Public Management

Incentives and Motivations Wednesday, April 19, 2023

Hun Myoung Park, Ph.D.

Public Management & Policy Analysis ProgramGraduate School of International Relations

2

Big Question (Behn 1995)

Micromanagement Motivation: How can public managers motivate

public employees to work energetically and intelligently towards achieving public purposes? How can the legislature control the executive, and how can political managers control civil servants (principal-agent problem)?

Measurement

3

Basic Questions

What do employees want to get from organizations and society?

Why do people want to work for government?

4

How To Motivate?

Organizations and their employees exchange (contribution and rewards)

Reward (carrot) and penalty (stick) based on fair and accurate performance appraisal

Need-incentive fit: What does he/she want to get?

Provide proper incentives/disincentives.

5

Need, Motive, and Value

• Need is a resource or condition required for the well-being of an individual

• Motive is a force acting within an individual that causes him to see to obtain or avoid some external object

• Value is an enduring belief that a specific mode of conduct or end-state of existence is personally or socially preferable to an opposite or converse mode of conduct or end-state of existence.

6

Employees’ NeedsMurray’s List of Basic Needs (1938)

Maslow’s Need Hierarchy (1954)

Alderfer’s ERG Model (1972)

AbasementAchievementAffiliationAggressionAutonomyCounteractionDefendanceDominanceExhibitionHarm avoidanceNurturanceOrderPlayRejectionSentienceSexSuccoranceUnderstanding

Self-actualization needsEsteem needsBelongingness social needsSafety needsPhysiological needs

Growth needsRelatedness needsExistence needs

7

Incentive for Employees

Which incentives do organizations provide to their employees?

88

Incentive Type Definitions and Examples

Barnard (1938)Specific Incentives

Material inducementsPersonal, nonmaterialistic inducements

Desirable physical conditions of workIdeal benefactions

General incentives

Associational attractiveness

Customary working conditions

Opportunity for feeling of enlarged participation in course of events

Condition of communion

Incentives “specifically offered to an individual”

Money, things, physical conditionsDistinction, prestige, personal power, dominating position

“Satisfaction of ideals about nonmaterial future or altruistic relations” (pride of workmanship, sense of adequacy, altruistic service for family or others, loyalty to organization, esthetic and religious feeling, satisfaction of hate and revenge)

Incentives that “cannot be specifically offered to an individual”Social compatibility, freedom from hostility due to racial, religious differencesConformity to habitual practices, avoidance of strange methods and conditionsAssociation with large, useful, effective organizationPersonal comfort in social relations

Types of Incentives 1

9

Incentive Type Definitions and Examples

Simon (1948)Incentives for employee participation

Incentives for elites or controlling groups

Clark and Wilson (1961) and Wilson (1973)Material incentives

Solidary incentives

Specific solidary incentives

Collective solidary incentives

Purposive incentives

Salary or wage, status and prestige, relations with working group, promotion opportunities

Prestige and power

Tangible rewards that can be easily priced (wages and salaries, fringe benefits, tax reductions, changes in tariff levels, improvement in property values, discounts, services, gifts)

Intangible incentives without monetary value and not easily translated into one, deriving primarily from the act of associating

Incentives that can be given to or withheld from a specific individual (offices, honors, deference)

Rewards created by act of associating and enjoyed by all members if enjoyed at all (fun, conviviality, sense of membership or exclusive-collective status or esteem)

Intangible rewards that derive from satisfaction of contributing to worthwhile cause (enactment of a law, elimination of government corruption)

Types of Incentives 2

10

Incentive & Organization Type 1

Clark and Wilson (1961) Material incentives: tangible rewards, often

monetary – wages, fringe benefits, patronage Solidary incentives: intangible rewards from the

act of association – sociability, status Purposive incentives: intangible rewards related

to the goals of the organization – e.g., working on an election of a supported candidate

11

Incentive & Organization Type 2 Utilitarian organizations rely primarily on

material incentives (business firms, labor unions). – Clark and Wilson predict they will have fairly precise-

cost accounting machinery (Scott p. 172). – Managers will focus on obtaining necessary material

incentives.– Conflicts will be about distribution. – Organizational goals will be secondary to incentives.

12

Incentive & Organization Type 3 Solidary organizations (service-oriented

voluntary organizations and social clubs) are places where people make contributions in return for sociability and status.– Executive efforts at securing prestige, good fellowship – Organizational goals are non-controversial and

socially acceptable. – These organizations tend to be less flexible and more

public in actions and decisions.

13

Incentive & Organization Type 4 Purposive organizations rely on their stated

goals to attract and retain people (Clark and Wilson, 1961).

– Executives need to maintain inducements, but when goals are lofty this is difficult to sustain.

– Often their efforts fail initially or intermittently (don't elect candidate, don't stop hunger, etc.).

– Sometimes the goals are too vague or only support a minority of interests.

14

Motivation Psychological forces that determine the

direction of behavior, level of effort, level of persistence.

Motivation is NOT unchangeable Preferences are not exogenous (given by

outside) but endogenous (socialization)

15

Intrinsic vs. Extrinsic Motivation

Intrinsic motivation– Comes from doing the work itself

Extrinsic motivation – To acquire materials or social rewards– To avoid punishment– Workers’ own personal characteristics; – Nature of their job– Nature of organizations

16

Work Motivations 1

A person’s desire to work hard and work well--to the arousal, direction, and persistence of effort in work settings.

Motivation alone does not determine performance.

17

Work Motivations 2

A general idea (umbrella concept) rather than a precisely defined research target.– Organizational commitment– Job involvement– Organizational climate– Leadership practices

18

Motives 1

Perry & Wise (1990) Rational (instrumental) motives are grounded in

enlightened self-interest and are present in individuals who believe that their interests coincide with those of the larger community. They personally identify with some programs and express a commitment to public policy or special interest advocacy.

19

Motives 2

Norm-based motives describe a desire to serve the public interest, a duty and loyalty to the government, and a concern for social equity.

Affective motives, such as altruism, are characterized by a willingness or desire to help others.

20

Content vs. Process Theory

Content theories of motivation are concerned with analyzing the particular needs, motives and rewards that affect motivation.

Process theories of motivation concentrate on psychological and behavioral processes behind motivation.

Distinctions can overlap and need not be taken as confining.

21

Content Theories

Maslow’s hierarchy of needs (1954) McGregor’s Theory X and Y (1960) Herzberg’s two factor theory (1968) McClelland’s 3 motivational needs (1961) Alderfer (1972): growth, relatedness, and

existence needs. J. Stacy Adams’ equity theory (1965)

22

Maslow: Hierarchy of Needs

A theory in psychology proposed in his 1943 paper A Theory of Human Motivation.– Often depicted as a pyramid consisting of five levels.

The first lower level is associated with the most basic needs, physiological needs.

– Higher needs only motivate behavior when the lower needs in the pyramid are met.

– Once an individual has moved upwards to the next level, needs in the lower level will no longer be prioritized and no longer motivate behavior.

23

Safety Needs

Belongingness & Love Needs

Physiological Needs

Esteem Needs

Self-Actualization

Maslow: Hierarchy of Needs

24

McGregor: Theory X and Y

• Theory X assumes workers lacking capacity for self-motivation and self-direction and calls for control

• Theory Y assumes workers having high-order needs (growth, development, interesting work and self-actualization)

• In theory Y, managers need participative management techniques, decentralized decision making, performance evaluation procedures, job enrichment program.

25

McGregor: Theory X and Y

Theory X – Top down; manager is dictatorial,

controlling

Theory Y – Bottom up; manager enables, gives

responsibility

26

Herzberg: Two-Factor Theory

• Hygiene needs (physical and psychological context--pay, job security, etc.)

• Hygiene needs cause job dissatisfaction when not satisfied, but they does not stimulate job satisfaction.

• Motivator needs (work itself; intrinsic needs) will result in high motivation once satisfied.

27

Herzberg: Two-Factor TheoryHygiene Factors Motivators

Company policy and administration

Supervision

Relationship with supervisor

Working conditions

Salary

Relations with peers

Personal life

Relations with subordinates

Status

Security

Achievement

Recognition

The work itself

Responsibility

Growth

Advancement

28

high on motivator scale, low on hygiene scale

Employees are motivated. Job fulfills higher order needs; but extrinsic factors, such as pay, are low so employee is dissatisfied.

high on motivator scale, high on hygiene scale

Best Case: Employees are motivated and satisfied, find job fulfilling; extrinsic factors are satisfactory (e.g. pay, work conditions)

low on motivator scale, low on hygiene scale

Worst Case: Employees are unmotivated, extrinsic factors (e.g. pay and work conditions) also unsatisfactory

low on motivator scale high on hygiene scale

Employees are not highly motivated but are satisfied with other factors of job (e.g. pay, flexible hours, etc.).

hygiene factors

10

9

8

7

6

5

4

3

2

1

0 1 2 3 4 5 6 7 8 9 10low high

highm

otiv

ator

sHerzberg: Two-Factor Theory

29

Adams: Equity theory

Perception of fairness of their work outcomes relative to work inputs

Compare his own outcome-input ratio (outcome/income) with others’ (referents) ratios

Equity, underpayment, overpayment Barnard’s exchange of incentives and

contributions in organizations

30

Equity Theory Scale

Input and motivation are reduced when perception of fairness/ equity (outputs) is tipped, i.e. when employee perceives effort is greater than reward

perceived balance

31

Process Theories

• Vroom: Expectancy Theory – Expectancies and dependent variables– Expectancy theory in public organizations

• Skinner: Operant Conditioning and Reinforcement

• Bandura: Social Learning (cognitive) Theory• Locke: Goal-Setting Theory

32

Vroom: Expectancy Theory 1

An individual considering an outcome sums up the values of all outcomes that will result from the action, with each outcome weighted by the probability of its occurrence.

Theory draws on the classic utilitarian ideas (maximizing pleasure and minimizing pain)

Integrates elements of needs, equity and reinforcement theories

Individual workers differ in their preferences for outcomes ire materials or social rewards

33

Vroom: Expectancy Theory 2

F= ∑(E ij Vj)

F= The force acting under individual to perform act i.

Eij=The expectancy or

perceived probability of any effort will lead to an outcome (act i will lead to outcome j)

V j = ∑(V k I jk )

Vj= Valence of the outcome j

I= The instrumentality of the outcome j for attainment of outcome k

V= The valence of outcome k

34

Vroom: Expectancy Theory 3

Valence refers to the emotional orientations people hold with respect to outcomes/rewards. How desirable each of the outcomes available from a job is to a person

Expectancy: Employees have different expectations and levels of confidence about their capabilities. Perception that high levels of effort lead to high performance.

Instrumentality refers to the perception of employees with respect to whether outcomes/rewards will actually result. High performance leads to the attainment of desired outcome.

35

Vroom: Expectancy Theory 4

• Expectancies as Dependent Variables– Expectancy type questions about relationships

between performance and pay, job security, promotion, and incentives often show association with reported work satisfaction and effort.

• Use in Public Organizations– The underlying principles still underpin many civil

service reforms and government pay systems.

36

Operant Conditional Theory 1

Operant conditional theory by Skinner (1953) Operant conditioning, i.e. the use of

consequences to modify the occurrence and form of behavior

Relationship between observable behavior and contingencies of reinforcements

To link the performance of specific behavior to the attainment of specific outcomes

Punishment is less efficient and effective in shaping behavior.

37

Operant Conditional Theory 2

Positive reinforcement (give desired outcome); negative reinforcement (give undesired outcome)

Operant extinction (curtail the performance of dysfunctional behaviors)

Punishment (dangerous, illegal or unethical behaviors to be eliminated immediately)

Positive reinforcement provides the most efficient means of influencing behavior.

38

Operant Conditional Theory 3

• Low ratio reinforcement schedule produces rapid acquisition of the behavior but more rapid extinction when the reinforcement stops.

• Intermittent reinforcement, especially in highly variable intervals or according to a variable ratio schedule (reinforcement after long varying periods or after varying numbers of occurrences), requires more time for behavior acquisition, but extinction occurs more slowly when the reinforcement seasons.

39

Social Learning Theory 1

Developed by Albert Bandura (1978) et al. Reflects value and limitations of operant

conditioning and behavior modification. Draws from behavior modification, but puts

greater emphasis on internal cognitive processes, like goals and a sense of self efficacy.

Gives attention to forms of learning and behavior change that may not be tied to external environment

40

Social Learning Theory 2

Individuals learn in ways other than through extra reinforcement, including:– modeling the behavior of others– vicarious experiences– mental rehearsal and imagery– self-management through setting goals for

oneself

41

Goal-setting Theory 1

Theory simply states that difficult goals lead to higher performance than easy goals, no goals, or vague goals.

Goals focus behavior and motivate individuals to achieve desired and states.

Goals may direct attention, intensify effort, intensify persistence, spark creativity in problem solving

As the value of a goal increases, the commitment to the goal increases.

42

Goal-setting Theory 2

Commitment to the goals and feedback are also necessary to performance.

Assignment of difficult (challenging; hard but not impossible to attain) goals enhances performance because goals appeal to motive and desire to achieve (Locke and Latham, 1990). – Goals provide a sense of purpose and create

standards for evaluating performance . – Participation in goal setting is not clearly linked to

higher levels of motivation.

43

Goal-setting Theory 3

Goal setting works best with management support and requires effective leadership.

People should be committed to goals. The manager should stress that the goals are important (have personal value) and are attainable.

Empower employees to develop strategies and tactics for achieving goals

Beware of goal overload  Mix qualitative and quantitative goals

44

Goal-setting Theory 4

Assign responsibility for achievement of goals  Feedback stimulates the accomplishment of

goals. The greater the success, the greater the

satisfaction. Paradox: More difficult goals are less likely to be

achieved, leaving people unsatisfied; this, in turn, fosters ambition, pushing people to strive to achieve further.

45

Lessons from Motivation Study

• Given diversity of individual preferences, there is no one best incentive that fits all cases

• Examine individual preferences and find out more salient ones in an institutional setting

• Try to measure performance although acknowledging its difficulty and danger

• Try to link performance and incentives• As individual preferences change (country,

generation…), incentives need to change as well