Motivation

From a manager’s perspective, it is important to
understand what prompts people, what influences them,
and why they persist in particular actions. Motivation can
lead to high performance in the workplace. People who
are committed to achieving organizational objectives generally
outperform those who are not committed. Those
who are intrinsically rewarded by accomplishments are
satisfied with their jobs and are individuals with high selfesteem.
Therefore, an important part of management is to
help make work more satisfying and rewarding for
employees and to keep employee motivation consistent
with organizational objectives. With the diversity of contemporary
workplaces, this is a complicated task. Many
factors, including the influences of different underlying
principles, are important to understanding motivation:
• People have reasons for everything they do
• Whatever people choose as a goal is something they
believe is good for them
• The goals people choose must be seen as attainable
• The conditions under which the work is done can
affect its value to employees and their perceptions of
attainability or success
When management was first studied in a scientific
way at the turn of the twentieth century, Frederick
Winslow Taylor (1856–1915) worked to improve productivity
in labor situations so important in those days of the
developing Industrial Revolution. Taylor developed efficiency
measures and incentive systems. When workers
were paid more for meeting a standard higher than their
normal production, productivity increased dramatically.
Therefore, workers seemed to be economically motivated.
At this time in history, social issues involved in human
behavior were not yet considered. A more humanistic
approach soon developed that has been influencing management
ever since.
During the late 1920s and early 1930s, Elton Mayo
(1880–1949) and other researchers from Harvard University
conducted studies at Western Electric’s Hawthorne
Works plant in Cicero, Illinois, to measure productivity.
They studied the effects of fatigue, layout, heating, and
lighting on productivity. As might be expected when
studying lighting, employee productivity levels increased
as the illumination level was increased; the same effect,
however, was noted when the illumination level was
decreased.
The researchers concluded that the attention paid to
the employees was more of a contributing factor to their
productivity level than the environmental conditions. The
improvement in the behavior of workers when attention is
paid to them came to be called the Hawthorne effect. As
a result of this research, it was evident that employees
should be treated in a humane way. These findings started
the human relations movement—a change in management
thinking and practice that viewed increased worker
productivity as grounded in satisfaction of employees’
basic needs. (Many years later, it was discovered that the
workers in the Hawthorne experimental group had
received an increase in income; money, therefore, was
probably a motivating factor, although it was not recognized
as such at the time.)
A simple model of motivation is shown in Figure 1.
Ongoing changes in the workplace require that managers
give continuous attention to those factors that influence
worker behavior, recognizing that each individual has
his or her own values and differing abilities. Being respon-
Simple model of motivation
Need—Creates desire to fulfill needs
(food, friendship, recognition,
achievement)
Behavior—Results in actions to fulfill needs Rewards—Satisfy needs; intrinsic or
extrinsic rewards
Feedback—Reward informs person whether
behavior was appropriate and should be used again
Figure 1

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Motivation
sive to these differences can help managers work effectively
with many different types of employees. Employee
performance is influenced in many ways—by how jobs are
designed, the conditions of the work environment, and
the appropriateness of benefits. Through the use of goals
and rewards, managers influence employees, improve
morale, and implement incentive and compensation
plans.
No one theory can explain all the variances in human
behavior, so a wide range of theories have developed over
time. The following eight motivation theories can help
managers to understand the needs that motivate people
and then implement reward systems that fulfill those
needs and reinforce the appropriate behavior.
HIERARCHY OF NEEDS
Abraham Maslow (1908–1970), a professor at Brandeis
University and a practicing psychologist, developed the
hierarchy of needs theory. He identified a set of needs that
he prioritized into a hierarchy based on two conclusions:
1. Human needs are either of an attraction/desire
nature or of an avoidance nature.
2. Because humans are “wanting” beings, when one
desire is satisfied, another desire will take its place.
The five levels of needs are shown in Figure 2.
According to Maslow’s theory, the lower-level needs must
be satisfied before higher-level needs.
• Physiological needs—These are basic physical needs
for food, water, and oxygen. In the workplace, these
needs translate into the survival needs for an
ergonomically designed work environment with adequate
heat, air, and an appropriate base salary compensation.
• Safety needs—People want to feel safe, secure, and
free from fear. They need stability, structure, and
order. In the workplace, job security and fringe benefits,
along with an environment free of violence, fill
these needs.
• Belonging needs—People have needs for social
acceptance and affection from their peers. In the
workplace, this need is satisfied by participation in
work groups with good relationships among
coworkers and between workers and managers.
• Esteem needs—People want to be regarded as useful,
competent, and important. People also desire selfesteem
and need a good self-image. In the workplace,
increased responsibility, high status, and
recognition for contributions satisfy these needs.
• Self-actualization needs—This highest motivation
level involves people striving to develop their full
potential, to become more of what they are capable
of being. They seek to attain self-fulfillment. In the
workplace, people satisfy this need by being creative,
receiving training, and accepting challenging assignments.
Managers can affect the physical, social, and psychological
environment in the workplace, and they have a
responsibility to help employees fulfill their needs. Focusing
on the needs of retraining for growth and challenge as
well as rewards and recognition is important to the quality
of work life.
ERG THEORY
In his work, Clayton Alderfer (1940– ) expanded on
Maslow’s hierarchical theory. He proposed three need categories
and suggested that movement between the need
levels is not necessarily straightforward. Failure to meet a
higher-level need could cause an individual to regress to a
lower-level need. These ERG theory categories are:
• Existence needs: Needs for physical well-being
• Relatedness needs: Needs for satisfactory relationships
with others
• Growth needs: The development of human potential
and the desire for personal growth and increased
competence
Maslow's hierarchy of needs
Self-
Actualization
Esteem
Belongingness and Love
Security/Safety
Physiological
Figure 2

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Motivation
MOTIVATION-HYGIENE THEORY
Frederick Herzberg (1923–2000), a professor of psychology
at Case Western Reserve University, studied the attitudes
of workers toward their jobs. Herzberg proposed
that an individual will be moved to action based on the
desire to avoid deprivation. This motivation, however,
does not provide positive satisfaction because it does not
provide a sense of growth. Herzberg’s research found that
positive job attitudes were associated with a feeling of psychological
growth. He thought that people work for two
reasons: for financial reasons to avoid physical deprivation,
and for achievement because of the happiness and
meaning it provides. Herzberg also identified the concept
of job enrichment, whereby the responsibilities of a job
are changed to provide greater growth and challenge. His
motivation-hygiene theory includes two types of factors,
motivation and hygiene.
Motivation. Motivation is based on the positive satisfaction
that psychological growth provides. The presence of
factors such as responsibility, achievement, recognition,
and possibility for growth or advancement will motivate
and satisfy people. These factors directly influence how
people feel about their work. The absence of these factors
will not necessarily demotivate or cause dissatisfaction.
Hygiene. Hygiene is based on an individual’s desire to
avoid deprivation and the resulting physical and emotional
discomfort. Hygiene factors include willingness to
supervise; positive working conditions; interpersonal relations
with peers, subordinates, and superiors; status; job
security; and salary. These factors do not motivate, nor
will their presence cause job satisfaction. Their absence,
however, will cause dissatisfaction.
Although salary is considered a hygiene factor, it plays
an indirect part in motivation as a measure of growth and
advancement or as a symbol of recognition of achievement.
THEORY X AND THEORY Y
Douglas McGregor (1906–1964), a professor at the Massachusetts
Institute of Technology and a social psychologist,
was greatly influenced by the work of Maslow.
McGregor recognized that people have needs and that
those needs are satisfied at work. He described two sets of
assumptions about people that he labeled Theory X and
Theory Y.
Theory X. The assumptions of Theory X are that most
people will avoid work because they do not like it and
must be threatened or persuaded to put forth adequate
effort. People have little ambition and do not want
responsibility. They want to be directed and are most
interested in job security.
Theory Y. The assumptions of Theory Y are that work is
very natural to people and that most people are selfdirected
to achieve objectives to which they are committed.
People are ambitious and creative. They desire
responsibility and derive a sense of satisfaction from the
work itself.
These assumptions were, at one time, applied to
management styles, with autocratic managers labeled as
adhering to Theory X and democratic managers to Theory
Y. Unfortunately, this fostered a tendency to see people
as members of a group rather than as individuals. The
important contribution of McGregor’s theory was to recognize
these two perspectives and to recognize that people
can achieve personal objectives through helping organizations
achieve their objectives. Their work can be a motivator.
ACQUIRED-NEEDS THEORY
In his studies on personality and learned needs, David
McClelland (1917–1998) developed the acquired-needs
theory because he felt that different needs are acquired
throughout an individual’s lifetime. He proposed three
needs:
1. Need for achievement—The desire to accomplish
something difficult, attain a high standard of success,
master complex tasks, and surpass others
2. Need for affiliation—The desire to form close personal
relationships, avoid conflict, and establish
warm friendships
3. Need for power—The desire to influence or control
others, be responsible for others, and have authority
over others
McClelland found through his research that early life
experiences determine whether people acquire these
needs. The need to achieve as an adult is influenced by the
reinforcement of behavior received as a child when a child
is encouraged to do things independently. If a child is
reinforced for warm, human relationships, then the need
for affiliation as an adult develops. If a child gains satisfaction
from controlling others, then the need for power will
be evident as an adult.
McClelland noted that people with a high need for
achievement are persistent in striving to reach goals, work
harder than people with other needs, and are medium risk
takers. He also found these characteristics to be common
among college graduates who selected entrepreneurial
occupations.

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Motivation
EXPECTANCY THEORY
Victor Vroom (1932– ) developed the expectancy theory,
which suggests expectancy is the perceived probability
that a certain effort or performance will result in the
achievement of a particular goal. Perceived probability is
important. Individuals’ expectations about their ability to
accomplish something will affect their success in accomplishing
it.
The desirability of outcomes is important, too. The
value of or preference for a particular outcome is called
valence. To determine valence, people will ask themselves
whether or not they can accomplish a goal, how important
is the goal to them (in the immediate as well as the
long term), and what course of action will provide the
greatest reward. An individual’s expectation of actually
achieving the outcome is crucial to success, and many factors
influence this.
The expectancy theory can be applied through incentive
systems that identify desired outcomes and give all
workers the same opportunities to achieve rewards, such
as stock ownership, promotions, or other recognition for
achievement.
EQUITY THEORY
The equity theory focuses on individuals’ perceptions of
how fairly they are treated in comparison to others. It was
developed by J. Stacy Adams (1925– ), who found that
equity exists when people consider their compensation
equal to the compensation of others who perform similar
work, which is an external standard. People judge equity
by comparing inputs (such as education, experience,
effort, and ability) to outputs (such as pay, recognition,
benefits, and promotion). It can also relate to internal
standards when people compare how hard they are working
with what they are getting in return.
If people perceive a discrepancy between the inputs
and outputs, then they are unhappy. When the ratio is out
of balance, inequity occurs. And inequitable pay can create
an impossible situation when implementing salary and
incentive systems. According to Richard L. Daft (2003),
individuals will work to reduce perceived inequity by
doing the following:
• Change inputs: Examples include increasing or
reducing effort
• Change outcomes: Such as requesting a salary increase
or improved working conditions
• Distort perceptions: This occurs when individuals
cannot change their inputs or outcomes; one example
is artificially increasing the importance of awards
• Leave the job: Individuals might do this rather than
experience what they perceive to be continued
inequity
When administering compensation and incentive
programs, managers must be careful to ensure that the
rewards are equitable; if programs are not perceived as
equitable, then they will not contribute to employee motivation.
REINFORCEMENT THEORY
Reinforcement theory is based on the relationship
between behavior and its consequences. In the workplace,
reinforcement can be applied to change or modify on-thejob
behavior through incentives and rewards and, to some
extent, punishments.
B. F. Skinner (1904–1990), a professor at Harvard
University, was a highly controversial behavioral psychologist
known for his work in operant conditioning and
behavior modification. His reinforcement theory takes
into consideration both motivation and the environment,
focusing on stimulus and response relationships. Through
his research, Skinner noted that a stimulus will initiate
behavior; thus, the stimulus is an antecedent to behavior.
The behavior will generate a result; therefore, results are
consequences of behavior.
According to Thomas McCoy:
The quality of the results will be directly related to
the quality and timeliness of the antecedent. The
more specific the antecedent is and the closer in
time it is to the behavior, the greater will be its
effect on the behavior. . . . The consequences provide
feedback to the individual. (1992, p. 34)
Therefore, the individual more easily associates the
behavior with the stimulus.
The four types of reinforcement are:
1. Positive reinforcement: The application of a pleasant
and rewarding consequence following a desired
behavior, such as giving praise. When a behavior is
positively reinforced, the individual is more likely to
repeat the behavior. People tend to have an intrinsic
(internal) need for positive reinforcement. Other
examples of positive reinforcers are recognition of
accomplishments, promotion, and salary increases.
2. Negative reinforcement: The removal of an unpleasant
consequence following a desired behavior. This
reinforcement is also called avoidance. An example
of negative reinforcement is when workers return
promptly from a lunch break to avoid being reprimanded
by their supervisor or when a manager no
longer reminds workers about a weekly deadline

ENCYCLOPEDIA OF BUSINESS AND FINANCE, SECOND EDITION 527
Multimedia Systems
when workers meet the deadline. Negative reinforcement
causes the behavior to be repeated.
3. Punishment: The application of an unpleasant outcome
when an undesirable behavior occurs to
reduce the likelihood of that behavior happening
again. This form of reinforcement does not indicate
a correct behavior, so its use in business is not usually
appropriate. Punishment, however, might be an
oral reprimand for coming to work late or a demotion
for inferior work performance.
4. Extinction: The absence of any reinforcement following
a behavior. Usually extinction occurs in situations
where positive reinforcement was formerly
applied. If the behavior is no longer positively reinforced,
then it is less likely to occur in the future
and it will gradually disappear. And when a behavior
is ignored, the behavior tends to go away or become
extinct.
In the workplace, positive reinforcement is the preferred
approach for increasing desirable behavior and
extinction is the preferred approach for decreasing undesirable
behaviors. Continuous reinforcement can be effective
in the early stages of behavior modification, but partial
reinforcement is more commonly used. Reinforcement is
most powerful when it is administered immediately.
The appropriateness of a reward depends on the situation.
But for managers to apply rewards appropriate for
work performance, it is necessary to understand what constitutes
a reward. And no single reward will be perceived as
positive by all employees. Rewards, however, are important
in behavior-based incentive plans because they reward
employee behavior that is desirable for the company. Both
incentives and recognition provide a reward; nevertheless,
incentives drive performance while recognition is an afterthe-
fact display of appreciation for a contribution.
Financial rewards are certainly important in compensation
programs. Social recognition provides employees
with a sense of self-worth by acknowledging the contributions
they have made. This recognition could be given in
the form of a ceremony that helps to validate and is an
important compensation—and one that probably costs a
company very little in relationship to the benefit to
employees.
SUMMARY
The application of motivation theories can help managers
to create work situations and employee recognition systems
that help workers fulfill their needs. As Maslow
wrote, “man has a higher nature … and … this higher
nature includes the needs for meaningful work, for
responsibility, for creativeness, for being fair and just, for
doing what is worthwhile and for preferring to do it well”
(1998, pp. 244–245).
Motivation is the key to performance improvement.
Some aspects of all jobs may be routine or mundane, but
other aspects can be developed to promote job satisfaction
and increased productivity. The sharing of responsibility
can provide opportunities for growth, renewal, and
achievement. This empowerment of workers can heighten
employee motivation and improve morale. Both longterm
and short-term incentive programs are needed for
the employee commitment and effectiveness necessary to
achieve organizational objectives. And in all instances,
workers must be treated fairly and equitably.