Week 12

Question 1

MOTIVATION : a psychological contract

Answer 1

It has to do with striking a balance between what individuals want and the possibility or ability of the organisation to provide
= balance btw what individuals are willing to supply and what organisations are willing to offer

Question 2

Content theories (4)

Answer 2

1. Maslow’s Hierarchy of Needs
2. Hackman and Oldham Job characteristics model
3. Herzberg’s Two-Factor Theory
4. McClelland’s Theory

Question 3

Process Theories (2)

Answer 3

1. Equity theory of motivation
2. Valence theory of motivation

Question 4

EQUITY THEORY

Answer 4

Recognises that individuals are concerned not only with the absolute amount of rewards for their efforts, but also with the relationship of this amount to what others receive.
If equity is missing people become demotivated

Question 5

JUSTICE (3 types)

Answer 5

1. Procedural Justice : fair decision-making procedures are used to arrive to a decision
2. Interactional Justice : people are treated with respect, kindness, and dignity in interpersonal interactions
3. Distributive Justice : outcomes received from the organisation are fair

Question 6

EXPECTANCY THEORY

Answer 6

Key = Expected Utility
Individual objective : maximise expected utility defined over a distribution of possible outcomes

Question 7

Expectancy Theory Relationships

Answer 7

1. Effort-Performance Expectancy : probability that exerting a given amount of effort will lead to performance
2. Performance-Reward Expectancy : belief that performing at a particular level will lead to the attainment of a desired outcome
3. Rewards-Personal Goals Expectancy (Valence) : organisational rewards satisfy an individual’s goals or needs and the attractiveness of potential rewards for the individual

Question 8

March and Simon (1958) theory of organisational equilibrium

Answer 8

1. An organisation is a system of interrelated social behaviours of a number of participants
2. Each participant receives inducements from the organisation for which the participant makes contributions (DECISION TO PRODUCE)
3. The participant will continue as long as her/his perception is that the inducements are higher than their contributions (DECISION TO PARTICIPATE)
4. The contributions from all the participants provides the pool of resources from which the organisation manufactures the inducements
5. An organisation is suitable only as long as the contributions are sufficient to provide inducements necessary to sustain contributions

Question 9

What do PAY LEVEL and PAY DISPERSION influence?

Answer 9

Pay level influences the decision to participation
Pay dispersion influences the decision to production

Question 10

Why would firms want to pay wages that are tied to performance?

Answer 10

Improvement of future performance
Social comparison
Interest alignment

Question 11

Reinforcement theory

Answer 11

States that a response followed by a reward is more likely to recur in the future

Question 12

Agency theory

Answer 12

Principals and agents have different interests
- Agent has informational advantages
- Principal can’t fully control the agent’s behaviours
When pay is tied to performance, agents adjusts effort level to utility of the reward