Incentive System

Topics: Motivation, Incentive program, Victor Vroom Pages: 17 (5559 words) Published: October 17, 2010
Expectancy theory is about the mental processes regarding choice, or choosing. It explains the processes that an individual undergoes to make choices. In organizational behavior study, expectancy theory is a motivation theory first proposed by Victor Vroom of the Yale School of Management. Expectancy theory predicts that employees in an organization will be motivated when they believe that: * The reward they are receiving is adequate to offset the amount of work being done. * these predicted organizational rewards are valued by the employee in question. "This theory emphasizes the needs for organizations to relate rewards directly to performance and to ensure that the rewards provided are those rewards deserved and wanted by the recipients." [1] - Emphasizes self interest in the alignment of rewards with employee's wants. - Emphasizes the connections among expected behaviors, rewards and organizational goals Vroom's theory assumes that behavior results from conscious choices among alternatives whose purpose it is to maximize pleasure and to minimize pain. Together with Edward Lawler and Lyman Porter, Vroom suggested that the relationship between people's behavior at work and their goals was not as simple as was first imagined by other scientists. Vroom realized that an employee's performance is based on individual factors such as personality, skills, knowledge, experience and abilities. 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). 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 concepts: [2]

1. 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. 2. 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. 3. Expectancy - Probability or strength of belief that a particular action will lead to a particular first level outcome. Vroom says the product of these variables is the motivation. In order to enhance the performance-outcome tie, managers should use systems that tie rewards very closely to performance. Managers also need to ensure that the rewards provided are deserved and wanted by the recipients.[3] 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 performance.[4] Victor Vroom (1964) defines motivation as a process governing choices among alternative forms of voluntary activities, a process controlled by the individual. The individual makes choices based on estimates of how well the expected results of a given behavior are going to match up with or eventually lead to the desired results. Motivation is a product of the individual’s expectancy that a certain effort will lead to the intended performance, the instrumentality of this performance to achieving a certain result, and the desirability of this result for the individual, known as valence. (S.E. Condrey, 200, p.482) [edit] References

1. ^ Montana, Patrick J; Charnov, Bruce H, Management – 4th edition; (2008) – Barron's Educational Series, Inc. ISBN 978-0-7641-3931-4 2. ^ P. Subba Rao, Personnel and Human Resource Management – Text and cases; (2000) – Himalaya Publishing House ISBN 8174937773 3. ^ Montana, Patrick J; Charnov, Bruce H, Management - 4th edition; (2008) -...
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