Page 291 - Introduction to Business

CHAPTER 7 Motivating and Leading Employees 265

employers try to provide through adequate wages. As Equity theory states that employees are motivated
employees move up Maslow’s hierarchy of needs, the to work smart and contribute to a firm’s success as long
motives become more subtle. The second level consists as they believe that they are treated and compensated
of safety needs, things that we desire to have to live fairly relative to others with similar levels of education
without anxiety or pain. The third level is social needs, and professional experience. Because equity theory is
like the need for a sense of belonging. In the fourth level very down to earth, employers can impact employee
are esteem needs, which are needs for rewards, promo- motivation by taking simple steps to make sure that all
tion, and recognition achieved by making the best pos- employees are treated fairly.
sible impression on others. The final level is self-actual- Reinforcement theory is based on the principle that
ization. Maslow’s model offers an appealing way to rewarding desired behavior will lead to continued good
organize motives into a coherent structure, and it pro- performance, while penalizing unacceptable behavior
vides managers with a policy framework for developing will lead to reduced misconduct. Managers can
employee motivation programs. therefore use positive and negative reinforcers in a
number of ways to achieve desired corporate
objectives. In general, positive reinforcement is the
LEARNING OBJECTIVE 4
preferred approach to employee motivation with
Explain why Theories X and Y are totally different
from Theory Z. negative reinforcement being used as sparingly as
possible or even being coupled with some rewards.
In his study, McGregor concluded that managers
generally classify workers into two categories with LEARNING OBJECTIVE 6
almost opposite traits. Theory X is based on Compare management by objective with
management’s distrustful vision of employees. participative management and the use of teams
According to Theory X, employees should be kept in a by firms.
controlled environment, because they are subservient,
reactive, and prone only to follow management’s The mantra of management by objective is that
directives. Theory Y is based on a positive view of managers should be directed and controlled by
human nature, where employees are self-driven and are objectives, rather than dictates from the boss, and
willing to take an initiative to achieve corporate goals rewarded for performance. MBO is essentially a
as long as it leads to appropriate rewards. top-down approach to running a firm, and it requires
Ouchi’s Theory Z posits that in order to be globally full collaboration of employees right down the line to
competitive, a hybrid firm, Type Z, that married the make the system a success. Also, it requires that top
best practices of U.S. and Japanese firms would be the managers of the company buy into the MBO concept,
best system for the United States. Type Z firms would or the system will fail since middle or junior managers
advocate lifetime employment, a more specialized by themselves will not be able to implement it.
career path after initial job rotation, collective decision Companies practice MBO because it involves the joint
making with corresponding responsibilities for its out- setting of achievable goals through close
comes, and gradual pay increases along with great con- communication between management and employees.
cern for the welfare of all employees. A key characteris- Implementing MBO programs can be time-consuming.
tic of a Type Z firm is a close interaction between As the workforce in countries becomes better
management and employees in the form of participa- educated and more skilled, managers realize that
tive management. employees can be more productive if work is organized
around teams. Teams are collections of people who
must rely on group collaboration if each member is to
LEARNING OBJECTIVE 5
achieve success. The changing environment of business
Summarize contemporary motivation theories and is increasingly calling for the use of multicultural,
describe the richness of each of the three major multidisciplinary teams that can cater to the needs of
theories.
diverse domestic and international markets. Depending
The three major contemporary motivation theories are on the cultural and professional background of its
expectancy theory, equity theory, and reinforcement members, team performance will vary. Yet, firms will be
theory. Expectancy theory predicts that an employee justified using the team approach as long as the team as
will be motivated to work hard to achieve a coveted a unit is more productive than the sum of its individual
reward, provided the prospects of receiving that reward members’ outputs.
are reasonable. Expectancy theory can be explained in Participative management calls for employees to
terms of three important relationships: between an actively provide input in the management decision-
employee’s effort and performance, between employee making process, as well as in the operation of the
performance and firm’s rewards, and between a firm’s company. Participative management is a bottom-up
rewards and an employee’s goals. approach. The sense of participation in the decisions

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