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Page No.

 Preface 2
 Acknowledgement 3
 Concept of Motivation 4
 Nature of Motivation 5
 Types of Needs 6
 Motivation & behaviour 7
 Motivation & performance 8
 Role of Motivation 9

 Theories of Motivation
 Maslow’s need hierarchy 10
 Herzberg’s motivation-hygiene theory 11-13
 Equity Theory 14-16
 McGregor’s Theory X and Theory Y 17-22
 Theory Z 23
 Alderfer’s ERG Theory 24-25
 McClelland’s need theory 26
 Vroom’s Expectancy Theory 27
 Case Study 28


We would like to express our gratitude to Professor R.K Singh for encouraging us to
prepare the term paper .The term paper would not have been completed without his
able guidance and ideas. It was our opportunity to work with such a literate .Our
sincere thanks to the staff members of GHS-IMR library for helping in every possible
way , co-operating& supporting without which the compilation of the term report would
not have been in the present form .
Finally, we would acknowledge the co-operation and hard work of our team members
who put their time in successful completion of the term paper.

Group Members








The term paper has been undertaken in order to fulfil the compulsory part of the
postgraduate diploma in management conducted by Dr. Gaur Hari Singhania Institute
of Management and Research.
The term paper has given an insight of the “motivational theories”. We hope that it will
prove helpful for those who want to gain knowledge about the motivational theories.


In order to understand the concept of motivation, we have to examine three terms : motive, motivating and
motivation and their relationship.

“ A motive is an inner state that energises, activates, or moves and
directs behaviour towards goals.”

Motivating is a term which implies that one person includes
another, to engage in action by ensuring that a channel to satisfy
the motive becomes available and accessible to the individual.


Dubin has defined motivation as:

“Motivation is the complex force starting and keeping a person at
at work in an organisation. Motivation is something that moves the person
to action, and continues him in the course of action already initiated”

According to McFarland ;
“ Motivation refers to the way in which urges, drives, aspirati
-ons, strivings, or needs direct, control, or explain the behaviour of human


1. Based on Motives: Motivation is based on individual’s motives which are internal to the individual .
These motives are in the form of feelings that the individual lacks something. In order to overcome this feel-
ing , he tries to behave in a manner which helps in overcoming this feeling.

2. Affected by Motivating: Motivation is affected by way the individual is motivated . It can also activate
the latent needs in the individual , that is , the needs that are the less strong and somewhat dormant , and
harness them in a manner that would be functional for the organisation.

3. Goal–directed Behaviour: Motivation leads to goal-directed behaviour. A goal-directed behaviour is

one which satisfies the cause for which behaviour takes place.

4. Related to Satisfaction: satisfaction refers to the contentment experiences of an individual which he

derives out of need fulfilment. Thus satisfaction is a consequence of rewards and punishments associated
with past experiences.

5. Complex Process: Motivation is a complex process ; complexity emerges because of the nature of
needs and the type of behaviour that is attempted to satisfy those needs.

6. Person Motivated in Totality : A person is motivated in totality and not in

part . Each individual in the organisation is a self-contained unit and his
needs are interrelated. These affect his behaviour in different ways.


There are many needs which an individual may have and there are various ways in which these may be
classified. The basic objective behind classification of needs into different categories is to find out
similarity and dissimilarity in various needs so that incentives are
grouped to satisfy the needs falling under one category or the other. Thus needs may be grouped into
three categories :

1. Primary Needs: Primary needs are also known as psychological , biological , basic or unlearned
needs . These needs are common to all human beings , though their intensity may differ . Some of the
needs are food , sleep , air to breathe etc. These needs arise out of the basic physiology of life and are
important for survival and preservation of species .These needs are conditioned by social practice .

2. Secondary Needs: As contrast to the primary needs, secondary needs are not natural but are
learned by the individual through his experience and interaction .Therefore, these are also called
learned or derived needs. Emergence of these needs depends on learning . There may be different types
of secondary needs like need of power, achievement, status, affiliation, etc.

3. General Needs: There are a number of needs which lie in the grey area between the primary and
secondary classifications. In fact, there are certain such needs for competence, curiosity, manipulation,
affection etc.


Motivation causes goal-directed behaviour. Feeling of a need by an individual generates a feeling that he lacks
something. This lack of something creates tension in the mind of individual. To overcome this state he engages
himself in a behaviour to satisfy his needs. This is goal-directed behaviour.



Goal-directed behaviour leads to goal-fulfilment and the individual succeeds in fulfilling his needs and thereby
overcoming his tension in the favourable environment. Behaviour ends the moment tension is released.
However, satisfaction of one need leads to feeling of another need. Thus goal-directed behaviour is a continuous





1. Motivation: Level of motivation derives an individual for work .

Motivation is based on motive which is a feeling that an individual lacks something . This feeling
creates some sort of tension in his mind . In order to overcome this tension, he engages in goal-directed
behaviour . Thus motivation becomes a prime mover for efforts and better work performance.

2. Sense of Competence: Sense of competence denotes the extent to which
an individual consistently regards himself as capable of doing a job.Sense
of competence of an individual depends to a very great extent on his locus
of control. Locus of control means whether people believe that they are in
control of events or events control them.

3. Ability: Ability is expressed in the form of the following equation:

Ability = knowledge x skill

Knowledge refers to the possession of information and ideas in a

particular field which may be helpful in developing relationships among
different variables related to that field . Skill refers to expertness, practical
ability or facility in action or doing something .

4. Role Perception : A role is the pattern of actions expected of a person in

activities involving others . Role reflects a person’s position in the social
system with its accompanying rights and obligations . Role perception is how
he thinks he is supposed to act in his own role and how others act in their
role. There are two types of problems which emerge in role specification :
role ambiguity and role conflict . Role ambiguity denotes the state in which
the individual is not clear what is expected from him in the job situation .
Role conflicts is the situation in which the individual engages in two or more
roles simultaneously and these roles are mutually incompatible .

5. Organisational Resource: Organisational Resources denote various types of

facilities – physical and psychological – which are available at the work place
Physical facilities include la – physical and psychological – which are
available at the work place. Physical facilities include layout of the work
place and physical environment . Psychological facilities include training and
development facilities , reward system, motivating leadership styles and so on


Motivation is one among the various factors affecting individual performance. All organisational facilities will
go waste in the lack of motivated people to utilise the facilities effectively. The importance of motivation in an
organization may be summed up as follows :

1. High Performance Level : Motivated employees put higher performance as

compared to other employees. In a study it was found that motivated people
employees worked close to 80-90 percent of their capability. High perform
-ance is a must for an organisation being successful and this performance
comes by motivation.

2. Low Employee Turnover : Motivated employees stay in the organisation and

their absenteeism is quite low. High turnover and absenteeism creates many
problems in the organisation.

3. Acceptance of Organisational Changes : Organisations are created in the

society. Because of changes in society, organisation have to incorporate
those changes to cope up with the recruitment of the time. When these
changes are introduced in the organisation, there is a tendency to resist these
changes by the employees. However if they are properly motivated, they accept,
introduce, and implement these changes keeping the organisation on the right
track of progress.


A well known proponent of the content theory is Abraham maslow who stated that there is a set of fine needs
and that these become drivers or motivators when a deficiency state arises. These fine need in ascending order
are as follows:-
1. Physiological

2. Security

3. Social

4. Esteem

5. Self –actualisation

• Physiological needs:- this includes the most basic needs for survival including food, water,
shelter,clothing and similar.when these needs has been fulfilled , we move onto the next level.

• Security:- this encompasses the need for safety and a feeling of security .people with a high
concern for this need may choose less risky public services jobs in preference to being a
freelance consultant.

• Social:-this covers our need for love, affection, belongings and sacrificing relationship with
family, friends, colleques and more intimate contacts

• Esteem :-maslow believed that people generally need to have a good evaluation of themselves
and they desire that others also value and respect them .he says that it is only from having our
needs for love basically met that we can aspire to working on this level of need .the majority of
people on level 3 and 4 , having satisfied 1 and 2.

• Self actualization:-when a person has satisfied all four needs of the lower level needs. maslow
proposed that they could direct attention to the highest level needs ssss

Herzberg's Motivation-Hygiene Theory
(Two Factor Theory)

To better understand employee attitudes and motivation, Frederick Herzberg performed studies to determine
which factors in an employee's work environment caused satisfaction or dissatisfaction. He published his
findings in the 1959 book The Motivation to Work.

The studies included interviews in which employees where asked what pleased and displeased them about their
work. Herzberg found that the factors causing job satisfaction (and presumably motivation) were different from
those causing job dissatisfaction. He developed the motivation-hygiene theory to explain these results. He
called the satisfiers motivators and the dissatisfiers hygiene factors, using the term "hygiene" in the sense that
they are considered maintenance factors that are necessary to avoid dissatisfaction but that by themselves do not
provide satisfaction.

The following table presents the top six factors causing dissatisfaction and the top six factors causing
satisfaction, listed in the order of higher to lower importance.

Factors Affecting Job Attitudes

Leading to Dissatisfaction Leading to Satisfaction
• Company policy • Achievement
• Supervision • Recognition
• Relationship w/Boss • Work itself
• Work conditions • Responsibility
• Salary • Advancement

• Relationship w/Peers • Growth

Herzberg reasoned that because the factors causing satisfaction are different from those causing dissatisfaction,
the two feelings cannot simply be treated as opposites of one another. The opposite of satisfaction is not
dissatisfaction, but rather, no satisfaction. Similarly, the opposite of dissatisfaction is no dissatisfaction.

While at first glance this distinction between the two opposites may sound like a play on words, Herzberg
argued that there are two distinct human needs portrayed. First, there are physiological needs that can be
fulfilled by money, for example, to purchase food and shelter. Second, there is the psychological need to
achieve and grow, and this need is fulfilled by activities that cause one to grow.

From the above table of results, one observes that the factors that determine whether there is dissatisfaction or
no dissatisfaction are not part of the work itself, but rather, are external factors. Herzberg often referred to these
hygiene factors as "KITA" factors, where KITA is an acronym for Kick In The A..., the process of providing
incentives or a threat of punishment to cause someone to do something. Herzberg argues that these provide only
short-run success because the motivator factors that determine whether there is satisfaction or no satisfaction are
intrinsic to the job itself, and do not result from carrot and stick incentives.

Implications for Management

If the motivation-hygiene theory holds, management not only must provide hygiene factors to avoid employee
dissatisfaction, but also must provide factors intrinsic to the work itself in order for employees to be satisfied
with their jobs.

Herzberg argued that job enrichment is required for intrinsic motivation, and that it is a continuous management
process. According to Herzberg:

• The job should have sufficient challenge to utilize the full ability of the employee.
• Employees who demonstrate increasing levels of ability should be given increasing levels of
• If a job cannot be designed to use an employee's full abilities, then the firm should consider automating
the task or replacing the employee with one who has a lower level of skill. If a person cannot be fully
utilized, then there will be a motivation problem.

Critics of Herzberg's theory argue that the two-factor result is observed because it is natural for people to take
credit for satisfaction and to blame dissatisfaction on external factors. Furthermore, job satisfaction does not
necessarily imply a high level of motivation or productivity.

Herzberg's theory has been broadly read and despite its weaknesses its enduring value is that it recognizes that
true motivation comes from within a person and not from KITA factors.

Adams' Equity Theory

The Theory Summarized:

The Adams’ Equity Theory is named for John Stacey Adams, a workplace and behavioural psychologist, who
developed this job motivation theory in 1963.

Much like many of the more prevalent theories of motivation (theories by Maslow's Hierarchy of Needs,
Herzberg's Theory, etc.), the Adams’ Equity Theory acknowledges that subtle and variable factors affect an
employee’s assessment and perception of their relationship with their work and their employer.

The theory is built-on the belief that employees become de-motivated, both in relation to their job and their
employer, if they feel as though their inputs are greater than the outputs. Employees can be expected to respond
to this is different ways, including de-motivation (generally to the extent the employee perceives the disparity
between the inputs and the outputs exist), reduced effort, becoming disgruntled, or, in more extreme cases,
perhaps even disruptive.

How to Apply the Adams' Equity Theory:

It is important to also consider the Adams’ Equity Theory factors when striving to improve an employee's job
satisfaction, motivation level, etc., and what can be done to promote higher levels of each.

To do this, consider the balance or imbalance that currently exists between your employee's inputs and outputs,
as follows:

Inputs typically include:

• Effort
• Loyalty
• Hard Work
• Commitment
• Skill
• Ability
• Adaptability

• Flexibility
• Tolerance
• Determination
• Enthusiasm
• Trust in superiors
• Support of colleagues
• Personal sacrifice, etc.

Outputs typically include:

• Financial rewards (salary, benefits, perks, etc.)

• Intangibles that typically include:

• Recognition
• Reputation
• Responsibility
• Sense of Achievement
• Praise
• Stimulus
• Sense of Advancement/Growth
• Job Security

Douglas mcgregor - theory x y

Douglas McGregor's XY Theory, managing an X Theory boss, and William Ouchi's Theory Z

Douglas McGregor, an American social psychologist, proposed his famous X-Y theory in his 1960 book 'The
Human Side Of Enterprise'. Theory x and theory y are still referred to commonly in the field of management
and motivation, and whilst more recent studies have questioned the rigidity of the model, Mcgregor's X-Y
Theory remains a valid basic principle from which to develop positive management style and techniques.
McGregor's XY Theory remains central to organizational development, and to improving organizational culture.

McGregor's X-Y theory is a salutary and simple reminder of the natural rules for managing people, which under
the pressure of day-to-day business are all too easily forgotten.

McGregor maintained that there are two fundamental approaches to managing people. Many managers tend
towards theory x, and generally get poor results. Enlightened managers use theory y, which produces better
performance and results, and allows people to grow and develop.

theory x ('authoritarian management' style)

• The average person dislikes work and will avoid it he/she can.
• Therefore most people must be forced with the threat of punishment to work towards organisational ob-
• The average person prefers to be directed; to avoid responsibility; is relatively unambitious, and wants
security above all else.
• Work is inherently distasteful to most people, and they will attempt to avoid work whenever possible.
• Most people are not ambitious, have little desire for responsibility, and prefer to be directed.
• Most people have little aptitude for creativity in solving organizational problems.
• Motivation occurs only at the physiological and security levels of Maslow's Needs Hierarchy.
• Most people are self-centered. As a result, they must be closely controlled and often coerced to achieve
organizational objectives
• Most people resist change.
• Most people are gullible and unintelligent.

Essentially, theory x assumes that the primary source of most employee motivation is monetary, with
security as a strong second.

The Hard Approach and Soft Approach

Under Theory X, management approaches to motivation range from a hard approach to a soft approach.

The hard approach to motivation relies on coercion, implicit threats, micromanagement, and tight controls --
essentially an environment of command and control. The soft approach, however, is to be permissive and seek
harmony in the hopes that, in return, employees will cooperate when asked. However, neither of these extremes
is optimal. The hard approach results in hostility, purposely low-output, and extreme union demands. The soft
approach results in increasing desire for greater reward in exchange for diminishing work output.

It would appear that the optimal approach to human resource management would be lie somewhere between
these extremes. However, McGregor asserts that neither approach is appropriate since the foundations of
theory x are incorrect.

. Characteristics of the X theory manager

Perhaps the most noticeable aspects of McGregor's XY Theory - and the easiest to illustrate - are found in the
behaviours of autocratic managers and organizations which use autocratic management styles.

What are the characteristics of a Theory X manager? Typically some, most or all of these:

• results-driven and deadline-driven, to the exclusion of everything else

• intolerant
• issues deadlines and ultimatums
• distant and detached
• aloof and arrogant
• elitist
• short temper
• shouts
• issues instructions, directions, edicts
• issues threats to make people follow instructions
• demands, never asks
• does not participate
• does not team-build
• unconcerned about staff welfare, or morale
• proud, sometimes to the point of self-destruction
• one-way communicator
• poor listener
• fundamentally insecure and possibly neurotic
• anti-social
• vengeful and recriminatory
• does not thank or praise
• withholds rewards, and suppresses pay and remunerations levels
• scrutinises expenditure to the point of false economy
• seeks culprits for failures or shortfalls

• seeks to apportion blame instead of focusing on learning from the experience and preventing recurrence
• does not invite or welcome suggestions
• takes criticism badly and likely to retaliate if from below or peer group
• poor at proper delegating - but believes they delegate well
• thinks giving orders is delegating
• holds on to responsibility but shifts accountability to subordinates
• relatively unconcerned with investing in anything to gain future improvements

How to manage upwards - managing your X theory boss

Working for an X theory boss isn't easy - some extreme X theory managers make extremely unpleasant
managers, but there are ways of managing these people upwards. Avoiding confrontation (unless you are
genuinely being bullied, which is a different matter) and delivering results are the key tactics.

• Theory X managers (or indeed theory Y managers displaying theory X behaviour) are primarily results
oriented - so orientate your your own discussions and dealings with them around results - ie what you
can deliver and when.
• Theory X managers are facts and figures oriented - so cut out the incidentals, be able to measure and
substantiate anything you say and do for them, especially reporting on results and activities.
• Theory X managers generally don't understand or have an interest in the human issues, so don't try to ap-
peal to their sense of humanity or morality. Set your own objectives to meet their organisational aims
and agree these with the managers; be seen to be self-starting, self-motivating, self-disciplined and well-
organised - the more the X theory manager sees you are managing yourself and producing results, the
less they'll feel the need to do it for you.
• Always deliver your commitments and promises. If you are given an unrealistic task and/or deadline
state the reasons why it's not realistic, but be very sure of your ground, don't be negative; be constructive
as to how the overall aim can be achieved in a way that you know you can deliver.
• Stand up for yourself, but constructively - avoid confrontation. Never threaten or go over their heads if
you are dissatisfied or you'll be in big trouble afterwards and life will be a lot more difficult.
• If an X theory boss tells you how to do things in ways that are not comfortable or right for you, then
don't questioning the process, simply confirm the end-result that is required, and check that it's okay to
'streamline the process' or 'get things done more efficiently' if the chance arises - they'll normally agree
to this, which effectively gives you control over the 'how', provided you deliver the 'what' and 'when'.

And this is really the essence of managing upwards X theory managers - focus and get agreement on the results
and deadlines - if you consistently deliver, you'll increasingly be given more leeway on how you go about the
tasks, which amounts to more freedom. Be aware also that many X theory managers are forced to be X theory
by the short-term demands of the organisation and their own superiors - an X theory manager is usually
someone with their own problems, so try not to give them any more.

The Problem with X Theory

Drawing on Maslow's Hierarchy of Needs, McGregor argues that a need, once satisfied, no longer motivates.
The company relies on monetary rewards and benefits to satisfy employees' lower level needs. Once those
needs have been satisfied, the motivation is gone. This management style, in fact, hinders the satisfaction of
higher-level needs. Consequently, the only way that employees can attempt to satisfy higher level needs at work
is to seek more compensation, so it is quite predictable that they will focus on monetary rewards. While money
may not be the most effective way to self-fulfilment, it may be the only way available. People will use work to
satisfy their lower needs, and seek to satisfy their higher needs during their leisure time. Unfortunately,
employees can be most productive when their work goals align with their higher level needs.

McGregor makes the point that a command and control environment is not effective because it relies on lower
needs for motivation, but in modern society those needs are mostly satisfied and thus no longer motivate. In this
situation, one would expect employees to dislike their work, avoid responsibility, have no interest in
organizational goals, resist change, etc., thus creating a self-fulfilling prophecy. To McGregor, motivation
seemed more likely with the Theory Y model.

XY Theory Management Application - Business Implications for Workforce


If Theory Y holds true, an organization can apply these principles of scientific management to improve
employee motivation:

• Decentralization and Delegation - If firms decentralize control and reduce the number of levels of
management, managers will have more subordinates and consequently will be forced to delegate some
responsibility and decision making to them.
• Job Enlargement - Broadening the scope of an employee's job adds variety and opportunities to satisfy
ego needs.
• Participative Management - Consulting employees in the decision making process taps their creative
capacity and provides them with some control over their work environment.
• Performance Appraisals - Having the employee set objectives and participate in the process of
evaluating how well they were met.

If properly implemented, such an environment would result in a high level of workforce motivation as
employees work to satisfy their higher level personal needs through their jobs.

Theory X (authoritarian management style)

• The average person dislikes work and will avoid it he/she can.
• Therefore most people must be forced with the threat of punishment to work towards organisational ob-
• The average person prefers to be directed; to avoid responsibility; is relatively unambitious, and wants
security above all else.
• Work is inherently distasteful to most people, and they will attempt to avoid work whenever possible.
• Most people are not ambitious, have little desire for responsibility, and prefer to be directed.
• Most people have little aptitude for creativity in solving organizational problems.
• Motivation occurs only at the physiological and security levels of Maslow's Needs Hierarchy.

• Most people are self-centred. As a result, they must be closely controlled and often coerced to achieve
organizational objectives
• Most people resist change.
• Most people are gullible and unintelligent.

McGregor’s Theory X and Theory Y

Douglas McGregor, an American social psychologist, proposed his famous X-Y theory in his 1960 book 'The
Human Side Of Enterprise'. Theory x and theory y are still referred to commonly in the field of management
and motivation, and whilst more recent studies have questioned the rigidity of the model, McGregor's X-Y
Theory remains a valid basic principle from which to develop positive management style and techniques.
McGregor's XY Theory remains central to organizational development, and to improving organizational culture.

McGregor's X-Y theory is a salutary and simple reminder of the natural rules for managing people, which under
the pressure of day-to-day business are all too easily forgotten.

McGregor maintained that there are two fundamental approaches to managing people. Many managers tend
towards theory x, and generally get poor results. Enlightened managers use theory y, which produces better
performance and results, and allows people to grow and develop.

Essentially, theory x assumes that the primary source of most employee motivation is monetary, with
security as a strong second.

Theory Y (participative management style)

• Effort in work is as natural as work and play.

• People will apply self-control and self-direction in the pursuit of organisational objectives, without ex-
ternal control or the threat of punishment.
• Commitment to objectives is a function of rewards associated with their achievement.
• People usually accept and often seek responsibility.
• The capacity to use a high degree of imagination, ingenuity and creativity in solving organisational
problems is widely, not narrowly, distributed in the population.
• In industry the intellectual potential of the average person is only partly utilised.
• Work can be as natural as play if the conditions are favourable.
• People will be self-directed and creative to meet their work and organizational objectives if they are
committed to them.

People will be committed to their quality and productivity objectives if rewards are in place that address
higher needs such as self-fulfilment

• The capacity for creativity spreads throughout organizations.

• Most people can handle responsibility because creativity and ingenuity are common in the population.

Under these conditions, people will seek responsibility.

Tools for teaching, understanding and evaluating X-Y theory factors

‘Theory X’ ‘Theory Y’

management staff

Theory X - authoritarian, Theory Y - liberating and

repressive style. Tight developmental. Control,
control, no development. achievement and
Produces limited, depressed continuous improvement
culture. achieved by enabling,


Comments on Theory X and Theory Y Assumptions

McGregor sees these two theories as two quite separate attitudes. Theory Y is difficult to put into practice on the
shop floor in large mass production operations, but it can be used initially in the managing of managers and

In "The Human Side of Enterprise" McGregor shows how Theory Y affects the management of promotions and
salaries and the development of effective managers. McGregor also sees Theory Y as conducive to participative
problem solving.

It is part of the manager's job to exercise authority, and there are cases in which this is the only method of
achieving the desired results because subordinates do not agree that the ends are desirable.

However, in situations where it is possible to obtain commitment to objectives, it is better to explain the matter
fully so that employees grasp the purpose of an action. They will then exert self-direction and control to do
better work - quite possibly by better methods - than if they had simply been carrying out an order which the y
did not fully understand.

The situation in which employees can be consulted is one where the individuals are emotionally mature, and
positively motivated towards their work; where the work is sufficiently responsible to allow for flexibility and
where the employee can see her or his own position in the management hierarchy. If these conditions are
present, managers will find that the participative approach to problem solving leads to much improved results
compared with the alternative approach of handing out authoritarian orders.

Once management becomes persuaded that it is under estimating the potential of its human resources, and
accepts the knowledge given by social science researchers and displayed in Theory Y assumptions, then it can
invest time, money and effort in developing improved applications of the theory.

McGregor realizes that some of the theories he has put forward are unrealizable in practice, but wants managers
to put into operation the basic assumption that:

• Staff will contribute more to the organization if they are treated as responsible and valued employees.

Theory Z - William Ouchi

First things first - Theory Z is not a McGregor’s idea and as such is not McGregor's extension of his XY theory.

Theory Z was developed by not by McGregor, but by William Ouchi, in his book 1981 'Theory Z: How
American management can Meet the Japanese Challenge'. William Ouchi is professor of management at UCLA,
Los Angeles, and a board member of several large US organisations.

Theory Z is often referred to as the 'Japanese' management style, which is essentially what it is. It's interesting
that Ouchi chose to name his model 'Theory Z', which apart from anything else tends to give the impression that
it's a McGregor idea. One wonders if the idea was not considered strong enough to stand alone with a
completely new name... Nevertheless, Theory Z essentially advocates a combination of all that's best about
theory Y and modern Japanese management, which places a large amount of freedom and trust with workers,
and assumes that workers have a strong loyalty and interest in team-working and the organisation.

Theory Z also places more reliance on the attitude and responsibilities of the workers, whereas McGregor's XY
theory is mainly focused on management and motivation from the manager's and organisation's perspective.
There is no doubt that Ouchi's Theory Z model offers excellent ideas, albeit it lacking the simple elegance of
McGregor's model, which let's face it, thousands of organisations and managers around the world have still yet
to embrace. For this reason, Theory Z may for some be like trying to manage the kitchen at the Ritz before
mastering the ability to cook a decent fried breakfast.

To develop your understanding of McGregor's X-Y Theory, complete the free test which indicates whether your
organisation is more Theory-X or Theory-Y, as well as indicating your own (or the particular individual's)
preference to be managed by X or Y style. The test is a simple reflective tool, not a scientifically validated
instrument, designed to give a broad indication of XY Theory tendencies and to aid understanding of the model.

Alderfer’s ERG Theory

Clayton Alderfer developed another need theory that streamlines Maslow’s. Alderfer does not disagrees with
Maslow’s hierarchy of needs completely. He suggests that as more concrete needs are satisfied, less concrete
needs become more important. Instead of the five needs that Maslow believes should be satisfied, Aderfer says
the there are only three important needs: existence relatedness, and growth




Clayton Alderfer’s ERG theory differs from Maslow’s theory in three respects.

First, the theory collapses Maslow’s five need categories into three:
1) Existence needs are desires or physiological and material well being.
2) Relatedness needs are desires for satisfying interpersonal relationships.
3) Growth needs are desires for continued personal growth and development.
Second, whereas Maslow’s theory argues that individuals move up the hierarchy as a result of the
satisfaction of lower order needs, ERG theory includes a unique frustration-regression component. This
suggests that an already satisfied need can become activated when a higher need cannot be satisfied .Thus if
a person is continually frustrated in his or her attempts to satisfy growth needs, relatedness needs can again
surface as key motivators. ERG theory offers a more flexible approach to understanding human needs than
does Maslow’s strict hierarchy. There are some differences between the ERG theory and the Hierarchy of
Needs theory. For one, the ERG theory does not believe in the levels of needs. A lower level need does not
need to be gratified. This theory accounts for a variety of individual differences, which would cause a
worker to satisfy the need at hand, whether or not a previous need has been satisfied. The second difference
is that if a more important need is not gratified, the desire to gratify a lesser need will increase. However, the
frustration of higher-older needs might lead workers to regress to a more concrete need category. The two
major motivational premises that the ERG theory gives are: the more lower-level needs are gratified, the
more higher-level need satisfaction is desired; the less higher-level needs are gratified, the more lower-level
satisfaction is desired.

McClelland's Theory of Needs

In the late 1940's psychologist David McClelland and his co-workers began experimenting the thematic
appreciation test(TAT)as a way of measuring human needs. The TAT as a way of measuring human needs. The
TAT is a projective technique that ask people to view pictures and write stories about what they see.
McClelland identified three themes on such TAT stories, with each corresponding to an underlying need that he
believes important for understanding individual behaviour. these need include:

Need for achievement(nAch): The desire to do something better or more efficiently, to solve problems,
or to master complex tasks;

Need for affliation(nAff): The desire to establish and maintain friendly and warm relations with others;

Need for power(nPower): The desire to control others, to influence their behaviour, or to be responsible
for others. The preferences for persons high in needs for achievement, affiliation, and power include :

High need achievement : Individual responsibility but double goals; feedback on performance(e.g.,
challenging quota and opportunity).

High need affliation- Interpersonal relationships. Opportunities to communicate(e.g., customer service,

members of group unit subject to group bonus)

High need power: Influence over other person’s attention ; recognition(e.g. formal position of supervisory
responsibility).People having these needs have certain ways of dealing with their jobs.People who are high in
the need for achievement tend to be mostly concerned with performing better than other perform. They are
usually more innovative and perform long term goal involvement .people with high need for affiliation are more
concerned with establishing interpersonal relations with other people. They tend to communicate more
frequently .Finally the people with high need for power wish to make an impression or influence others .They
are very concerned with personal prestige .therefore, McClelland believes that managers can motivate workers
by knowing what kinds of need they have and provide them with a job that matches that need . a person
behaviour is not determine by needs alone .a person’s habit ,skills and environmental opportunities are also
factors. McClleland says that there is no one-to-one correspondence between needs and behaviour.

McClleland need theory has created many prediction about many aspects of human motivation .Recently, a

researcher found that American males with high achievement need come more often from the middle class than
from the lower or upper class. They have better memory for incomplete tasks and more apt to volunteer as
subjects for psychological experiments .They are more active in college and community activities,choose
experts over friends as working partners and are more resistant to social pressure .They also cannot give
accurate reports of what their “inner concern” with achievement is therefore,it might be assumed that such
subjects-the “highs”-would always do better at any kind of task under any circumstances. Other research as
suggested that appealing for cooperation leads those in the group who have strong need for affliation,to work
harder ,rather than those with high need in achievement.


This theory brings together many of the elements of previous theories . It combines the perceptual aspects of
equity theories with the behavioral aspects of the other theories Basically ,it comes down to this “equation”:

M = E * I * V

Motivation = Expectancy * Instrumentality * Valence
M (motivation) is the amount a person will be motivated by the situation in which they find themselves. It is
the function of the following : E (expectancy) = The person’s perception that effort will result in performance.
In other words, the person’s. I (instrumentality) = the person’s perception that performance will be
rewarded/punished, i.e. , the person’s assessment of how well the amount of reward correlates with the quality
of performance. (note here that model is phrased in terms of extrinsic motivation, in that it asks ‘what are
chances I am going to get rewarded if I do a good job?’.But for intrinsic situations, we can think as asking ‘how
good will I feel if I can pull this off?’). V(valence) = the perceived strength of the reward or punishment that
will result from the performance. Valence may be positive (Individual prefers attaining zero valance, but is
indifferent towards the outcome) or negative Valance (individual prefers not to attain). If the reward is small ,
the motivation will be small, even if expectancy and instrumentality are both perfect (high). The model of
Vroom’s theory may be as follows


Performance and Motivation in Mcdonalds

People are the most important resources of an organisation. They ensure the interaction of financial, industrial,
and other resources so that the organisation can function. Nowadays experienced managers realize that he
financial reward cannot stay the only kind of an employee encouragement. The employees' needs should be
viewed as an entity that leads to the search of non financial motives. There exist many non financial motives
that are connected with the employee's satisfaction of needs, such as his/her recognition, participation in the
decision-making, self-fulfillment, personal growth and others.

The practice shows that the full use of human resources of an organisation is one of the most significant
advantages, which allow companies to occupy the leading positions in the world market. The 'McDonalds'
company flourishes owing to the logical integration of the staff into the problem solving. The company adheres
to the principle: 'The result is done by a man'. 'McDonalds' examines its employees as the primary source of
progress in the field of quality and productivity. This organisation has based its success on the motivation
theories having altered only some aspects of them. 'McDonalds' adheres to four simple principles, which give
the possibility to increase the performance of its employees:

1. The company must elaborate different systems of motivation for every department.

2. The personnel must have clear and attainable aims. It is better to have one aim per a person.

3. The aims must change: managers should have one aim for half of a year. For example, at first a manager
examines the number of clients, then he/she examines the number of returning clients; and then he/she should
analyze the increase in business sales. This method gives the possibility to find new abilities of employees and
to check new methods of work.

4. The rise of salary amount must be sensible for an employee.

The 'McDonalds' company applies three components of the motivation system: financial encouragement, non
financial encouragement, and social policy. All the three factors are described in Maslow's motivation theory.
However, Maslow states that all the needs must be fulfilled one after another. The research of the 'McDonalds'
company, its strategy and structure shows that only a simultaneous fulfilment of employee's needs will increase
an employee's performance. It is not necessary to fulfil all the needs of every level. In the reality an employee
has a set of needs in every concrete moment.

Summarising, the 'McDonalds' company has effective motivation system that makes it possible to increase
employees' performance, and hence the company's productivity. The situational approach applied by
'McDonalds' administration staff has turned out to be the most relevant to the current situation. The
administrators have used the specific techniques on the basis of motivation theories. Having applied the
procedure of assembly line in food preparation, 'McDonalds' has ensured the standard quality of the production
and the high performance. Besides, the company has implemented effective motivation strategy that is based on
the existing motivation theories. Consequently, on the basis of the research we can say that every company has
its own system of behaviour explanation and every concrete case should be examined as the 'McDonalds'
company case. Motivation theories, such as Maslow's theory and Self Determination Theory should serve as the
basis for elaborating a strategy which will direct manager's forces towards the aim - employee satisfaction via
intrinsic motivation and Maslow's Hierarchy of Needs model.


Principle & Practices of management

(L.M. Prashad)

Organizational Behavior
(Robbins, Judge, Sanghi)

Organizational Behavior
(Nelson & Quick)