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CHAPTER 10 - MOTIVATING AND REWARDING EMPLOYEES

LEARNING OUTCOMES
After reading this chapter, students should be able to:
1. Define and explain motivation.
2. Compare and contrast early theories of motivation.
3. Compare and contrast contemporary theories of motivation.
4. Discuss current issues in motivating employees.
5.
Opening Vignette Best Practices at Best Buy
SUMMARY
Do traditional workplaces reward long hours instead of efficient hours? Wouldnt it make more sense to
have a workplace in which people can do whatever they want, whenever they want, as long as the work
gets done? Well, thats the approach that Best Buy is taking.1 And this radical workplace experiment,
which obviously has many implications for employee motivation, has been an interesting and
enlightening journey for the company.
In 2002, then-CEO Brad Anderson (now the companys vice chairman) introduced a carefully crafted
program called ROWE (Results-Only Work Environment). ROWE was the inspiration of two HRM
managers at Best Buy, Cali Ressler and Jody Thompson, who had been given the task of taking a flexible
work program that was in effect at corporate headquarters in Minnesota and developing it for everyone in
the company. Ressler and Thompson said, We realized that the flexible work program was successful as
employee engagement was up, productivity was higher, but the problem was the participants were being
viewed as not working. And thats a common reaction from managers who dont really view flexible
work employees as really working because they arent in the office working traditional hours. The two
women set about to change that by creating a program in which everyone would be evaluated solely on
their results, not on how long they worked.
The first thing to understand about ROWE The first step in implementing ROWE was a culture audit at
company headquarters, which helped them establish a baseline for how employees perceived their work
environment. After four months, the audit was repeated. The second phase involved explaining the
ROWE philosophy to all the corporate employees and training managers on how to maintain control in a
ROWE workplace. In the third phase, work unit teams were free to figure out how to implement the
changes. From 2005 to 2007, productivity jumped 41 percent and voluntary turnover fell to 8 percent
from 12 percent. And employees say that the freedom has changed their lives. They dont know if they
work fewer hourstheyve stopped countingbut they are more productive.
Teaching notes
1.
2.
3.
4.

Ask students to identify what motivates them.


What motivational theories might apply to U.S. workers today?
How do effective managers help motivate their employees?
Do you think that motivation theories and practices that motivate individuals at a U.S. based company
would be effective in explaining and generating motivation in other countries? If so, which
countries? If not, why? (Most motivation theories are US based and are culture bound)

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1. WHAT IS MOTIVATION
a) Definition
1. Many incorrectly view motivation as a personal trait.
2. Motivation is the result of the interaction between the individual and the situation.
a) Individuals differ in motivational drive.
b) An individuals motivation varies from situation to situation.
3. Motivation refers to the process by which a persons efforts are energized, directed, and
sustained toward attaining a goal.
4. Function of three key elements: energy, direction and persistence.
a) The energy element is a measure of intensity.
(1) When someone is motivated, he or she puts forth effort and tries hard.
(2) Quality and intensity must be measured.
b) The effort must be channeled in a direction that benefits the organization.
(1) Effort directed toward, and consistent with, the organizations goals.
c) Persistence is the 3rd key element.
(1) We want employees to persist in putting forth effort to achieve those goals.
Teaching Notes
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2. WHAT DO EARLY THEORIES OF MOTIVATION SAY?
a) Introduction
3. In the 1950s three specific theories were formulated.
a) Now considered questionably valid, are probably still the best-known explanations for
employee motivation.
b) The hierarchy of needs theory.
c) Theories X and Y.
d) The two-factor theory, motivation-hygiene theory.
e) Three needs theory.
4. Although more-valid explanations of motivation have been developed, students should
know these theories because:
a) They represent the foundation from which contemporary theories grew.
b) Practicing managers regularly use these theories and their terminology.

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c) What Is Maslows Hierarchy of Needs Theory?


5. The best-known theory of motivation.
6. Within every human being, there exists a hierarchy of five needs.
a) Physiological needs.
b) Safety needs.
c) Social needs.
d) Esteem needs.
e) Self-actualization needs.
7. As each need is substantially satisfied, the next need becomes dominant. (Exhibit 10-1.)
8. No need is ever fully gratified, a substantially satisfied need no longer motivates.
9. To motivate, you need to understand where that person is in the hierarchy and focus on
satisfying needs at or above that level.
10. Widely recognized, particularly among practicing managers, its popularity can be
attributed to the theorys intuitive logic and ease of understanding.
11. Research does not generally validate the theory.
12. Maslow had no empirical substantiation for his theory, and several studies found no
support.
a) What Is McGregors Theory X and Theory Y?
13. Douglas McGregor proposed two distinct views of the nature of human beings.
a) A basically negative view, labeled Theory X.
b) A basically positive view, labeled Theory Y.
14. McGregor concluded that a managers view of human nature, and therefore his or her
approach to management, is based on a group of assumptions, either positive or negative.
15. Theory X assumes that physiological and safety needs dominate the individual.
16. Theory Y assumes that social and esteem needs are dominant.
17. McGregor held to the belief that the assumptions of Theory Y were the most valid.
18. There is no evidence to confirm either set of assumptions.
a) What Is Herzbergs Two Factor Theory?
19. An individuals attitude toward his or her work can very well determine success or failure.
20. Herzberg investigated the question What do people want from their jobs?
a) Exhibit 10-2 represents Herzbergs findings, also called the Motivation-Hygiene
Theory.
21. He concluded that certain characteristics were consistently related to job satisfaction
(factors on the left side of Exhibit 10-2) and others to job dissatisfaction (the right side of
Exhibit 10-2).
a) Intrinsic factors such as achievement, recognition, and responsibility were related to
job satisfaction.

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b) When dissatisfied, they tended to cite extrinsic factors such as company policy and
administration, supervision, interpersonal relationships, and working conditions.
22. The opposite of satisfaction is not dissatisfaction, as was traditionally believed.
a) Removing dissatisfying characteristics does not necessarily make the job satisfying.
b) Exhibit 10-3, the opposite of satisfaction is no satisfaction, and the opposite of
dissatisfaction is no dissatisfaction.
23. Managers who eliminate factors that create job dissatisfaction bring about peace but not
motivation.
a) The factors that eliminate job dissatisfaction were characterized as hygiene factors.
b) To motivate people on their jobs, emphasize motivators, those factors that increase job
satisfaction.
24. The criticisms of the theory include the methodology Herzberg used and his failure to
account for situational variables.
25. Much of the enthusiasm for enriching jobs can be attributed to Herzbergs findings.
a) Herzberg focused on the organizations effect on the individual.
From the Past to the Present
Deciding how work tasks should be performed is of interest to managers. Researchers have been curious
about the ideal approach to work design. They want to know the importance of attitudes toward work and
the employees' experiences, both good and bad, that workers reported.
What he discovered changed the way we view job design. The fact that job dissatisfaction and job
satisfaction were the results of different aspects of the work environment was critical.
1. How do different work designs help motivate employees?
b) What Is McClellands Three-Needs Theory?
26. David McClelland and others have proposed the three-needs theory.
27. Need for achievement (nAch)the drive to excel, to achieve in relation to a set of
standards, to strive to succeed.
a) Striving for personal achievement rather than for the rewards of success per se (nAch).
b) The desire to do something better or more efficiently than it has been done before.
c) High achievers differentiate themselves from others by their desire to do things better.
d) They seek situations in which they can attain personal responsibility for finding
solutions to problems, in which they can receive rapid and unambiguous feedback,
and in which they can set moderately challenging goals.
e) High achievers dislike succeeding by chance.
f) They avoid what they perceive to be very easy or very difficult tasks.

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28. Need for power (nPow)the need to make others behave in a way that they would not
have behaved otherwise;
a) The need for power (nPow) is the desire to have impact and to be influential.
b) Individuals high in nPow enjoy being in charge, strive for influence over others, and
prefer to be in competitive and status-oriented situations.
29. Need for affiliation (nAff)the desire to be liked and accepted by others.
a) This need has received the least attention by researchers.
b) Striving for friendships, prefer cooperative situations rather than competitive ones,
and desire relationships involving a high degree of mutual understanding.
Teaching Notes
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30. HOW DO CONTEMPORARY THEORIES EXPLAIN MOTIVATION
a) What is Goal-Setting Theory? (Exhibit 10-4)
31. Goal-setting theory - says that specific goals increase performance and that difficult goals,
when accepted, result in higher performance than do easy goals.
32. Working toward a goal is a major source of job motivation.
33. Specific and challenging goals are superior motivating forces.
34. The specificity of the goal itself acts as an internal stimulus.
35. Participatively set goals elicit superior performance; in other cases, individuals performed
best when their manager assigned goals. Participation is probably preferable to assigning
goals when employees might resist accepting difficult challenges.
36. People will do better if they get feedback on how well theyre progressing toward their
goals because feedback helps identify discrepancies between what theyve done and what
they want to do.
37. Self-generated feedbackwhere an employee monitors his or her own progresshas been
shown to be a more powerful motivator than feedback coming from someone else.
a) Three other contingencies influence the goal-performance relationship:
38. Goal commitment - is most likely when goals are made public, when the individual has
an internal locus of control, and when the goals are self-set rather than assigned.
39. Self-efficacy refers to an individuals belief that he or she is capable of performing a task.
The higher your self-efficacy, the more confidence you have in your ability to succeed in a
task.
40. National culture - well adapted to North American countries because its main ideas align
reasonably well with those cultures. It assumes that subordinates will be reasonably
independent (not a high score on power distance), that people will seek challenging goals

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(low in uncertainty avoidance), and that performance is considered important by both


managers and subordinates (high in assertiveness).
a) How Does Job Design Influence Motivation?
41. Job design refers to the way tasks are combined to form complete jobs.
42. Managers can design motivating jobs by using the job characteristics model (JCM),
developed by J. Richard Hackman and Greg R. Oldham. This model helps managers
describe any job in terms of five core job dimensions.
a) Skill variety.
b) Task identity.
c) Task significance.
d) Autonomy.
e) Feedback.
43. Exhibit 10-5 presents the model.
a) The first three dimensionsskill variety, task identity, and task significance
combine to create meaningful work.
b) Jobs that possess autonomy give the job incumbent a feeling of personal responsibility
for the results.
c) If a job provides feedback, the employee will know how effectively he or she is
performing.
44. Research on the JCM has found that the first three dimensionsskill variety, task identity,
and task significancecombine to create meaningful work.
a) If these three characteristics exist in a job, we can predict that the person will view his
or her job as being important, valuable, and worthwhile.
45. Jobs that possess autonomy give the job incumbent a feeling of personal responsibility.
46. Jobs that provide feedback let the employee know how effectively he or she is performing.
47. JCM suggests that internal rewards are obtained when an employee learns (knowledge of
results through feedback) that one personally (experienced responsibility through
autonomy of work) has performed well on a task that one cares about (experienced
meaningfulness through skill variety, task identity, and/or task significance).
a) The links between the job dimensions and the outcomes are moderated or adjusted by
the strength of the individuals growth need (the persons desire for self-esteem and
self-actualization).
48. Individuals with a high growth need are more likely to experience the psychological states
when their jobs are enriched than are their counterparts with a low growth need.
49. Job enrichment (vertical expansion of a job by adding planning and evaluation
responsibilities): Individuals with low growth need dont tend to achieve high performance
or satisfaction by having their jobs enriched.
50. Exhibit 10-6 depicts guidelines for job redesign based on the JCM .

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a) What is Equity Theory?


51. Employees make comparisons.
52. There is considerable evidence that employees compare themselves to others and that
inequities influence the degree of effort that employees exert.
53. Developed by J. Stacey Adams, equity theory says that employees perceive what they get
from a job situation (outcomes) in relation to what they put into it (inputs) and then
compare their input-outcome ratio with the input-outcome ratio of relevant others. (See
Exhibit 10-7.)
a) If they perceive their ratio to be equal to those of the relevant others with whom they
compare themselves, a state of equity exists.
b) If the ratios are unequal, inequity exists; that is, workers view themselves as underrewarded or over-rewarded.
54. The referent is an important variable in equity theory.
55. There are three referent categories: other, system, and self.
a) Other includes other individuals with similar jobs in the same organization and also
includes friends, neighbors, or professional associates.
b) The system considers organizational pay policies and procedures and the
administration of that system.
c) Self refers to input-outcome ratios that are unique to the individual. It reflects past
personal experiences and contacts.
56. The choice of a particular set of referents is related to the information available about
referents as well as the perceived relevance.
57. When employees perceive an inequity, they might:
a) distort either their own or others inputs or outcomes,
b) behave so as to induce others to change their inputs or outcomes,
c) behave so as to change their own inputs or outcomes,
d) choose a different comparison referent,
e) quit their job.
58. Individuals are concerned with both absolute rewards and the relationship of those rewards
to what others receive.
59. On the basis of ones inputs, such as effort, experience, education, and competence, one
compares outcomes such as salary levels, raises, recognition, and other factors.
60. A perceived imbalance in input-outcome ratios relative to others creates tension.
61. The theory establishes four propositions relating to inequitable pay. (See Exhibit 10-7.)
62. Whenever employees perceive inequity, they will act to correct the situation.
63. Distributive justice - is the perceived fairness of the amount and allocation of rewards
among individuals.
64. More recent research has focused on looking at issues of procedural justice, which is the
perceived fairness of the process used to determine the distribution of rewards.

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65. This research shows that distributive justice has a greater influence on employee
satisfaction than procedural justice, while procedural justice tends to affect an employees
organizational commitment, trust in his or her boss, and intention to quit.

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66. Equity theory is not without problems.


a) The theory leaves some key issues still unclear.
(1) How do employees define inputs and outcomes?
(2) How do they combine and weigh their inputs and outcomes to arrive at totals?
(3) When and how do the factors change over time?
67. Equity theory has an impressive amount of research support and offers important insights
into employee motivation.
Right or Wrong?
The 14-member investment and operations staff of the Missouri State Employees Retirement System
(MOSERS) received almost $300,000 in bonuses in 2008, even though the pension fund lost almost $1.8
billion.39 One person, the organizations chief investment officer, received over a third of that amount.
1. What do you think?
2. What ethical issues do you see in this situation?
3. What would you do?
a) How Does Expectancy Theory Explain Motivation?
68. The most comprehensive explanation of motivation is Victor Vrooms expectancy theory.
69. It states that an individual tends to act on the basis of the expectation that the act will be
followed by a given outcome and the attractiveness of that outcome to the individual.
70. It includes three variables or relationships.
a) Expectancy - effort-performance linkagethe probability perceived by the individual
that exerting a given amount of effort will lead to performance.
b) Instrumentality - performance-reward linkagethe degree to which the individual
believes that performing at a particular level will lead to the attainment of a desired
outcome.
c) Valence - attractivenessthe importance that the individual places on the potential
outcome or reward that can be achieved on the job.
71. It can be summed up in the following questions:
a) How hard do I have to work to achieve a certain level of performance, and can I
actually achieve that level?
b) What reward will performing at that level get me?
c) How attractive is this reward to me, and does it help achieve my goals?
72. How does expectancy theory work?
a) Exhibit 10-8 shows a very simple version of expectancy theory.
b) The strength of a persons motivation to perform (expectancy/effort) depends on how
strongly that individual believes that he or she can achieve what is being attempted.
c) If this goal is achieved (instrumentality/performance), will he or she be adequately
rewarded by the organization?

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d) If so, will the reward satisfy his or her individual goals? (valence/attractiveness)
(1) First, what perceived outcomes does the job offer the employee?
(a) The critical issue is what the individual employee perceives the outcome to
be, regardless of whether his or her perceptions are accurate.
(2) Second, how attractive do employees consider these outcomes to be?
(a) This is an internal issue and considers the individuals personal attitudes,
personality, and needs.
(3) Third, what kind of behavior must the employee exhibit to achieve these outcomes?
(a) What criteria will be used to judge the employees performance?
(4) Fourth, how does the employee view his or her chances of doing what is asked?
(a) What probability does he or she place on successful attainment?
e) How Can We Integrate Current Motivation Theories?
73. There is a tendency to view the motivation theories independently even though many of
the ideas underlying the theories are complementary.
74. Exhibit 10-9 presents a model that integrates much of what we know about motivation.
a) Its basic foundation is the simplified expectancy model.
75. The individual effort box has an arrow leading into it that flows out of the individuals
goals.
76. The goals-effort loop is meant to remind us that goals direct behavior.
a) Expectancy theory predicts that an employee will exert a high level of effort if he or
she perceives a strong relationship between effort and performance, performance and
rewards, and rewards and satisfaction of personal goals.
b) Need theories tell us that motivation would be high to the degree that the rewards an
individual received for his or her high performance satisfied the dominant needs
consistent with his or her individual goals.
77. The model considers the need for achievement, equity, and the job characteristics model.
78. Finally, we can see the JCM in this integrative exhibit. Task characteristics (job design)
influence job motivation at two places.
a) First, jobs that score high in motivating potential are likely to lead to higher actual job
performance since the employees motivation is stimulated by the job itself.
b) Second, jobs that score high in motivating potential also increase an employees
control over key elements in his or her work.
79. Jobs that offer autonomy, feedback, and similar task characteristics help to satisfy the
individual goals of employees who desire greater control over their work.
Teaching Notes
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80. WHAT CURRENT ISSUES DO MANAGERS FACE?


a) How Does Country Culture Affect Motivation Efforts?
81. Current studies of employee motivation are influenced by some significant workplace
issuescross-cultural challenges, motivating unique groups of workers, and designing
appropriate rewards.
82. Employees have different personal needs and goals theyre hoping to satisfy through their
jobs.
83. Motivating a diverse work force also means that managers must be flexible enough to
accommodate cultural differences.
a) The theories of motivation we have been studying were developed largely by U.S.
psychologists and were validated in studies of American workers.
b) Therefore, these theories need to be modified for different cultures.
(1) The self-interest concept is consistent with capitalism and the extremely high value
placed on individualism in countries such as the United States.
(2) These motivation theories should be applicable to employees in such countries as
Great Britain and Australia.
(3) In more collectivist nationssuch as Japan, Greece, and Mexicosecurity needs
would be on top of the needs hierarchynot self-actualization.
84. The need-for-achievement concept also has a U.S. bias.
a) It presupposes the existence of two cultural characteristics: a willingness to accept a
moderate degree of risk and a concern with performance.
b) These characteristics would exclude countries with high uncertainty avoidance scores
and high quality-of-life ratings.
85. Several recent studies among employees in other countries indicate that some aspects of
motivation theory are transferable.
a) Motivational techniques were shown to be effective in changing performance-related
behaviors of Russian textile mill workers.
b) A recent study examining workplace motivation trends in Japan seems to indicate that
Herzbergs model is applicable to Japanese employees.
86. Managers must change their motivational techniques to fit the culture.
a) How Can Managers Motivate Unique Groups of Workers?
87. Motivating employees has never been easy. Employees come into organizations with
different needs, personalities, skills, abilities, interests, and aptitudes.
a) Flexibility is key to maximizing motivation among todays diversified work force.
b) Studies show that men place considerably more importance on autonomy in their jobs
than do women.
c) The opportunity to learn, convenient work hours, and good interpersonal relations are
more important to women than to men.

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d) What motivates a single mother with two dependent children working full time may
be very different from the needs of a young, single, part-time worker, or the older
employee.
e) Employees have different personal needs and goals theyre hoping to satisfy through
their jobs.
Developing Your Motivating Employees Skill
About the Skill
Because a simple, all-encompassing set of motivational guidelines is not available, the following
suggestions draw on the essence of what we know about motivating employees.
Steps in Practicing the Skill
1 Recognize individual differences. Employees have different needs, attitudes, personality, and other
important individual variables.
2 Match people to jobs. People who lack the necessary skills will be at a disadvantage.
3 Use goals. Employees should have hard, specific goals and feedback on performance and the goals
should be participatively set.
4 Ensure that goals are perceived as attainable. Employees who see goals as unattainable will reduce
their effort.
5 Individualize rewards. Use employee differences to individualize the rewards.
6 Link rewards to performance. Rewards such as pay increases and promotions should be given for the
attainment of employees specific goals.
7 Check the system for equity. Employees should perceive that rewards or outcomes are equal to the
inputs and effort.
8 Dont ignore money. Various pay incentives are important in determining employee motivation.
88. Flextime - ExampleSusan Talbot is the classic morning person.
a) Susans work schedule as a claims adjuster at State Farm Insurance is flexible.
b) It allows him some degree of freedom as to when she comes to work and when she
leaves.
89. Many employees continue to work an eight-hour day, five days a week.
90. A number of scheduling options have been introduced to give management and employees
more flexibility. A compressed workweek is a workweek where employees work longer
hours per day but fewer days per week.
91. How does flextime work?
a) Flextime is a scheduling option that allows employees, within specific parameters, to
decide when to go to work.
b) Flextime is short for flexible work hours.
(1) Employees have to work a specific number of hours a week, but they are free to vary
the hours of work within certain limits.
(2) Each day consists of a common core, usually six hours, with a flexibility band
surrounding the core.

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(3) Some flextime programs allow extra hours to be accumulated and turned into a free
day off each month.
(4) Flextime has become an extremely popular scheduling option; about 60 percent of
firms in a recent study offered employees some form of flextime.
(5) The potential benefits from flextime are numerous.
(a) Improved employee motivation and morale, reduced absenteeism as a result
of enabling employees to better balance work and family responsibilities,
increased wages due to productivity gains, and the ability of the organization
to recruit higher-quality and more-diverse employees.
(6) Flextimes major drawbacks:
(a) It is not applicable to every job.
(b) It works well with job tasks for which an employees interaction with people
outside his or her department is limited.
(c) It is not a viable option when key people must be available during standard
hours.
92. Can employees share jobs?
a) Job sharing is a special type of part-time work.
(1) It allows two or more individuals to split a traditional forty-hour-a-week job.
b) Job sharing is growing in popularity, with 57 percent of large organizations offering it.
c) Job sharing allows the organization to draw upon the talents of more than one
individual for a given job.
(1) Opportunity to acquire skilled workers who might not be available on a full-time
basis.
(2) An option for managers to use to minimize layoffs.
d) Major drawbackfinding compatible pairs of employees who can successfully
coordinate the intricacies of one job.
93. What is telecommuting?
a) Telecommuting capabilities that exist today have made it possible for employees to be
located anywhere on the globe and do their jobs.
b) Companies no longer have to consider locating near their work force.
c) It refers to employees who do their work at home on a computer that is linked to their
office.
d) More than 27 million people work at home in the United Statesand the number is
expected to continue to rise.
e) Telecommuting offers an opportunity for a business in a high-labor-cost area to have
its work done in an area where lower wages prevail.
f) Challenge for employers revolves around training managers in how to establish and
ensure appropriate work quality and on-time completion.
(1) Emphasis will be on the final product, not the means by which it is accomplished.

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g) Work at home may also require managers to rethink their compensation policy.
(1) Will the company pay workers by the hour, on a salary basis, or by the job
performed?
(2) Employees who work more than 40 hours during the work week will be entitled to
overtime pay.
h) Because telecommuting employees are often full time, it will be the organizations
responsibility to ensure the health and safety of the off-premise work site.
(1) Equipment provided by the company that leads to an employee injury or illness is the
responsibility of the organization.
i)

For employees, there are two big advantages of telecommuting.

(1) The decrease in time and stress of commuting.


(2) The increase in flexibility in coping with family demands.
j)

Some potential drawbacks.

(1) Telecommuting employees miss the regular social contact.


(2) They may be less likely to be considered for salary increases and promotions.
(3) Will non-work-related distractions significantly reduce productivity for those without
superior willpower and discipline?

MANAGING DIVERSITY | Developing Employee Potential: The Bottom Line of Diversity


One of a managers more important goals is helping employees develop their potential. The managers at
Bell Labs have worked hard to develop an environment in which the ideas of diverse employees are
encouraged openly. One thing they can do is make sure that diverse role models are in leadership
positions so that others see the opportunities to grow and advance.
Another way for managers to develop the potential of their diverse employees is to offer developmental
work assignments that provide a variety of learning experiences in different organizational areas.
Employees who are provided the opportunity to learn new processes and new technology are more likely
to excel at their work and to stay with the company.
1. What can managers do to ensure that their diverse employees have the opportunity to develop their
potential?
2. What would be an example of developmental work?
k) Motivating Professionals
94. Professionals are typically different from nonprofessionals.
a) They have a strong and long-term commitment to their field of expertise.
b) Their loyalty is more often to their profession than to their employer.
c) Their commitment to their profession means they rarely define their workweek in
terms of nine-to-five or five days a week.
95. Money and promotions into management typically are low on their priority list.
96. Job challenge tends to be ranked high.
a) They like to tackle problems and find solutions.

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b) Their chief reward in their job is the work itself.


c) They value support.
d) They want others to think that what they are working on is important.
97. Managers should provide them with new assignments and challenging projects.
a) Give them autonomy to follow their interests and allow them to structure their work in
ways they find productive.
b) Reward them with educational opportunities.
c) Reward them with recognition.
d) And managers should demonstrate that theyre sincerely interested in what theyre
doing.
e) Motivating Contingent Employees
98. Contingent workers are part-time, contract, and other forms of temporary workers, due to
organizations eliminating workers, downsizing and restructuring.
99. They can be motivated:
a) with the opportunity of permanent employment
b) training opportunities
c) How Can Managers Design Appropriate Rewards Programs?
100. Employee rewards programs play a powerful role in motivating appropriate employee
behavior.
101. Open Book Management - is a motivational approach in which an organizations
financial statements (the books) are shared with all employees.
102. Organizations share information so that employees will be motivated to make better
decisions about their work and better able to understand the implications of what they do,
how they do it, and the ultimate impact on the bottom line.
a) How Can Managers Use Employee Recognition?
103. Employee recognition programs consist of personal attention and expressions of interest,
approval, and appreciation for a job well done.
104. 84 percent of organizations had some type of program to recognize worker achievements.
105. Consistent with reinforcement theory, rewarding a behavior with recognition immediately
following that behavior is likely to encourage its repetition.
a) How Can Managers Use Pay-For-Performance to Motivate Employees?
106. Forty percent of employees see no clear link between performance and pay.
107. Pay for-performance programs pay employees on the basis of some performance
measure.
a) Piece-rate plans, gainsharing, wage incentive plans, profit sharing, and lump-sum
bonuses.
108. These forms of pay reflect pay adjustments based on performance measures.

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109. Performance-based compensation is probably most compatible with expectancy theory.


110. Pay-for-performance programs are gaining in popularity in organizations. Some 80
percent of large U.S. companies have some form of variable pay plan.
111. The growing popularity can be explained in terms of both motivation and cost control.
112. Making some or all of a workers pay conditional on performance measures focuses his
or her attention and effort on that measure, then reinforces the continuation of that effort
with rewards.
a) However, if the employee, team, or the organizations performance declines, so too
does the reward.
113. A recent extension of this concept is called competency-based compensation.
a) It pays and rewards employees on the basis of the skills, knowledge, or behaviors
employees possess.
b) Pre-set pay levels (broadbanding) are established on the basis of the degree to which
these competencies exist.
c) Pay increases in a competency-based system are awarded for growth in personal
competencies as well as for the contributions one makes to the overall organization.
d) Final Note on Employee Rewards.
114. During times of economic and financial uncertainty, managers abilities to recognize and
reward employees are often severely constrained.
115. Managers can maintain and even increase employee motivation by:
a) clarifying each person's role in the organization
b) keeping open lines of communication and two-way exchanges between top-level
managers and employees
c) valuing the employees.
Teaching Notes
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Chapter 10 - Motivating and Rewarding Employees

REVIEW AND APPLICATIONS


CHAPTER SUMMARY
10.1
Define and explain motivation. Motivation is the process by which a persons efforts are
energized, directed, and sustained toward attaining a goal. The energy element is a measure of
intensity or drive. The high level of effort needs to be directed in ways that help the organization
achieve its goals. Employees must persist in putting forth effort to achieve those goals.
10.2
10-2. Compare and contrast early theories of motivation. Individuals move up the hierarchy of
five needs (physiological, safety, social, esteem, and self-actualization) as needs are substantially
satisfied. A need thats substantially satisfied no longer motivates. A Theory X manager believes that
people dont like to work or wont seek out responsibility so they have to be threatened and coerced
to work. A Theory Y manager assumes that people like to work and seek out responsibility, so they
will exercise self-motivation and self-direction. Herzbergs theory proposed that intrinsic factors
associated with job satisfaction were what motivated people. Extrinsic factors associated with job
dissatisfaction simply kept people from being dissatisfied. Three-needs theory proposed three
acquired needs that are major motives in work: need for achievement, need for affiliation, and need
for power.
10.3
Compare and contrast contemporary theories of motivation. Goal-setting theory says that
specific goals increase performance and difficult goals, when accepted, result in higher performance
than do easy goals. Important points in goal-setting theory include: intention to work toward a goal is
a major source of job motivation; specific hard goals produce higher levels of output than generalized
goals; participation in setting goals is probably preferable to assigning goals, but not always;
feedback guides and motivates behavior, especially self-generated feedback; and contingencies that
affect goal setting include goal commitment, self-efficacy, and national culture.
The job characteristics model says there are five core job dimensions (skill variety, task identity, task
significance, autonomy, and feedback) that are used to design motivating jobs. Equity theory focuses
on how employees compare their inputs-outcomes ratios to relevant others ratios. A perception of
inequity will cause an employee to do something about it. Procedural justice has a greater influence
on employee satisfaction than does distributive justice. Expectancy theory says that an individual
tends to act in a certain way based on the expectation that the act will be followed by a desired
outcome. Expectancy is the effort-performance linkage (how much effort do I need to exert to achieve
a certain level of performance); instrumentality is the performance- reward linkage (achieving at a
certain level of performance will get me what reward); and valence is the attractiveness of the reward
(is the reward what I want).
10.4
Discuss current issues in motivating employees. Most motivational theories were developed in
the United States and have a North American bias. Some theories (Maslows need hierarchy,
achievement need, and equity theory) dont work well for other cultures. However, the desire for
interesting work seems important to all workers and Herzbergs motivator (intrinsic) factors may be
universal. Managers face challenges in motivating unique groups of workers. A diverse workforce is
looking for flexibility. Professionals want job challenge and support, and are motivated by the work
itself. Contingent workers want the opportunity to become permanent or to receive skills training.
Open-book management is when financial statements (the books) are shared with employees who
have been taught what they mean. Employee recognition programs consist of personal attention,
approval, and appreciation for a job well done.
Pay-for-performance programs are variable
compensation plans that pay employees on the basis of some performance measure.

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Part 4 Leading

To check your understanding of outcomes 10.110.4, go to mymanagementlab.com and try the chapter
questions.
UNDERSTANDING THE CHAPTER
1. Most of us have to work for a living, and a job is a central part of our lives. So why do
managers have to worry so much about employee motivation issues?
Answer: Managers need to worry about employee motivation due to the competitive nature of the
workplace and productivity . Organizations need engaged employees for successful and profitable
results.
2. Contrast lower-order and higher-order needs in Maslows needs hierarchy.
Answer: Within every human being, there exists a hierarchy of five needs. Lower-order needs are
physiological needs and safety needs. Higher-order needs are social needs, esteem needs, and selfactualization needs. See Exhibit 10-1.
3. What role would money play in (a) the hierarchy of needs theory, (b) two-factor theory, (c)
equity theory, (d) expectancy theory, and (e) motivating employees with a high nAch? How do
needs affect motivation?
Answer: A need, in our terminology, means some internal state that makes certain outcomes appear
attractive. (a) Money would satisfy the lower needs in Maslow's theory and work toward the higher
needs. Money might be a security need, providing shelter, food, and clothing, or it could be a selfesteem need in giving the individual a sense of self-worth. (b) Money is a hygiene theory. (c) Money
becomes a measure of fairnessIs my raise, salary appropriate to my position? (d) Money is relevant
only to the degree the individual perceives that the monetary reward is appropriate for the amount of
effort put forth. (e) Money could be seen as a way to measure success.
4. What are some of the possible consequences of employees perceiving an inequity between their
inputs and outcomes and those of others?
Answer: There is considerable evidence that employees make comparisons of their job inputs and
outcomes relative to others and that inequities influence the degree of effort that employees exert.
If the ratios are unequal, inequity exists; that is, they view themselves as under-rewarded or overrewarded. When inequities occur, employees attempt to correct them. On the basis of equity theory,
when employees perceive an inequity, they might (1) distort either their own or others
inputs
or outcomes, (2) behave in some way to induce others to change their inputs or outcomes, (3) behave
in some way to change their own inputs or outcomes, (4) choose a different comparison referent,
and/or (5) quit their job. The theory establishes the four propositions relating to inequitable pay.
5. What are some advantages of using pay-for-performance to motivate employee performance?
Are there drawbacks? Explain.
Answer: People do what they do to satisfy some need. They look for a payoff or reward. Pay is an
important variable in motivation; managers need to look at how pay is used to motivate high levels of
employee performance. Pay-for-performance programs are compensation plans that pay employees
on the basis of some performance measure and are probably most compatible with expectancy theory.
Pay-for-performance programs are gaining popularity in organizations. Making some or all of a
workers pay conditional on performance measures focuses his or her attention and effort on that
measure, then reinforces the continuation of that effort with rewards. However, if the employee,

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Chapter 10 - Motivating and Rewarding Employees

team, or the organizations performance declines, so too does the reward. Failure to reach the
performance measures can result in the forfeiture of a percentage of salary placed at risk.
6. Many job design experts who have studied the changing nature of work say that people do their
best work when theyre motivated by a sense of purpose rather than by the pursuit of money.
Do you agree? Explain your position. What are the implications for managers?
Answer: Student answers may vary. People are motivated by intrinsic and extrinsic rewards. When
individuals feel that they are making a difference, the money ceases to be the main motivator. The
implications for managers is that they need to uncover what motivates each employee in order to
understand them and offer the appropriate response such as job re-design, praise, rewards, etc.
7. Could managers use any of the motivation theories or approaches to encourage and support
workforce diversity efforts? Explain.
Answer: Most employees are motivated by one of David McClelland's theories. Need for
achievement (nAch). The drive to excel, to achieve in relation to a set of standards, to strive to
succeed. Striving for personal achievement rather than for the rewards of success per se (nAch). The
desire to do something better or more efficiently than it has been done before. They seek situations in
which they can attain personal responsibility for finding solutions to problems, in which they can
receive rapid and unambiguous feedback, and in which they can set moderately challenging goals.
Need for power (nPow). The need to make others behave in a way that they would not have behaved
otherwise. The need for power (nPow) is the desire to have impact and to be influential. Individuals
high in nPow enjoy being in charge, strive for influence over others, and prefer to be in competitive
and status-oriented situations.
Need for affiliation (nAff). The desire for friendly and close interpersonal relationships. Striving for
friendships, prefer cooperative situations rather than competitive ones, and desire relationships
involving a high degree of mutual understanding.
Other theories like Equity theory would ensure that employees were treated fairly. Equity theory is
heavily dependant on employee perception. Perceptions will vary based on cultural backgrounds. So
managers need to be sensitive to cultural differences Expectancy theory would also meet people's
expectations through communication.
8. Can an individual be too motivated? Discuss.
Answer: Probably not as long as the motivation can be channeled into productive behavior.
Employees, particularly professionals should be given autonomy to follow their interests and allow
them to structure their work in ways they find productive. Reward them with educational
opportunitiestraining, workshops, attending conferencesthat allow them to keep current in their
field and to network with their peers. Also reward them with recognition. They seek situations in
which they can attain personal responsibility for finding solutions to problems, in which they can
receive rapid and unambiguous feedback, and in which they can set moderately challenging goals.
9. Do some additional research on ROWE discussed in the chapter opener. Write up your findings
in a report. Be sure to cite your information.
Answer: answers will vary by student.

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Part 4 Leading

UNDERSTANDING YOURSELF
What are My Dominant Needs?
This instrument was designed to deal with flaws in previous attempts to measure four individual needs:
achievement, affiliation, autonomy, and power. These are defined as follows:
AchievementThe desire to excel and to improve on past performance.
AffiliationThe desire to interact socially and to be accepted by others.
AutonomyThe desire to be self-directed.
PowerThe desire to influence and direct others.
INSTRUMENT This test contains 20 statements that may describe you and the types of things you may
like to do. For each statement, indicate your agreement or disagreement using the following scale:
1 = Strongly disagree
2 = Disagree
3 = Neither agree nor disagree
4 = Agree
5 = Strongly agree
1. I try to perform my best at work.
2. I spent a lot of time talking to other people.
3. I would like a career where I have very little supervision.
4. I would enjoy being in charge of a project.
5. I am a hard worker.
6. I am a people person.
7. I would like a job where I can plan my work schedule myself.
8. I would rather receive orders than give them.
9. It is important to me to do the best job possible.
10. When I have a choice, I try to work in a group instead of by myself.
11. I would like to be my own boss.
12. I seek an active role in the leadership of a group.
13. I push myself to be all that I can be.
14. I prefer to do my work and let others do theirs.
15. I like to work at my own pace on job tasks.
16. I find myself organizing and directing the activities of others.
17. I try very hard to improve on my past performance at work.
18. I try my best to work alone on a work assignment.
19. In my work projects, I try to be my own boss.
20. I strive to be in command when I am working in a group.

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SCORING KEY Add up items 1, 5, 9, 13, and 17. These represent your achievement score. The
affiliation score is made up of items 2, 6, 10, 14, and 18 (reverse score 14 and 18). The autonomy score is
items 3, 7, 11, 15, and 19. The power score is items 4 (reverse score), 8, 12, 16, and 20. Scores for each
will range from 5 to 25.

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Chapter 10 - Motivating and Rewarding Employees

ANALYSIS AND INTERPRETATION


The higher a score, the more dominant that need is for you. For comparative purposes, the researchers
used this test with approximately 350 college graduates who averaged 28 years of age. Their average
scores were 22.6 for achievement; 16.1 for affiliation; 20.0 for autonomy; and 17.7 for power.
Overview
Some people have a compelling drive to succeed, but they are striving for personal achievement rather
than the rewards of success. They have a desire to do something better or more efficiently than it has
been done before. This drive is the need for achievement. From research into the need for achievement,
McClelland found that high achievers differentiate themselves from others by their desire to do things
better. They seek situations in which they can attain personal responsibility for finding solutions to
problems, receive rapid and unambiguous feedback on their performance, and set moderately challenging
goals. They prefer working at a challenging problem and accepting the personal responsibility for success
or failure rather than leaving the outcome to chance or the actions of others.
High achievers perform best when they perceive their probability of success as being 0.5, that is, when
they estimate that they have a 5050 chance of success. They dislike gambling with high odds (high
probability of failure) because success in such a situation would be more a matter of luck than of ability,
and they get no achievement satisfaction from happenstance success. Similarly, they dislike low odds
(high probability of success) because then there is no challenge to their skills. They like to set realistic
but difficult goals that require stretching themselves a little. When there is an approximately equal chance
of success or failure, there is the optimum opportunity to experience feelings of accomplishment and
satisfaction from their efforts.
The need for power is the desire to have an impact, to be influential, and to control others. Individuals
high in nPow enjoy being in charge, strive for influence over others, prefer competitive and statusoriented situations, and tend to be more concerned with gaining prestige and influence over others than
with effective performance.
The third need isolated by McClelland is affiliation. This need has received the least attention of
researchers. Individuals with a high nAff strive for friendship, prefer cooperative situations rather than
competitive ones, and desire relationships involving a high degree of mutual understanding.
Teaching Notes
An extensive amount of research indicates that some reasonably well supported predictions can be made
based on the relationship between achievement need and job performance. Though less research has been
done on power and affiliation needs, there are consistent findings in those areas too. First, individuals
with a high need to achieve prefer job situations with personal responsibility, feedback, and an
intermediate degree of risk. When these characteristics are prevalent, high achievers will be strongly
motivated. The evidence consistently demonstrates, for instance, that high achievers are successful in
entrepreneurial activities such as running their own business, managing a self-contained unit within a
large organization, and many sales positions. Second, a high need to achieve does not necessarily lead to
being a good manager, especially in large organizations. High nAch salespeople do not necessarily make
good sales managers, and the good manager in a large organization does not typically have a high need to
achieve. Third, the needs for affiliation and power tend to be closely related to managerial success. The
best managers are high in the need for power and low in their need for affiliation. Last, employees have
been successfully trained to stimulate their achievement need. If the job calls for a high achiever,
management can select a person with a high nAch or develop its own candidate through achievement
training.

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Exercises
1. Whats Need Gotta Do With It? Break the class into groups based upon their scores on this
assessment. Have them discuss how they would react to a scenario in which they received a
promotion, but had to move far away from home if they were to accept. How would they react?
Learning Objective(s): To show how individuals with different needs react to similar situations.
Preparation/Time Allotment: This should be about a 15-minute class discussion. Allow another 10
minutes to discuss the results with the entire class.
Advantages/Disadvantages/Potential Problems: This exercise works best if you have individuals that
scored dramatically different on the survey. For example, a high need for affiliation person may not
want the promotion. Their first reaction might be what about my co-workers and family? A high
need for power person is going to wonder whom they will be managing, and a high need for
achievement person, while probably happy to receive the promotion, may ask, What is next?
Discuss these differences with the class and ask them how they would manage these differences.
2. See For Yourself. Have the students administer the survey to a group of their co-workers. After
scoring the survey, have them observe these co-workers at work, looking for examples that fit the
profile. For example, does the high affiliation person prefer meetings, group work, and social
activities? Are the high achievement people the first ones in and the last to leave?
Learning Objective(s): To illustrate through real-workplace examples how needs translate into
observable behavior.
Preparation/Time Allotment: Give the students at least two weeks to observe behaviors. It may take
that long for them to see actual items that relate to the survey. Have them present their findings to
class, or turn in their report as a project.
Advantages/Disadvantages/Potential Problems: Make sure that the people that they are observing
understand the scope of the project so that the students are not intrusive. Also, make sure the students
ensure confidentiality of the survey results. Participants should have access to their own score.
Ensure that any school-based requirements for experimentation have been satisfied and that students
get organizational consent prior to starting this activity.
FYIA (For Your Immediate Action)
La Mexican Kitchen
To: Linda Bustamante, Operations Manager
From: Matt Perkins, Shift Supervisor
Re: Staff Turnover
HELP! Weve been having a difficult time keeping our food servers for any length of time. It seems like I
just get them trained and they leave. Although these positions pay minimum wage, you and I both know a
motivated server can make additional money from tips.
This fictionalized company and message were created for educational purposes only. It is not meant to reflect
positively or negatively on management practices by any company that may share this name.

1. What are your ideas to better motivate our food servers?

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Chapter 10 - Motivating and Rewarding Employees

CASE APPLICATION
Searching For?
Summary: Google has been in the top 10 list of Best Companies to Work For by Fortune magazine for
three years running and was number one on the list for two of those three years. But make no mistake.
Googles executives decided to offer all these fabulous perks for several reasons: to attract the best
knowledge workers it can in an intensely competitive, cutthroat market; to help employees work long
hours and not have to deal with time-consuming personal chores; to show employees theyre valued; and
to have employees remain Googlers (the name used for employees) for many years. But a number of
Googlers have jumped ship and given up these fantastic benefits to go out on their own.
Discussion Questions
1. Whats it like to work at Google? (Hint: Go to Googles Web site and click on About Google.
Find the section on Jobs at Google and go from there.) Whats your assessment of the
companys work environment?
Answer: student answers will vary based on the web site.
2. Google is doing a lot for its employees, but obviously not enough to retain several of its talented
employees. Using what youve learned from studying the various motivation theories, what
does this situation tell you about employee motivation?
Answer: It is very difficult to help motivate employees and to keep them motivated. The workplace
is very competitive especially for the star performers. Even utilizing the various theories, individuals
still make their own choices, particularly to become entrepreneurs and start their own companies.
3. What do you think is Googles biggest challenge in keeping employees motivated?
Answer: They have some of the best and brightest minds working for them, so it is a challenge to
keep them motivated. The American dream of owning your own company provides stiff competition.
4. If you were managing a team of Google employees, how would you keep them motivated?
Answer: There are a variety of answers for this, but management must be very creative and the
motivation can't just be extrinsic. Managers would need to be in continuous dialogue with the
employees to keep them engaged and to understand their desires and future plans.

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