Analysis of Application of Equity Theory and Expectancy Theories at Ultimate Software - Coursework Example

Case Study: Analysis of Application of Equity Theory and Expectancy Theories at Ultimate Software University Affiliation Name Case Study: Analysis of Application of Equity theory and Expectancy theories at ultimate Software Equity theory Equity theory is an important attempt at explaining how individual’s motivation at the work place is influenced by perception of extent of fairness in social exchange (Kreitner and Kinicki, 2010). Equity theory involves individuals making comparison on how they are treated in with how other employees making similar contributions are treated (Bolino and William, 2008). The theory, which was developed by J. Stacy Adams posit that people seek social equity in the rewards they expect for performance (Daft et al, 2011, p. 615). Bolino and William (2008) further assert that Adams’ equity is an important theory in motivation research as it attempts to expound how individual’s comparison of their ratio of inputs and outputs to the ratio of inputs and outputs of others affect motivation at the work place. Inputs to job include experience, education, ability, and effort while outcome includes pay, recognition, benefits, and promotions among other outcomes (Bolino and William, 2008). Equity theory asserts that when people perceive that outcome equals to what other persons receive for making similar contributions, or in similar work group or perceived group average, then the people believe that they are receiving fair and equitable treatment and this motivates them in employment (Bolino and William, 2008). On the other hand, the theory proposes that when people perceive existence of inequity, both positive and negative inequity, a desire to restore equity is subsequently developed influencing employee’s behaviors. Positive inequity occurs where an individual feels that referent other is receiving lesser outcome for similar input while negative inequity occurs where an employee feels that referent others are receiving greater outcome for similar inputs (Kreitner and Kinicki, 2010). Employees may restore equity through distortion of perception such as a or leaving the job among other ways if they experience negative inequity and may seek less pay, acquire more skills or artificial increase of status attached to a job if they experience positive inequity. Explaining employees motivation at Ultimate using Equity theory Equity theory has often been demonstrated in many organizations and research and even in case studies and clear implications for managers is evident on the way they should use rewards such as promotions and salary increases to motivate employees especially considering the potential that inequity has on pressurizing employees to try to change work habits, leave the job or change the system. This assertion is supported by Kreitner and Kinicki, (2010) who points out that motivation is highest when as many people as possible in an organization perceive that they are receiving equitable treatment In the case study, explanation of employees behavior using equity theory is possible by analyzing the inputs that various employees put in the job, and the output that they receive and their perceptions of whether input- outcome ratio is equitable by making comparisons to persons in similar positions both within work group or perceived group average in the organization and the industry. In Ultimate software, various inputs are identified. For instance, inputs that are visible include loyalty and trust, which are captured in the statement that asserts that “employees credit Scherr for setting the tone that fosters loyalty and trust” (Kreitner and Kinicki, 2010, pp. 243) indicating that trust and loyalty are some of the inputs that the employees offer to the company. Generally, employees perceive that they receive fair treatment in return as indicated by the same assertion. Since equity theory suggests that employees perceive equity in treatment when the outcome is comparable to the inputs against perceived group average, employees perceive presence of equity when they feel they are treated as fair as others within perceived work group, Ultimate employee see themselves to be treated fairly comparable to referent others and this is evident in the statement that “ultimate employees rave about such uncommon benefits as fully paid health premiums for themselves” (p. 234). Daft et al, 2011 points out that restoration of equity works in both ways, citing examples of situations such as where a person with a high level of education receives similar pay to a new employee with less education potential of resulting to the experience of a desire to correct the perceived anomaly through changing inputs such as by working less, absenteeism or changing outcomes through request for salary increase, bigger office and unionization while a person receiving more than what others who make similar contribution receive, may seek to amend the inequity through changing inputs such as working harder, or change outcome by considering less pay, or getting more education. In Ultimate software, this is captured by José’s motivation to go back for master’s degree to hone his skills and become more valuable to the organization followed by the desire to seek to correct the anomaly of inequity that is created as he is more likely to feel he deserves additional benefits such as promotion after acquiring more skills. Expectations for outcome to be reflected with increase in inputs as captured in the equity theory are thus captured by the expectations by Chinea of parlaying the master’s degree into a promotion. Such a promotion will restore equity since for higher skills level, he would be expecting a bigger position than he was with his colleagues and which can now be compared to a new referent other persons with similar qualifications. The promotion will effectively increase the input-output ratio for Chinea since by increasing input (education) relative to referent others in the same work group results to an expectation that the outcome must also be increased (promotion) to restore the input-outcome ration or equity balance. Equity is further manifested in the assertion and philosophy adopted by Sherr, “If you take care of employees, then they take care of you” (Kreitner and Kinicki, 2010, pp. 243) indicating that Scherr considers each employee equally valuable with the subsequent benefits of having a workforce that is likely to generate a perception of equity among the employees contributing to a motivated workforce. The fact that the health premium benefits are uncommon is an indication that they receive favorable treatment, or greater outcome comparable to among the best they can compare themselves against. This can have the effect of motivating the employees to work harder to justify these benefits in order to regain a balance of equity. Similar benefits, which are outcomes, are also captured in the 30 per cent company match on 401 (k) contributions; stock options and annual tuition reimbursement and the education benefits that are the maximum eligible for tax benefits. Expectancy theory Besides use of equity theory to explain the motivational behavior of employees, expectancy theory is also an important theory. Expectancy theory of motivation, whose first application at the work place is credited to Victor Vroom, is regarded as a larger theory in scope and complexity in comparison to equity theory (Griffin and Gregory, 2010). Expectancy theory endeavors to provide a framework that aids our understanding of motivation in regard to individual decision-making process attained through a specific behavior –reward interaction process (Issac et al, 2001). Specifically, the theory examines how people choose alternative behaviors based on motivational strength that contributes to individual expending efforts, skills and behavior to perform certain specific actions and tasks with the expectations of rewards that are sufficiently attractive and attainable to the person (Kreitner and Kinicki, 2010). The theory is based on the proposition that motivation depends on how much one wants something and the extent that one thinks they are likely to get it (Griffin and Gregory, 2010). The theory key concepts that aid in understanding motivation recognizes differences in motivational forces among individuals and subsequently posits that individuals intentionally choose behavior that provides the greatest motivational force (Miner, 2007). Expectancy theory works differently on different individuals since different people may attach different valences to different rewards and thus what each employee would be willing to sacrifice to attain such needs vary across different individuals; a fact that managers should take into consideration by matching rewards to individuals preferences in order to motivate them (Dubrin, 2010). Explanation of staff motivation at Ultimate using expectancy theory Expectancy theory can also be used to explain motivation of employees in Ultimate software. Firstly, since the basic premise of expectancy theory is expectation that effort should lead to desired performance, motivation of employees at Ultimate largely depends on how much each employee value some things and the extent that they perceive that they would get what they need (Griffin and Gregory, 2010). The desire for promotion in employees such as Chinea to acquire more skills for instance could be explained using expectancy theory. Chinea’s acquisition of new skills through getting masters education is driven by desire or expectation that he would be able to get promotion accompanied by increase in rewards such as salaries that goes with the promotion. The desire for promotion in this case acts as an impetus for acquiring more education in order to satisfy the need for promotion which is possible by acquisition of skills such as a master’s education. The skills contribute to Chinea becoming more valuable for the organization with his expectation that the increase in value would lead to expected performance for Chinea, which is the outcome of promotion. The extent of his believe in his ability to attain the promotion is best captured in the statement that he hopes that he would parlay his education to a promotion (Kreitner and Kinicki, 2010). The motivational strength to acquire promotion is sufficient to result to Chinea spending resources and time on his own education to acquire additional skills. The behavior reflected by Chinea in acquisition of skills through education that may be relevant in adding value to the organization is a manifestation of the complex interaction of his desire for promotion, and sufficient believe in the sufficiency of the effort, skills and other resources needed to attain the promotion as a reward for the behavioral adaptation as espoused in expectancy theory. Another aspect concerning expectancy theory manifested in the case is the unique differences in valences that different persons may attach. While Chinea would sacrifice a lot for promotion, Lisa’s expectation that the company may approve and implement her suggestion for paid adoption leave is what may be more likely to motivate her to perform well in the organization. DuBrin (2010) suggests that application of expectancy theory is evident where employers invest in employee training thereby strengthening employees subjective hunches that effort leads to good performance and this is also further evident by Chineas assertion that “ultimate understands the importance of helping to grow their employees and helping educate them” (Kreitner and Kinicki, 2010, pp. 243). Expectancy theory requires that employees are presented with credible evidence that good performance leads to anticipated rewards and besides this being captured in Scherrs philosophy that if you take care of employees, they will take care of you, it is more aptly captured in the belief by Chinea that he would receive a promotion if he hones his skills and becomes more valuable to the organization by acquiring a masters degree. References Bolino and William. 2008. Old faces, new places: equity theory in cross-cultural contexts. Journal of Organizational behavior, 29, 29-50. Willey Interscience. Kreitner, R. and Kinicki, A. 2010. 6th ed. Organizational Behavior, Sydney: McGraw-Hill. Rita Zeidner in HR Magazine, July, 2008, In Kreitner, R. and Kinicki, A. 2010. 6th ed. Organizational Behavior, Sydney: McGraw-Hill. Griffin, R. and Gregory, M. 2011. Organizational behavior. Cengage Learning. Issac, R.,Wilfred, Z and Douglas, P. 2001. Leadership and motivation: The effective application of expectancy theory. Journal of managerial Issues, 13, 2, p.212-226. DuBrin, A. 2010. Essentials of management. Cengage Learning. Daft, L., and Dorothy, M. (2010). Understanding management. Cengage Learning. Miner, J. B. 2007. Organizational behavior: From theory to practice.Armonk, NY: M.E.Sharpe. Read More