UGBA 105UGBA 105Sections 102,104,106Sections 102,104,106

Week 10: Motivation IWeek 10: Motivation I

AgendaAgenda

Review theories of Review theories of motivationmotivation

Video of Lincoln Electric Video of Lincoln Electric Discuss motivation at Discuss motivation at Lincoln Electric & People Lincoln Electric & People ExpressExpress

A Definition of A Definition of MotivationMotivation

Performance = Performance = (Motivation x (Motivation x Ability)Ability)

Motivation is an internal state that energizes, directs and maintains human action.Greenberg, Jerald (2002) Managing Behavior in Organizations

Earlier Theories of Earlier Theories of MotivationMotivationThe learning (Skinnerian) approach The learning (Skinnerian) approach to motivation:to motivation:

if you do _____, I’ll give you if you do _____, I’ll give you ______.______.

Homo economicus (e.g.Theory X) Homo economicus (e.g.Theory X) suggests: the greater the promised suggests: the greater the promised reward, the greater the reward, the greater the motivation. motivation.

Dilbert on MotivationDilbert on Motivation

Motivation is complicated: Motivation is complicated: Expectancy TheoryExpectancy Theory

MotivationMotivation determines the level of employee determines the level of employee efforteffort..

PerformancePerformance depends on depends on motivationmotivation and and abilityability.. MotivationMotivation is partly determined by perceptions of is partly determined by perceptions of

linkages from effort to performance to outcomes.linkages from effort to performance to outcomes. The The environmentenvironment (incentive system) partly (incentive system) partly

determines the strength of the linkage from effort determines the strength of the linkage from effort to performance, and from performance to outcomes.to performance, and from performance to outcomes.

Motivatio

n

Effort Performan

ce

Outcomes

Environme

nt

Ability

Edward Lawler, Motivation in Work Organizations, Brooks/Cole, 1973.

Tightening E-P-O Tightening E-P-O LinkagesLinkages

Motivatio

n

Effort Performan

ce

Outcomes

If I put forth theeffort, will it fulfill the

organization’s performance goals?

EXPECTANCY

Will meeting theorganization’s performance goals

earn me the promisedrewards?

INSTRUMENTALITY

Do I value thisreward?

VALENCE

Equity and MotivationEquity and Motivation

If I perceive these as unequal I may:

• reduce my effort (my input)

• increase my outcomes in other ways

• change my referent other

• change my perception of my input

MY OUTCOMES

MY INPUTS=

OTHER’S OUTCOMESOTHER’S INPUTS

?

To determine valence, people compare their input/output ratios to those of people

around them.M. Patchen, The Choice of Wage Comparisons, Prentice-Hall, 1961.

J. Adams, “Toward an understanding of inequity,” Journal of Abnormal & Social Psychology, 1963.

Motivation and Money: Motivation and Money: It DOES MatterIt DOES Matter

The Problem With Strong The Problem With Strong Monetary Incentives …Monetary Incentives …

… … is that they work TOO well!is that they work TOO well! Sears Auto CentersSears Auto Centers

– 1989 – Unveiled a new incentive system that based 1989 – Unveiled a new incentive system that based compensation on the average revenue per customer visit.compensation on the average revenue per customer visit.

– 1999 – A class-action lawsuit claimed Sears had defrauded 1999 – A class-action lawsuit claimed Sears had defrauded $400M from its customers nationwide by selling them $400M from its customers nationwide by selling them unnecessary services.unnecessary services.

Nortel NetworksNortel Networks

– After the 2000/01 dot-com crash, the Board of Directors After the 2000/01 dot-com crash, the Board of Directors offered top executives $13.6M in incentive compensation if offered top executives $13.6M in incentive compensation if the firm broke even for one quarter; $30M more if the firm the firm broke even for one quarter; $30M more if the firm broke even for three consecutive quarters.broke even for three consecutive quarters.

– The firm massively under-reported income in 2002 to make The firm massively under-reported income in 2002 to make sure 2003 was a break-even year. 2003 bonuses: CEO Frank sure 2003 was a break-even year. 2003 bonuses: CEO Frank Dunn $2.15M; CFO $831K. The firm’s performance crashed in Dunn $2.15M; CFO $831K. The firm’s performance crashed in 2004.2004.

Alternatives to Strong Alternatives to Strong Monetary Incentives:The Monetary Incentives:The Importance of ContextImportance of Context

Customer SatisfactionCustomer Satisfaction– ““We [at Nordstrom] remain committed to the simple idea We [at Nordstrom] remain committed to the simple idea

our company was founded on, earning the trust of our our company was founded on, earning the trust of our customers, one at a time.”customers, one at a time.”

Technological InnovationTechnological Innovation– The mission of Cray Research (founded 1972 by Seymour The mission of Cray Research (founded 1972 by Seymour

Cray, designer of the world’s first supercomputer) is Cray, designer of the world’s first supercomputer) is “to design and build a larger, more powerful computer “to design and build a larger, more powerful computer than anyone has now.”than anyone has now.”

– ““Google’s mission is to organize the world's Google’s mission is to organize the world's information and make it universally accessible and information and make it universally accessible and useful.”useful.”

What other overarching goals do firms use to keep monetary incentives in context?

Extrinsic and Extrinsic and Intrinsic rewardsIntrinsic rewards

ExtrinsicExtrinsic IntrinsicIntrinsic

Lessons LearnedLessons Learned

Implications of Motivation Theories for Implications of Motivation Theories for ManagersManagers

Figure out what outcomes each employee values.Figure out what outcomes each employee values.

Determine what kinds of behavior you desire.Determine what kinds of behavior you desire.

Make sure desired levels of performance are reachable.Make sure desired levels of performance are reachable.

Link desired outcomes to desired performance.Link desired outcomes to desired performance.

Analyze the total situation for conflicting Analyze the total situation for conflicting expectancies.expectancies.

Create opportunity for intrinsic and extrinsic Create opportunity for intrinsic and extrinsic rewards.rewards.

Check the system for its equity!Check the system for its equity!

Motivation at People Motivation at People ExpressExpress Describe the reward system Describe the reward system at PE?at PE?

What were its strengths? What were its strengths? Weaknesses?Weaknesses?

What recommendations would What recommendations would you suggest to improve the you suggest to improve the long term success of People long term success of People Express?Express?