ACCA F1 Accountant in Business - 2010 - Study text

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Chapter 9: Motivation

Process theories

Process theories of motivation concentrate on the process by which individuals are

motivated, and the strength of that motivation. In other words, the key question is:

‘how are people motivated?’

It is argued that individuals are motivated differently, and the strength of their

motivation depends on a variety of factors, such as:

 needs

 personality

 perceptions about whether more effort will result in achieving goals

 the rewards

 expectations about whether the rewards for achieving the goals will actually

meet the individual’s needs.

Rewards and perceptions of rewards are usually a key factor in process theory.

Examples of process theory include:

 Vroom’s expectancy model

 Handy’s motivational calculus.

1.2 Maslow: the hierarchy of needs

In the 1950s, US psychologist Abraham Maslow developed a theory of the

motivation of individuals at work. He argued that individuals have seven in-built

needs, and his theory is concerned with the motivating power of each of these

needs.

Two needs are needs of a ‘higher order’ that must be met before the other five needs

can be satisfied. These higher order needs are:

 a need for freedom of inquiry and expression: social conditions must allow free

speech and encourage justice, honesty and fairness

 a need for knowledge and understanding: a need to explore and experiment.

The other five needs can be arranged in a hierarchy of five levels. The need at a

lower level is dominant until it has been satisfied. When the need at one level has

been satisfied – and only then – the need at the next level becomes dominant.

 A need that has been satisfied no longer motivates the individual.

 An individual is motivated by the need at a level in the hierarchy that has not

yet been satisfied.

 The highest level of need – self-actualisation – can never be fully satisfied.

The hierarchy of needs (the five levels of need) is usually drawn as a pyramid.

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Physiological needs (basic needs)

These are the needs for food, shelter, clothing and everything else that we need to

stay alive. These needs can be satisfied by money.

Safety needs or security needs

Safety needs are the needs for security in work. Individuals want to feel safe against

the risks of unemployment, and they want protection against the consequences of

illness or having to retire. People also want fair treatment at work. These needs can

be satisfied by:

 employment legislation and

 the employer’s arrangements for a pension scheme for its employees and for the

treatment of its employees who are affected by illness or injury.

Social needs

Social needs are the needs to interact with other people, and to be part of a group.

At work, social needs can be met by working with other people. However, the way

in which work is organised has an important effect on whether the social needs of

employees are fully met.

Esteem needs (or ego needs)

Esteem needs are the needs for the esteem of other people, and to feel good about

one’s own value or importance. Esteem needs can be met by promotion and by the

status of the job. However, promotion only offers short-term esteem. In the longer

term, individuals get esteem from their work by having some say in how their work

is organised.

Self-fulfilment needs (self-actualisation needs)

These are the needs to achieve something worthwhile in life. This need is never fully

satisfied. An individual at this level in the hierarchy needs continuing success and

achievements.

Self-

fulfilment

needs

Esteem needs

Social needs

Safet

/securit

needs

siolo

ical needs

(

basic needs

)

Chapter 9: Motivation

The significance of Maslow’s ideas

The significance of Maslow’s ideas is that it suggests an approach that management

should take to improving the motivation of employees. Management must make

sure that lower-level needs are satisfied before they try to motivate employees with

initiatives aimed at the satisfaction of higher-level needs.

For example:

 Pay is extremely important, because it satisfies basic needs. Employees must be

paid enough to satisfy their basic physiological needs (whatever these are

perceived to be).

 Unless employees feel secure in their job, there is no point in trying to increase

motivation through job design that improves social interaction.

 Making individuals feel part of a group must come before satisfying needs for

esteem and status.

Limitations of the hierarchy of needs

The hierarchy of needs is a simple and logical idea about human motivation, but it

has significant weaknesses and limitations. The main problem is its assumption that

needs are the same for all people and can be satisfied for everyone in the same way.

 Individuals have different needs, and they are not necessarily in the hierarchical

order suggested by Maslow.

 Many individuals may seek to satisfy several different needs at the same time.

 The same need may cause different reactions and responses from different

individuals.

 There is an underlying assumption that the objectives of the organisation will be

achieved if individuals receive rewards of higher status (promotion) or self-

fulfilment. Maslow does not show any link between self-fulfilment and

improved organisational performance.

 Maslow’s model is vague about the nature of self-actualisation or self-fulfilment

needs. More modern theories of motivation go into much more detail about the

nature of high-level needs and their satisfaction.

 It is a ‘content theory’ of motivation. It does not explain the strength of

motivation, nor the effect on motivation of people’s perceptions. (Content theory

is explained later.)

The theory also fails to recognise that self-actualisation is not always possible. The

environment in which the organisation operates may not be suitable for self-

fulfilment – for example the nature of the product or service of the organisation, its

technology or environment might mean that organisations should not (and cannot)

offer their employees the satisfaction of self-actualisation needs. An example might

be working on the factory floor. It is difficult to achieve self-actualisation working in

a low-level job in a factory environment

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1.3 Herzberg and motivation-hygiene theory (two-factor theory)

In the 1950s, Frederick Herzberg carried out some research into the factors that

motivate individuals in their work, by interviewing 200 engineers and accountants.

He developed a two-factor theory of motivation, which he set out in his book The

Motivation to Work (1959).

Herzberg identified two groups or categories of factors: those causing

dissatisfaction with work and those causing satisfaction. He called these:

 hygiene factors (= the factors causing dissatisfaction) and

 motivator factors (= the factors causing satisfaction).

The most significant hygiene and motivator factors were as follows:

Factors causing dissatisfaction Factors causing satisfaction

Hygiene factors Motivator factors

Company policy Achievement

Supervision Recognition

Relationship with the boss The work itself

Working conditions Responsibility

Salary Advancement

Relationship with colleagues Growth

It might be supposed that factors causing dissatisfaction and factors causing

satisfaction are opposites. However, Herzberg argued that this is not the case.

 The opposite of dissatisfaction is not satisfaction: it is not being dissatisfied.

 The opposite of satisfaction is not dissatisfaction: it is not being satisfied.

The conclusion from Herzberg’s analysis is that management need to deal with two

different categories of factors affecting the concerns of employees in their work.

 Management need to make sure that hygiene factors are given proper attention.

If employees are content with their hygiene factors, they will not be dissatisfied.

For example, employees need to feel that they are being paid well enough in

order to prevent them from being dissatisfied. However, satisfying the hygiene

factors only prevents dissatisfaction, it does not create satisfaction.

 In order to motivate individuals, the motivator factors need to be satisfied.

Creating motivation therefore means providing conditions at work that will

make individuals feel a sense of achievement and recognition. According to

Herzberg, a key factor in creating motivation is job enrichment – making the

work itself more interesting and fulfilling.

Chapter 9: Motivation

1.4 McGregor: Theory X and Theory Y

Douglas McGregor (in The Human Side of Enterprise, 1960) suggested that there are

two different approaches to managing people. Each approach is based on a different

view of whether individuals can be motivated at work. McGregor called the two

management approaches Theory X and Theory Y.

Theory X

The Theory X approach to management is an authoritarian style. The manager

instructs his employees and tells them what to do. The Theory X approach is based

on the following views about people at work:

 The average person dislikes work and will avoid having to do any if at all

possible.

 Individuals must therefore be forced to work towards the organisation’s

objectives, with the threat of punishment for not working properly.

 The average person prefers to be directed, wants to avoid responsibility, has no

ambition and wants security more than anything else.

Theory Y

The Theory Y approach to management is a participative management style, in

which the manager encourages his employees to participate in decision-making. The

Theory X approach is based on the following views about people at work:

 Putting effort into work is as natural as play.

 Individuals will apply self-direction and self-control to work towards the

objectives of the organisation, without the need for constant supervision or the

threat of punishments.

 The strength of an individual’s commitment to the organisation’s objectives is

related to the rewards associated with achieving those objectives.

 Individuals usually accept and then seek responsibility.

 At work, the intellectual potential of the average person is only partly utilised.

Individuals have much more potential that could be utilised.

The implications of McGregor’s theory

The Theory Y approach to management is consistent with a participative approach

to decision-making, where the manager gives all the relevant information to his

employees and encourages them to contribute to solving problems and deciding

what should be done.

McGregor suggested that a Theory Y approach is not always possible, or advisable.

 Theory Y is difficult to put into practice in a factory environment.

 There will be some situations when the manager must exercise his authority,

because this is the only way of getting results. (For example, a manager must

decide what to do when his subordinates cannot agree and are arguing amongst

themselves.)

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However, McGregor argued that Theory Y can often be used to manage managers

and professionals. When it is possible to get the commitment of employees to the

objectives of the organisation, it is better to explain problems fully to them. The

employees will exert self-direction and self-control to do better work and achieve

better results than if they are told what to do by an authoritarian manager.

For a Theory Y approach to management to work, employees must be positively

motivated to work and emotionally mature, and the work must be sufficiently

responsible to allow them some flexibility (some choice in how they set about the

work). In these circumstances, a Theory Y approach will lead to much better results

for the organisation than a Theory X management style.

1.5 Argyris on motivation (immaturity/maturity model)

Chris Argyris advocated a participative style of management. He believed that by

involving employees in the decision making process, managers can achieve much

better results for the organisation.

He argued that a Theory X style of management is widely applied by managers in

practice. Many people at work are therefore treated as immature people.

Individuals are immature when they are infants, but mature as they get older.

According to Argyris (immaturity/maturity theory) individuals go through seven

personality changes as they move from immaturity as infants to maturity as adults.

Personality change

1 Passive state to active state

Individuals mature from a passive state in

infancy to an active state as adults.

Dependency to

independence

Individuals move from being dependent on

others as infants to a state of being relatively

independent as adults.

Behaving in a few ways to

behaving in many ways

Individuals behave in only a few ways as

infants. Mature adults can behave in many

different ways.

Shallow interest to deeper

interests

As infants, individuals have shallow and erratic

interests. As they mature, individuals develop

deeper and stronger interests.

Short to a longer time

perspective

The time perspective of infants is very short,

and infants care only about the present. As

people mature, they develop a longer time

perspective and are aware of the past and the

future as well as the present.

From subordinate position

to higher position

Infants are subordinate to everyone else. As they

develop into adults, individuals move to a

position of equality or even superiority over

others.

From no awareness of self

to awareness of self

Infants lack any sense of ‘self’. Mature adults are

not only aware of self: they can also control it.

Chapter 9: Motivation

Argyris argued that few individuals, if any, develop to full maturity in all seven

aspects of their personality. However, as mature adults they are capable of doing

and achieving much more than they could as immature infants.

Argyris used his immaturity/maturity theory to criticise management practice in

many organisations. He argued that:

 People are kept from maturing in their work by the management practices in

organisations.

 In some organisations, employees are encouraged to be passive, dependent and

subordinate. Employees therefore often behave in an immature way.

 Keeping employees in an immature state is built into formal bureaucratic

organisation structures. In these organisations, jobs are designed first, and then

people are found to fit into the jobs. Job design is based on specialisation, a chain

of command, unity of command and concepts of the span of control – all

concepts of classical management theory. Jobs designed in this way are often

over-simplified, and they are routine, boring and lacking in any challenge for the

job holders. Power and authority remain in the hands of the senior management

at the top of the organisation.

Bureaucratic and democratic organisations

Argyris compared two different types of organisation.

 A bureaucratic organisation or pyramid organisation. This is the equivalent of

an organisation based on Theory X management.

 A democratic or humanistic organisation. This is the equivalent of an

organisation based on Theory Y management.

The differences between the two types of organisation are set out below. It should

be apparent that Argyris argued for a democratic style of organisation, because this

type of organisation is, he believed, more effective in achieving its objectives.

Bureaucratic organisation Democratic organisation

(Pyramid organisation) (Humanistic organisation)

General

description

Relationships between people

are shallow and mistrustful,

and are not authentic.

Relationships between people

are trusting and authentic.

There is widespread mistrust,

inter-group conflict and rigidity

in behaviour.

There is greater competence in

interpersonal relationships,

more inter-group co-operation

and flexibility in attitudes and

behaviour.

The organisation is not very

successful at problem-solving.

People are treated as mature

human beings with an

opportunity to develop to their

fullest potential.

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Important

human

relationships

are:

Those related to achieving the

objectives of the organisation –

getting the work done.

Those related to getting the

work done. In addition, other

important relationships are also

those related to maintaining the

organisation’s system and

adapting to the environment.

Effectiveness

in human

relationships

More effective when the work

is rational, logical and clearly

communicated. Less effective

when behaviour is more

emotional.

Effective. All relevant

behaviour is conscious and can

be discussed and controlled.

Most

effective

method of

controlling

human

relationships

Authoritarian: giving directions

and applying controls. There is

also a system of rewards and

penalties based on rational

behaviour and achieving goals.

A system of rewards and

penalties based on rational

behaviour and achieving goals.

Management is democratic:

managers influence others

through authentic relationships

and internal commitment to the

organisation’s goals.

1.6 Adams: equity theory of motivation

Another view of motivation was suggested by Adams (1963). This is the ‘equity

theory’ of motivation, where ‘equity’ means ‘fairness’.

Equity theory states that we all seek a fair balance between what we put into our

work (inputs) and what we get out (outputs). We get our ideas about what is a fair

balance by comparing our own situation to reference points or examples in the

‘market’ – for example, what someone else is earning and what they have to do to

earn it. We are also influenced by the views of colleagues and friends in deciding

what our reference points should be.

Inputs and outputs in equity theory might be any of the following:

Inputs

Outputs

Effort

Loyalty

Hard work

Commitment

There should be a fair

balance between

inputs and outputs

Tangible outputs:

Financial rewards

Bonuses

Pension rights

Other benefits such as company car

Skill and ability

Intangible outputs:

Flexibility Recognition

Tolerance Reputation

Enthusiasm Praise and thanks from others

Determination Interest

Trust in the boss Responsibility

Chapter 9: Motivation

Giving support to colleagues and

subordinates

Personal sacrifices

Training and development

Travel

A sense of achievement

Promotion

Adams argued that:

 People compare what they receive for the effort they put into work with what

others receive for the same amount of effort.

 If they believe that someone else is getting more for the same amount of effort,

they feel a sense of inequity.

 The greater the inequity, the greater the individual’s sense of unfairness and

anger.

The greater a person’s sense of anger, the more he or she will work to try to restore a

sense of equity (fairness). There are several ways in which this might happen. If an

individual has a feeling of negative inequity, he or she can:

 reduce the inputs – for example, put in less effort and commitment

 change the amount or the nature of the reward required

 change the basis for comparison, and use another example or reference point for

comparison

 distort the comparison psychologically, for example by convincing oneself that

the inputs are less or the outputs are more than they really are

 leave the job.

Adams therefore argued that what people do at work is driven by a sense of

inequity as well as a belief in equity.

1.7 Vroom: expectancy theory

Victor Vroom published his ideas on expectancy theory in 1964. Expectancy theory

is a theory for predicting the strength of an individual’s motivation to put in effort

at work.

Vroom argued that our behaviour is the result of conscious choices that we make

between different alternatives. We each have our own personal goals and needs for

satisfying those goals. Some of these needs may be satisfied through work. We can

be motivated to work if we believe that:

 there is a positive correlation between the efforts we make and the performance

that is the result of our efforts – in other words, the more effort we put in, the

better the performance will be, and

 good performance will result in a desirable reward, and

 the reward will satisfy an important need.

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Rewards may be a mixture of:

 extrinsic rewards – pay, bonuses, and so on

 intrinsic rewards – promotion, sense of achievement, sense of recognition, and

so on.

The motivation to obtain rewards is an important aspect of the theories of writers

such as Vroom, Handy and McClelland, and it is important to understand that

‘rewards’ can consist of both extrinsic and intrinsic rewards. The distinction

between these two types of reward is explained in more detail later.

Vroom also argued that there are two or three specific factors that determine the

strength of an individual’s motivation;

 Valence. Valence is the strength of the individual’s need for rewards.

 Expectancy. Expectancy is the strength of the individual’s belief that by putting

in more effort, he will improve his performance.

 Instrumentality. Instrumentality is the belief of an individual that by achieving

a certain performance target, rewards will be obtained.

In a simplified version of the expectancy model, expectancy is defined as the belief

of the individual that by putting in more effort, he or she will get the desired

rewards. In this simplified model, expectancy is therefore a combination of

expectancy and instrumentality.

Vroom’s expectancy model for measuring the strength of an individual’s motivation

is:

Motivation

(Strength of motivation)

= Valence × Expectancy

Implications of expectancy theory

Expectancy theory has several implications for management.

 Motivation depends partly on valence, which is the strength of an individual’s

desire for particular rewards. Managers should therefore try to find out what

their employees do want.

 Motivation also depends on expectancy. Some individuals do not believe that

they are able to achieve better performance by trying harder. They may lack self-

confidence, or lack training. (Alternatively, they may not be in a position to

affect performance, in which case motivation will be very low, and possibly nil.)

Management must consider ways of trying to increase the expectancy of their

employees, for example by providing training and development, giving them

the resources they need to do the job, or by providing supervision and guidance.

 Instrumentality may also affect motivation. Managers must keep the promises

that they have given of rewards for performance – and try to make sure that

employees believe that the managers will keep their promises.

ACCA F1 Accountant in Business - 2010 - Study text - Emile Woolf Publishing

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