Expectancy Theory


The Expectancy Theory is a prominant motivational approach used in I/O psychology (PSU WC PSYCH 484, 2014, L4, P.2).  Also referred to as VIE, it is a cognitive theory that links effort, performance, and outcome   The theory suggests that people are motivated by their perception of how their efforts will improve performance, and in turn lead to desired outcomes (rewards).  Perception is the key word. People will be more productive if they believe that their expectations will be realized.  That is, the belief in the possibility is of more importance than the reality of the possibility (PSU WC PSYCH 484, 2014, L4, P.2).  The Law of Effect principle of reinforcment theory predicts that people will act to avoid pain and maximize pleasure.  Similarly, the Expectancy Theory predicts that people will increase effort if they believe that performance will be enhanced and that higher performance will lead to a reward that is of personal value.  From that perspective, expectancy theory can also be seen as a process theory (Expectancy Theory, n.d.). 

Vroom (1964, 1995 as cited in PSU WC PSYCH 484, 2014, L4, P.2) introduced the Expectancy Theory to I/O psychology in the 1960's, and suggested that "the source of motivation is the mulitiplicative function of valence, instrumentality, and expectancy." It is the perception of the individual for these factors that must be positive. In order to preserve the largest motivational force of an employee, the perceived outcomes resulting from perceived performance must also be desirable for the employee. Many times there is more than one single desirable outcome. Outcomes can be combined, such as:





If the belief of the employees is that the outcomes will not produce the desired result, motivation is not produced. In order for employees to perceive outcome, the details in their performance must be clear from management.



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  VIE Theory Components 



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Expectancy is the belief that more effort will lead to enhanced performance.

Expectancy can be influenced by factors such as past successes, compentencies, interests, and situational constraints. 

                Example: “If I study and learn about checking accounts, then I will make my sales goals by getting more people to open accounts. ”

(PSU WC PSYCH 484, 2014, L4, P.2).


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The belief that the performance will result in the desired outcome

Beliefs about the outcome are more important than the outcome in itself. 

                 Example: “If I smile and greet every customer, I will receive a positive performance review”

(PSU WC PSYCH 484, 2014, L4, P.2).


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The outcome must be something of value, different people have different preferences

It is the level of satisfaction that is expected, not that is actually found

                Example: “A positive performance review is important to me because I want to keep my job”

(PSU WC PSYCH 484, 2014, L4, P.2).



Case Study

(Microsoft Word Clipart) 

Wiki Bank is a local bank with a small town feel.  Each client is warmly greeted by name, and they often receive courtesy calls when their account balances are low or negative to not cover any incoming transactions. The compensation and salary programs are based on work effort and length of employment.  Based on the local reach of Wiki Bank and its growth potential, ABC Bank has proposed a merger which is accepted by Wiki Bank. The two banks then become ABC-Wiki Bank.  

The work conditions and compensation program changes rapidly after the merger to match the competition.  The employees are expected to do more work in the same amount of time with the same pay. The new incentive plan is based on achieving 90%, 100% and 120% of goal.  While the incentive plan is based on a quarterly basis, each employee is expected to achieve at minimum 60% of goal monthly to avoid a write up – 2 consecutive months of achieving 60% of goal or below leads to job termination.  

These changes have caused the employees to feel they are no longer able to communicate honestly with the leadership team for fear of losing their jobs. More stress is also felt by the team due to the lack of job security, time constraints, and increasing month and quarterly goals. 


Tom is a personal banker who began with ABC-Wiki Bank 30 years ago and has been merged into the workforce with the employees of ABC-Wiki Bank. Tom is 62 years old and began contemplating retirement at the beginning of the merger. He has consistently achieved the goals set at a rate of 90-100%. Tom has been married for 35 years and his children have long since moved away from home. The compensation and incentives are not as important to Tom as they were early in his career. Tom is more interested in spending time traveling with his wife and preparing for retirement.

Susan is the Teller Lead at age 40. ABC-Wiki Bank has been Susan's work home for 15 years. She began as a teller and has been an inspiration to employees in their handling of customer issues and overall interaction. After the merger, Susan has been increasingly flustered with the expectations. She tries very hard not to show the other employees her frustrations however at times it does show. Susan values the position she has and feels positive when she is praised by management.

Mary is a teller. Mary is 35 and new to the banking industry. She began at ABC-Wiki Bank less than one year ago. She is a single mom with two children in daycare. Mary is concerned that her regular compensation will not always be enough to provide for her family. The quarterly incentives would make a huge difference in her financial means. She works hard to complete the monthly and quarterly goals to reach the incentive pay.

April is a teller who has worked with ABC-Wiki Bank for 7 years. April, who is 28, lives with her fiancé and plans to get married next Spring. She has been diligently working to make her way up through the ranks at the bank but is starting to feel as though she is not appreciated for the work she does. April is confused about what she can do to increase her promotion opportunities.

Edith is the Branch Manager for ABC-Wiki Bank. She is 50 years old and lives alone. She began working in the bank industry as a personal banker 20 years ago and worked her way up to branch manger. Edith has no dependents at home to care for and work is her only source of social activity which makes her want to be liked by all who works under her. She often finds the demands of her position to be overwhelming and does not feel compensated for her work there. Edith knows that she has invested a lot of her life to her job and knows she will not find a better position somewhere else. Due to fatigue from her work demands, Edith does what she needs to in order to maintain her job on a daily basis. 

Theory Application 

Expectancy (E→P) in followers can be influenced by the leaders understanding of the concept (Expectancy Theory, n.a.).

Instrumentality (P→O) is contingent upon follower beliefs (Expectancy Theory, n.a.) 

Valance (value to the follower) should be considered by the leader (Expectancy Theory, n.a.) 


The Expectancy Theory can be applied to improve motivation at the ABC-WIKI Bank as follows: 

(Fall 2012 Case Study, 2012)




Years with

ABC-Wiki Bank


Level of





Motivational strategy



Bank Manager

 20 years

Low- Medium


Edith knows from her past that working hard can show good performance, hence her working her way up to branch manager. At her current state she feels exhausted from work which hinders her effort leading to just enough performance to keep her job.


Edith knows that pushing herself harder will not have any more desirable outcomes. She wants to maintain the position she has and feels harder work would be unappreciated and unnecessary.


Edith values her job enough to keep it, but not enough to pursue more. She values the social interactions she has at work due to no friends or family outside of work, yet she feels she is under-compensated in a job that leaves her exhausted.

Edith is mostly rewarded by the social aspect of work so a great motivation for her would include social events such as lunches, or work parties.



Personal Banker

 30 years

Low- Medium


Tom is internally motivated therefore he will continue to achieve his goals  while he plans for retirement.


Tom is no longer motivated by incentives yet he continues to achieve 90-100%   of his sales goals.


Low – Medium

Tom is more interested in spending time traveling with his wife and preparing for retirement

Tom is currently planning for retirement, to keep him engaged in maintaining his sales goals, Edith can let him leave at 3pm on a Friday twice a month. 

Tom will be able to use this time off to go fishing, early golf game, spend time with his wife and grandchildren.



Teller Lead

 15 years



Susan doesn’t expect to meet her job role requirements and is afraid to ask for help.

 Low –Medium  

Susan is not clear of her new role since the merger which leads to frustration


Her value is tied to praise and approval from upper management

Susan needs clear and concise job descriptions which will provide direction. She will also benefit from weekly and monthly developmental sessions with Edith. 

Susan will gain more confidence and this will reflect in her interactions with the rest of the team.




 Less than one year



Mary knows if she performs well and meets her sales goal, she will receive her incentive.


Mary understands  that her incentive pay is directly tied to her performance which causes her additional stress


Mary values the additional income achieving her sales goal provides.

Mary will meet with Susan monthly to prepare and review a plan that allows her to achieve her sales goals and earn her incentives.

With this guidance Mary can see immediate and sustained goal/incentive achievement which can lead her to feeling less stressed.




 7 years

Medium- High


April feels that by working hard she will perform well which is a key factor to climbing the ranks of the branch which is a goal for April.


April works hard because she wants to succeed, but she feels unappreciated and that her hard work may not be noticed.


April values being promoted and climbing the ranks would be very satisfactory for her.

April is most highly rewarded by receiving promotions at work. Edith as a manager could talk to April and tell her where she needs to improve in order to be promoted and help achieve her goals.



As shown by the case study, the Expectancy Theory (VIE) can be a valuable tool in the workplace.   Here it was used to analyze job performance and develop effective systems of reward ((PSU WC PSYCH 484, 2014, L4, P.7).  The ABC-WIKI Bank recognized the importance of understanding what outcomes are most valued by their employees.  A great example of this would be Edith. By history. we know that she values socializing.  In order to align her personal goals with the company goal of effectively motivating employees to achieve excellence in job performance and service delivery, social events can periodically be built into the work environment for the enjoyment of Edith and her peers (Expectancy Theory, 2012).


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Expectancy Theory (n.d.) In PSYCH 484: Work Attitudes and Motivation. Retrieved September 21, 2014 from https://wikispaces.psu.edu/display/PSYCH484/4.+Expectancy+Theory

Fall 2012 Case Study (2012) In PSYCH 484: Work Attitudes and Motivation.  Retrieved September 21, 2014 from https://wikispaces.psu.edu/display/PSYCH484/Fall+2012+Expectancy+Case

Pennsylvania State University World Campus, PSYCH 484: Work Attitudes and Motivation, Lesson Four: Retrieved September 21, 2014 from https://courses.worldcampus.psu.edu/fa14/psych484/001/content/lesson04/lesson04_01.html