MATS School of Business and IT

Renu V. Kotian
Section D
06/07/06

COMPENSATION AND BENEFITS

ASSIGNMENT 1 – VICTOR VROOM’S EXPECTANCY THEORY

INTRODUCTION TO THE THEORY

The Expectancy Theory of Victor Vroom deals with motivation and management. In this
theory, he examines why people chose to follow a particular course of action. Motivation
refers to the initiation, direction, intensity and persistence of behavior. Motivation is a
temporal and dynamic state where a person is encouraged to a course of action. This
encouragement comes from a discrepancy between the persons existing state and desired
state. Vroom's theory assumes that behavior results from conscious choices among
alternatives whose purpose it is to maximize pleasure and minimize pain.

The theory focuses on personal perceptions. The basic notion here is that people desire
certain outcomes of behavior, which may be thought of as rewards or consequences of
behavior, and that they believe there is a relationship between the efforts they put forth, the
performance they achieve, and the outcomes they receive. It is a process theory of motivation
that proposes that motivation depends on individuals’ expectations about their ability to
perform tasks and receive desired rewards. It is not concerned with identifying types of
needs, but with the thinking process that individuals use to achieve rewards.

The expectancy theory states that, in the workplace, individuals have a variety of goals and
that they can be motivated if they believe that:
• There is a positive correlation between efforts and performance,
• Favorable performance will result in an outcome,
• The outcome's value to the employee can be determined,
• (The desire to satisfy the need is strong enough to make the effort worthwhile).

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Putting the theory in the form of an equation1

Person’s Person’s Desirable Person’s belief that these desired

Motivation = Outcomes * outcomes can be attained

“Person’s Desirable Outcome” is “Expectancy”

“Person’s belief that these desirable outcomes can be attained” are the multiplied effects of
Valence and Instrumentality. These three elements, i.e. Valence, Expectancy, and
Instrumentality are the key constructs behind the theory

 Valence: Valence is the value or importance one places on a particular reward. The
valence of an outcome is positive when the individual desires it and negative when he or
she wishes to avoid it; valences are therefore scaled over a wide range of positive and
negative values.
“What rewards do I value?”

 Expectancy: The belief that effort leads to performance. Refers to the perceived
relationship between a given level of effort and a given level of performance. People
attach various expectancies to an outcome. Competent and secure individuals tend to
perceive expectancy more positively than incompetent and pessimistic individuals.
“What are my chances of getting the job done if I put forth the necessary effort?”

 Instrumentality: The belief that performance is related to the rewards. Ranges from -1 to
+1 (the belief that outcome is attainable only without the other) through 0 (belief that
there is no relationship between the two outcomes) to +1 (belief that the first outcome is
necessary and sufficient for the second outcomes to occur).
“What are my chances of getting the rewards I value if I satisfactorily complete the job?”

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Organization Behavior: Concepts, Realities, applications and challenges, PG Aquinas, Excel Books, 2006

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The following is a model for the expectancy theory notions of effort, performance and
rewards. 2

Effort Performance Reward

Perceived Perceived
“Effort- “Performance- Perceived value of
Performance” Reward” rewards
probability probability

Expectancy “Effort to Performance”

Will putting effort into a task lead to high performance?
Expectancy “Performance to Outcome”
Will high performance lead to desired outcomes? 3

A persons motivation increases along with his or her belief that effort leads to performance
and that performance leads to rewards, assuming that person wants the rewards. The value, or
valence, that people place on various rewards varies. All people do not place the same value
on each reward.

THEORY DISCUSSION: EXPANDING THE EXPECTANCY THEORY

Under the expanded model, satisfaction does not lead to performance. Performance, but not
always, leads to satisfaction through the reward process. As suggested by the extended
model, the way to get the ideal performance and ideal satisfaction is to reward high
performance. Rewarding high performance leads to high Performance-Outcome expectancy
(which is an important component of motivation). Poor performance should not be rewarded.
If it was this would lead to low Performance-Outcome expectancy and eventually low
subordinate motivation to perform. 4

2
Organization Behavior: Concepts, Realities, applications and challenges, PG Aquinas, Excel Books, 2006
3
Organization Behavior: Richard L Daft, Raymon A Noe, Harcourt College Publishers, 2001
4
Organization Behavior: Concepts, Realities, applications and challenges, PG Aquinas, Excel Books, 2006

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 THEORY APPLICATION
Within the framework of the expectancy theory, the following motivational problems can be
identified by management: 5
 If the motivational problem is related to the person’s belief that effort will not result in
performance, the solution lies in altering this belief. The person can be shown how an
increase in effort or an alteration in the kind of effort put forth can be converted into
improved performance.

 If the motivational problem is related to the person’s belief that performance will not
result in rewards, the solution lies in altering this belief. The person can be shown how an
increase in performance or a somewhat altered form of performance will be converted
into rewards.

 If the motivational problem is related to the value the person places on, or the preference
the person has for certain rewards, the solution lies in influencing the value placed on the
rewards or altering the rewards themselves.

The following questions can be asked by management in a bid to evaluate employee’s

behavior based on parameters from the expectancy theory. 6
Effort-to performance relationships
Capability Does the employee have the ability to perform well?
Confidence Does the employee believe he or she can perform the job well?
Challenge Does the employee have to work hard to perform the job well?
Criteria Does the employee know the difference between good and poor
performance?

Performance-to-outcome relationships
5
Organization Behavior: Concepts, Realities, applications and challenges, PG Aquinas, Excel Books, 2006
6
Organization Behavior: Richard L Daft, Raymon A Noe, Harcourt College Publishers, 2001

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Credibility Does the employee believe the manager will deliver on promises?
Consistency Does the employee believe that all will receive similar rewards for
good performance and similar negative outcomes for poor
performance?

Outcome-Valence relationships
Compensation Does the employee value the rewards associated with good
performance?

Effort-to-Performance and Performance-to-Outcome relationships

Cost What does it cost to the employee-in effort and forgone outcomes-to
perform well?

Effort-to-Performance-to-Valence relationships
Communication Does the manager communicate with the employee verbally and
nonverbally – receiving as well as sending messages?

Through the above questions:

 Managers can foster a high E-P expectancy in subordinates. Done by clear about
performance expectations, setting performance goals so that they are challenging, but
doable, making sure that employees have the training and resources necessary to reach
the required performance levels and providing encouragement.

 Another major factor in encouraging motivation is offering opportunities for rewards

(extrinsic and intrinsic) with a high valence to employees.
 The extended model of expectancy theory also indicates that managers might not get
the expected results from their motivational efforts unless employees perceive their
outcomes and rewards as equitable.

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 CONCLUSION
Communication is a key element in the successful implementation of this theory in any
organization. Without the crucial element of communication, there will be no use to any steps
towards evaluating employees motivational behavior.

Managers must let employees know what level of performance in expected of them and what
they what their rewards are for the meeting of that expectation. Managers also need to
communicate to employees that they indeed have the potential and ability to meet those
expectations.