Part 2: Managing Motivation through Goals, Expectations, and Feedback - Principles of Management

Four-drive theory, learned needs theory, and Maslow’s writing collectively help managers to understand and adjust the intensity and persistence of employee effort. People are motivated to a higher degree and a longer time when managers can understand and align employee needs and underlying drives with organizational objectives.

But drives and needs represent just the first piece of the motivation puzzle. The second part involves directing that effort through goals, expectations, and feedback. This aspect of motivation is best understood through goal setting and feedback as well as expectancy theory.


One important way that ACUITY, the insurance company described at the beginning, dramatically improved employee motivation was by introducing a new performance appraisal system in which employees and their supervisor mutually determine specific, achievable goals for the next six months or year. In addition, under CEO Ben Salzmann’s leadership, ACUITY has become highly focused on measurable results.

The company closely watches and sets benchmark goals for the all-important combined ratio (claims and expenses against premiums earned), percentage of surplus growth, premium growth rate, employee turnover rate, average premium per agency, and so on.

ACUITY has improved employee motivation through goal setting. Goal setting is the process of motivating employees and clarifying their role perceptions by establishing performance objectives. A goal is a desired future state that an organization or person attempts to realize.

Goal setting improves role perceptions and consequently clarifies the direction of employee effort. When conducted effectively, goal setting can also increase the intensity and persistence of effort. It achieves this higher level of motivation through employee buy-in and by raising the level of personal goal expectations.

Consider recent events at Speedera Networks (now merged with Akamai). CEO Ajit Gupta announced to all 120 employees in Santa Clara, California, and Bangalore, India, that “if we pull together to achieve our business targets [for the next quarter], then we’ll all be on a beach in May.” Speedera would cover employee expenses as well as 50 percent of a spouse’s or family member’s expenses for four days at a Hawaiian resort.

Everyone at the Internet applications company worked feverishly toward the company’s goals, which included a hefty revenue growth target. Their motivation was further fueled with constant reminders of the Hawaiian trip. “The offices were transformed to look like tropical islands,” says Gupta. Staff also received postcards and brochures with tempting images of the resort and its attractions. Much to everyone’s delight the company achieved its goals; and Speedera staff from both countries had a memorable bonding experience on the Hawaiian beaches.

Goal setting provides the critical linkage between the organization’s strategic plans and individual motivation. These plans are formulated all the way down to each work unit. Managers then translate the units’ action plans into specific targets for individuals and teams to achieve.

Translating action plans into goals for individuals and teams involves more than telling them to “do your best.” As we described earlier, goals must be precise and measurable ; that is, they should specify levels of change over a specific and relatively short time frame, such as “reduce scrap rate by 7 percent over the next six months."

Notice that precise goals specify a time period in which they should be achieved. Second, managers should limit the number of goals for each employee or team to the most important objectives . Third, goals need to be challenging, yet realistic . This can be a difficult balancing act.

Challenging goals motivate people to put forth more effort and sometimes for a longer time. They also fulfill a person’s sense of achievement when the goals are achieved. Yet employees must be committed to the goals. People are less motivated to attempt goals that are too tough.

Finally, goals have little value unless employees receive associated feedback about the consequences of their behavior. Feedback lets people know whether they have achieved a goal or are properly directing effort toward it. Feedback is also an essential ingredient in motivation because self-actualization and the need for achievement depend on knowledge of goal attainment.

As with effective goals, feedback works best when it is precise and measurable. It should also be timely —available as soon as possible after the behavior or results so employees see a clear association between their actions and the consequences. Feedback should also be sufficiently frequent . New employees require more frequent feedback to aid their learning.

Some jobs (like those of executives) necessarily have less frequent feedback because the consequences of their actions take longer to materialize than those of, say, a cashier’s job. Finally, feedback should be credible, such as from people with no vested interest or from reliable monitoring devices.

Some companies have successfully improved the feedback process through executive dashboards—real-time data shown on an employee’s computer screen. Almost half of Microsoft employees use a dashboard to monitor project deadlines, sales, and other metrics.

Microsoft CEO Steve Ballmer regularly reviews dashboard results in one-on-one meetings with his seven business leaders. “Every time I go to see Ballmer, it’s an expectation that I bring my dashboard with me,” says Jeff Raikes, who heads the Microsoft Office division.

Verizon CIO Shaygan Kheradpir also appreciates the instant feedback provided by his dashboard, which is a huge plasma screen on the wall of his office. Called the “Wall of Shaygan,” the screen displays the status of more than 100 network systems around the country in green, yellow, or red lights. Another part of the screen shows sales, voice portal volumes, call center results, and other business metrics.

Goal setting represents one of the “tried and true” management theories. In partnership with goal setting, feedback also has an excellent reputation for improving employee motivation and performance. At the same time managers sometimes have difficulty putting goal setting into practice.

One concern is that goal setting tends to focus employees on a narrow subset of measurable performance indicators while ignoring aspects of job performance that are difficult to measure. A second problem is that when goals are tied to financial rewards, employees are often motivated to set easy goals (while making the boss think they are difficult) so they have a higher probability of receiving the bonus or pay increase.


Although goal setting and feedback are powerful tools to motivate employees, they don’t really explain why employees are motivated. The expectancy theory of motivation provides the missing explanation. Expectancy theory is based on the idea that work effort is directed toward behaviors that people believe will lead to desired outcomes. The theory also predicts the intensity of the person’s effort.

As illustrated in Figure below, an individual’s effort level depends on three factors: effort-to-performance (E-to-P) expectancy, performance-to-outcome (P-to-O) expectancy, and outcome valences (V). Employee motivation is influenced by all three components of the expectancy theory model. If any component weakens, motivation weakens.

  • E-to-P expectancy: This refers to the individual’s perception that his or her effort will result in a particular level of performance. In some situations employees may believe that they can unquestionably accomplish a task (a probability of 1.0). In other situations they expect that even their highest level of effort will not result in the desired performance level (a probability of 0.0). In most cases the E-to-P expectancy falls somewhere between these two extremes.
  • P-to-O expectancy: This is the perceived probability that a specific behavior or performance level will lead to particular outcomes. In extreme cases employees may believe that accomplishing a particular task (performance) will definitely result in a particular outcome (a probability of 1.0), or they may believe that this outcome will have no effect on successful performance (a probability of 0.0). More often the P-to-O expectancy falls somewhere between these two extremes.
  • Outcome valences: A valence is the anticipated satisfaction or dissatisfaction that an individual feels toward an outcome. It ranges from negative to positive. (The actual range doesn’t matter; it may be from –1 to +1 or from –100 to +100.) An outcome valence represents a person’s anticipated satisfaction with the outcome. Outcomes have a positive valence when they are consistent with our values and satisfy our needs; they have a negative valence when they oppose our values and inhibit need fulfillment.
    To understand how expectancy theory explains the direction and intensity of employee effort, consider the following situation at ACUITY, the insurance firm described throughout

Expectancy Theory of Motivation.

Expectancy Theory of Motivation.

Until recently ACUITY distributed sick leave credits for each month that an employee showed up for work but not during months when the person took sick leave. This program was supposed to motivate people to show up for work and to take sick leave only when they were sick, but that’s not what happened. Instead many people showed up for work when they were sick; others took lengthy absences in the same month.

The problem with ACUITY’s old sick leave plan was that the P-to-O expectancy directed people to avoid sick leave at some times and to take as much as possible at other times.

Suppose it’s the last day of the month and you wake up with the flu, complete with fever and nausea. You should stay at home to recover and avoid making others sick, but being absent from work today would cost you an entire month of sick leave credit. And given the probability that the illness will last a few more days, you will lose next month’s sick leave credit as well.

Your solution? Some folks would try to work today to receive this month’s sick leave credit. Ifthe illness is just as bad tomorrow, they might take several days off (even when well enough to work) because they have already lost that month’s credits anyway! How did ACUITY resolve this problem? It now pays employees when they are sick, trusting them not to abuse this privilege.

Management Implications of Expectancy Theory One of the appealing characteristics of expectancy theory is that it identifies several ways in which managers can increase employee motivation through each of the model’s three components (see Figure below).

E-to-P expectancies are influenced by the individual’s belief that he or she can successfully complete a task. Some companies increase this can-do attitude by assuring employees that they have the necessary competencies, clear role perceptions, and necessary resources to reach the desired levels of performance.

Matching employees to jobs based on their abilities and clearly communicating the tasks required are an important part of this process. Similarly, E-to-P expectancies are learned, so behavioral modeling and supportive feedback (positive reinforcement) typically strengthen employee self-confidence.

Management Implications of Expectancy Theory

Management Implications of Expectancy Theory

The most obvious ways to improve P-to-O expectancies are to measure employee performance accurately and distribute more valued rewards to those with higher job performance. ACUITY, described at the beginning, followed this advice by introducing a more objective performance evaluation system and more closely linking rewards to individual and team performance. P-to-O expectancies are perceptions, so employees should believe that higher performance will result in higher rewards.

Having a performance-based reward system is important, but this fact must be communicated. When rewards are distributed, employees should understand how their rewards have been based on past performance. More generally, companies need to regularly communicate the existence of a performance-based reward system through examples, anecdotes, and public ceremonies.

Finally, performance outcomes influence work effort only when they are valued by employees. To improve the valences of outcomes, managers need to individualize rewards so employees who perform well are offered a choice.

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