Motivation at Work: Goal-setting and Expectancy Theory. Presented by Jason T Wu

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1 Motivation at Work 1 Running head: Motivation at Work Motivation at Work: Goal-setting and Expectancy Theory Presented by Jason T Wu Management SPRING Dr. F. Robert Buchanan Updated: May 10 th, 2007

2 Motivation at Work 2 Motivation at Work: Goal-setting and Expectancy Theory Just how effective is expectancy and goal-setting theory in corporations? How are they not effective? What are other alternatives? Many papers and studies have shown that motivation at work has a tremendous outcome on performance and thus motivating employees have become a critical strategy for many companies. This paper presents the purpose of motivation at work, which and how are the theories being implemented in the real business world. Furthermore, this paper will discuss Expectancy and Goal-setting theories and demonstrates the comparison between the two approaches. Introduction to Motivation Motivation defined by scientists, as described by Greenberg (2005), is a series of processes involving arousing, directing, and maintaining one s behavior towards a specific goal. The study of motivation at work is in fact closely related to the discipline of psychology. In short, the given definition implies that every individual be motivated starting with energy or the drive behind their action. As the example given by Greenberg (2005), when a particular individual feels hungry he or she will be driven to find food to fulfill the satisfaction.

3 Motivation at Work 3 The second component in motivation is the choice of behavior made; continuing the example would be that the hungry individual has many food selections to choose from and would be likely to decide on the most favorable one. The third component would involve the willingness and the persistency of the individual to commit to the goal. Job performance, in general, does not totally rely on motivation alone; however, it does account an important part (when qualifications and skills are in place) of how employee could improve their productivity through individual satisfactions and needs. As discussed by Greenberg (2005), motivation by definition is fulfilling the needs of a human being. A five-level hierarchy system was introduced by Maslow to break down this fulfillment; individual needs typically start from the very basics to the very dispensable in the order of physiological, safety, social, esteem, and self-actualization. The physiological need is a crucial component as it describes the motivation to achieve and obtain the basic human needs to stay alive. There are quite a few theories which are somewhat related to such a hierarchy system in one way or another; equity theory, goal-setting theory, and expectancy theory are examples of such.

4 Motivation at Work 4 Many researches have found that motivations have a great impact on individuals which leads to better productivity, job satisfaction, and performance. Studies have further indicated that correct implementation of goal-setting and expectancy theory would highly contribute to firms in numerous aspects. Most companies in the United States use the expectancy theory as the basis of their incentive systems for motivation purposes (Kren, 1990). Some researchers also have concluded that the combination of expectancy and goal-setting would be an effective approach to promote motivation. Goal-setting Theory Goal-setting theory as described by theorists (Locke, 1975) is a motivational technique rather than a formal theory. In fact, many laboratory tests have proven that goal-setting and management by objectives are positively correlated. Locke has put a lot of work into goal-setting theory; as pointed out by Locke (1975) and Greenberg (2005), the theory claims the objective assigned to individuals have an impact on job performances when the objective is perceived as achievable and is aligned with their personal goals. Second, the theory claims that goals act as a motivator in individuals daily tasks. By this, the author meant that employees will be motivated based on comparing their present capacity with that of the requirement to

5 Motivation at Work 5 succeed the given goal. Also, individuals will receive complements when goals are met thus it acts as a break point of expected levels of performances during a specific time period. The third claim coming out from this theory is that individuals will accept the assigned goal as a part of their own rather than corporate-only goal. The belief that a particular individual would have a great chance of reaching a goal would greatly attract the individual to commit to the goal and therefore engage a goal commitment. As Steel and Konig (2006) demonstrated, people in goal-setting teams tend to stick in an assigned project for a longer period of time than the non-goal oriented teams. In essence, the study has illustrated that a big part of the goal-setting theory could be used to better prepare for projects because the longer the people work in the same environment the more familiar it is for them to effectively get the tasks done. The model also claims that role of selfefficacy and goal commitment act as the fuel to power performance. In fact studies done by Locke (1975) and Kren (1990) have both shown similar conclusions; goal existence increases performance without any extrinsic rewards for enforcement of accepting or attaining the assigned goals, and vice versa. The increase in performance is narrow down to the level of commitment and individual s self-efficacy.

6 Motivation at Work 6 There are studies which confirmed that the more difficult the goal the more productive and better performance would incur when such individual is committed to it. The experiment conducted by Steel and Konig (2006) suggests two important factors in the relationship between motivation and goal setting: the level of goal difficulty and goal proximity. Ultimately, the first part of the conclusion both authors came up is that the higher the difficulty correlates to higher motivation and better performances. The second part of conclusion is that higher the goal proximity would also tend to increase the motivation. Other discussions by Locke (1975), Greenberg (2005), and Kren (1990) have also confirmed the claim; the finding by the authors was that moderately hard goals would result in higher level of performance than low or no goals at all. One thing to keep in mind that is also presented in Locke s (1975) paper is that the clarity of the goal plays a critical function in this process. High goal difficulty only would take effect in job performance when participants understood exactly what they have been expected and are self-assured. A major drawback in Goal-setting theory as Steel and Konig (2006) illustrated is that it would damage the firm s internal function when employees reach to the point of diminishing return. The process of breaking down major milestones into sub goals

7 Motivation at Work 7 proves to be a good practice to increase motivation; however, performance decreases at a point where management give out unattainable goals or further divide the sub goals into smaller pieces. The authors also suggested that impulsive people should be assigned goals that are based on their proximity, in other words, assigned them with frequent but smaller yet moderately difficult goals. Additionally, Greenberg (2005) suggested a guideline for setting effective goals. One of which is to assign specific goals; yet, this is directly related to the clarity of the assigned goals. Second is to assign difficult but attainable performance goals. Again, this goes back to the previous discussion about goal commitment when individuals do not committed to the goals either it is impossible to achieve or it does not related to his or her personal objective the performance often degrades overtime. The last condition is to provide feedback about the extent which the expected work have been met. This acts as an encouragement and a pad on the back on the employees which supports them both emotionally and psychologically. Expectancy Theory Expectancy theory, introduced by Victor H. Vroom, is an approach which has a belief that individuals are motivated

8 Motivation at Work 8 towards their desired rewards and that working hard will achieve this state. In essence, Green (1992) mentioned that the expectancy theory deals with three important relationships: effort and performance, performance and outcome, and outcome and satisfaction. These three relationships is the basis of the theory and as discussed by Greenberg (2005) the expectancy theory is the basic idea behind most of the companies incentive systems of rewards and performance such as the merit pay plans or the pay-for-performance plans. The three relationships discussed in Green s book are further explained by three important terminologies: expectancy, instrumentality, and valence. Expectancy is, of which, the individual would believe that his or her effort will affect the performance one way or another; as long as certain degree of effort is hold up on the task the performance will increase. Second, instrumentality is described as an individual s belief that he or she will be rewarded when the job is done with a reasonable expectation. And last but not least is valence which describes that the rewards should be perceived as expected by the subject employee. Additionally, as Eden (1988) described it, the definition of expectancy is nothing less than one s momentary belief concerning the likelihood a particular action will followed by a particular outcome; in the case of motivation, the outcome would

9 Motivation at Work 9 typically in the form of some tangible goods that are perceived by the employees as valuable. Kren (1990) summarized in her paper that the expectancy approach is the most popular framework and also resembles the real business world. For many decades, it is viewed as the basis of majority of the incentive systems worldwide. One of the main reasons is that this particular framework integrates the effect of budget participations and incentives; which, for most of the organizations, is the easiest and risk-free resource to start with. The three components in this model also act as a connector to everything. For instance, incentives may acts to increase valence of the objective and consequently increase the level of motivation. The participants may also raise their expectancy level to improve their job performances which also lead to motivation upgrades. A research study conducted by Chen, Gupta, and Hoshower (2006) used the expectancy theory to demonstrate a few key factors to motivate people. This study is based on universities faculty member as the test subjects and using different kinds of reward systems as the control variables. The data collection process is in the form of survey questionnaire from 320 faculty member in 10 different business schools. Furthermore, the research put its focus into several discussions between the

10 Motivation at Work 10 level of expectancy and the degree of motivation within the universities. Those discussions include effectiveness use of tenure and promotion, ineffective use of pay raises, unexpected consequences of the annuity pay raise system, and the time spent conducting researches. Ultimately, the authors found expectancy theory does have an impact of performances and have concluded five intriguing facts. First is that untenured faculty members are mostly motivated by extrinsic rewards. Second, in contrast to untenured member, tenured members are mostly motivated by intrinsic rewards. Third finding consist of two relationships: first part is that there is a positive correlation between the faculty s research output and tenured members where as the second part involves a negative correlation between research and the years of academic employment. To support this conclusion, the authors research results have shown that the higher the motivation for rewards the more published article prior to study or during subject s career than that of lower motivation for rewards. Fourth finding was that there is no relationship between the discipline and research productivity. And, finally, the fifth finding was that there is no evidence to conclude that gender would affect research productivities. A major criticism brought up by Locke (1975) in his paper was that since expectancy theory explained motivation as

11 Motivation at Work 11 attaining pleasure or avoid pains it is considered as a form of psychological hedonism which describes that motivation is based on the physiological needs of every human being. However, the vast majority of rational individuals do not necessarily choose objects or actions that solely depend on the degree of pleasure they expect their choices to bring. This is one of the continuous areas that are been heavily researched and studied. Comparisons Both theories have some kind of similarities and differences. One of the similarities is that both theories concluded motivation is the key to influence job performances; indeed, studies and researches in both fields either within the real word or a laboratory environment has proved this claim. Another similarity is that the higher the inputs will often result in higher outcomes. In the case of goal-setting theory, researchers have found that with difficult goals employees would perform better; and as with expectancy theory, the higher the rewards will likely to promote higher job motivations. Yet, as shown in Table 1, both claims are closely associated with the degree of proximity between personal goals or employee s perception of the rewards. Furthermore, both theories claims that the test subject must have the qualified skills and tools

12 Motivation at Work 12 to do the tasks if this is not met, the theories will not take any effect on motivation and job performances. One of the differences between the two theories is that incentives act as an important motivation variable in expectancy theory but not so much in the goal-setting environment. For goal-setting theory to be effective, many findings have suggested that setting higher or more difficult goals would increase employee s motivation. Another difference is that goal-setting theory tends to have longer motivation duration than other approach; as for expectancy theory, motivation will diminish when rewards are perceived as worthless. This is a difficult area to master since employee s needs and perceptions always changes overtime. Therefore, companies that implement the expectancy theory approach need to ensure the incentives consistently appear to be attractive. Another interesting differences pointed out by Locke (1975) is that in goal-setting theory the correlation between expectancy and performance is negative. For example, harder the goal implies lower expectancy and yet hard goals usually lead to higher performance; this fact contrasts with findings in the expectancy theory. Conclusion Majority of the research and studies have all implied that motivation at work is necessary to maintain a stable workforce.

13 Motivation at Work 13 Also as Wilson (2005) pointed out in this article, to maintain the level of workforce the employer must constantly engage different retention activities especially in the twenty-first century business world. Motivation does matter satisfying employees are more productive and acts as an intangible asset to the prosperity of the organization. Finding and implementing the appropriate motivator is crucial. Wilson (2005) has discussed in his paper that particular motivator would only work for certain group of people; for example, research has found that as workers get promoted and payroll increased money would no longer be a motivator. Other researches have found that as employee gets older interesting work becomes the top priority. Goal-setting and expectancy theory can be applied to many different situations. For instance, goal-setting in general would benefit greatly to impulsive individuals. Whereas expectancy theory attempts to explain how people would react to certain reward systems. The theories are related to a certain extent; they both have similarities and differences. To select the right approach, companies should conduct some type of commitment survey focusing on their own employees. From the data collected, the organization should be able to analyze it and set priorities based on which motivation factors are the

14 Motivation at Work 14 most common among the workers. The organization, then, would be able to pick the appropriate method. References Greenberg, Jerald. (2005). Managing behavior in organizations. New Jersey: Pearson Education Incorporated. Green, Thad B. (1992). Performance and motivation strategies for today s workforce: a guide to expectancy theory applications. Connecticut: Quorum Books. Locke, Edwin A. (1975). Personnel attitudes and motivation. Annual Review of Psychology. 26, p457-p480. Steel, Piers. & Konig, Cornelius J. (2006). Integrating theories of motivation. Academy of Management Review. 31(4), p889-p913. Kren, Leslie. (1990). Performance in a Budget-Based Control System: An Extended Expectancy Theory Model Approach. Journal of Management Accounting Research. 2, p100-p112. Eden, Dov. (1988). Pygmalion, Goal Setting, and Expectancy: Compatible Ways to Boost Productivity. Academy of Management Review. 13(4), p639-p652. Chen, Yining., Gupta, Ashok., & Hoshower, Leon. (2006). Factors That Motivate Business Faculty to Conduct Research: An

15 Motivation at Work 15 Expectancy Theory Analysis. Journal of Education for Business. 81(4), p179-p189. Wilson, Michael. (2005). The Psychology of Motivation and Employee Retention. Maintenance Supplies. 50(5), p48-p49. Appendix Table 1. Goal-setting Theory and Expectancy Theory Goal-setting Theory Expectancy Theory Facts and Claims: Retain employee to work longer in a specific project Largely supported and researched by many scholars Higher level of difficulties tends to increase job performance Proximity and difficulty contributed to goal-setting and motivation Long motivation duration Division of major milestones into small goals greatly helps productivity and motivation Studies have shown goal-setting teams are likely to increase in performance due to higher motivation than low or non goal-setting teams Incentives and goals have little or no relationships High goal clarity associated with high job satisfaction and high rated performances Drawbacks and Criticisms: Diminishing return would occur when it is over looked Not all individual would benefit from the same approach; for example, impulsive individuals need to implement different assign techniques Low goal proximity to the individual would have low goal commitment and lower job performance Must have the right qualifications Facts and Claims: Mostly recognized method of incentive system Individuals will be motivated by believing working hard will receive desired tangible rewards Based on three critical relationships: expectancy, instrumentality, and valance Basic human needs fuels the desirable reward to survive Great predictor for self-ratings of effort, attitudes, and performance Higher motivation for rewards (expectancy) will lead to higher productivity (motivation) Job performance would influence individual s role perceptions Drawbacks and Criticisms: Construct and objective performance correlations in real-life setting are low Cannot fully explain individual differences in choices and actions Must have the right qualifications