Class: MBA (Finance and Investments) – Part Time

Module: Organisation Behaviour and Human Resource

Management

Name: Veekashsing Sookun

Assignment: “P = C x M”. Discuss.

Date: 02 February 2010

To my baby daughter Lakshana, my wife and my parents
 ACKNOWLEDGEMENT

I would like to express my sincerest gratitude to the following persons:

Dr. Hemant Chittoo for providing the class and myself with an opportunity to work on this
assignment which has provided an insight of the works of several academics. Through out history
the major challenge faced by all organizations is managing people and through the research
undertaken, we have seen that there are several ways of managing this important resource to get
the work done. This cumulative knowledge will be used as far as possible in the real life
situations;

My fellow colleagues of the MBA Finance and Investments – Part Time class and my colleagues
Samila Collappen and Yosheena Joganah for always sharing knowledge and being present for
assistance. This demonstrates the quality of education received and makes us all good citizens;
and

Last but not the least, my parents and wife for their constant support, understanding and presence
despite the very limited time I spend with them.
 INTRODUCTION

There is an old saying that you can take a horse to the water but you can not force it to drink. It
will drink only if it is thirsty. This also applies to people. People will do what they want to or
otherwise motivated to do so. They must be motivated or driven to it, either by themselves or
through external stimulus.

The question that arises is whether people are born with self motivation or drive and the answer is
both yes and no. If no, they can be motivated, for motivation is a skill which can and must be
learnt. This is essential for any business to survive and succeed.

Performance is considered to be a function of ability/ competence and motivation, thus1:

Job performance = function (ability) (motivation)

P=CXM

The objective of this assignment is discussing about the validity of whether Performance =
Competence x Motivation. We will start by providing the definition of performance, competence
and motivation. Thereafter, we will describe the elements and characteristics of competence
through the review of (I) Key Competencies and (II) Competence and the demand of modern life
and seek the support of David McClelland. The result of the analysis will be described in the
section Findings where we will check whether competence alone may account for performance.

With regards to motivation, we will review the following selected theories to check whether they
may alone account for performance:

a. Pre-Classicists - Contribution of Robert Owen;

b. Expectancy theory - Victor Vroom;
c. Management by objectives – Peter Drucker;
d. Hierarchy of Needs – Abraham Maslow;
e. Job Design – Hackman & Oldham;
f. ERG Theory of Motivation - Clayton P. Alderfer;
g. Motivation and hygiene – Frederick Herzberg;
h. Theory X and Theory Y - Douglas McGregor;
i. Hawthorne Studies – Elton Mayo;
j. Equity Theory - J. Stacey Adams;
k. Jeremy Bentham’s - “The Carrot and Stick Approach”; and
l. The Porter and Lawler Model

The criticism/ limitation for each theory will be considered, results of analysis will be provided in
section Findings and the evaluation of the relationship “P = C X M” will be provided in the
conclusion with Annexure I describing the reasoning.
1
John B. Miner, Organizational behavior: Essential theories of motivation and leadership
NB: This study can not be limited to the 5,000 words given the concepts, works and theories of various
academics covered.

DEFINITIONS

1. Definition of performance

The concept of performance is an old phenomenon in a working environment especially in the

private sector and if we can not define performance, we can not measure or manage it (Armstrong
and Baron, 1998).

The Oxford English dictionary defines performance as the "accomplishment, execution, carrying
out and working out of anything ordered or undertaken". This refers to outcomes/outputs
(accomplishment), but also states that performance is about doing the work, as well as being
about the results achieved. While Armstrong and Murlis (1994) argue that "performance is a
multi-dimensional construct, the measurement of which varies, depending on a variety of
factors."

There are different views on what performance is. On an individual basis, it is a record of the
person’s accomplishments (Armstrong and Baron, 1998).

2. Definition of competence

Competencies/ abilities are the state or quality of being adequately or well qualified to perform a
task. A person gains competency through education, training, experience and natural abilities2.

While there are many definitions of competency, most of them have two common components3:

a. The competencies are observable or measurable skills, knowledge, and abilities; and

b. The knowledge, skills and attitude must distinguish between superior and other
performers.

Knowles (1975) uses the following typology for competencies:

a. Knowledge;

b. Understanding;

c. Skill;

d. Attitude; and

e. Value

2
Chalofsky, N. (1984) "Professional Growth for HRD Staff" in The Handbook of Human Resource Development edited
by Nadler, L. Pp. 13.3-13.4.
3
Knowles, M. (1975). Self-Directed Learning. New York: Association Press.

2
Knowles adds that the main reason that makes expert performers "experts," is that they have a
love for what they are doing, which can only be captured through values and attitudes.

When assessing the expert performers with such tools as interviews, observation and self-
assessments, a lot of skills and knowledge indicators are gathered.

A hierarchy of standards would be:

a. Competent - Satisfactory, able to perform the competency;

b. Proficient - Above average, able to perform the competency well (expert); and

c. Excellent - Extraordinary, able to perform the competency superbly (guru).

3. Definition of motivation

Motivation is the activation or energization of goal-oriented behavior. Motivation is said to be

intrinsic or extrinsic. According to various theories, motivation may be rooted in the basic need to
minimize physical pain and maximize pleasure, or it may include specific needs such as eating
and resting, or a desired object, hobby, goal, state of being, ideal, or it may be attributed to less-
apparent reasons such as altruism, selfishness, morality or avoiding mortality.

3
 DISCUSSION

COMPETENCIES

1. KEY COMPETENCIES

Competencies are probably most closely related to abilities which mean either able to do or a
special talent while competencies relate more to expertise and experience. Competencies can be
thought of as the state or quality of being well qualified to perform a task. A person gains a
competency through education, training, experience or natural abilities. While there are many
definitions of competency, most of them have two common elements:

a. The competency is an observable and measurable knowledge and skills; and

b. The knowledge and skills must distinguish between superior performers and other
performers

Attitudes, traits or personalities have also played a major role in competencies, even though they
are not normally thought of as being observable and measurable.

1.1 Importance of competencies

Globalisation and modernisation are creating an increasingly diverse and interconnected world.
To make sense of and function well in this world, individuals need to master changing
technologies and to make sense of large amounts of available information. They also face
collective challenges as societies – such as balancing economic growth with environmental
sustainability and prosperity with social equity. In these contexts, the competencies that
individuals need to meet their goals which have become more complex, requiring more
than the mastery of certain narrowly defined skills.4

1.2 Key Competencies in Three Broad Categories

1.2.1 COMPETENCY 1 - USING TOOLS INTERACTIVELY

A. The ability to use language, symbols and text interactively

This key competency concerns the effective use of spoken and written language skills,
computation and other mathematical skills, in multiple situations. It is an essential tool for
functioning well in society and the workplace and participating in an effective dialogue with
others.
4
Key DeSeCo publications, Key competencies for a successful life and a well-
functioning society (2003),
D.S. Rychen and L.H. Salganik (eds.)

4
B. The ability to use knowledge and information interactively

The increasingly important role of the service and information sectors and knowledge
management throughout today’s societies make it essential for people to be able to use
information and knowledge interactively.

This requires critical reflection on the nature of information itself – its technical infrastructure
and social, cultural, and even ideological context and impact.

Information competence is necessary as a basis for understanding options, forming opinions,

making decisions and carrying out informed and responsible actions.

Using knowledge and information interactively requires individuals to:

a. Recognise and determine what is not known;

b. Identify, locate and access appropriate information sources;

c. Evaluate the quality, appropriateness and value of that information, as well as its sources;
and

d. Organise knowledge and information

C. The ability to use technology interactively

Technological innovation has placed new demands on individuals inside and outside the
workplace. At the same time, technological advances present individuals with new opportunities
to meet demands more effectively in new and different ways.

Interactive use of technology requires an awareness of new ways in which individuals can use
technologies in their daily lives. ICT has the potential to transform the way people work together
(by reducing the importance of location), access information (by making vast amounts of
information sources instantly available) and interact with others (by facilitating relationships and
networks of people from around the world on a regular basis). To harness such potential,
individuals will need to go beyond the basic technical skills needed to simply use the Internet,
send e-mails and so on.

As with other tools, technology can be used interactively if users understand its nature and reflect
on its potential. Most importantly, individuals need to relate the possibilities embedded in
technological tools to their own circumstances and goals. A first step is for individuals to
incorporate technologies into their common practices, which produces a familiarity with the
technology that then allows them to extend its uses.

1.2.2 COMPETENCY 2: INTERACTING IN HETEROGENEOUS GROUPS

A. The ability to relate well to others

This allows individuals to initiate, maintain and manage personal relationships with, for example,
personal acquaintances, colleagues and customers. Relating well is not only a requirement for

5
 social cohesion but increasingly, for economic success as changing firms and economies are
placing increased emphasis on emotional intelligence.

This competency assumes that individuals are able to respect and appreciate the values, beliefs,
cultures and histories of others in order to create an environment where they feel welcome, are
included and thrive.

Co-operating well with others requires:

a. Empathy – taking the role of the other person and imagining the situation from his or her
perspective. This leads to self-reflection, when, upon considering a wide range of
opinions and beliefs, individuals recognize that what they take for granted in a situation is
not necessarily shared by others; and

b. Effective management of emotions – being self-aware and able to interpret effectively

one’s own underlying emotional and motivational states and those of others.

B. The ability to cooperate

Many demands and goals cannot be met by one individual alone but instead require those who
share the same interests to join forces in groups such as work teams, civic movements,
management groups, political parties or trade unions.

Co-operation requires each individual to have certain qualities which include:

a. The ability to present ideas and listen to those of others;

b. An understanding of the dynamics of debate and following an agenda;

c. The ability to construct tactical or sustainable alliances;

d. The ability to negotiate; and

e. The capacity to make decisions that allow for different shades of opinion.

C. The ability to manage and resolve conflicts

Conflict is part of social reality, an inherent part of human relationships. It arises when two or
more individuals or groups oppose one another because of divergent needs, interests, goals or
values.

The key to approaching conflict in a constructive manner is to recognise that it is a process to be

managed rather than seeking to negate it. This requires consideration of the interests and needs of
others and solutions in which both sides gain.

For individuals to take an active part in conflict management and resolution, they need to be able
to:

a. Analyse the issues and interests at stake, the origins of the conflict and the reasoning of
all sides, recognising that there are different possible positions;

6
 b. Identify areas of agreement and disagreement;

c. Reframe the problem; and

d. Prioritise needs and goals, deciding what they are willing to give up and under what
circumstances.

1.2.3 COMPETENCY 3: ACTING AUTONOMOUSLY

A. The ability to act within the big picture

This key competency requires individuals to understand and consider the wider context of their
actions and decisions. It requires one to take account of how they relate, for example, to society’s
norms, to social and economic institutions and to what has happened in the past. One needs to
recognise how one’s own actions and decisions fit into this wider picture.

This competency requires individuals, for instance, to:

a. Understand patterns;

b. Have an idea of the system in which they exist;

c. Identify the direct and indirect consequences of their actions; and

d. Choose between different courses of action by reflecting on their potential

consequences in relation to individual and shared norms and goals.

B. The ability to form and conduct life plans and personal projects

This applies the concept of project management to individuals. It requires individuals to interpret
life as an organised narrative and to give it meaning and purpose in a changing environment,
where life is often fragmented.

This competency assumes an orientation towards the future, implying both optimism and
potential, but also a firm grounding within the realm of the feasible. Individuals must be able, for
instance, to5:

a. Define a project and set a goal;

b. Identify and evaluate both the resources to which they have access and the resources they
needs (e.g. time and money);

c. Prioritise and refine goals;

d. Balance the resources needed to meet multiple goals;

e. Learn from past actions, projecting future outcomes; and

5
Key DeSeCo publications, Defining and selecting key competencies (2001), D.S.
Rychen and L.H. Salganik (eds.)

7
 f. Monitor progress, making necessary adjustments as a project unfolds.

C. The ability to assert rights, interests, limits and needs

This is important for contexts ranging from highly structured legal affairs to everyday instances
of assertiveness of individuals’ own interests. Although many such rights and needs are
established and protected in laws or contracts, it is ultimately up to individuals to identify and
evaluate their rights, needs and interests and to assert and defend them actively.

On the one hand, this competency relates to self-oriented rights and needs. It also relates to the
rights and needs of the individual as a member of the collective (e.g. actively participating in
democratic institutions and in local and national political processes). The competency implies the
ability, for instance, to6:

a. Understand one’s own interests (e.g. in an election);

b. Know written rules and principles on which to base a case;

c. Construct arguments in order to have needs and rights recognised; and

d. Suggest arrangements or alternative solutions

6
Key DeSeCo publications, Projects on competencies in the OECD context: Analysis of
theoretical and conceptual foundations (1999) L.H. Salganik, D.S. Rychen, U. Moser
and J. Konstant

8
2 COMPETENCE AND THE DEMANDS OF MODERN LIFE

Key competencies are not determined by arbitrary decisions about what personal qualities and
cognitive skills are desirable, but by careful consideration of the psychosocial prerequisites for a
successful life and a well-functioning society.

This demand-led approach asks what individuals need in order to function well in society as they
find it. What competencies do they need to find and to hold down a job? What kind of adaptive
qualities are required to cope with changing technology?

However, competence is also an important factor in the ways that individuals help to shape the
world, not just to cope with it. Thus, as well as relating to key features and demands of modern
life, competencies are also determined by the nature of our goals, both as individuals and as a
society.

The framework described here relates to individual competencies, rather than to the collective
capacities of organisations or groups. However, as illustrated in the diagram below, the sum of
individual competencies also affects the ability to achieve shared goals.7

Individual and collective goals and competencies

Success for individuals

• Gainful employment income;

• Personal health, safety;
• Political participation; and
• Social networks
Individual competencies;
Institutional competencies; and
Application of individual
REQUIRE competencies to contribute
Success for society

• Economic productivity;
• Democratic processes;
• Ecological sustainability; and
• Social cohesion, equity and human
rights

7
Key DeSeCo publications, Contributions to the second DeSeCo symposium (2003),
D.S. Rychen, L.H. Salganik, and M.E. McLaughlin (eds.)

9
3 DAVID MCCLELLAND

The original use of competencies was conceived by David McClelland who used it as an
alternative for the replacement of intelligence tests with criterion reference testing (McClelland,
19738). He argued that intelligence tests were not valid predictors of intelligence and irrelevant to
the workforce.

McClelland worked with the U.S. Navy and other large organizations to improve their failing
selection process, which was based on selecting the best and brightest from elite universities.

McClelland developed competencies for each position based on behavioral interviews with
superior performing Foreign Service Officers and underpinned each competency with behavior
indicators. 9

Contrasts

Tasks are normally very specific in that they inform the task holder and other interested persons,
such as supervisors and trainers, on how each logical and necessary action results in a major
accomplishment.

The main benefit of tasks is that they are normally very specific, especially when they include the
steps, thus they leave little room for error when it comes to evaluating the worthiness of task
performance. However, being very specific, they can be extremely time-consuming to create,
especially when a job may have 50 to 100 tasks or more. With jobs and processes rapidly
changing in many environments, they can quickly become out of date. In addition, when it comes
to such professions as management, leadership and knowledge workers, most job responsibilities
are often ill-defined and very broad in scope, thus the specific nature of tasks do not work well.

Thus, the ideal of competencies are based on the analysis of exemplary performers. After an
analysis, normally composed of interviews and observations, a few keywords are chosen to
describe each competency. Each job normally has five to ten competencies. The number is
normally kept small, otherwise they run into the same problems as tasks -- there are simple too
many to properly evaluate and keep up-to-date10.

For example, some of the competencies for a person in a leadership position might include Ethics,
Decision Making, Team Development, and Coaching.

Behavioral Indicators

Competencies are normally based on an analysis by interviewing and observing an expert

performer (McClelland, 1973). During the analysis, key behavioral indicators are determined for

8
McClelland, D.C. (1973). esting for competence rather than for intelligence. American Psychologist, 28,
1-14.
9
Berger, D. & Berger, R. (2003). The Talent Management Handbook: Creating Organizational
Excellence. New York: McGraw-Hill.

10
Northouse, P. (2004). Leadership Theory and Practice. Thousand Oaks, CA.: Sage Publications.

10
successful performance of the job. These behavioral indicators are linked to a competency. For
example, the competency of decision making might include the following behavioral indicators:

Dealing with difficult decisions:

a. Able to connect information together in order to diagnose problem;

b. Determines root cause to fully resolve issue; and

c. Sensitive to the needs of others when dealing with divisive issues.

Commits to a course of action:

a. Can make decisions quickly when necessary; and

b. Seeks the correct answer and understands the impact that the decision could have on
other organization issues.

The behavioral indicators are often contrasted with INEFFECTIVE indicators, for example:

Dealing with difficult decisions:

a. Avoids making decisions and often waits for others to make the decision; and

b. Does not take responsibility for wrong or ineffective decisions.

Competency models are also helpful in the growth of present employees. Few, if any employees
will be expert performers in all the competencies listed for a position, thus the model is used to
help them with their career growth within the organization.

Criticisms

a. There is a lack of a common definition and understanding and the possibility of becoming
ethnocentric; and

b. Since competencies often encompass attitudes, there is the danger of them becoming so
specific that it could promote ethnocentrism, rather than diversity.

11
FINDINGS:

After the analysis of the basis of competencies, the issues found are:

a. There is a need for combining key competencies to attain objectives;

b. There is a need to clearly define competencies;

c. Competencies encompass attitude and attitudes differ;

d. There is a need for moving beyond taught knowledge and skills to meet set targets; and

e. There is a need for reflectiveness – the heart of key competencies

A competency is more than just knowledge and skills. It involves the ability to meet complex
demands, by drawing on and mobilising psychosocial resources (including skills and attitudes) in
a particular context.

Individuals need a wide range of competencies in order to face the complex challenges of today’s
world but it would be of limited practical value to produce very long lists of everything that they
may need to be able to do in various contexts at some point in their lives.

Competence alone can not account for performance, there is a need for motivation and other
elements.

12
 DISCUSSION

MOTIVATION

Motivation is the desire to succeed and there are different types of motivation namely
Achievement Motivation, Affiliation Motivation, Competence Motivation, Power Motivation,
Attitude Motivation, Incentive Motivation and Fear Motivation.

Motivation is said to be intrinsic or extrinsic.

1.1 Intrinsic motivations

Intrinsic motivation comes from rewards inherent to a task or activity itself - the enjoyment of a
puzzle or the love of playing.11 This form of motivation is usually associated with high
educational achievement and enjoyment by students. Intrinsic motivation has been explained by
Fritz Heider's attribution theory, Bandura's work on self-efficacy 12 and Ryan and Deci's cognitive
evaluation theory. Students are likely to be intrinsically motivated if they:

a. attribute their educational results to internal factors that they can control;

b. believe they can be effective agents in reaching desired goals; and

c. are interested in mastering a topic, rather than just rote-learning to achieve good grades.

1.2 Extrinsic motivation

Extrinsic motivation comes from outside of the performer. Money is the most obvious example,
but coercion and threat of punishment are also common extrinsic motivations.

While competing, the crowd may cheer on the performer, which may motivate him/ her to do
well. Trophies are also extrinsic incentives. Competition is in general extrinsic because it
encourages the performer to win and beat others, not to enjoy the intrinsic rewards of the activity.

Social psychological research has indicated that extrinsic rewards can lead to overjustification
and a subsequent reduction in intrinsic motivation. In one study demonstrating this effect,
children who expected to be rewarded with a ribbon and a gold star for drawing pictures spent
less time playing with the drawing materials in subsequent observations than children who were
assigned to an unexpected reward condition and to children who received no extrinsic reward13

11
Deci, E. (1972), "Intrinsic Motivation, Extrinsic Reinforcement, and Inequity", Journal of Personality and Social
Psychology 22 (1): 113–120
12
Bandura, A. (1997), Self-efficacy: The exercise of control, New York: Freeman, pp. 604, ISBN 9780716726265,
http://books.google.com/books?id=mXoYHAAACAAJ
13
Lepper, M. R., Greene, D. & Nisbett, R. E. (1973) Undermining children's intrinsic interest with extrinsic rewards: A
test of the overjustification hypothesis. Journal of Personality and Social Psychology, 28(1), pp. 129-137.

13
 1.3 Self-control

The self-control of motivation is increasingly understood as a subset of emotional intelligence; a

person may be highly intelligent according to a more conservative definition (as measured by
many intelligence tests), yet unmotivated to dedicate this intelligence to certain tasks. Victor
Vroom's "expectancy theory" provides an account of when people will decide whether to exert
self control to pursue a particular goal.

Drives and desires can be described as a deficiency or need that activates behaviour that is aimed
at a goal or an incentive. These are thought to originate within the individual and may not require
external stimuli to encourage the behaviour. Basic drives could be sparked by deficiencies such as
hunger, which motivates a person to seek food; whereas more subtle drives might be the desire
for praise and approval, which motivates a person to behave in a manner pleasing to others.

THEORIES OF MOTIVATION

1. Pre-Classicists - Contribution of Robert Owen

During the early years of the nineteenth century, Owen’s textile mill at New Lanark in Scotland
was the scene of some novel ways of treating people. His view was that people were similar to
machines. A machine that is looked after properly, cared for and maintained well, performs
efficiently, reliably and lastingly, similarly people are likely to be more efficient if they are taken
care of. Robert Owen practiced what he preached and introduced such things as employee
housing and company shop. His ideas on this and other matters were considered to be too
revolutionary for that time.

Criticisms/ limitations

Though the recommendations are the basis of modern management, the environment and level of
education have changed. Rewards/ incentives need to be provided according to performance.

2. Expectancy theory - Victor Vroom

Expectancy theory explains the processes that an individual undergoes to make choices. It
predicts that employees in an organization will be motivated when they believe that:

a. Putting in more effort will yield better job performance;

b. Better job performance will lead to organizational rewards, such as an increase in

salary or benefits; and

c. These predicted organizational rewards are valued by the employee in question.

Victor H. Vroom introduces three variables within the expectancy theory which are valence (V),
expectancy (E) and instrumentality (I). The three elements are important behind choosing one
element over another because they are clearly defined: effort-performance expectancy (E>P
expectancy), performance-outcome expectancy (P>O expectancy).

14
 E>P expectancy: Our assessment of the probability our efforts will lead to the required
performance level.

P>O expectancy: Our assessment of the probability our successful performance will lead to
certain outcomes. Vroom’s model is based on three concepts14:

a. Valence - Strength of an individual’s preference for a particular outcome. For the valence
to be positive, the person must prefer attaining the outcome to not attaining it;

b. Instrumentality – Means of the first level outcome in obtaining the desired second level
outcome; the degree to which a first level outcome will lead to the second level outcome;
and

c. Expectancy - Probability or strength of belief that a particular action will lead to a

particular first level outcome.

Criticisms/ limitations

a. Expectancy theory is not always about self-interest in rewards but about the
associations people make towards expected outcomes and the contribution they feel they
can make towards those outcomes.

b. In order to enhance the performance-outcome tie, managers should use systems

that tie rewards very closely to performance which is not always efficient;

c. Managers also need to ensure that the rewards provided are deserved and wanted
by the recipients15; and

d. In order to improve the effort-performance tie, managers should engage in

training to improve their capabilities and improve their belief that added effort will in fact
lead to better performance16.

3. Management by objectives – Peter Drucker

Management by Objectives17 (“MBO”) is a process of agreeing upon objectives within an

organization so that management and employees agree to the objectives and understand what they
are in the organization.

The essence of MBO is participative goal setting, choosing course of actions and decision
making. An important part of the MBO is the measurement and comparison of the employee’s
actual performance with the standards set. Ideally, when employees themselves have been
involved with the goal setting and the choosing the course of action to be followed by them, they
are more likely to fulfill their responsibilities.
14
P. Subba Rao, Personnel and Human Resource Management – Text and cases; (2000) – Himalaya
Publishing House ISBN 8174937773
15
Montana, Patrick J; Charnov, Bruce H, Management - 4th edition; (2008) - Barron's Educational Series,
Inc. ISBN 978-0-7641-3931-4
16
Montana, Patrick J; Charnov, Bruce H, Management - 4th edition; (2008) - Barron's Educational Series,
Inc. ISBN 978-0-7641-3931-4
17
Drucker, Peter F., "The Practice of Management", 1954. ISBN 0060110953

15
 Criticisms/ limitations

a. It over-emphasizes the setting of goals over the working of a plan as a driver of

outcomes;

b. It underemphasizes the importance of the environment in which the goals are set;

c. Companies evaluated their employees by comparing them with the "ideal" employee18;

d. It did not address the importance of successfully responding to the following obstacles
and constraints as essential to reaching a goal:

(i) Defects in resources, planning and methodology;

(ii) Increasing burden of managing the information organization challenge; and

(iii) Impact of a rapidly changing environment, which could alter the landscape
enough to make yesterday’s goals and action plans irrelevant to the present19

4. Hierarchy of Needs – Abraham Maslow

Maslow believed that human needs could be classified in a hierarchy of 5 basic needs:

a. Self actualization needs - Needs to realize one’s deepest creative and productive
potential;

b. Esteem needs – Needs for self esteem, self respect and appreciation from others;

c. Social needs – Need to socialize with other people, need for relationships based on
emotions, need for friendships;

d. Safety needs – Need for physical and psychological stability and safety; and

e. Physiological needs – Primary needs such as water, food and a home

The idea of hierarchy is to show that needs on a given level must be satisfied before the needs on
the next level become interesting. Also, only unsatisfied needs can function as motivation.

Criticisms/ limitations

Wahba and Bridgewell20 found little evidence for the ranking of needs Maslow described or even
for the existence of a definite hierarchy at all.

Chilean economist and philosopher Manfred Max-Neef21 has also argued fundamental human
needs are non-hierarchical and are ontologically universal and invariant in nature - part of the

18
The Woman's Guide to Management Success by Cannie J, 1979 ISBN 0139617639
19
The Goal of Management; from MBO to Deming to Project Management and Beyond
20
Wahba, A; Bridgewell, L (1976). "Maslow reconsidered: A review of research on the need hierarchy
theory". Organizational Behavior and Human Performance (15): 212–240.
21
Max-Neef on Human Needs and Human-scale Development

16
 condition of being human; poverty, he argues, may result from any one of these needs being
frustrated, denied or unfulfilled.

5. Job Design – Hackman & Oldham

Job design aims to enhance job satisfaction and performance, methods include job rotation, job
enlargement and job enrichment.

Hackman & Oldham proposed the Job Characteristics Model, which is widely used as a
framework to study how particular job characteristics impact on job outcomes, including job
satisfaction.

The model states that there are five core job characteristics namely skill variety, task identity, task
significance, autonomy and feedback, which impact three critical psychological states namely
experienced meaningfulness, experienced responsibility for outcomes and knowledge of the
actual results, in turn influencing work outcomes (job satisfaction, absenteeism, work motivation,
etc.).22

The five core job characteristics can be combined to form a motivating potential score (MPS) for
a job, which can be used as an index of how likely a job is to affect an employee's attitudes and
behaviors.

Criticisms/ limitations

a. Ways of designing jobs in the absence of explicit guidance by manager;

b. Predicting the design of a total job from the design of its constituent tasks when viewed
separately; and

c. Job design principles training as managers must not only be able to understand the
principles, but they must be able to apply them to existing and new jobs.

22
Hackman, J. R., & Oldham, G. R. (1976). Motivation through the design of work: Test of a theory.
Organizational Behavior and Human Performance, 16, 250-279.

17
 6. ERG Theory of Motivation - Clayton P. Alderfer

Clayton Alderfer revised Abraham Maslow's Hierarchy of Needs and called it the ERG Theory.
ERG theory stands for Existence, Relatedness and Growth and was created to align Maslow's
motivation theory more closely with empirical research.

Existence needs Relatedness needs Growth needs

Satisfaction implies Progression

Frustration implies Regression

Similarities to Maslow's Needs Hierarchy

Hierarchy of Needs – ERG Theory of Motivation -

Abraham Maslow Clayton P. Alderfer
Self actualization needs Growth needs
Esteem needs
Social needs Relatedness needs
Safety needs
Physiological needs Existence needs

After the original formulation of Maslow's Hierarchy of Needs, studies had shown that the middle
levels of Maslow's hierarchy overlap. Alderfer addressed this issue by reducing the number of
levels to three. The letters ERG represent these three levels of needs:

a. Existence refers to our concern with basic material existence motivators;

b. Relatedness refers to the motivation we have for maintaining interpersonal relationships;

and

c. Growth refers to an intrinsic desire for personal development.

Like Maslow's model, the ERG motivation is hierarchical, and creates a pyramid or triangle
appearance. Existence needs motivate at a more fundamental level than relatedness needs, which,
in turn supercedes growth needs.

• Growth = Self-Actualization + External Esteem Needs

• Relatedness = Internal Esteem Needs + Social Needs
• Existence = Safety Needs + Physiological Needs

18
Differences from Maslow's Needs Hierarchy

a. Alderfers ERG theory demonstrates that more than one need may motivate at the same
time. A lower motivator need not be substantially satisfied before one can move onto
higher motivators;

b. The ERG theory also accounts for differences in need preferences between cultures better
than Maslow's Need Hierarchy; and

c. The ERG theory acknowledges that if a higher-order need is frustrated, an individual may
regress to increase the satisfaction of a lower-order need which appears easier to satisfy.

Leadership Lessons

Unlike with Maslow's theory, managers need to understand that each employee operates
with the need to satisfy several motivators simultaneously. Based upon the ERG theory,
leadership which focuses on exlcusively one need at a time will not motivate their people
effectively.

Furthermore, the frustration-regression principle has additional impact on motivation in the

workplace.

As an example, if employees are not provided opportunities to grow, an employee might regress
to fulfilling relatedness needs, socializing with co-workers more. Or, the inability of the
environment or situation to satisfy a need for social interaction might increase the desire for more
money or better working conditions. If Leadership recognizes these conditions soon enough in
the process, they can take steps to satisfy those needs which are frustrated until such time that the
worker can again pursue growth.

Criticisms/ limitations

There is a need for opportunity to be provided to motivated staffs.

19
7. Motivation and hygiene – Frederick Herzberg

Herzberg proposed the Motivation-Hygiene Theory23, also known as the Two factor theory (1959)
of job satisfaction.

According to his theory, people are influenced by two sets of factors:

Motivator Factors Hygiene Factors

Achievement Pay and Benefits

Recognition Company Policy and Administration
Work Itself Relationships with co-workers
Responsibility Supervision
Promotion Status
Growth Job Security
Working Conditions
Personal life

Herzberg proposed several key findings as a result of this identification:

a. People are made dissatisfied by a bad environment, but they are seldom made satisfied by
a good environment;

b. The prevention of dissatisfaction is just as important as encouragement of motivator

satisfaction;

c. Hygiene factors operate independently of motivation factors. An individual can be highly

motivated in his work and be dissatisfied with his work environment;

d. All hygiene factors are equally important, although their frequency of occurrence differs
considerably;

e. Hygiene improvements have short-term effects. Any improvements result in a short-term

removal of, or prevention of, dissatisfaction;

f. Hygiene needs are cyclical in nature and come back to a starting point; and

g. Hygiene needs have an escalating zero point and no final answer24

Criticisms/ limitations

a. Difficulties of measuring motivation;

23
Herzberg, F.I. 1987, 'One more time: How do you motivate employees?', Harvard Business Review,
Sep/Oct87, Vol. 65 Issue 5, p109-120 (note: the reference to sales numbers is in the abstract written by the
editors.)
24
Herzberg, Frederick (1959), The Motivation to Work, New York: John Wiley and Sons

20
 b. It is natural for people to take credit for satisfaction and balm dissatisfaction on external
factors; and

c. Job satisfaction does not necessarily imply high level of productivity or motivation.

8. Skinner’s Rewards/ Reinforcement Theory – B.F. Skinner

The basis for Rewards/ Reinforcement Theory is B. F Skinner’s belief that human behaviour is
controlled and maintained by conditions in the surroundings.

Behaviour may be random and influenced by experiments but there is a tendency that behviour
which is rewarded will be repeated and behaviour that is punished will be avoided. This is
respectively called positive and negative reinforcements.

Thus motivating becomes a question of identifying the current needs in order to be able to
provide the proper rewards.

Apart from the earliest laboratory experiments with animals, the theory has mostly been tested on
relatively simple organizational behaviour such as quantitative outputs and absence due to illness.
However the theory has proven to be sufficient in predicting behaviour in modern day complex
working life.

Requirements for effective reward systems:

a. Rewards must be clearly defined and consistent with other rewards for comparable tasks
or expertise;
b. Employees must be informed about exactly what they will be rewarded for;
c. Employees should not receive the same rewards because they do not perform identically;
d. Rewards must cover the current needs of the employees;
e. Rewards must be distributed fairly;
f. Rewards must at least correspond with rewards of competitors or comparable
organizations;
g. Rewards must be large enough to be personally satisfactory;
h. Rewards must be able to satisfy the employees who deliver top performance;
i. Rewards must be related to performance; and
j. Rewards must concur with the organizational context, that is, values, management style,
strategy and structure

Modern reward systems such as ‘personal pay packages’ are systems that allow the individual
employee to decide how much of the pay will be set aside for pension, car, vacation, health
scheme, etc. The motivational aspect is that the employee feel appreciated because he is given the
opportunity to influence the composition of his pay package. In terms of motivation, performance
is ascribed too much value when adjusted to the individual employee and his valence.

Criticisms/ limitations

a. A set of conditions is created which are designed to eliminate behaviour (Laird Burns,
1995, p.108). This approach is rigid and mechanical.25

25
Burns, R. 1995 The adult learner at work Business and Professional Publishing, Sydney.

21
 b. Laird considers this aspect of behaviourism has little or no relevance to education as
punishment is widely used in everyday life although it only works for a short time and
often only when the punishing agency is present.26

c. It is useful in learning repetitive tasks like multiplication tables and those work skills that
require a great deal of practice, higher order learning is not involved.27

d. This theory leads to totalitarianism 28

9. Theory X and Theory Y - Douglas McGregor

Theory X and Theory Y29 are theories of human motivation used in human resource management,
organizational behavior, organizational communication and organizational development. They
describe two very different attitudes toward workforce motivation.

McGregor felt that companies followed either one or the other approach. He also thought that the
key to connecting self-actualization with work is determined by the managerial trust of
subordinates.

Theory X

In this theory, management assumes employees are inherently lazy and will avoid work if they
can and that they inherently dislike work. As a result of this, management believes that workers
need to be closely supervised and comprehensive systems of controls developed.

A hierarchical structure is needed with narrow span of control at each and every level. According
to this theory, employees will show little ambition without an enticing incentive program and will
avoid responsibility whenever they can.

According to Michael J. Papa30, if the organizational goals are to be met, theory X managers rely
heavily on threat and coercion to gain their employee's compliance since the sole purpose of the
employee's interest in the job is money.

Theory Y

In this theory, management assumes employees may be ambitious and self-motivated and
exercise self-control. It is believed that employees enjoy their mental and physical work duties.
According to Papa, to them work is as natural as play. They possess the ability for creative
problem solving, but their talents are underused in most organizations.

Given the proper conditions, theory Y managers believe that employees will learn to seek out and
accept responsibility and to exercise self-control and self-direction in accomplishing objectives to
which they are committed.

26
Burns, S. 1995 'Rapid changes require enhancement of adult learning' HRMonthly June, pp 16-17.
27
Brooks, J 1995 Training and Development Competence: a practical guide Kogan Page, London.
28
Robert Conquest Reflections on a Ravaged Century (2000) ISBN 0-393-04818-7, page 74
29
Douglas McGregor: Theory X and Theory Y. Workforce; Jan2002, Vol. 81 Issue 1, p32,1/4p,1 bw.
30
Papa, M.J., Daniels, T.D., & Spiker, B.K. (2008). Organizational communication: Perspectives and
trends. Thousand Oaks, CA: Sage.

22
 A Theory Y manager believes that, given the right conditions, most people will want to do well at
work. They believe that the satisfaction of doing a good job is a strong motivation. Theory Y
managers are more likely than Theory X managers to develop the climate of trust with employees
that is required for human resource development. This includes managers communicating openly
with subordinates, minimizing the difference between superior-subordinate relationships, creating
a comfortable environment in which subordinates can develop and use their abilities. This climate
would include the sharing of decision making so that subordinates have say in decisions that
influence them. This theory is a positive view to the employees.

Theory X and Theory Y combined

For McGregor, Theory X and Y are not different ends of the same continuum. Rather they are
two different continua in themselves. Thus, if a manager needs to apply Theory Y principles, that
does not preclude him from being a part of Theory X & Y.

Criticisms/ limitations

a. Theory X and Y seem to represent unrealistic extremes;

b. This theory has been criticized widely for generalization of work and human behavior;
and

c. Most employees and managers fall somewhere in between these poles.

10. Hawthorne Studies – Elton Mayo

Elton Mayo conducted behavioral experiments at the Hawthorne Works of the American Western
Electric Company in Chicago. He made some illumination experiments, introduced breaks in
between the work performance and also introduced refreshments during the breaks. On the basis
of this he drew the conclusions that motivation was a very complex subject. It was not only about
pay, work condition and morale but also included psychological and social factors. Although this
research has been criticized from many angles, the central conclusions drawn were:

a. People are motivated by more than pay and conditions;

b. The need for recognition and a sense of belonging are very important; and

c. Attitudes towards work are strongly influenced by the group.

Criticisms/ limitations

a. Mayo's contributions to management thought have come increasingly under fire. The
celebrated sociologist Daniel Bell31 criticized Mayo and other industrial sociologists for
"adjusting men to machines," rather than with enlarging human capacity or freedom.

b. James Hoopes32 criticized Mayo in 2003 for "substituting therapy for democracy."

31
Daniel Bell, "Adjusting Men to Machines: Social Scientists Explore the World of the Factory,"
Commentary 3 (1947): 79-88.

23
11. Equity Theory - J. Stacey Adams

As per the equity theory of J. Stacey Adams, people are motivated by their beliefs about the
reward structure as being fair or unfair, relative to the inputs. People have a tendency to use
subjective judgment to balance the outcomes and inputs in the relationship for comparisons
between different individuals. Accordingly:

Outcome by a person Outcome by another person

Inputs by a person Input by another person

Balance or imbalance in the mind

of the individual

Rewards are
Rewards are Rewards are
more than
not equitable equitable
equitable

Demotivation Normal Demotivation

reaction
Reduction in
quality and
quantity of
production

Leave the job

If people feel that they are not equally rewarded they either reduce the quantity or quality of work
or migrate to some other organization. However, if people perceive that they are rewarded higher,
they may be motivated to work harder.

Criticisms/ limitations

This theory ignores competence and opportunity completely.

32
James Hoopes, "The Therapist: Elton Mayo" in "False Prophets: The Gurus who created modern
management...", 2003, pp. 129-159.

24
12. Jeremy Bentham’s - “The Carrot and Stick Approach”

Bentham’s view was that all people are self-interested and are motivated by the desire to avoid
pain and find pleasure. Any worker will work only if the reward is big enough or the punishment
sufficiently unpleasant. This view - the ‘carrot and stick’ approach - was built into the
philosophies of the age and is still to be found, especially in the older, more traditional sectors of
industry.

Reward and punishment are still considered strong motivators. In all theories of motivation, the
inducements of some kind of ‘carrot’ are recognized which is money in the form of pay or
bonuses. Even though money is not the only motivating force, it has been and will continue to be
an important one.

The trouble with the money ‘carrot’ approach is that too often everyone gets a carrot, regardless
of performance through such practices as salary increase and promotion by seniority, automatic
‘merit’ increases, and executive bonuses not based on individual manager performance.

The ‘stick’, in the form of fear–fear of loss of job, loss of income, reduction of bonus, demotion,
or some other penalty–has been and continues to be a strong motivator. It often gives rise to
defensive or retaliatory behavior, such as union organization, poor-quality work, executive
indifference, failure of a manager to take any risks in decision making or even dishonesty.

Criticisms/ limitations

This theory ignores competence completely.

25
13. The Porter and Lawler Model

Lyman W. Porter and Edward E. Lawler developed a more complete version of motivation
depending upon expectancy theory.

Effort

Perception of Ability to do
task required specific task

Performance
accomplishment

Perceived effort Intrinsic Extrinsic

reward rewards rewards

Perceived
equitable rewards

Satisfaction

Value of
rewards

Actual performance in a job is primarily determined by the effort spent. But it is also affected by
the person’s ability to do the job and also by individual’s perception of what the required task is.
So performance is the responsible factor that leads to intrinsic as well as extrinsic rewards. These
rewards, along with the equity of individual lead to satisfaction. Hence, satisfaction of the
individual depends upon the fairness of the reward.

Criticisms/ limitations

This theory though fully supports the argument that P = C X M, it ignores opportunity.

26
FINDINGS:

After the analysis of the different theories of motivation, the issues found are:

a. Some motivation theories account for performance and apply for circumstances related
satisfying the basic needs;

b. Competence is an element ignored in most theories; and

c. There is complete ignorance of opportunity

Motivation alone can not account for performance, there is a need for competence and other
factors as described in Annexure I.

27
 CONCLUSION

Individual performance can be raised through a focus on setting and monitoring goals and
aligning development and reward to individual aspirations and potential to grow and develop new
skills33. Further performance management assumes that by raising individual levels of
performance, organisational performance will also improve, although to date no definitive
evidence has been provided to conclude that this is indeed the case34.

It is found that former practices in the management of individual performance have been found
lacking35. Merit rating and management by objectives were eventually found to be too
mechanistic to deal with a fast-changing environment where organisations need to be ever more
agile and adaptable to survive. The annual appraisal risks becoming an annual ritual rather than
offering meaningful direction.

The work on people and performance found that HR practices alone do not drive organisational
performance but they do contribute to developing able, committed and motivated individuals
who, when given the opportunity, are more likely to exhibit discretionary effort and performance
above that which is sufficient to fulfil the requirements of the job36.

The Goal Setting Theory of Edwin Locke and Cognitive Evaluation Theory state that when the
goals to be achieved are set at a higher standard, employees are motivated to perform better by
putting maximum effort and a shift from external rewards to internal rewards results into
motivation. Thus if goals are SMART - specific, measurable, acceptable, realistic and time-
bound, performance is achievable without competence.

Our studies and from analysis (refer to Annexure I) made, we conclude that performance in most
situation is a function of competence, motivation and opportunity. The reasoning is that we may
be very competent and motivated but if we are not given an opportunity to face a challenge, we
will not be able to demonstrate performance. Thus, we have:

Performance = Competence X Motivation X Opportunity

Any policies or processes to manage talent should be aligned to performance management to

ensure that people are developing the right skills and are being challenged to develop themselves
to the full extent of their talents37.

ANNEXURE 1
33
ARMSTRONG, M. and BARON, A. (1998) Performance management: the new realities. London: Institute of
Personnel and Development.
34
BRISCOE, D.B. and CLAUS, L.M. (2008) Employee performance management: policies and practices in
multinational enterprises. In: BUDWAH, P.W. and DENISI, A. (eds). Performance management systems: a global
perspective. Abingdon: Routledge.
35
LATHAM, G., SULSKY, L.M. and MACDONALD, H. (2007) Performance management. In: BOXALL, P.,
PURCELL, J. and Wright, P. (eds). Oxford handbook of human resource management. Oxford: Oxford University
Press.
36
MOHRMAN, A.M. and MOHRMAN, S.A. (1995) Performance management is ‘running the business’.
Compensation & Benefits Review. July–August. pp69–75.
37
INSTITUTE OF PERSONNEL MANAGEMENT. (1992) Performance management in the UK: an analysis of the
issues. London: IPM.

28
 Can the Competence Is
Number Theory theory alone seems not opportunity a
account for necessarily necessary
performance required element
Yes No Yes No Yes No
1 Pre-Classicists - Contribution
of Robert Owen
  

2 Expectancy theory - Victor

Vroom   

3 Management by objectives –
Peter Drucker
  

4 Hierarchy of Needs –
Abraham Maslow
  

5 Job Design – Hackman &

Oldham
  

6 ERG Theory of Motivation -

Clayton P. Alderfer
  

7 Motivation and hygiene –

Frederick Herzberg
  

8 Rewards/ Reinforcement
Theory – B.F. Skinner
  

9 Theory X and Theory Y -

Douglas McGregor   

10 Hawthorne Studies – Elton

Mayo
  

11 Equity Theory - J. Stacey

Adams   

12 Jeremy Bentham’s - “The

Carrot and Stick Approach”
  

13 The Porter and Lawler Model

  

29
30