MANAGING HUMAN CAPITAL

A strategic approach to people management that focuses on the issues

that are critical to an organization's success

◦ Greater transparency on how value is created

through effective people policies and practices will benefit organizations and their

stakeholders.

These personal assets are highly interrelated and have implications for both individuals and organizations:

Intellectual Capital

Emotional Capital

Social Capital

It form the basis for strong and supportive relationships and for developing the courage and grit necessary for entrepreneurship and taking action.

Is at the heart of individual development

The creation of knowledge and personal value.

Enables the exercise of choice.

Enables the continual growth

Enables fulfillment of ambition

Maintained through self awareness and insight.

Arises from the forging of relationships

Traditional hierarchical roles and responsibilities vs integrated structures and relationships of trust and reciprocity

Content Theories◦ Maslow’s Hierarchy of Needs theory◦ Alderfer’s Modified Need Hierarchy Model◦ Herzberg’s Two Factor Theory (Motivation-Hygiene

Theory)◦ McClelland’s Achievement Motivation Theory

Process (Extrinsic) Theories◦ Expectancy Theories

Vroom’s Expectancy Theory

The Porter and Lawler Expectancy Model

◦ Equity Theory◦ Goal Theory◦ Attribution Theory

Maslow’s theory –Hierarchy of needs (triangle)

Lower needs must be satisfied before higher needs motivates

Once a need is substantially met, it no longer motivates

The motivation-hygiene theory put forward by Herzberg is a development of Maslow’s theory.

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The model condenses Maslow’s 5-levels of need into 3-levels based on the core needs of:◦ Existence – concerned with sustaining human existence

and survival and cover physiological and safety needs of a material nature.

◦ Relatedness – concerned with relationships to the social environment and cover love or belonging, affiliation and meaningful interpersonal relationships of a safety or esteem nature.

◦ Growth – concerned with the development of potential and cover self-esteem and self-actualization.

Thus, ERG Theory

Also known as Herzberg's motivation-hygiene theory

Motivating factors creating job satisfaction: achievement, recognition, personal growth (advancement), responsibility, challenging work.

Hygiene factors creating job dissatisfaction: supervision, company policy, salary, relationship with peers or supervisors, working condition

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This theory suggests that to improve job attitudes and productivity, administrators must recognize and attend to both sets of characteristics and not assume that an increase in satisfaction leads to a decrease in an un-pleasurable dissatisfaction.

Hygiene factors are needed to ensure an employee is not dissatisfied.

Motivation factors are needed in order to motivate an employee to higher performance.

If management wishes to increase satisfactionon the job, it should concerned with the nature of the work itself – the opportunities it presents for gaining status, assuming responsibility and for achieving self-realization.

But, if management wishes to reduce dissatisfaction, then it must focus on the job environment (policies, procedures, supervision & working conditions).

If management is equally concerned with both, then managers must give attention to both sets of job factors.

Linking Maslow’s, Alderfer’s and Herzberg’s theories of motivation

McClelland’s work originated from investigations into the relationship between hunger needs and the extent to which imagery of food dominated thought processes

He identified 4 main arousal-based, and socially developed needs or motives:

1. The achievement motive correspond to

2. The power motive Maslow’s S-A, 3. The affiliative motive esteem & love needs

4. The avoidance motive

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A need to achieve- A person with this type of need, will set goals that

are challenging but realistic.

A need for power- The need to lead others and make an impact.- Socialized power: directed more towards the

organization and concern for group goals. Is exercised on behalf of other people

- Personalized power: characterized by satisfaction from exercising dominance over the people, and personal enhancement.

A need for affiliation- The need for friendly relationships and human

interaction.

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The relative intensity of these motives varies:

◦ Between individuals◦ Between different occupations

Managers appear to be higher in achievement motivation than in affiliation motivation

n-Ach is seen as the most critical for a country’s economic growth and success

◦ Linked to entrepreneurial spirit and the development of available resources

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Underlying basis of expectancy theory:

People are influenced by the expected results of their actions.

Motivation is a function of the relationship between:

◦ Effort expended and perceived level of performance◦ The expectation that rewards (desired outcomes) will be

related to performance.

There must also be:◦ The expectation that rewards (desired outcomes) are

available

These relationships determine the strength of the ‘motivational link’

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Expectancy theory: the motivational link

Performance depends upon the perceived expectation regarding effort expended and achieving the desired outcome.

◦ The desire for promotion will result in high performance only if the person believes there is a strong expectation that this will lead to promotion.

◦ If otherwise the person believes promotion to be based solely on age and length of service, there is no motivation to achieve high performance.

A person’s behavior reflects a conscious choice between the comparative evaluation of alternative behaviors.

The choice of behavior is based on the expectancy of the most favorable consequences.

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Was the first person to propose an expectancy theory aimed specifically at work motivation.

Also known as VIE theory or valence theory.

Under ET, an individual chooses behavior;◦ On the basis of probabilities perceived◦ On the benefits, personal utilities or satisfaction that can

be derived from the outcomes

Individuals should be rewarded with what he/she perceives as important rather than what the manager perceives

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Vroom argued that in order for a person to be motivated, the effort, performance and motivation must be linked.

Three important variables:◦ Valence – anticipated value◦ Instrumentality◦ Expectancy.

The theory is founded on the idea that people prefer certain outcomes from their behavior over others.◦ They anticipate feelings of satisfaction should the preferred

outcome be achieved.

Valence is the feeling about or the importance that the individual places upon the expected outcomes.◦ (the attractiveness of, the preference for, a particular outcome

to the individual) E.g. If I am mainly motivated by money, I might not

value offers of additional time off.

A person may desire an object but then gain little satisfaction from obtaining it.

Alternatively, a person may strive to avoid an object, but find, subsequently, that it provides satisfaction.

Thus, valence is the anticipated satisfaction from an outcome.

Whereas value is the actual satisfaction provided by an outcome.

Instrumentality is the belief that if you perform well, a valued outcome will be received: i.e. if I do a good job, there is something in it for me.

The valence of outcomes derives from their instrumentality.

This leads to a distinction between:◦ First level outcomes◦ Second-level outcomes

First level outcomes

◦ Are performance-related

◦ Refer to the quantity of output or to the comparative level of performance

◦ Some people may seek to perform well ‘for its own sake’ and without thought to expected consequences of their actions.

◦ Usually however, performance outcomes acquire valence because of the expectation that they will lead to other outcomes as an anticipated source of satisfaction i.e. second-level outcomes.

Second level outcomes

◦ Are need-related

◦ Derived through achievement of first-level outcomes i.e. through achieving high-performance.

◦ Many need-related outcomes are dependent upon actual performance rather than effort expended.

◦ People generally received rewards for what they have achieved rather than for effort alone or through trying hard.

Expectancy is the belief that increased effort will lead to increased performance: i.e. if I work harder then this will be better achieved.

When a person chooses between alternative behaviors which have uncertain outcomes, the choice is affected by:◦ The preference for a particular outcome;◦ The probability that such an outcome will be achieved.

People develop a perception of the degree of probability that the choice of a particular action will actually lead to the desired outcome this is expectancy.

It is the relationship between a chosen course of action and its predicted outcome.

Its value ranges between 0, indicating zero probability that an action will be followed by the outcome, and 1, indicating certainty that an action will result in the outcome.

The combination of valence and expectancy determines a person’s motivation for a given form of behavior. This is termed as motivational force.

Basic model of expectancy theory

Developed from Vroom’s expectancy theory

The model goes beyond motivational force and considers performance as a whole.

Pointed out that effort expended (motivational force):◦ does not lead directly to performance;

◦ is mediated by :

individual abilities and traits;

The person’s role perceptions.

Introduce rewards as an intervening variable

See motivation, satisfaction and performance as separate variables and attempt to explain the complex relationships among them.

Recognizes that job satisfaction is more dependent upon performance, than performance is upon satisfaction.

◦ i.e. performance determines job satisfaction

◦ And not job satisfaction that determines performance (human relations approach)

The Porter and Lawler motivation model

Valence

expectancyDesirable outcomes

The attractiveness of alternative behaviors is dependent on 2 types of expectancies :

◦ Effort-performance expectancies (E P) A person’s perception of the probability that a given amount

of effort will result in achieving an intended level of performance

Measured on a scale between 0 and 1 The closer the relationship between effort and performance,

the higher the E P expectancy score.

◦ Performance-outcome expectancies (P O) A person’s perception of the probability that a given level of

performance will actually lead to particular need-related outcomes.

Measured on a scale between 0 and 1. The closer the perceived relationship between performance

and outcome, the higher the P O expectancy score.

An illustration of the Lawler expectancy model

Managers should:

Use rewards appropriate in terms of individual performance. Outcomes with high valence should be used as an incentive for improved performance.

Attempt to establish clear relationships between effort-performance and rewards, as perceived by the individual.

Establish clear procedures for the evaluation of individual levels of performance.

Managers should:

Pay attention to intervening variables such as abilities and traits, roles perceptions, organizational procedures and support facilities, which, may affect performance, even though indirectly.

Minimize undesirable outcomes which may be perceived to result from a high level of performance such as industrial accidents or sanctions from co-workers, or to result despite a high level of performance such as short-time working or layoffs.

Focuses on people’s feelings of how fairly they have been treated in comparison with the treatment received by others.

It is based on exchange theory, as social relationships involve an exchange process.

Most exchanges involve a number of inputs and outcomes.

People is said to place a weighting on these various inputs and outcomes according to how they perceive their importance.

When there is an unequal comparison of ratios, the person experiences a sense of inequity.

An illustration of Adams’s equity theory of motivation