mbo,equity and expectancy theory

MANAGEMENT BY OBJECTIVES(MBO) DEFINITION:

“A management model that aims to improve performance of an organization by clearly defining objectives that are agreed by both management and employees”

The idea was first outlined by Peter Drunker in the book named as “PRINCIPLES OF MANAGEMENT” IN 1954.

PETER DRUNKER

MBO PROCESS

ADVANTAGES1. Helps to focus on the goal achievement.2. Evaluates performance3. Highlights need of performance4. Increase motivation

“NO OPERATIONAL POLICY HAS CONTRIBUTED MORE TO HWELETT PACKARD’S SUCCESS ………..MBO”

- BILL PACKARD ,HP’S FOUNDER

DISADVANTAGES

1. Setting Unclear or Unattainable objective.2. Time Consuming.3. Focused only on outcomes.4. Neglect on important matters.

EQUITY THEORY It is a perception based theory. It was developed by John Stacey Adams. Employee expect to be rewarded in the same

way that other employees are for the same level of input.

It discuss how unequal outcome rewarding can effect a persons job performance, job satisfaction, motivation, absentiseem and turnover.

JOHN STACEY ADAMS

CONTINUED………. Equity theory has five parts: People hold beliefs about their inputs and

outcomes. People compare themselves to a referent other. People form beliefs about others inputs and

outcomes. People compare their input/outcome ratio with

others input/outcome ratio. Perception of inequity motivate behavior to

restore equity.

CONTINUED………. When people compare themselves with

each other in this way they may react in one of three basic ways:

1. Overpayment inequity:Person feels guilt because their input/output ratio is more compared to the others input/output ratio.

CONTINUED………..2. Under payment equity:Person feels anger because their input/output ratio is less compared to the others input/output ratio.3. Equitable payment:This is when person’s input/output ratio is equitable to the other person’s input/output ratio.

BENEFITS OF EQUAL REWARDS

1. Increase motivation.2. Increase job satisfaction.3. Increase job performance.4. Decrease absentiseem.5. Decrease turnover rate.6. Increase level of productivity.

DRAWBACKS OF UNEQUAL REWARDS Lack of motivation. Decrease job satisfaction. Decrease job performance. Increase Absentiseem. Increase Turnover rate. Low Level of Productivity.

EXPECTANCY THEORY Expectancy theory helps us understand

the thought process behind how people choose to behave.

This Theory was developed by Victor vroom.

Employee wants:1. Maximum pleasure.2. Minimum Pain.

MOTIVATIONAL FORCE Definition: “It is the Effort to performance expectations and performance to

outcome expectancies, together with outcome valence, determine our motivational force.”

Motivational force=Expectancy*Instrumentality*Valence Terminologies:Expectancy: Belief that increase in effort will lead to increases the performance. E->PInstrumentality: Belief that increase in performance will lead to certain outcomes. P->OValance:Extent to which an outcome is desirable.

HOW TO INCREASE MF MANAGERS SHOULD:1. In case of effort to performance they

should select, train and coach employees.

2. In case of performance to outcomes they should measure employee performance and explain it to them.

3. Provide them Tasty Outcomes.