Chapter 10: Motivating and Leading Employees
Psychological Contracts in Organizations
=> psychological contract: the set of expectations held by an employee concerning what he
or she will contribute to an organization (contributions) and what the organization will
provide the employee with (inducements) in return.
- in a sense, a psychological contract resembles a legal contract.
- if either party perceives an imbalance in the contract, that party has the right to seek a
- an example can be seen in the employee asking for a pay raise, promotion or a bigger office,
if he or she has fulfilled or surpassed her part of the contract. If her demands are not met, he
or she has the option of putting forth less effort or looking for another job.
- this shows that employees want to be valued by their employers, and must be given the right
inducements in order to maintain their contributions to the organization.
=> human relations: interactions between employers and employees and their attitude
towards one another.
The Importance of Job Satisfaction and Morale
=> job satisfaction: the pleasure and feeling of accomplishment employees derive from
performing their jobs well.
=> morale: the generally positive or negative mental attitude of employees toward their work
and workplace. It is determined by a variety of factors, including job satisfaction, pay,
benefits, co-workers and promotion opportunities.
Why Businesses need Satisfied Employees:
=> Satisfied Employees: - when workers are enthusiastic and happy with their jobs, the organization benefits in many
- due to their commitment to their work and organization, satisfied workers are more likely to
work hard and try to make useful contributions to the organization.
- they will also have fewer grievances, and are less likely to engage in native behaviours such
as making complaints, deliberately slowing work pace, etc.
- they are also more likely to come to work every day on time, and remain with the
=> Unsatisfied Employees:
- unsatisfied workers are far more likely to be absent due to minor illnesses, personal reason
or a general disinclination to go to work.
=> turnover: the percentage of an organization’s workforce that leaves and must be replaced.
- some turnovers are natural and healthy, weeding out low-performing workers in order to
- however high levels of turnover can have negative consequences such as numerous
vacancies, disruption in production, decreased productivity and high refraining costs.
Motivation in the Workplace
=> motivation: the set of forces that causes people to behave in certain ways.
Classical Theory and Scientific Management:
=> classical theory of motivation: attempts to say that workers are motivated almost solely
by money. However this theory is incorrect.
=> scientific management: breaking down jobs into easily repeated components and
devising more efficient tools and machines for performing them.
- according to Frederick Taylor in his book “ The Principles of Scientific Management”, “ if
workers were motivated by money, then paying them more will prompt them to produce
more. Meanwhile the firm that analysed jobs and found better ways to perform them would
be able to produce goods more cheaply, make higher profits ad thus pay - and motivate -
workers better than its competitors.”
Behaviour Theory: The Hawthorne Studies:
=> Hawthorne effect: the tendency for worker’s productivity to increase when they feel they
are receiving special attention from management.
The Human Resource Model: Beliefs about People at Work:
=> Theory X: a management approach based on the belief that people must be forced to be
productive because they are naturally lazy, irresponsible and uncooperative.
=> Theory X attempts to prove that:
- people are lazy
- people lack ambition
- people are self-centred - people resist change
- people are gullible and not very bright
=> Theory Y: a management approach based on the belief that people want to be productive
because they are naturally energetic, responsible and co-operative.
=> Theory Y attempts to prove that:
- people are energetic
- people are ambitious and seek responsibility
- people can be selfless
- people want to contribute to business growth and change
- people are intelligent
Maslow’s Hierarchy of Needs Model:
=> hierarchy of human needs model: theory of motivation describing five levels of human
needs and arguing that basic needs must be fulfilled before people work to satisfy higher-
level needs. In ascending order:
=> physiological needs: necessary for survival; include food, water, shelter and sleep.
Business address these by providing both comfortable working environments and sufficient
salaries to buy food, water and shelter.
=> security needs: needs for stability and protection from the unknown. Many employers
offer pension plans and job security.
=> social needs: include the needs for friendship and companionship. Making friends