("Victor Vroom’s expectancy theory | Business must sell," 2014)
The Expectancy Theory is a cognitive theory on motivation. American psychologist Edward Tolman founded what is now a branch of psychology known as purposive behaviorism in 1932. The theory was further used to explain organizational behavior by an American business school professor, Victor Vroom, in his book Work and Motivation (1964).
Expectancy Theory is centered on the fact that a person's efforts will net an acceptable reward for their performance, which is due to the amount of effort that is exerted. As mentioned, this theory is cognitive in that it is a mental activity emphasizing the importance of thoughts, judgments, and perceptions (PSU, WC, 2015). Basically, this means that when a person believes their effort = performance = reward, they will become motivated. According to Vroom, all three of these variables need to be in action in order for motivation to take place. For more detailed information on Expectancy Theory, please visit the Expectancy Theory Main Wiki Page.
Expectancy theory is one of the most popular approaches to motivation in I/O psychology (PSU WC, 2015, p2). Victor Vroom brought this theory to the attention of the I/O psychology research field as he took inspiration from his award-winning dissertation and worked on a general formulation of a theory. This theory dealt with the interaction of individual differences and situational variables in the work environment. The result was his creation of the VIE Theory (Valence, Instrumentality, Expectancy) or “expectancy theory” as published in Work and Motivation (Vroom 1964). This seems like a rather simple theory and easy to grasp, but in fact it can be very difficult to understand. Vroom defined this theory better by developing a model to help explain the relationship between effort, performance and rewards; it’s known as the Valence, Instrumentality and Expectancy (VIE) model:
- A person's efforts will result in an acceptable level of performance (expectancy)
Expectancy theory is described by the effort put forth that leads to an expected level of performance. This in turn leads to a reward, or instrumentality; and ending with valence, or something of importance to the individual such as money (MSG, 2015). In other words, it is the motivation that gets an individual up out of bed and off to work, because they will be rewarded for their effort. An example of this would be privately owned jewelry stores have the choice to pay employees on salary, hourly, or commission. If an employee is expecting to make a fixed rate, such as $15 an hour, or $120 a day they might not be motivated to be overly charismatic when presenting the jewelry because their valence, or reward is the same regardless of their performance. This is where commission can be the game changer in a company’s sales. If the employee knows that the amount of money she makes is within her control, she is more likely to be friendly, helpful, and an overall good sales person striving for an increase in income. This is a perfect example of the expectancy theory and how employees will perform differently when the reward is greater.
- A person's performance will results in a specific outcome for the person (instrumentality)
Instrumentality is the second of three Expectancy Theory components and is the link between the performance of the individual and the resulting outcome. Strong instrumentality is noticed when the individual gets more of what they want and it is directly correlated by their level of performance. According to Porter & Lawler, when all three conditions are met, expectancy, instrumentality, and valance, an individual will feel the most motivated. In the above example, commissions in a sales position are extremely important to the welfare of a person whose livelihood is strictly commission based. It is all about the performance that creates the outcome. If a sales person doesn’t believe that there will be a reward waiting for them, they will not be motivated to do the job to the best of their ability. This is a cognitive theory of motivation that keeps the employee encouraged to perform. What we notice in this case study is that when structure is removed, then there becomes no discernible link between performance and outcome. The employees were less motivated to apply an effort. When structure and targets were reintroduced, this changed and performance once again became directly linked to reward and outcome. The employees responded positively and now feel more motivated at work.
- When the outcome received is valued by the person (valence)
The third link to the expectancy theory is valence. Valence refers to the appeal of the outcome, or its value to you. It is the significance that individuals may place on the outcomes that are based on their needs, goals, values, and other sources of motivation (Alanis Business Academy, 2012). Some things are more significant to certain people than others. One person may be more motivated by money, whereas others may be motivated by time off to spend with their families.
Factors related with the person's valence are values, needs, goals, preferences, sources of motivation, and the asset of a person's preference for a specific outcome.
An example would be as if a student didn’t really care what grade they received on an exam so they didn’t really put in any effort.
Additionally, Expectancy Theory addresses the the notion that people, particularly employees, are motivated by what they believe the outcome of their performance will be. If someone views the outcome or reward as something desirable to them, then they are more likely to to be motivated to perform well and be more successful at their current position. This case study will examine the expectancy theory and how its elements may be applied to a sales organization whose employees are compensated by salary rather than commission based sales.
Expectancy Theory in Action ~ With The Use of a Carrot!
The ABC Apartment community has been experiencing a decline in occupancy, and management feels that an overhaul of employee compensation practices is necessary for increased occupancy. The success of the property is at stake. The manager at ABC Apartments decides to incorporate a commission-based policy, in order to increase occupancy. For each new lease, and move in, the leasing employee will receive a $50 commission. They also have an opportunity to earn a $75 commission for each lease that is renewed, in order to help retain the current residents The higher commission is placed on retaining existing residents, since it is quite expensive to turn an apartment for a new resident, but understandably, there will always be unavoidable reasons for people moving out. Some may have to relocate to new areas for a job; others may purchase a home. And, for this reason, it is important to also offer a commission for new leases, as well.
The company's is that employees will put forth great effort to gain new leases and increase the amount of current residents who renew their lease. The employees level of effort in obtaining the goal level of occupancy will prove their expectancy and the resulting commission, from new leases and renewals, would be the instrumentality, or reward that the leasing employee will earn. This commission based pay structure has a high level of valence, since the leasing employees are highly motivated by monetary rewards, for their efforts to successfully raise occupancy 5% by the end of the month.
Due to the fact that the valence, instrumentality, and expectancy are all present, occupancy has increased and the owner of ABC Apartments is satisfied.
Leases = Commission = Increase in Occupancy
(Leadership Styles and Theories)
Below is a checklist a company could follow to ensure they keep their employees motivated:
(Journal of General Education)
Williams and Scott (2013) illustrate the commission compensation practice used in their company. Their company pays each of their employees in commission, regardless if they work in sales, finance, or administration. This unusual practice is successful for the fairly small business for a number of reasons. First, every employee is motivated to help the company succeed because their pay is directly dependent on sales. The element of instrumentality is heavily illustrated in this scenario because the outcome of better pay relies on the effort of the employees. For example, if someone working in development is not proactive and seeking the creation of new products, then sales may not improve because there is nothing new for the sales department to sell. If employees do not feel and understand the linkage between their performance and the success of the organization, then they are not motivated to be engaged and effective in their work (PSU WC 2015, L 4 P4).
When valence, instrumentality, and expectancy are in sync with one another, it is very likely that the results will be positive. For the three components to be in sync, all three components must be present. There must be a reward of some kind, which is the instrumentality component. The person must also value the reward, which is the valence component. The sales example was a perfect example of how expectancy theory can be beneficial for businesses. It is also beneficial for employees as well. If the expectancy theory is utilized correctly, the employees will be motivated to complete the expectations of them. The employees gain rewards that are important to them.
Alanis Business Academy (2012, September 2). Episode 27: Expectancy Theory of Motivation
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Vroom, Victor H. (1964). Work and motivation. John Wiley & Sons, Inc. Abstract: Vroom’s seminal book that introduces his Expectancy Theory cognitive model. Vroom introduces the model and its concepts of Valence, Expectancy, and Force.