organisational Relation notes for bba students

1. UNIT TWO
Syllabus: Determinants of Individual Behaviour 15 hours
Foundations of individual behaviour, Values, Attitudes, and job satisfaction,
Personality and Emotions, Perception and individual Decision Making, Basic
Motivation Concepts, Motivation: from Concepts of Applications.
Chapter 2
Both ability and biological characteristics are helpful in predicting and explaining
organizational behaviour. Ability refers to an individual’s capacity to perform the various tasks
within a job. Abilities are comprised of two sets of factors: intellectual and physical. Number
aptitude, verbal comprehension, perceptual speed, inductive reasoning, deductive reasoning,
spatial visualization, and memory comprise general mental ability. Physical abilities include
stamina, manual dexterity, leg strength, and similar talents.
Biographical characteristics are important in predicting both employee performance and job
satisfaction. These include age, gender, race, and tenure, among others. Misconceptions
surround each of these, particularly with respect to age and gender. Older workers for example
are no less productive than younger workers; in addition, they exhibit high levels of judgment,
a strong work ethic, and commitment to quality. They are also less likely to leave their
organization. Contrary to some perceptions, there are no consistent male-female differences in
problem-solving ability, analytical skills, competitive drive, motivation, sociability, or learning
ability. Working mothers are, however, more likely to prefer part-time work, flexible working
schedules, and telecommuting. Differences among employees related to race are particularly
difficult to identify, as race is hard to define. In employment settings, there is a tendency for
individuals to favour colleagues of their own race in performance evaluations, promotion
decisions, and pay raises. Finally, with respect to tenure or seniority, employees with greater
tenure are more productive and experience fewer absences than their less tenured counterparts.
Learning is generally defined as any relatively permanent change in behaviour as a result of
experience. Current approaches to learning evolved from earlier research in classical
conditioning, operant conditioning, and social-learning.
Classical conditioning research, pioneered by Russian physiologist Ivan Pavlov, used an
unconditioned stimulus (meat), paired with an artificial or conditioned stimulus (ringing of a
bell), to evoke salivation (an unconditioned response). After a time, when the dog heard the
bell ringing (a conditioned stimulus), even when was no meat, it began to salivate (conditioned
response).
Pioneered by B.F. Skinner, operant conditioning argues that reinforcement strengthens a
behaviour and increases the likelihood that it will be repeated. Moreover, these rewards are
most effective if they immediately follow the response.
Finally, social-learning theory is the view that we learn through both observation and direct
experience. An extension of operant conditioning, social-learning theory recognizes the
existence of observational learning and the importance of perception in learning. People

2. respond to how they perceive and define consequences, not to the objective consequences
themselves.
Managers attempt to shape behaviour through positive reinforcement, negative reinforcement,
punishment, and extinction. Positive reinforcement is a reward for a job well done, while
negative reinforcement is the termination of something unpleasant in response to the desired
behaviour. Punishment is the application of a negative stimulus in response to an undesirable
act and extinction is the elimination of any reinforcement whatsoever, or ignoring a given
behaviour. Both positive and negative strengthen a response and increase the probability of its
repetition and, thus, result in learning.
In addition, reinforcement can be continuous or intermittent. Evidence indicates that
intermittent, or varied, form of reinforcement tends to promote more resistance to extinction
than does the continuous form. Rewards may be characterized as fixed-interval, variable-
interval, fixed-ratio, and variable-ratio. When rewards are spaced at uniform time intervals, the
reinforcement schedule is described as fixed-ratio. If rewards are distributed in time so that
reinforcements are unpredictable, the schedule is of the variable-interval type. In a fixed-ratio
schedule, after a fixed or constant number of responses are given, a reward is initiated. Finally,
when the reward varies relative to the behaviour of the individual, the organization has
employed a variable-ratio schedule.
The application of behaviour modification strategies to shaping employee behaviour is
popularly referred to as OB Model. OB Model is a five-step process, where managers:
1. identify the behaviours that are critical to the employee’s job performance,
2. collect baseline performance data,
3. identify the behavioural contingencies or consequences of performance,
4. develop and implement a strategy to increase desirable performance behaviour and
decrease undesirable behaviours, and
5. Evaluate the performance improvement.
OB Mod has been used by a number of organizations to improve employee productivity; to
reduce errors, absenteeism, tardiness, and accident rates; and to improve friendliness towards
customers.
There are a number of global implications. First, there is strong evidence to suggest that
research about intellectual abilities generalizes across cultures. There are limited differences in
intellectual ability across cultures. However, there has been limited research into the degree to
which gender and other biological factors influence organizational behaviours in other
countries. Similarly, there is little cross-cultural research into learning.
A number of conclusions for managers emerge from this analysis. First, a good fit between the
abilities of the employee and the job is essential. To achieve a good ability-job fit, selection,
promotion, and transfer decisions should reflect the abilities of the candidates. In addition, the
fit can be improved by customizing the job to match the abilities of the employee. Second,
although biological characteristics are readily visible, they are poor predictors of behaviour and
should be a minor influence in management decision making. Finally, positive reinforcement
is a powerful tool and is more effective than punishment in modifying employee behaviour.

3. Chapter 3
Attitudes are evaluative statements – either favourable or unfavourable – concerning objects,
people, or events. Attitudes have cognitive, affective, and behavioural components. Cognitive
components of attitude relate to what a person knows, while the affective components relate to
how people feel. Managers tend to be most concerned with behavioural components – how
people behave or intend to behave.
Research has generally concluded that people seek consistency among their attitudes and
between their attitudes and their behaviour. Cognitive dissonance occurs when an individual
has two or more attitudes that are inconsistent, or if one or more attitudes is inconsistent with
behaviour. Inconsistency causes discomfort and individuals will seek a stable state in which
there is a minimum of dissonance. The desire to reduce dissonance will be determined by the
importance of the elements creating the dissonance, the degree of influence the individual
believe that she has over the elements, and the rewards that may be involved in the dissonance.
Finally, the text examines the issue of whether attitudes cause behaviour or if behaviour,
instead, influences attitude. Research has shown that attitudes influence future behaviour,
moderated by a number of variables, including the importance of the attitude, its specificity, its
accessibility, whether there are social pressures, and whether a person has direct experience
with the attitude.
Three of the more prominent attitudes in organizational behaviour research are job satisfaction,
job involvement, and organizational commitment. Job satisfaction can be defined as a positive
feeling about one’s job resulting from an evaluation of its characteristics. A related attitude is
job involvement, which measures the degree to which a person identifies psychologically with
his or her job. The third attitude is organizational commitment, an employee’s desire to
maintain continued membership within his or her organization. Organizational commitment,
which has affective, continuance, and normative components, has a positive correlation with
productivity.
A related job attitude is perceived organizational support, the degree to which employees
believe that the organization values their contribution and cares about their well-being.
Research show that people perceive their organization as supportive when rewards are deemed
fair, when employees have a voice in decisions, and when their supervisors are seen as
supportive.
Employee engagement refers to the extent to which the employee is involved with, and satisfied
by, the work that he or she does. Highly engaged employees have a passion for their work and
feel a deep connection to their company, while disengaged employees put time, but not energy
or attention, into their work.
Job satisfaction is a positive feeling about one’s job resulting from an evaluation of its
characteristics. The most widely used approaches to measuring job satisfaction are a single
global rating and a summation score made up of a number of job facets. Interestingly, the single
global rating is as effective at measuring job satisfaction as the more complex summation score.
In the United States and most developed countries, workers are generally satisfied with their
jobs, although satisfaction varies among individual facets of jobs.

4. Although workers generally indicate that they are satisfied with their jobs, job satisfaction
levels in the US are dropping. American workers are most satisfied with their jobs overall, with
the work itself, and with their supervisors and coworkers. However, they are less satisfied with
their pay and promotion opportunities. Pay appears to have a limited effect on job satisfaction,
particularly among higher income employees. Personality also affects job satisfaction. People
with positive core self-evaluations are more satisfied with their jobs than those with negative
core self-evaluations.
When employees dislike their jobs, they may exhibit a variety of behaviours. The behaviours
may be categorized as constructive or destructive and active or passive. Responses to
dissatisfaction include exit (looking for a new position), voice (actively and constructively
attempting to improve conditions), loyalty (passively waiting for conditions to improve), or
neglect (passively allowing conditions to worsen, to include chronic absenteeism, reduced
effort, or apathetic attitude).
The possible outcomes of job satisfaction related to performance, organizational citizenship
behaviour, customer satisfaction, absenteeism, turnover, and workplace deviance. The
relationship between productivity and job satisfaction is positive, but it is unclear whether
satisfaction leads to productivity or if productivity leads to satisfaction. Organizational
citizenship behaviour is closely linked to job satisfaction and implies that an employee is
willing to go above and beyond job requirements through such actions as talking positively
about the organization, helping others, and going beyond the normal expectations of their job.
The evidence indicates that satisfied employees increase customer satisfaction and loyalty,
particularly in service organizations. There is also a consistently negative relationship between
satisfaction and absenteeism and turnover, although the negative correlation between
satisfaction and turnover is more significant. Finally, job dissatisfaction predicts a broad range
of behaviours associated with workplace deviance.
Evidence suggests that there may be some cultural differences in job satisfaction. Workers in
Western cultures have higher job satisfaction than those in Eastern cultures. There are a number
of possible explanations. Among these, Eastern cultures appear to be more accepting of
negative emotions than Western cultures.
Managers can positively impact satisfaction levels through providing mentally challenging
work, equitable rewards, and through providing supportive working conditions. Although high
pay is effective in attracting employees, high pay alone is unlikely to create a satisfying work
environment.

5. Chapter 4
Personality is the sum total of ways in which an individual reacts to and interacts with others.
Factors that determine personality are both heredity, or genetic, and environmentally
determined. Researchers have found that genetics accounts for about fifty percent of
personality variation and more than thirty percent in occupational and leisure interests. Specific
dimensions of personality include shyness, aggression, submissiveness, laziness, loyalty, and
timidity. These are collectively known as personality traits. Traits are believed to be important
in employee selection, matching people to jobs, and in guiding career development decisions.
Assessment tools have been used to measure the strength and variation of personality. The most
widely used personality test in the world is the Myers-Briggs Type Indicator (MBTI). This
test classifies people as Extroverted vs. Introverted, Sensing vs. Intuitive, Thinking vs. Feeling,
or Judging vs. Perceiving. The MBTI is a valuable tool for increasing self-awareness and for
providing career guidance, but is generally unrelated to job performance.
The Big Five Model classifies personality into extroversion, agreeableness, conscientiousness,
emotional stability, and openness to experience. Research has found important relationships
between the Big Five dimensions and job performance. Conscientiousness, for example,
predicted job performance for all occupational groups. The impact of other factors tends to
vary by occupational group. For example, extraversion is predictive of performance in
managerial and sales positions.
Major personality attributes influencing OB include core self-evaluation, Machiavellianism,
narcissism, self-monitoring, and risk taking. Core self-evaluation refers to the degree to which
people like or dislike themselves and whether they see themselves as capable and effective.
Machiavellianism refers to the degree to which individuals are pragmatic, emotionally distant,
and believe that the ends justify the means. Individuals who are high in Machiavellianism tend
to manipulate more, win more, and are persuaded less than low Machs. This trait is desirable
in jobs that require bargaining skills or that offer substantial rewards for winning.
Narcissism describes a person who has a grandiose sense of self-importance, requires excessive
admiration, has a sense of entitlement, and is arrogant. A study found that, while narcissists
thought that they were better leaders than their colleagues, their supervisors actually rated them
as worse leaders.
Self-monitoring behaviour refers to an individual’s ability to adjust his or her behaviour to
situational factors. High self monitors remake themselves to a situation and are highly sensitive
to external cues. They are behavioural chameleons in that they can change their behaviour
depending on the audience. Low self-monitors show their true feelings regardless of the
circumstances. There is high behavioural consistency between who they are and what they do.
High self monitors tend to receive more promotions and better performance ratings.
Risk taking refers to an individual’s willingness to take chances. High risk takers make more
rapid decisions and use less information in making their choices than did the low risk-taking
managers. The importance of risk taking as a personality characteristic varies with occupation,
with high risk taking being more valuable in some jobs compared to others.

6. Individuals may also be described as having Type A or Type B personalities. Types As have
been characterized as being “aggressively involved in a chronic, incessant struggle to achieve
more and more in less and less time, and if required to so, against the opposing efforts of other
things or other persons.” Type As experience a greater degree of stress than their Type B
counterparts.
Finally, proactive personality types are not afraid to buck conventional practices through
voicing their opinion and engaging in civic behaviour. They are more likely to persist in the
face of obstacles and to act as change agents within their organization.
Values describe an individual’s ideas as to what is right, good, or desirable. They are
considered stable and enduring, but may be influenced by outside agents that are considered
uncontrollable. Values influence how we feel and behave. Rokeach identified two sets of
values, with each set containing 18 individual value items. Terminal values refer to desirable
end-states, while instrumental values refer to preferable modes of behaviour to achieve the
terminal values. Rokeach’s research demonstrated that people in the same occupations or
categories (e.g., corporate managers, union members, parents, students) tend to hold similar
values, as do generational cohorts. Four such cohorts are Veterans (those entering the
workforce through the 1950s and early 1960s); Baby Boomers (those who entered the
workforce from the mid-1960s through the mid-1980s); followed by the Generation Xers, and
Nexters. The dominant group in the workforce could have a profound impact on the way in
which they are managed. Nexters, for example, expect relational opportunities and a greater
degree of freedom at work than all of the groups before them. Generational differences may
also contribute to shifts in ethical behaviour. While Veterans tended to be highly loyal to their
employers and were likely to make decisions that were in the best interest of the organization,
Baby Boomers tend to be more self-centred and focused on their individual success.
John Holland’s research examines personality and job fit. He defines six personality types and
proposes that satisfaction and the propensity to leave a job depend on the degree to which
individuals successfully match their personalities to an occupational environment. Additional
research investigates the person-organization fit, the match between the person and the
organization.
Culture may also influence interactions at work. Groundbreaking cross-cultural work
performed by Geert Hofstede found that across cultures 5 dominant dimensions existed:
 Power distance
 Individualism vs. collectivism
 Masculinity vs. femininity
 Uncertainty avoidance
 Long-term vs. short-term orientation
Employees in the U.S. tend to be very individualistic and short-term in their orientation. The
U.S. scored low on power distance and uncertainty avoidance. Finally, Americans tended to
score high on masculinity, reflecting an emphasis on traditional gender roles.

7. In the same vein, the Global Leadership and Organizational Behaviour Effectiveness (GLOBE)
research identified nine dimensions on which national cultures differ:
 Assertiveness
 Future orientation
 Gender differentiation
 Uncertainty avoidance
 Power distance
 Individualism/collectivism
 In-group collectivism
 Performance orientation
 Humane orientation
The GLOBE project confirms that Hofstede’s five dimensions are still valid and provides an
updated measure of where countries stand on each dimension.
Chapter 5
Perception is a process by which individuals organize and interpret their sensory impressions
in order to give meaning to their environment. Perceptions differ depending whether we think
the behaviour is caused by the person or the situation. Attribution theory states that an internal
or external attribution depends on distinctiveness (whether an individual displays different
behaviours in different situations), consensus (whether everyone who is faced with a similar
situation responds in the same way), and consistency (whether a person responds the same way
over time). Fundamental attribution error occurs when we attribute poor performance to
internal factors rather than situational constraints. Similarly, self-serving bias is when
individuals attribute successes to internal factors, such as their intelligence or ingenuity, and
failures to external factors like bad luck or uncooperative co-workers.
Individuals often use shortcuts in decision making and these shortcuts can result in significant
distortions. These shortcuts include selective perception, the halo effect, contrast effects,
projection, and stereotyping. Selective perception occurs when we only process information
that is aligned with our attitudes, interests, and backgrounds. In other words, we choose to see
what we want to see. The halo effect occurs when a single characteristic, say attractiveness,
forms the basis for a general impression about someone. For example, if someone is attractive
we may associate he/she has an array of unassociated traits: sociability, intelligence,
promotability. Contrast effects occur because we don’t evaluate a person in isolation; our
reaction is influenced by other persons we have recently encountered. For example if one has
average skills and is evaluated in a group which includes someone who is stellar, the average
skill set may look poor by comparison. Stereotyping is when we use decision making short-
cuts to draw general determinations about an individual or group.
There are many applications of perception theory in the organization, including employment
interviews and performance expectations. Perception is a major influence in the interview
process and can severely impair the effectiveness of decision making. Studies have shown that
interviewers tend to make decisions very early in the interview process and different

8. interviewers often perceive candidates quite differently. In evaluating the performance of
employees, generalizations save time, but often prevent us from accurately perceiving the
individual. In employment settings, what a manager expects from a subordinate can alter actual
performance. The phenomenon is termed a self-fulfilling prophecy or Pygmalion effect.
Finally, perception also has a major impact on the performance evaluation process.
Individuals in organizations make decisions, making choices among two or more alternatives.
Understanding how managers make decisions can improve decision effectiveness. The first
step in making a decision is identification of the problem, a discrepancy between the current
and desired conditions.
Rational decision-making is a model derived from economics, in which individuals wish to
make decisions that maximize value. Steps in the rational decision making model include (1)
identifying the problem; (2) identifying the decision criteria; (3) weighting the previously
identified criteria; (4) generating possible alternatives; (5) rating each alternative on each
criterion; (6) computing the optimal decisions. The rational decision-making model makes a
number of assumptions, including complete information, lack of bias, and maximum payoff.
While the model of rational decision-making describes how decisions should be
made, bounded rationality describes how decisions are made. When faced with a complex
problem, most people reduce the problem to a level at which is can be understood. Because we
do not have all of the available information we “satisfice”, or arrive at an outcome that it “good
enough,” one that meets an acceptable level of performance. Because humans have limited
decision making capacity, our decision making is often biased. Common biases are
overconfidence, anchoring, confirmation, availability, representativeness, escalation of
commitment, randomness, the winner’s curse, and hindsight.
Intuitive decision-making is a process that occurs unconsciously. It is the accumulation of
distilled experience that manifests as a “gut feeling.” There is a growing recognition that
intuitive decision-making can be a legitimate alternative in certain circumstances.
Decision makers often make errors. Some of the most common errors include overconfidence
bias, anchoring bias, confirmation bias, availability bias, escalation of commitment,
randomness error, winner’s curse, and hindsight bias.
Individual differences can impact the way individuals perceive and evaluate information.
Personality clearly influences decision-making, particularly with respect to conscientiousness
and self-esteem. There are also gender-related differences in decision-making – women tend
to spend more time evaluating a decision than do men.
A number of organizational factors, including performance evaluations, reward systems,
formal regulations, system-imposed time constraints, and historical precedents will influence
decision-making processes.
Three ethical criteria can be used when making decisions: utilitarianism, the rights view, and
the justice view. The goal of utilitarianism is to provide the greatest good for the greatest
number of people. This view tends to dominate business decision-making, as it is consistent
with goals of efficiency, productivity, and high profits. The rights focus emphasizes decision-
making that respects and protects the rights of individuals, including the rights to privacy, free
speech, and due process. In contrast, the justice focus relies on fairly and impartially applying

9. rules in an attempt to equitably distribute benefits and costs. Each of these decision criteria has
advantages and costs that must be carefully considered.
Creativity, or the ability to produce novel and useful ideas, consists of expertise, creative-
thinking skills, and intrinsic task motivation. The potentiality for creativity is enhanced when
individuals work in environments that provide flow of ideas, fair and constructive judgment of
ideas, rewards for creative work, sufficient financial, material, and information resources,
freedom, to decide what work is to be done and how to do it, a supervisor who communicates
effectively, shows confidence in others, and supports the work group, and work group members
who support and trust each other.
Motivation is one of the processes that account for an individual’s intensity, direction, and
persistence of effort toward attaining a goal. Intensity is concerned with how a person tries,
and direction is how that energy is channelled. Does an employee spend his or her time
subverting the company through job neglect or sabotage or do they focus on obtaining company
goals? Do they persist in their efforts, maintaining focus in a dependable fashion over time?
Early theories of motivation like Maslow’s theory of needs and Herzberg’s two factor theory
were an attempt to explain the motivational factors operant at work. Abraham Maslow
described needs existing in an ascending hierarchy, consisting of the following dimensions:
physiological, safety, social, esteem, and self-actualization. In Maslow’s conceptualization a
need that is substantially satisfied ceases to motivate. Maslow separated the five needs into
lower and higher orders. Physiological and safety needs were described as lower-order needs
and social, esteem, and self-actualization were classified as higher-order needs. Higher-order
needs tend to be satisfied internally, while lower-order needs are predominantly satisfied
externally.
ERG theory was an extension of Maslow’s hierarchy of needs proposed by Clayton Alderfer.
He grouped needs into three categories: existence (similar to physiological and safety need),
relatedness (similar to social and status needs), and growth (similar to esteem and self-
actualization needs). Unlike Maslow, Alderfer did not believe that lower level needs needed to
be satisfied before higher level needs. Alderfer proposed that individuals could work on all
three needs at the same time. In addition, ERG theory suggests that frustration over inability to
satisfy a higher-order need might lead to regression to a lower level.
Douglas McGregor’s Theory X and Theory Y presumes that there two different types of
managers. Theory X managers believe that employees are lazy and must be controlled or
coerced into producing, while Theory Y managers believe that employees who enjoy and even
seek responsibility. Theory X assumes that lower-order needs dominate individuals, while
Theory Y assumes that people are motivated by higher-order needs. McGregor suggests that
Theory Y is more valid than Theory X and that managerial decisions should reflect this
approach.
Frederick Herzberg’s two-factor theory suggests that there are two types of factors in the
workplace: hygiene factors and motivational factors. Hygiene factors are extrinsic factors, such
as supervision, pay, company policies, and working conditions. The absence of one or more
hygiene factors can lead to a state of dissatisfaction, but their presence does not lead to a greater
desire to excel at one’s job. Motivational factors are intrinsic factors, like advancement,

10. recognition, responsibility, and achievement that are directly related to job satisfaction. The
absence of motivational factors does not cause dissatisfaction; rather, a state of neutrality.
Herzberg suggests that managers must make sure that hygiene factors have been addressed to
move employees from a state of “dissatisfaction” to a state of “no dissatisfaction” and must
add one or more motivational factors to move employees from “no satisfaction” to
“satisfaction”.
McClelland’s theory of needs states that workers are motivated by three needs: need for
achievement, need for power, and need for affiliation. Individuals differ in the degree to which
a particular need motivates them. The best managers have been characterized as high in Need
for Power (nPow) and low in need for affiliation (nAff).
Contemporary theories of motivation, including cognitive evaluation theory, goal-setting
theory, management by objectives, and self-efficacy theory, represent the current state of the
art in explaining employee motivation.
Cognitive evaluation theory suggests allocating extrinsic rewards for behavior that had been
previously intrinsically rewarding tends to decrease the overall level of motivation. This theory
appears to be well supported, particularly as it relates to tangible rewards. However, verbal
rewards seem to keep people focused on the task and encourage them to do it better. An
outgrowth of cognitive evaluation theory is self-concordance, which considers the degree to
which people’s reasons for pursuing goals are consistent with their interests and core values.
Goal-setting theory states that specific and difficult goals, with feedback, lead to higher
performance. Goal-setting theory presupposes that an individual is committed to the goal.
Behaviorally, this means that an individual believes she can achieve the goal and wants to
achieve it. Goal commitment is most likely to occur when goals are made public, when the
individual has an internal locus of control, and when the goals are self-set rather than assigned.
In addition, goals-setting theory is culture bound – it’s well adapted to countries like the United
States and Canada because its key components align reasonably well with North American
cultures.
Management by objectives programs emphasize participatively set goals that are tangible,
verifiable, and measurable. Through MBO, overall organizational objectives are converted into
specific objectives for organizational units and individual members. There are four ingredients
common to most MBO programs: goal specificity, participation in decision making, an explicit
time period, and performance feedback.
Self-efficacy (also known as “social cognitive theory” or “social learning theory”) refers to an
individual’s believe that he or she is capable of performing a task. The higher an individual’s
self-efficacy, the more confidence he has in his ability to succeed in a task. Individual with
lower self-efficacy are more likely to lessen their effort or give up all together. There are four
ways that self-efficacy can be increased: enactive mastery, vicarious modelling, verbal
persuasion, and arousal. Verbal persuasion is associated with the Pygmalion effect and the
Galatea effect. The Pygmalion effect is a form of a self-fulfilling prophesy where believing in
something can make it true. The Galatea effect, a workplace variant, occurs when high
performance expectations are communicated directly to the employee.

11. Reinforcement theory states that behaviour is caused by external reinforcement. In other
words, rewards shape the way people feel about the job; people’s feelings thoughts, feelings,
and attitudes do not shape the way they feel regarding work outcomes.
Equity theory makes the assumption that people will compare their job inputs and outcomes
with those of others and then respond to eliminate perceived inequities. Job inputs include
effort, experience, education, and competence, while outcomes include salary levels, raises,
and recognition. When an employee perceives that their ratio of inputs to outcomes is equal to
relevant others, a state of equity exists. When an employee perceives that the ratio is unequal,
equity tension creates anger or guilt. Employees will make four comparisons: self-inside, self-
outside, other-inside, and other-outside. Employees may respond to perceived inequity by
changing their inputs; by changing their outcomes; by distorting perceptions of self or others;
by choosing a different referent; or by leaving the situation.
The issue of equity or fairness can be evaluated from the perspective of organizational justice.
Organizational justice refers to an overall perception of what is fair in the workplace, comprised
of distributive, procedural, and interactional justice. Historically, equity theory focused on
distributive justice, which is the perceived fairness of the amount and allocation of rewards
among individuals. A key addition under organizational justice is procedural justice, the
perceived fairness of the process used to determine the distribution of rewards. Finally,
interactional justice is the individual’s perception of the degree to which he or she is treated
with dignity, concern, and respect.
Expectancy theory refers to an individual’s assessment of the abilities needed to achieve, the
subsequent rewards, and the preferences of those rewards. An individual will be motivated to
act when he sees that effort will lead to an outcome, and the outcome will lead to a reward he
find desirable. For an individual to exert a high level of effort, three relationships must exist.
First, the individual must believe that high effort will result in high performance. Second, the
individual must perceive that high performance will be rewarded. Finally, the reward being
offered must meet an individual’s goals or needs.
All of the theories presented in this chapter are culturally bound, in other words, they have
formulated by Western researchers and tested on Western samples. Cultural constraints may in
some instances cause a reinterpretation of a given theory. For example, in countries like
Portugal or Chile which are high uncertainty avoidance goal setting theory (which assumes a
high degree of independence) may not apply. Employees in these countries would feel
uncomfortable setting their own goals because they are high in uncertainty avoidance and high
in power distance.

12. Chapter 6
The job characteristics model or JCM suggests that any job can be described in terms of five
core job dimensions: skill variety, task identity, task significance, autonomy, and feedback are
motivating job characteristics. From a motivational standpoint, the JCM says that internal
rewards are obtained by individuals when they learn that they personally have performed well
on a task that they care about. The core dimensions can be combined into a single predictive
index, called the motivating potential score (MPS). If jobs score high on motivating potential,
the model predicts that motivation, performance, and satisfaction will be positively affected
and that the likelihood of absence and turnover will be lessened.
If employees suffer from overroutinisation of their work, managers may consider job rotation,
job enlargement, or job enrichment. Job rotation (or cross-training) is the periodic shifting of
an employee from one task to another. Job rotation reduces boredom and increases motivation
through diversifying the employee’s activities. It also has indirect benefits for the organization
because employees with a wider range of skills give management more flexibility in scheduling
work, adapting to changes, and filling vacancies. Among the drawbacks of job rotation are
increased training costs and potential decreases in productivity.
Job enlargement is the horizontal expansion of a job. It increases the number and variety of
tasks that an individual performs results in a job with more diversity.
Job enrichment is the vertical expansion of a job, increasing the degree to which the worker
controls the planning, execution, and evaluation of his or her work. An enriched job organizes
tasks so that the worker completes an activity, increases the employee’s freedom and
independence, increases responsibility, and provides feedback so that an individual will be able
to assess and correct his or her own performance. Jobs may be enriched by combining tasks,
forming natural work units, establishing client relationships, expanding jobs vertically, and
opening feedback channels.
Three alternative work arrangements, flexitime, job sharing, and teleworking, alter work
arrangements to increase motivation. Flexitime, or flexible work hours, allows employees some
discretion over their start and stop times, while requiring a specific number of hours per week.
Job sharing allows two or more individuals to split a traditional 40-hour-a-week job. Finally,
teleworking, allows employees to do work at home through a computer linked to their office.
Employee involvement programs are a way to increase workers’ control and autonomy to
improve their motivation, organizational commitment, productivity, and job satisfaction.
Examples of involvement programs include participative management, representative
participation, and quality circles. Participative management programs use joint decision
making as a strategy to improve employee performance. Representative participation
programs, widely required by law in Western Europe, provide for worker representation in
company decision making. The two most common implementations of representative
participation are work councils and board representatives. Quality circles, another form of
employee involvement, are work groups of eight to ten employees and supervisors who have a
shared area of responsibility. They meet regularly to discuss their quality problems, investigate
causes of the problems, recommend solutions, and take corrective actions.
In determining pay structures, companies must make some strategic decisions. The process
of initially setting pay levels entails balancing internal and external equity. Some organizations

13. prefer to be pay leaders, paying well above the market, while others pay considerably less.
Piece-rate plans, merit based pay, bonuses, skill-based pay, profit sharing, gainsharing, and
employee share ownership plans are all forms of variable-pay programs. Instead of paying a
person only for seniority, a variable pay program bases a portion of the employee’s pay on
some individual or organizational measure of performance.
Flexible benefits allow employees to choose benefits that best meet their needs. They can be
uniquely tailored to reflect difference in employee needs based on age, marital status, spouses’
benefit status, number and age of dependents. The three most popular types of flexible benefit
plans are modular plans, core-plus options, and flexible spending accounts. Modular plans are
predesigned packages of benefits, with each module put together to meet the needs of a specific
group of employees. Core-plus options consist of a core of essential benefits and a menu-like
selection of other benefit options from which employees can select and ad to the core. Flexible
spending plans allow employees to set aside up to the dollar amount offered in the plan to pay
for particular services. Today, almost all major corporations in the United States offer flexible
benefits.
Employee recognition programs range from private letters of thanks to publicized formal
programs where specific types of behaviour are encouraged and the procedures for attaining
recognition are clearly identified. A recent survey of employees in a variety of work settings
found that recognition was considered to be the most powerful workplace motivator. An
obvious advantage of workplace recognition programs is that they are inexpensive. Critics
argue that they are highly susceptible to political manipulation by management. In jobs with
objective measurement criteria, such as sales, recognition programs are perceived as fair.
However, in jobs where the criteria for good performance is clear, there is greater potential for
managerial manipulation and abuse.
Across all countries, extrinsic job characteristics (pay, working conditions) were consistently
and positively related to satisfaction with one’s job. Richer countries, countries with stronger
social security, countries that stressed individualism rather than collectivism, and countries
with a smaller power distance showed a stronger relationship between the presence of intrinsic
job characteristics (recognition, interesting job) and job satisfaction.
In conclusion, managers should consider the following recommendations concerning
motivation:
 Recognize individual differences.
 Use goals and feedback.
 Allow employees to participate in decisions that affect them.
 Link rewards to performance.
 Check the system for equity.