companies must realign their sources of
motivation with these changes.
2. Harvard Business School professors have recently
proposed four fundamental human drives. Relate

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these innate drives to Maslow’s needs hierarchy showing up in a snow storm, whereas another
theory and Alderfer’s ERG theory. How are they person may perceive that the company does reward
similar? How do they differ? employees who make this effort.
These four fundamental human drives include: Valences. Employees value different outcomes of
going to work or staying at home in a snow storm.
Drive to acquire. This is the drive to seek, take
One person might stay at home because he/she
control, and retain objects and personal
doesn’t like the job anyway and this is a good
experiences. This relates to not only physiological
excuse to miss a day of work. Another employee
(Maslow) and existence (Alderfer) but also forms
might trek through a snow storm because he/she
the foundation for competition and the basis for
thoroughly enjoys work compared to staying at
our need for esteem (Maslow) and growth
home. In fact, this person might enjoy the
(Alderfer).
challenge of driving in snow storms!
Drive to bond. This is the drive to form social
4. What are the limitations of expectancy theory in
relationships and develop mutual caring
predicting an individual’s work effort and
commitments with others. This relates to
behaviour?
belongingness (Maslow) and relatedness
(Alderfer). Although one of the appealing characteristics of
expectancy theory is that it provides clear
Drive to learn. This is the drive to satisfy one’s
guidelines for increasing employee motivation this
curiosity, to know and understand ourselves and
theory also has potential limitations with respect to
the environment around us. This relates to the
predicting an individual’s work effort and
higher order needs of self-actualization (Maslow)
behaviour.
and growth (Alderfer).
Some critics suggest that expectancy theory is
Drive to defend. This is the drive to protect
culture-bound, arguing that the theory makes
ourselves physically and socially. This is the only
Western-oriented assumptions that employees have
drive that is reactive because it is triggered by a
strong feelings of personal control. In reality,
threat. Because the drive to defend also extends
however, expectancy theory does not assume that
beyond protecting our physical self to defending
people feel they have complete control over their
our relationships and our belief systems it relates
lives; the contrary, the E-to-P expectancy varies
to both safety, belonginess and esteem needs
directly with the employer’s perceived control over
(Maslow) and existence and relatedness
the work situation. In conclusion, research
(Alderfer).
indicates this criticism is not valid and that
The innate human drives theory of motivation expectancy theory does predict employee
reinforces the work of Maslow and Alderfer in that motivation in different cultures.
needs are part of human nature. However, the
Another challenge is that expectancy theory seems
innate human drives theory suggests that needs are
to ignore the central role of emotion in employee
based on innate drives, that are hard-wired into
effort and behaviour. Emotion serves an adaptive
our genes and manifested as conscious emotions
function that demands our attention and energizes
that influence rational calculations.
us to take action. The valence element of
3. Use all three components of expectancy theory to expectancy theory captures some of this emotional
explain why some employees are motivated to process, but only peripherally. As a result,
show up for work during a snowstorm whereas theorists likely need to redesign the expectancy
others don’t make any effort to leave their home. theory model in light of this new information
about the importance of emotions in determining
E-to-P Expectancy. This is a perception, so two
an individual’s behaviour.
neighbours will develop different perceptions
about their expectancy of reaching the workplace 5. Several service representatives are upset that the
safely in the same snow storm. newly hired representative with no previous
experience will be paid $1,00 a year above the
P-to-O Expectancy. Two people may have
usual starting salary in the pay range. The
different perceptions about the outcomes of
department manager explained that the new hire
attending work. One person may believe that the
would not accept the entry-level rate, so the
company doesn’t praise or reward employees for
company raised the offer by $1,000. All five reps

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currently earn salaries near the top of the scale
($10,000 higher), although they all started at the
minimum starting salary a few years earlier. Use
equity theory to explain why the five service
7.
representatives feel inequity in this situation.
(Note: This incident is based on an actual
experience in a Canadian telecommunications
company, as conveyed to the author by the
department manager.)
In this incident, the five reps are experiencing
underreward inequity. They are using the new
hire as the comparison other. Their main inputs
are length of service and previous experience. The
main outcome in this equity equation is salary.
The reps seem to believe the standard pay scale is
equitable because their inequity stems from the
fact that the new hire is receiving more than the
entry level rate. Thus, the reps feel that the new
hire is receving more outcomes per input
(salary/experience) compared to their equity ratio.
This ratio is particularly easy for them to
determine because they received the standard entry
rate when they began working in the department.
6. Using your knowledge of the characteristics of
effective goals, establish two meaningful goals
related to your performance in this class.
8.
Six conditions to maximize task effort and
performance are identified. Effective goals should
reflect each of the following elements.
Specific. A specific goal communicate precise
outcome expectations
Relevant. Relates to the individual’s role and is
within his/her control
Challenging. Goal that is challenging enough to
stretch the employee’s abilities and motivation
toward peak performance
Goal commitment. Commitment exists to
accomplishing the goal
Goal participation. Individual (sometimes)
participates in setting the goal
Goal feedback. Information that people receive
about the consequences of their behaviour
Students should be encouraged to write draft goal
statements and then working in small groups or
with a partner, refine their draft goal statements to
ensure each of the above criteria are applied. Each
goal statement needs to reflect the individual’s
current level of performance, knowledge etc. For
141
Chapter 5 Motivation in the Workplace
example, what is challenging to one student, may
be unattainable, therefore, de-motivating to
another student.
When do employees prefer feedback from non-
social rather than social sources. Explain why
non-social sources are preferred under these
conditions.
Non-social feedback sources include computer
printouts, and the job itself. There are three
primary situations in which employees prefer
feedback from non-social sources.
a) When learning about progress toward their
goals. Generally, people feed that non-social
feedback is more accurate and informative
than social sources for monitoring progress
toward goal accomplishment.
b) When receiving negative feedback. Non-
social feedback is less damaging to the
person’s self-esteem.
c) When actively seeking feedback. When a
person is eager to hear how they are doing,
they might appear insecure to a social source,
so people in this situation feel more
comfortable with non-social feedback sources.
Inequity can occur in the classroom as well as in
the workplace. Identify classroom situations in
which you experienced feelings of inequity. What
can instructors do to maintain an environment that
fosters both distributive and procedural justice?
There should be no shortage of discussion here.
Feelings of inequity seem to develop easily in
evaluative settings (such as a course where student
grades have value for receiving degrees and
scholarships). One common complaint we often
hear about from students who receive a low grade
on an exam, case, or other assignment is that they
“worked harder than many other students” on the
assignment. Although you might point out that
the grade is based on results, not effort, some
students still feel as sense of inequity. Their
outcome/input ratio considers amount of time, so
inequity occurs when their comparison other
receives a higher grade with less time.
Another source of inequity occurs when some
students successfully bypass the limitations of an
assignment. The author recently experienced this
with a case analysis that had a seven page limit.
The assignment clearly stated that the case write-
up must be double-spaced and use normal font size
and margins. Some students complained because
Part 2 Individual Behaviour and Processes
they saw others successfully use a 10-point font,
which gave them more words to answer the case
questions. The offending students claimed this was
their “normal” font size whereas others said it
wasn’t. (Microsoft’s default is 12-point New Times
Roman.) A couple of students also successfully
shrunk the line spacing slightly less than double-
spacing. The complaining students felt this was
unfair, claiming that they could have received a
higher grade if they could have written more
words.
PHOTO CAPTION CRITICAL THINKING
QUESTIONS
Triangle Suspension Systems Ltd.
Q: How would the other three innate human drives be
affected by layoffs?
A: This is an excellent discussion (or exam) question
because students are caught off-guard by the fact that
layoffs might affect other innate drives. The most
obvious innate drive (other than the need to bond) is
the drive to defend because layoffs involve a personal
loss of income, status, and relationships. The drive to
acquire also applies here because employment has
status implications. People who are laid off lose status
in many societies. Probably least central to layoffs is
the drive to learn. Still, students might identify how
layoffs increase the drive to learn because being laid off
creates new unknown situations that need to be
explored. In some instances, layoffs result in the need
to learn a new career.
142
In conclusion, it is important that instructors
maintain an environment that fosters both
distributive and procedural justice in order to
enhance students’ motivation. Instructors need to
ensure that students believe that the evaluation
process is fair. Instructors may require training
and development to understand how to develop
and apply objective grading rubrics for assessing
student assignments and exams. Instructor
development and coaching may be needed to
develop behaviours associated with procedural
justice eg. exhibiting a supportive demeanour,
giving students some control over process etc.
EnCana Corporation
Q: Under what conditions would money be a strong
motivator?
A: Several factors need to be considered to answer this
question. First, individuals vary in their need for
money. Everyone has a drive to acquire, but this is
stronger in some people than in others. Learned needs
theory similarly suggests that people with high need
for achievement value money as an indicator of their
success. Second, money has more motivational value
when it is given support and recognition by others. In
some societies, people are supposed to subdue their
wealth, whereas displaying your wealth is respected in
other cultures. This ability to display and recognize the
value of money might influence its motivational
potential. Third, the amount of money received is a
factor in its motivational value. The $5 certificates
described in this photo caption illustrate that the
recognition value had higher value than the monetary
value of the reward.
 Chapter 5 Motivation in the Workplace

CDW Computer Centres

Q: To what extent is this goal-setting process
compatible with the characteristics of effective goals?

A: This question is answered by the characteristics of

effective goals, including specific goals, relevant goals,
challenging goals, goal commitment, participation in
goal formation (sometimes), and goal feedback. CDW
seems to apply most of these conditions. The goals are
certainly specific because they apply numerical
objectives within a specific time. The goals are
relevant to the organization, and likely are relevant to
the sales force. These goals might be less relevant to
support staff and others within CDW who cannot
directly influence sales. Without a doubt, CDW applies
challenging goals. The fact that these goals were
achieved suggests that they were not viewed as
impossible by most employees. In other words, goal
commitment was sufficiently strong. It isn’t clear that
CDW involved employees in forming the goals.
However, the success of this goal setting suggests that
participation might not be necessary here. Lastly,
CDW provided clear feedback regarding goal
achievement.

ACTIVITY 5.1: CASE ANALYSIS

NO FAIR PAY IN THIS PLACE

These case notes have been prepared by By Susan Meredith, Selkirk College

Case Synopsis
The author describes a situation in a previous job in British Columbia in which head office treated the BC operations as
insignificant. The author was particularly concerned when she discovered that Helen, an employee at head office, was
paid significantly more than she was paid in British Columbia. The author complained to her boss, who dismissed the
difference in terms of how much people in Toronto get paid. The case describes the outcome of this incident.

Current state of affairs in Mr. James’ office:

Several people have come and gone – only one remains from when I worked there six years ago. The front office
receptionist that I had trained and mentored is still there. She now has my old position but with fewer staff to supervise.
With the elimination of 2 staff positions Mr. James finally realized that to keep anybody he was going to have to
increase their salary. The current manager makes $50,000 – the same $30,000 I had plus $20,000 from one of the
eliminated positions. I have no idea what Horrible Helen is earning.

Suggested Answers to Case Questions

143
Part 2 Individual Behaviour and Processes
Author’s note: This case is primarily intended to
illustrate equity theory and job dissatisfaction as
well as perceptions, stress, and cognitive
3.
dissonance.
1. What are some of the elements that contributed to
this employee’s feelings of inequality?
The worker had the perception of an imbalance in
workload plus very demanding daily interactions
4.
with customers. As well, it appears the worker in
BC felt her academic qualifications were superior
along with specific work experience that should
have increased her value to her employer.
2. Why was the Toronto worker considered a
“comparison other” but not the co-worker in B.C?
It’s not so much that the co-worker in B.C. was
not a comparison other rather there were no
perceived inequities in their workloads or salaries.
Additional Comments on the Case
This is a classic case useful in explaining Equity
Theory. Employees do compare their job duties and
results with others. Those job duties or inputs are the
amount of effort, education, experience, personality
and/or skill sets that a person contributes to their
organization. I had begun comparing my inputs and
outputs to those of Horrible Helen.
I perceived my value to the effective functioning of the
business to be almost double what I perceived my
“comparison other’s” value as being. Unfortunately I
could not convince the owner that my outputs were far
superior in quantity and quality when compared to
Horrible Helen, even though everyone else in the office
could see the reality.
When employees encounter a perceived inequality they
will usually choose one of several actions:
144
Each individual was concentrating on the apparent
differences rather than similarities.
How was the inequity solved?
For the B.C. worker, the initial solution was to
voice her concerns and when those concerns were
not acknowledged and no attempt at resolution
offered, the worker excited.
What other factors may have contributed to the job
dissatisfaction experienced by these two
employees?
Other factors might include an obvious absence of
respect on the boss’ part. Another factor was the
apparent lack of communication between the
regional office and the head office, which lead to a
feeling of not truly being heard or respected. No
acknowledgement or fair reward for the
consistently challenging work without which the
head office might just as well shut down.
 They may change their inputs as I did by
lessening my effort.
 They may change the comparison or referent
other, which I tried to do but there were none.
 They may evaluated their perceptions and test
them out with someone not emotionally
attached to the outcome, so they can make
adjustments. I did do this but others supported
my perceptions, so that didn’t help.
 They may revaluate the referent other thereby
giving more credit for inputs of which they
might be unaware. I had been in Toronto and
had witnessed Helen’s inputs. I just couldn’t
give her more credit.
 They may eventually leave the field, when all
else fails, as I did.
 Chapter 5 Motivation in the Workplace

ACTIVITY 5.2: CASE ANALYSIS

KEEPING SUZANNE CHALMERS

Case Synopsis
This case describes a meeting with software engineer Suzanne Chalmers and Thomas Chan, the vice-president of
software engineering at Advanced Photonics Ltd. (APL). Chalmers arranges the meeting to indicate her intention to
leave APL. Chan tries to keep her by offering better conditions and, eventually, more money and share options. But
Chan knows that Chalmers is already a millionaire from her share options and the appreciation of APL’s share price.
The case highlights the difficulty in motivating people to stay and the relative importance of financial rewards
compared to other sources of motivation. Soon after the meeting, Chalmers submits her resignation and, after a few
months rest, takes up a position at a start-up company.

Suggested Answers to Case Questions

1. Why didn’t money motivate Suzanne Chalmers to
stay with APL?
In this particular situation, the needs fulfilled by
money (mainly physiological, safety, and social)
were not strongest for Suzanne. Instead, it seems
that Suzanne required more self-actualization,
particularly work with more variety and challenge.
The job seems to be getting routine. Moreover,
she later took a job at a start-up firm where she
probably performed a wider variety of tasks.
2. If you were Thomas Chan, what strategy, if any,
would you use to motivate Susan Chalmers to stay
at Advanced Photonics Ltd.?
In any situation, Thomas Chan’s first task is to
determine what drives the employees, that is, what
is the most important source of motivation. Notice
in this case that Chan continuously pushed
“hygiene” factors, such as better working
conditions (office space), money, and time off.
With each offering, Suzanne showed a lack of
interest. Thomas Chan could have probed what
Suzanne is lacking in her work, and likely would
have discovered that she needs a change on job
activities that would offer more variety and new
challenges.
3. What innate drives seem to be motivating
Suzanne Chalmers?
All drives operate in everyone, with the drive to
defend most active only when the person is
threatened. However, it seems that the drive to
learn is probably the most important one for
Suzanne in this situation because she subsequently
entered a new job with a variety of job duties.
Students might also suggest that the drive to
acquire is apparent, specifically that she wants to
acquire new experiences. At the same time,
Suzanne definitely does not have a drive to acquire
material goods such as money or physical
resources. Moreover, she doesn’t express a strong
drive to bond, particularly since she is motivated
to leave APL.

145
Part 2 Individual Behaviour and Processes
ACTIVITY 5.3: TEAM EXERCISE
A QUESTION OF FEEDBACK
Purpose
This exercise is designed to help students to
understand the importance of feedback, including
problems that occur with imperfect communication in
the feedback process.
Materials
The instructor will distribute a few pages of exhibits to
one person on each team. The other students will
require a pencil with eraser and blank paper. Movable
chairs and tables in a large area is helpful.
Instructions
Step 1: The class is divided into pairs of students. Each
pair is ideally located in a private area, away from
other students and where one person can write. One
student is given the pages of exhibits from the
instructor. The other student in each pair is not
allowed to see these exhibits.
Step 2: The student holding the materials will describe
each of the exhibits and the other student’s task is to
accurately replicate each exhibit. The pair of students
can compare the replication with the original at the
end of each drawing. They may also switch roles for
each exhibit, if they wish. If roles are switched, the
instructor must distribute exhibits separately to each
student so that they are not seen by the other person.
Each exhibit has a different set of limitations, as
described below:
Exhibit 1: The student describing the exhibit cannot
look at the other student or his/her diagram The
student drawing the exhibit cannot speak or otherwise
communicate with the person describing the exhibit.
Exhibit 2: The student describing the exhibit may look
at the other student’s diagram. However, he/she may
only say “Yes” or “No” when the student drawing the
diagram asks a specific question. In other words, the
person presenting the information can only use these
words for feedback and only when asked a question by
the writer.
Exhibit 3: (optional -- if time permits) The student
describing the exhibit may look at the other student’s
diagram and may provide any feedback at any time to
the person replicating the exhibit.
146
Step 3: The class will gather to debrief this exercise.
This may include discussion on the importance of
feedback, the characteristics of effective feedback for
individual learning, and how feedback is a form of
reinforcement in behaviour modification.
Comments to Instructors
This exercise illustrates the importance of feedback
because students drawing the exhibit quickly realize
the vital importance of feedback to provide direction.
Instructors will distribute the exhibits on the following
pages in this instructors’ guide. Please be sure to give
the exhibits to the person who describes them, and
ensure that the person drawing these does not see them
in advance. Instructors can substitute their own
diagrams if they prefer.
I find it useful during the debriefing session to
review the main functions of feedback: learning
(corrective) and motivational. Specifically, students
should see the need for corrective feedback in this
exercise. The person giving instructions is limited in
the ability to provide corrective feedback either because
he/she isn’t observing the results (Exhibit 1) or isn’t
allowed to say anything unless specifically asked. You
might ask students who described Exhibit 2 whether
they were frustrated by this inability to say anything
while the person drawing was deviating from the
intended goal.
While most people will focus on the value of
corrective feedback in this exercise, feedback also
serves a valuable motivational role. The person
describing the exhibit has limited ability to provide
motivational feedback because he/she can’t see whether
the drawing is correct (exhibit 1) or can’t say anything
unless asked (Exhibit 2). However, the person drawing
receives feedback as soon as he/she compares the result
with the original.
The instructor might bring out some discussion on
the value of feedback for motivating people. Ask
students to imagine the situation where, at the end of
each activity, the person drawing receives no verbal or
visual feedback. Note how this often happens in
organizations, and ask students for situations where
they experienced this lack of feedback.
 A QUESTION OF FEEDBACK
EXHIBIT 1
IMPORTANT: The student describing this exhibit cannot look at the other student or his/her diagram The student
drawing the exhibit cannot speak or otherwise communicate with the person describing the exhibit. The student
drawing this exhibit must not see this sheet until after this activity is completed. No additional tools or instruments
(e.g. no rulers) may be used for this activity.

© Steven L. McShane
 A QUESTION OF FEEDBACK
EXHIBIT 2
IMPORTANT: The student describing this exhibit may look at the other student’s diagram. However, he/she may only
say “Yes” or “No” when the student drawing the diagram asks a specific question. In other words, the person presenting
the information can only use these words for feedback and only when asked a question by the writer. The student
drawing this exhibit must not see this sheet until after this activity is completed. No additional tools or instruments
(e.g. no rulers) may be used for this activity.

© Steven L. McShane
 A QUESTION OF FEEDBACK
EXHIBIT 3
IMPORTANT: The student describing this exhibit may look at the other student’s diagram and may provide any
feedback at any time to the person replicating the exhibit. The student drawing this exhibit must not see this sheet until
after this activity is completed. No additional tools or instruments (e.g. no rulers) may be used for this activity.

© Steven L. McShane
 ACTIVITY 5.4: SELF-ASSESSMENT
MEASURING YOUR EQUITY SENSITIVITY
Purpose
This self-assessment is designed to help students to
estimate their level of equity sensitivity
Overview and Instructions
Correcting feelings of inequity is one of the most
powerful motivating forces in the workplace. But
people react differently to equitable and inequitable
situations based on their equity sensitivity. Equity
sensitivity refers to a person’s outcome/input
Feedback for the Equity Sensitivity Scale
[NOTE: The following information is also provided in Appendix B and/or the Student CD.]
The Equity Sensitivity scale ranges from 16 to 80.
People are divided into three categories, depending on
their score along this scale. The three categories are:
“Entitleds” (16-37 points on the scale) feel more
comfortable receiving proportionately more than
others. They might accept having the same
outcome/input ratio as others, but would prefer
receiving more than others performing the same work.
“Equity sensitives” (38-58 points on the scale) fit the
standard equity theory model. They want their
outcome/input ratio to be equal to the outcome/input
ratio of the comparison other. As the ratios become
different, equity sensitives feel an uncomfortable
tension.
preferences and reaction to various outcome/input
ratios when compared to other people. Students are
asked to read each of the statements in the scale and
circle the response that they believe best reflects their
position regarding each statement. Students then
calculate their results using the scoring key in
Appendix B or through the student CD for self-scoring.
Students are asked to read each statement in this
instrument and indicate the degree to which they
personally agree or disagree with that statement. This
instrument has 16 statements.
“Benevolents” (59-80 points on the scale) are tolerant
of situations where they are underrewarded. They
might still prefer equal outcome/input ratios to the
comparison other, but don’t mind if others receive
more than they do for the same inputs.
Score Interpretation
59 to 80 Benevolents
38 to 58 Equity sensitives
16 to 37 Entitleds
 ACTIVITY 5.5: SELF-ASSESSMENT
MEASURING YOUR GROWTH NEED STRENGTH

Purpose important to them. For each question, two different

This self-assessment is designed to help students to
estimate your level of growth need strength.
Overview and Instructions
People differ in the kinds of jobs they would most like
to hold. The questions in the exercise give students a
chance to say just what it is about a job that is most
kinds of jobs are briefly described. Students are asked
to indicate which of the two jobs they personally would
prefer if they had to make a choice between them. In
answering each question, students should assume that
everything else about the jobs is the same. Students
should pay attention only to the characteristics actually
listed. After circling each answer, students use the
scoring key to calculate their results for this scale.

Feedback for the Growth Need Strength Scale

[NOTE: The following information is also provided in the Student CD.]

This well-known scale estimates the strength of your

growth needs. ERG theory groups human needs into
three broad categories: existence, relatedness, and
growth. The theory proposes that people are motivated
simultaneously by more than one need level. However,
growth needs dominate our motivation only after
existence and relatedness needs have been reasonably
fulfilled. Growth need strength indicates the strength
of your growth needs, including self-esteem, personal
achievement, self-actualization. Although
organizational behaviour scholars now doubt that
people have a pre-determined needs hierarchy, it is
well established that we do have growth needs.

Scores on the Growth Need Strength Scale can range

from 12 to 60. Higher scores indicate that you have a
higher growth need strength (i.e stronger growth
needs). As the graph shows, total score below 30
indicates a relatively low growth need strength,
whereas a score above 42 indicates a relatively high
growth need strength.
Score Interpretation
43 to 60 High Growth Needs
30 to 42 Moderate Growth Needs
12 to 29 Low Growth Needs
 SUPPLEMENTAL TEAM EXERCISE
BONUS DECISION MAKING
Purpose
This exercise is designed to help students understand
the elements of equity theory and how people differ in
their equity perceptions.
Instructions
Four managers in a large national insurance company
are described below. The national sales director of the
company has given your consulting team (first
individually, then together) the task of allocating
$100,000 in bonus money to these four managers. It is
entirely up to your team to decide how to divide the
money among these people. The only requirements are
that all of the money must be distributed and that no
two branch managers can receive the same amount.
The names and information are presented in no
particular order. You should assume that economic
conditions, client demographics, and other external
factors are very similar for these managers.
Step 1: Students will form teams of 4 or 5 people.
Working alone, they read information about the four
managers. Then they fill in the amount they would
allocate to each manager in the “Individual Decision”
column.
Step 2: Still working alone, students fill in the “Equity
Inputs Form.”. First, in the “Input Factor” column,
they list in order of importance the factors they
considered when allocating these bonus amounts (e.g.
seniority, performance, age, etc.). The most important
factor should be listed first and the least important last.
Next, in the “Input Weight” column, students estimate
the percentage weight that they assigned to this factor.
The total of this column must add up to 100 percent.
Step 3: After individually allocating the bonus money
and determining the input factors and weights, team
members will compare their results and note any
differences. Then, for each job, team members will
reach a consensus on the bonus amount that each
manager should receive. These amounts will be
written in the “Team Decision” column.
Step 4: The instructor will call the class together to
compare team results and note differences in inputs
and input weights used by individual students.
Discussion of these results in terms of equity theory
will follow.
Comments for Instructors
I find it useful to post the results for each team in a
chart (team numbers across the top and the four
managers on the left side to form rows.) When the
entire set of results are documented, ask participants to
debate any variations across teams. The discussion
should make students aware that it is very difficult to
consider all of the employee inputs when allocating
bonuses. Very likely, someone will feel that the process
is unfair because different people assign different
weights to these factors
Where team members easily agree on factors, it is
useful to remind them that (1) they are a relatively
homogeneous group of business students (consensus
may be more difficult if nonbusiness students are
included in the teams), and (2) people from different
cultures hold different values. For example, students
from some African and Asian countries tend to have
difficulty accepting a very high performance
orientation.
The results of this exercise will vary from one team
to the next, particularly if the class includes
nonbusiness students and/or people from diverse
cultural backgrounds. For example, the average
distribution of bonus money in my classes has been
approximately $17K, $37K, $23K, and $23K to Bob,
Edward, Lee, and Sandy, respectively. However, the
amount varies considerably. One team with a strong
seniority-orientation allotted $43K, $19K, $28K, and
$10K to the four managers, whereas another team with
a strong performance orientation allotted $5K, $50K,
$15K, and $30K.
 BONUS DECISION MAKING EXERCISE
STUDENT HANDOUT (PAGE 1 OF 3)
Background Information
Four managers in a large national insurance
company are described below. The national sales
director of the company has given your consulting
team (first individually, then together) the task of
allocating $100,000 in bonus money to these four
managers. It is entirely up to your team to decide
how to divide the money among these people. The
Student Instructions
Step 1: Form teams of 4 or 5 people. Working
alone, read the following information about the
four managers. Then fill in the amount you would
allocate to each manager in the “Individual
Decision” column of the “Bonus Allocation Form”.
Step 2: Next, still working alone, fill in the “Equity
Inputs Form.” First, in the “Input Factor” column,
list in order of importance the factors you
considered when allocating these bonus amounts
(eg. seniority, performance, age, etc.). The most
important factor should be listed first and the least
important last. Next, in the “Input Weight” column
estimate the percentage weight that you assigned to
this factor. The total of this column must add up to
100 percent.
only requirements are that all of the money must be
distributed and that no two branch managers can
receive the same amount. The names and
information are presented in no particular order.
You should assume that economic conditions, client
demographics, and other external factors are very
similar for these managers.
Step 3: After individually allocating the bonus
money and determining the input factors and
weights, team members will compare their results
and note any differences. Then, for each job, team
members will reach a consensus on the bonus
amount that each manager should receive. These
amounts will be written in the “Team Decision”
column.
Step 4: The instructor will call the class together to
compare team results and note differences in inputs
and input weights used by individual students.
Discussion of these results in terms of equity theory
will follow.
 BONUS DECISION MAKING EXERCISE
STUDENT HANDOUT (PAGE 2 OF 3)
Manager Profiles
Bob B. Bob has been in the insurance business for
over 27 years and has spent the past 21 years with
this company. A few years ago, Bob’s branch
typically made the largest contribution to regional
profits. More recently, however, it has brought in
few new accounts and is now well below average in
terms of its contribution to the company. Turnover
in the branch has been high and Bob doesn’t have
the same enthusiasm for the job as he once did.
Bob is 56 years old and is married with five
children. Three children are still living at home.
Bob has a high school diploma as well as a
certificate from a special course in insurance
management.
Edward E. In the two years that Edward has been
a branch manager, his unit has brought in several
major accounts and now stands as one of the top
units in the country. Edward is well respected by
his employees. At 29, he is the youngest manager in
the region and one of the youngest in the country.
The regional director initially doubted the wisdom
of giving Edward the position of branch manager
because of his relatively young age and lack of
experience in the insurance industry. Edward
received an undergraduate business degree from the
University of Prince Edward Island and worked for
five years as a sales representative in Kitchener,
Ontario before joining this company. Edward is
single and has no children.
© 1997, 1983 Steven L. McShane
Lee L. Lee has been with this organization for
seven years. The first two years were spent as a
sales representative in the office that she now
manages. According to the regional director, Lee
rates about average as a branch manager. She
earned an undergraduate degree in geography from
the University of Calgary and worked in Alberta as
a sales representative for four years with another
insurance company before joining this organization.
Lee is 40 years old, divorced, and has no children.
She is a very ambitious person but sometimes has
problems working with her staff and other branch
managers.
Sandy S. Sandy is 47 years old and has been a
branch manager with this company for 17 years.
Seven years ago, her branch made the lowest
contribution to the region’s profits, but this has
steadily improved and is now slightly above
average. Sandy seems to have a mediocre attitude
toward her job but is well liked by her staff and
other branch managers. Her experience in the
insurance industry has been entirely with this
organization. She previously worked in non-sales
positions, and it is not clear how she became a
branch manager without previous sales experience.
Sandy is married and has three school-aged
children. Several years ago, Sandy earned a
diploma in business from a nearby community
college by taking evening courses.
 BONUS DECISION MAKING EXERCISE
STUDENT HANDOUT (PAGE 3 OF 3)

Bonus Allocation Form

Name Individual Decision Team Decision

Bob B. $_________ $_________

Edward E. $_________ $_________

Lee L. $_________ $_________

Sandy S. $_________ $_________

TOTALS: $100,000 $100,000

Equity Inputs Form

Input Factor* Input Weight**

_________________________ _________%

_________________________ _________%

_________________________ _________%

_________________________ _________%

_________________________ _________%

TOTAL: 100%

* List factors in order of importance, with most important factor listed first.
** The weight of each factor is a percentage ranging from 1 to 100. All factor weights together must add up to 100
percent.
 SUPPLEMENTAL CASE: STEELFAB CORP.
STUDENT HANDOUT
Jackie Ney was an enthusiastic employee when she
began working in the accounting department at
Steelfab Corp. In particular, she prided herself on
discovering better ways of handling invoice and
requisition flows. The company had plenty of
bottlenecks in the flow of paperwork throughout
the organization and Jackie had made several
recommendations to her boss, Mr. Johnston, that
would improve the process. Mr. Johnston
acknowledged these suggestions and even
implemented a few, but he didn't seem to have
enough time to either thank her or explain why
some suggestions could not be implemented. In
fact, Mr. Johnston didn't say much to any of the
other employees in the department about anything
they did.
At the end of the first year, Jackie received a 6
percent merit increase based on Mr. Johnston's
evaluation of her performance. This increase was
equal to the average merit increase among the 11
people in the accounting department and was above
the inflation rate. Still, Jackie was frustrated by the
fact that she didn't know how to improve her
chances of a higher merit increase the next year.
She was also upset by the fact that another new
employee, Jim Sandu, received the highest pay
increase (10 percent) even though he was not
Discussion Questions
1. What symptom(s) exist in this case to suggest that something has gone wrong?
2. What are the main causes of these symptoms?
3. What actions should the organization take to correct these problems?
© Copyright. Steven L. McShane.
regarded by others in the finance department as a
particularly outstanding performer. According to
others who worked with him on some assignments,
Jim lacked the skills to perform the job well enough
to receive such a high reward. However, Jim Sandu
had become a favoured employee to Mr. Johnston
and they had even gone on a fishing trip together.
Jackie's enthusiasm toward Steelfab Corp. fell
dramatically during her second year of
employment. She still enjoyed the work and made
friends with some of her co-workers, but the spirit
that had once carried her through the morning rush
hour traffic had somehow dwindled. Eventually,
Jackie stopped mentioning her productivity
improvement ideas. On two occasions during her
second year of employment, she took a few days of
sick leave to visit friends and family in Vermont.
She had used only two sick days during her first
year and these were for a legitimate illness. Even
her doctor had to urge Jackie to stay at home on
one occasion. But by the end of the second year,
using sick days seemed to "justify" Jackie's
continued employment at Steelfab Corp. Now, as
her second annual merit increase approached,
Jackie started to seriously scout around for another
job.
 SUPPLEMENTAL CASE ANALYSIS:
STEELFAB CORP.

Case Synopsis
This case describes Jackie Ney’s first two years of work experience in the accounting department of Steelfab Corp.
Jackie was initially enthusiastic and contributed ideas for improved work flow efficiency, but she received little
feedback or support from her boss. Her first year merit increase was average, but was less than she had expected.
Moreover, the highest increase went to an employee who goes fishing with the supervisor and whose performance
record is considered by coworkers as deserving the highest increase. By the second year, Jackie had stopped giving new
ideas, had begun to take unwarranted sick leave, and was thinking about quitting her job.

Suggested Answers to Case Questions

1. What symptom(s) exist in this case to suggest that solutions to paperwork flow problems in the
something has gone wrong? organization (i.e., high EP expectancy). In
other words, she exhibited a high expectancy of
By the end of the second year, Jackie Ney
the probability that her efforts would lead to high
experienced lower motivation and higher job
performance. Due to Mr. Johnston’s actions (and
dissatisfaction regarding supervisor and company
inaction), however, Jackie’s belief decreased in the
policies. She had stopped providing productivity
probability that high performance would lead to
improvement ideas. She began making improper
desired rewards (i.e., decreasing P>O
use of sick leave and was thinking of leaving the
expectancy). Although some of Jackie’s ideas were
company.
implemented, Mr. Johnston did not reward Jackie
2. What are the causes of these symptoms? through praise. It is clear from her actions and
statements that Jackie is achievement-oriented and
Jackie Ney feels a strong sense of inequity over the
would value praise from her boss. She would also
merit system. She compares herself to others
value feedback describing how well her ideas are
within the department and, in particular, to
working, but this information was not freely
another new employee, Jim Sandu. Sandu received
provided by Mr. Johnston. Finally, although
the highest merit increase even though his skill
Jackie’s merit increase may have been based partly
and performance levels were generally regarded as
on the ideas she provided, this connection was not
lower than Jackie’s. Jackie feels that her lower
clarified. Moreover, due to equity problems
merit increase is inequitable because Jim’s inputs
(described above), the merit increase was not
--particularly his effort and skills -- are less than
strongly valued.
hers. She does not believe that being a good friend
of the boss is a valid input. Jackie’s response to 3. What actions should the organization take to
this inequity is to reduce her inputs. She stops correct these problems?
giving new ideas (although this is also due in part
Jackie’s practice of offering suggestions are
to factors explained by expectancy theory below)
consistent with organizational goals because
and uses paid absenteeism to balance the scales.
companies need any information to improve their
Eventually, Jackie addresses her feelings of
effectiveness. Consequently, we find out why
inequity (along with other sources of
Johnston made the merit increase decisions in this
dissatisfaction here) by looking for work in
way. It may be that he had valid reasons for this
another organization.
merit pay distribution. If so, he should be
Expectancy theory can be used to explain why encouraged or trained to communicate these
Jackie Ney stopped giving new ideas to her boss, reasons more clearly to employees in the
Mr. Johnston. Jackie seemed to be confident (at department.
least initially) that she could work out innovative
 Johnston does not provide a performance review,
yet this should be encouraged to strengthen
employees’ PO expectancy. If the merit
decisions were poorly made, the reasons for this
should be determined. Johnston may lack the skills
to properly evaluate, in which case he should
receive rater training. If Johnston is not motivated
to reward employees based on valid performance
factors, his superior may wish to transfer him to a
job where performance evaluation is not required.
Or the superior may want to find out why Johnston
is not motivated to do this task properly, then
realign the reward system so he is motivated to
make fair merit decisions.
Johnston’s superior should also find out why
Johnston failed to give encouragement and
SUPPLEMENTAL LECTURE: EQUITY IN THE PAY-
SETTING PROCESS
Equity theory is frequently discussed in the context of
monetary rewards, and organizational leaders have
developed some rather elaborate procedures to ensure
that employees receive “a fair day’s pay for a fair day’s
work.”
Three types of comparison other are considered
when deciding how much money employees should
receive. These comparison others correspond to
employee equity, internal equity, and external equity.
Employee Equity. Employee equity refers to a
person’s equity feelings when the comparison other is
in the same job within the same organization. One
strategy for maintaining employee equity is to establish
a fixed pay policy whereby everyone in the job receives
the same wage rate. This may be effective if everyone
contributes equally, but inequities exist otherwise.
An alternative is to establish a range of pay for each
job, with each employee’s pay level within that range
based on seniority or performance appraisal ratings. A
third strategy is to pay employees based completely on
their sales volume or production output with no
minimum or maximum limits. Each of these methods
is used in industry and government, but none provides
a perfect solution.
Internal Equity. Employees also compare themselves
with coworkers in different jobs within the
organization. For example, nurses might feel inequity
because they receive the same salary as the hospital’s
feedback to Jackie Ney on her paperwork flow
ideas. Again, if Johnston lacks the interpersonal
skills to provide praise and feedback, he should
receive proper supervisory training or be moved to
a job where these skills are less important. If
Johnston seems to lack the motivation to fulfill
these supervisory responsibilities, his superior may
want to re-examine Johnston’s own reward system
so that supervisory coaching is more clearly
rewarded.
In the short term, Jackie should be approached to
reinforce her importance to the organization and
the value of her efforts. She should be made aware
of the above-mentioned reviews of the
performance appraisal system and have an
opportunity to provide input to this process.
entry level technicians and believe that these
technicians provide fewer inputs (education, value-
added, etc.) to the organization.
To minimize inequities between jobs, many
organizations use a process called job evaluation (see
Chapter 6 of the textbook). Job evaluation forms a job
hierarchy by systematically evaluating the worth of
each job. Jobs are placed in higher pay grades if they
require more skill, effort, and responsibility, and
involve harsher working conditions. Although
imperfect, job evaluation helps firms to estimate
whether nurses, for instance, are fairly paid compared
to, say, technicians.
External Equity. External equity refers to a person’s
equity feelings when the comparison other is in other
organizations. For example, an accountant might
compare her salary and benefits with a friend working
in the same position at another firm. Organizations try
to maintain external equity through salary surveys.
Their ultimate objective is to provide competitive
monetary rewards to attract new employees while
preventing labor costs from escalating out of hand.
Source: T.A. Mahoney, “Understanding Comparable
Worth: A Societal and Political Perspective,” Research
in Organizational Behaviour, 9 (1987), pp. 209-245.
 SUPPLEMENTAL LECTURE: QUANTIFYING
EXPECTANCY THEORY
Using expectancy theory, we can quantify the relative
likelihood that an effort level will be exerted. Basically,
we need to learn three things: (1) the valence of salient
outcomes, (2) P>O expectancies with respect to those
outcomes for specific performance levels, and (3) E>P
expectancies with respect to those performance levels
and a particular effort level.
An example will help clarify how expectancy theory
may be quantified. Suppose that valence ranges from
-1 to +1 and that you value a quarterly bonus (+.7) and,
to a lesser extent, a day off with pay (+.3). Further
suppose that you dislike making mistakes in your work
(-.4).
Performance is a complex concept with numerous
levels and dimensions. For the sake of simplicity, we
shall consider only one dimension (quantity -- number
of customer requests completed on time) and two
specific levels (5 and 10 customer requests completed).
Let’s suppose you believe that completing 10 requests
on time will definitely result in a day off with pay
(1.0), a good probability of a quarterly bonus (.5) but
also a strong chance that you will make mistakes (.8).
In contrast, completing only 5 customer requests is
expected to result in a low probability of a day off with
pay (.2) a slightly lower quarterly bonus (.4) but also
hardly any chance that you will make mistakes (.1).
Finally, let’s suppose that your E>P expectancy for
completing 10 requests on time is only .4 whereas the
likelihood of completing 5 requests on time is .9. In
other words, there is only a 40 percent chance that you
could possibly complete 10 requests on time whereas
there is a 90 percent chance of completing 5 requests
on time.
The exhibit on the next page illustrates the
quantification of expectancy theory in this situation.
Effort motivation is calculated as:
M = [E>P] * [(P>O) * V]
.132 = .4 * [(1 * .3)+(.5 * .7)+(.8 * -.4)]
.270 = .9 * [(.2 * .3)+(.4 * .7)+(.1 * -.4)]
Based on these calculations, we can see that you are
motivated to achieve the lower performance goal (5
requests completed on time). Notice that the composite
valence of the higher and lower performance goals are
almost identical (.33 versus .30). However, the
equation tilts in favour of the lower performance goal
because the E>P expectancy is much higher.

Effort E—>P P—>O

Motivation Expectancy Expectancy Valence

10 Requests 1.0 Day Off .3

Higher .4 Completed
.132 Effort on Time
.5 Bonus .7
.8 Mistakes –.4

5 Requests .2 Day Off .3

Lower Completed
.27 .9 on Time
.4 Bonus .7
Effort
.1 Mistakes –.4
 VIDEO SUGGESTIONS
Along with the video cases for this part of the textbook, the following videos and films generally relate to one or more
topics in this chapter. These programs may be available at your college/university or rented from the distributor. Please
contact your film librarian to determine the availability of these programs at your institution. This list was compiled
from library holdings of several universities. Due to the variety of video material, this is not a comprehensive list. Nor
can we say that all of the programs below are suitable for your class.

The X Factor: Managing and Motivating
Generation X. (1998, 22 min., CorVision Media and
WGBY-TV). This program, featuring Gen-X
consultant Bruce Tulgan, introduces Generation X:
who they are, how they view the world of work, and
which factors shaped their perspective. It discusses
seven management principles and how they are
effectively used in recruiting, motivating, and retaining
Generation X employees.
Re-Energizing the Mature Organization: Designing
the Organization for the Future. (1997, 54 min.,
Stanford Alumni Assoc.) Part of the Stanford executive
briefings, this program highlights: explains how to
implement effective change; outlines organizations of
the future; examines way to re-energize people. By
describing the organization of the future, Dr. Robert
Zawacki discusses how to re-energize and motivate
people to compete in the 90s. He shares his experiences
with transforming organizations; specifically, how to
design organizations which view 'time' as a
competitive advantage and how to manufacture quality
products with self-directed teams.
Mobilizing Commitment in Your Organization.
(1997, 46 min., Stanford Alumni Assoc.) Part of the
Stanford executive briefings, this video program
highlights: practical applications of mobilization;
empowering employees towards innovation; realizing
the corporate benefits of shared commitment. Jennifer
Kenny offers a reinterpretation of current and
historical business breakdowns seeing them instead as
the result of lacking commitment, trust, and
coordination. She outlines a new model where these
principles are the cornerstone of all business processes
and can be applied to leverage the learning of others
and gain their commitment to a shared future.
Coaching a Winning Team (1997, 55 min., Stanford
Alumni Association). Part of the Stanford executive
briefings series, this video program highlights:
building credibility and consensus in a vision; using
enthusiasm to turn around team motivation; identifying
and using complimentary strengths in a team. In this
video described as "motivational," "extremely
inspirational," and "a dynamic stab in the arm," Tara
VanDerveer shows us that whether it be in basketball
or business, a successful team is born of strengthening
individual qualities and focusing them on a singular
goal.
Motivating and Rewarding Employees. (1997, 66
min., National Press Publications). Management
consultant and author Bob Nelson shows managers
how to spark enthusiasm in their employees and build
an atmosphere of loyalty and trust where productivity
flourishes. This program is based on Nelson’s best-
selling book, 1001 Ways to Reward Employees.
Even Eagles Need a Push. (199?, 24 min., VHS). In
this video, consultant David McNally shows viewers
how to enthusiastically commit to new levels of
achievement and excellence. He describes five qualities
of a confident, empowered employee.
The Unorganized Manager: Part 3 -- Divine
Intervention. (1995?, 20 min., Video Arts). This
humorous video program outlines goal setting for team
members. St Peter (John Cleese) recalls Richard to
The Pearly Gates for an annual check-up. Here, he
discovers that Richard’s management style still leaves
a lot to be desired. Despite having learned to organize
himself (from Parts 1 and 2 of this program), Richard
is failing to organize his team. St Peter then explains
that Richard needs to set standards for his team
members, measurable either by quality, quantity, cost
or time. In this way both Richard and his managers
can know how they are doing. Richard’s final lesson is
to agree targets with individual team members in order
to help them develop and realize their potential, or to
bring their performance back on track.
Motivation and Goal Setting. (1995, 62 min.,
Business Advantage). This program explains how to
discover start-up strategies to goal-setting; self-
motivation solutions, how to build productivity
boosters into every plan you make; concrete steps you
can take; the most crucial qualities to help set realistic
goals; how to avoid time-wasting and stay focused.
Coaching to Develop Motivation. (1995, 11 min., Ash
Quarry Productions). This program demonstrates a
coaching technique for ensuring that people take
responsibility for motivating themselves. It offers
practical examples of the use of the 'question style' of
coaching, and will help the coach to ask the right
questions, use silence effectively, and push for detail.
Goals and Goal Setting. (1994, 19 min., Crisp
Publications). Shows the value of a common purpose
in improving teamwork and productivity. Explains the
difference between goals, missions and objectives, the
setting of priorities, and creating goals with
measurable results.
The Best of Motives. (1994, ?? min., Video Arts). This
British comedy/drama illustrates the "six skills of
motivation" that are essential to effective management.
The protagonist learns to provide information,
feedback, and recognition, and begins to involve,
empower, and listen to the people he supervises. The
result is higher production, improved quality, and
substantial rewards. The first part of this two-part
program is called Nobody ever tells us. Part two is
called Nobody ever asks us.
Keep Reaching II. (199?, 23 min., VHS). This
program is designed to help employees master 10 steps
to help motivate themselves. Based on the “circle of
motivation” theory developed by Joe Batten. Includes
elements of goal setting.
Goal Setting. (1993, 38 min. on 2 videos,
VideoLearning & More Corp.). This two-part video
looks at the differences between people who succeed
and those who fail or don't even try and shows the
importance of goal setting techniques. Part one
includes Realizing your potential (19 min.). Part two
is called Setting and achieving goals (19 min.).
Motivating Others. (1992, 25 min., American
Management Association). The abstract of this
program says that it demonstrates a concrete set of
guidelines to help managers elicit superior
performance from their employees.
Motivation, Myths and Realities. (1985, 20 min.,
VHS) Management expert Saul Gellerman discusses
ways to motivate employees to greater productivity and
creativity.
It’s Not Just the Money. (1976, 30 min., 3/4 inch).
Discusses management techniques which motivate
employees better than money. Part of the Ontario
Educational Communications Authority’s
“Understanding Behaviour in Organizations” series.
Building Commitment and Motivation. (1982, 30
min., VHS). An employee who is enthused and
committed is a valuable asset. This program discusses
how to build this enthusiasm and motivation.
Focusing on the Human Side. (1990, 22 min., VHS)
Five keys to help supervisors relate more effectively to
their employees are making people feel more motivated
and satisfied.
Managing Motivation, (1981, 10 min., VHS). The
Expectancy Theory. Shows how providing rewards,
creating expectations of success and maintaining open
communication can increase employee motivation and
productivity.
Giving Positive Feedback. (1985, 6 min., VHS).
Demonstrates simple techniques for improving
feedback to employees that can increase efficiency and
productivity.
The Self-motivated Achiever. (1967, 28 min., 16
mm.). David C. McClelland discusses the problem of
identifying individuals with a high need for
achievement and how to deal with them within an
organization. Of assistance in providing the manager
with an understanding of motivating others towards
achievement.
NOTES