This document discusses motivation and reward systems. It covers several theories of motivation including Maslow's hierarchy of needs, ERG theory, McClelland's acquired needs theory, and Herzberg's two-factor theory. It also discusses process theories of motivation such as Vroom's expectancy theory, Adams' equity theory, and Locke's goal setting theory. The document then covers types of rewards including intrinsic and extrinsic rewards. It discusses reinforcement theory and different reinforcement schedules. It defines job analysis, job description, job evaluation, and different approaches to reward systems such as skill-based pay.

1. MODULE 2:
MOTIVATION AND REWARD
SYSTEMS

2. 5. Motivation

3. What is Motivation?
 It is the internal condition that activates
behavior and gives it direction; energizes and
directs goal-oriented behavior
Job performance is a given requirement in any
organization. It is possible, however, if the
following conditions are met:
1. THE CAPACITYTO PERFORM
2. THE OPPORTUNITYTO PERFORM
3. THEWILLINGNESSTO PERFORM

4. Key Elements of Motivation
 Intensity
 Direction
 Persistence

5. THEORIES OF MOTIVATION
 CONTENT theories are those that focus on
analyzing the wants and needs of an
individual.The four better known content
theories are the following:
1. Hierarchy of NeedsTheory by Abraham
Maslow
2. ERGTheory of Clayton Alderfer
3. Acquired NeedsTheory of David L.
McClelland
4. Two-FactorTheory of Frederick Herzberg

6. CONTENT.1:Abraham Maslow’s
Hierarchy of Needs
Abraham Maslow forwarded the idea that human beings possess
a hierarchy of five needs such that as each need is substantially
satisfied, the next need becomes dominant.
 A brief description of the needs is provided as follow:
1. Physiological needs – which include, hunger, thirst, shelter, sex,
and other bodily needs.
2. Safety needs – which include security and protection from
physical and emotional harm.
3. Social needs – which include affection, belongingness,
acceptance, and friendship.
4. Esteem needs- which include internal esteem factors such as
self-respect, autonomy, and achievement, and external esteem
factors such as status, recognition, and attention.
5. Self-actualization – refers to the drive to become what one is
capable of becoming which includes growth, achieving one’s
potential, and self-fulfillment.

8. CONTENT.2: ERG Theory
The ERG theory is a need hierarchy theory of
motivation that was developed by Clayton Alderfer. He
believed that in motivating people, we are confronted
by three sets of needs: (E) EXISTENCE, (R)
RELATEDNESS, and (G) GROWTH.
1. EXISTENCE – this refers to needs satisfied by such
factors as food, air, water, pay, and working
conditions.
2. RELATEDNESS – this refers to the needs satisfied by
meaningful social and interpersonal relationships.
3. GROWTH – this refers to the needs satisfied by an
individual making creative or productive
contributions.

9. CONTENT.3: Acquired Needs
Theory
Acquired needs theory was developed as a result of a research
made by David McClelland and his associates.They found out
that managers are motivated by three fundamental needs
which may be briefly described as follows:
1. NEED FOR ACHIEVEMENT – this refers to the desire to do
something better or more efficiently, to solve problems, or
to master complex tasks.
2. NEED FOR AFFILIATION – which refers to the desire to
establish and maintain friendly and warm relations with
others.
3. NEED FOR POWER – which refers to the desire to control
others, to influence their behavior, or to be responsible for
others.

10. CONTENT.4: Two Factor Theory
Frederick Hezberg developed his two-factor theory that identifies
job context as a source of job dissatisfaction and job content as the
source of job satisfaction.
The job content of work setting relates more to the environment in
which people work.The factors associated with job context are called
hygiene factors which include the following:
1. ORGANIZATIONAL POLICIES
2. QUALITY OF SUPERVISION
3. WORKING CONDITIONS
4. SALARY
5. RELATIONSHIPWITH PEERS
6. RELATIONSHIPWITH SUBORDINATES
7. STATUS
8. SECURITY

11. THEORIES OF MOTIVATION
PROCESS theories explain how people act in
response to the wants and needs that they
have. Classified under process theories are
the following:
1. ExpectancyTheory ofVictorVroom
2. EquityTheory of J. StaceyAdams
3. Goal SettingTheory of Edwin A. Locke

12. PROCESS.1: Expectancy Theory
One of the process theories refer to the expectancy
theory that was developed byVictorVroom.This
theory sees people as choosing a course of action
according to what they anticipate will give them the
greatest rewards.
Vroom elaborated by explaining that motivation is
a product of the following factors:
1. VALENCE – how much one wants a reward.
2. EXPECTANCY – one’s estimate of the probability
that effort will result in successful performance.
3. INSTRUMENTALITY – one’s estimate that
performance will result in receiving the reward.

13. PROCESS.2: Equity Theory
Equity theory may be defined as a theory that individuals
compare job inputs and outcomes with those of others and
then respond to eliminate inequities.
Equity theory assumes that employees are motivated by a
desire to be equitably treated at work. Equity exists when
employees perceive that the ratios of their efforts to their
rewards are equivalent to the ratios of other employees.
Inequity exists when these ratios are not equivalent.
Inequity leads to the experience of tension, and tension
motivates a person to act in a manner to resolve the inequity.
The person, however, will be confronted with any of the two
types of inequity:
1. OVER REWARDED
2. UNDER REWARDED

14. Employees who feel over rewarded will think
there is an imbalance in their relationship with
their employer.They will seek to restore the
balance through any of the following:
1. THEY MIGHTWORK HARDER
2. THEY MIGHT DISCOUNTTHEVALUE OFTHE
REWARDS
3. THEY COULDTRYTO CONVINCE OTHER
EMPLOYEESTOASK FOR MORE REWARDS
4. THEY MIGHT CHOOSE SOMEONE ELSE FOR
COMPARISON PURPOSES

15. When employees feel under rewarded, they will
seek to reduce their feelings of inequity through
any of the following:
1. THEY MIGHT LOWERTHE QUALITY OR
QUANTITY OFTHEIR PRODUCTIVITY
2. THEY COULD INFLATETHE PERCEIVED
VALUE OFTHE REWARDS PERCEIVED
3. THEY COULD FIND SOMEONE ELSETO
COMPARETHEMSELVES
4. THEY COULD BARGAIN FOR MORE
REWARDS
5. THEY MIGHT QUIT

16. PROCESS.3: Goal Setting
Theory
• Goal SettingTheory may be defined as the
theory that specific and difficult goals, with
feedback lead to higher performance.
• Goal Setting theory is based on the premise
that behavior is regulated by values and
goals. A goal is the specific target that an
individual is trying to achieve.
• It was Edwin A. Locke and his associates who
developed a comprehensive framework
linking goals to performance.

17.  Their findings about goals include the
following:
1. Specific goals lead to a higher performance
then generalized goals
2. Performance generally increases in direct
proportion to goal difficulty.
3. For goals to improve performance, they must
be accepted by the workers.
4. Goals are more effective when they are used
to evaluate performance
5. Goals should be linked to feedback.

18. 6. Appraising and
Rewarding

19.  Pay is an important feature, because it is the
main reason why people work.
 In particular, pay provides employees with
the opportunity to meet both lower-level
maintenance and upper-level growth and
achievement needs.
 The challenge for managers is to administer
rewards properly.
 Rewards include monetary and non-
monetary.

20. Rewards
 Rewards are used by managers and employers as
motivators for their employees to achieve their
personal goals as well as the goals of the company they
are working in. Rewards may vary depending on the
need of the employee and the capability of the
company/employer and may range from salaries to
promotions and others.
 Some rewards may be given to all individuals by
virtue of their employment (Universal or across the
board rewards). Other rewards may be given by
function of seniority while many are given via results of
job performance.
 This results are taken from:
 Feedbacks
 Job evaluation

21. Types of Rewards
Intrinsic Extrinsic
 self administered by the
person. It provides a
feeling of satisfaction or
gratification
 Completion
 Achievement
 Autonomy
 Personal growth
 Initiated from outside the
person.
 Financial rewards: salaries
and wages
 Interpersonal rewards
 Promotions

22. Reinforcement Theory
A reinforcement is different from a reward in that a reward is
perceived to be desirable and given after the performance. A
reinforcement can be both positive and negative
 Positive reinforcement- added stimulus that strengthens
the probability of a behavioral response.
 Negative reinforcement- increase in frequency of a
response following the removal of the negative reinforce
immediately after the response.
 Punishment- presenting an uncomfortable consequence for
a particular behavior response. Managers apply
punishment by either application or removal.
 Extinction- Decline in response rate because of
nonreinforcement.

23.  REINFORCEMENT SCHEDULES:
1. Continuous- Reinforcer follows every response
2. Fixed Interval- Response after specific time period
is reinforced.
3. Variable interval- Response after varying periods
of time is reinforced.
4. Fixed ratio- A fixed number of responses must
occur before reinforcement.
5. Variable Ratio- A varying number of responses
must occur before reinforcement.

24. Job Analysis
 Find out the relative worth of the job
 Getting information about the current or
proposed duties and requirements of a position
to determine the most appropriate function
 Collecting of information about the duties and
responsibilities, necessary skills, outcomes, and
work environment
 Focuses on work behaviors, tasks, and outcomes
 Data can be gathered through observation,
interviews, work sampling, and questionnaires

25. Job Description
 Describing the duties performed, the skills
training and experience required, the
responsibilities involved, the contribution
under which the job is done and other
relations of the job to the other jobs in the
organization

26. Job Evaluation
 Assessment of the relative worth of job on
the basis of a consistent set of job factors and
personal factors such as qualifications and
skills required

27. Different Approaches to
Reward System
 Skill-Based pay
 Paying an employee at a rate based on their ability to
develop and apply personal skills
 Advantages:
 Organization increases its flexibility.
 Organization may need fewer distinct job classifications.
 Fewer employees are needed
 Organization may experience reduction in turnovers and
absenteeism
 Broadbanding
 A pay system that reduces actual number of pay grades to a
relatively few broadly based pay grades.
 Places emphasis on titles, grades and job description

28.  Concierge Services
 Basically a butler system wherein employees hire
them for help in their busy schedules
 Team-based Rewards
 Part-time Benefits
 Gain Sharing
 Provide employees with a share of the financial
benefits the organization receives from improved
operating efficiencies and effectiveness.
 Employee Stock ownership Plans
 Companies make a contribution of stock to
employees

29. There are three important organizational
concerns influenced by rewards:
Turnover and Absenteeism
Job Performance
Organizational Commitment