Tag: University of Mumbai BMS Notes

The shortcomings of the trait theory led to a significant change in the emphasis of leadership approach. This shift in emphasis began to focus attention on the actual behaviour and actions of leaders as against personal qualities or traits of leaders. According to this approach, leadership involves an interpersonal relationship between a leader and subordinates in which the behaviour of the leader towards the subordinates constitute the most critical element. The good behaviour of the leader raises the morale, builds up confidence and spirit among the team members and lack of good behaviour will discard him as a leader.

The behavioural approach differs from the traits approach in that:

(i) The traits approach emphasizes some particular trait to be possessed by leader whereas this theory emphasized on particular behaviour by him.

(ii) The purpose of trait theory was to separate leaders from non-leaders on the basis of traits, whereas the purpose of behavioural theory is to determine how various kinds of specific behaviour affect the performance and satisfaction of subordinates.

Behavioral leadership theory is conducted by scientifically evaluating the moods and actions of individuals in leadership roles to adopt patterns that may impact you and the environment around your team members. If a study of multiple leaders is large enough, statistical conclusions can be drawn to determine the tangible metrics of their behaviors, and it can serve as an indicator to if their management style encourages workplace improvement.

Behavioral leadership theories are designed to study a leader’s behavior in a controlled situation to generate marketing potential. If leaders can take the viewpoint of their customers when they’re reviewing a product or service targeted toward them, they know how to establish a lasting relationship, leading to continuous purchases and revenue for the company. In this article, we overview how behavioral leadership theories are defined and the effects they have on you and your coworkers.

Advantages of behavioral leadership theory

There are two main advantages of behavioral leadership theory:

1. It addresses key questions on an organization’s leadership model

A couple of points that can be addressed by this study is if leaders expect you to cooperate among various departments on different tasks or if teams are consistently involved in decision-making to foster support on related projects. If there is a lag when it comes to the work being completed on a marketing project, the behavioral theory of leadership can answer why there may be a lag and who is directly responsible for it. If a marketing manager did not communicate expectations for the approval process on client deliverables, then a change of direction is needed to get a project back on track to keep the clients satisfied with your brand.

2. It identifies the leadership style of your manager

Behavioral theories of leadership only assess behavior, not traits or capabilities. Trait theory goes in-depth on how managers and employees have characteristics like being adaptable to changing circumstances and alertness in a social environment that show if they’re qualified to be a leader. Executing a behavioral leadership theory evaluation highlights the events a manager acts upon given the situation.

If you feel like your means of communication differs from your manager, determine which leadership style your manager has, such as:

• Coaching leadership: This kind of leader helps you set your and your department’s goals and is proactive in giving feedback about performance. For example, a manager can assign your team a project as a growth opportunity in addition to setting expectations and creating a positive work environment for staff. Each month, a sales director can set goals for their team to reach a quota of outbound calls to prospects, leads generated and deals closed over a set period. Once the sales director gathers all performance metrics, they determine if they met or exceeded their targets for these three categories, suggest improvements and answer questions or concerns from the team about how to proceed.
• Visionary leadership: These types of leaders can inspire progress from their employees while earning trust for new ideas and creating a bond between you and other organizations’ employees. This is helpful if you’re a part of a smaller organization that is growing fast or a larger organization that is experiencing a corporate restructuring. If your manager forms a group with you and your coworkers to resolve anxieties about workload, this is an example of a visionary leader.
• Servant leadership: Servant leaders have a people-first mindset and are fulfilled when you feel personally and professionally fulfilled. Many managers have the belief that if you’re fulfilled in all aspects of your life, then you’re more likely to produce great work regularly. They can raise employee morale and help you re-engage with your work. Say the CEO of your company has coffee with you once a month to address concerns, questions or thoughts about a product that is launching soon. This is intended to help alleviate confusion you may have about your work and to help the client receive a highly valuable product.
• Autocratic leadership: An autocratic leader makes a company decision without consulting you about it directly. If a decision needs to be made quickly, then it makes sense to not loop you in, especially if you’re not an upper-level employee in an organization. This strategy can save you time if you’re working on a project that has a stringent client deadline so you don’t have to be pulled into a meeting that doesn’t require your input.
• Laissez-faire or hands-off leadership: This approach is the opposite of autocratic leadership where its approach is centered on delegating tasks to different employees without or with little supervision. if you’re highly experienced in your field, then you would be in favor of this style as it requires little oversight. It’s also beneficial if you like the freedom of creating your own schedule that meets the department’s goals.
• Democratic leadership: Democratic leaders ask their team to provide input before making a managerial decision. This can be a chance for you to shine by presenting your ideas in a way that is correlated to the teams’ performance. Even though each leader differs in how much input they ask from their team, an agreement matters if there is an unbreakable bond between coworkers.

Disadvantages of behavioral leadership theory

There are two main disadvantages of behavioral leadership theory:

1. Behavioral theories are a learned process and take time

Whether you’re a leader or an employee, determining certain behaviors that fit scenarios come with trial and error. Leaders have to be willing to put themselves in an environment to be tested, and they have to acknowledge that their behavior is worth monitoring. With the vast deadlines pending and clients to attend to, a CEO or impactful leader may be a difficult test subject to access. However, if they show a willingness to be vulnerable, they’ll know more about themselves than they did going into the evaluation, and it can have a direct effect on how they interact with you as time progresses.

2. Leaders have other considerations for how to manage employees

Leaders may consider power and influence approaches to getting work done and how to work with you. This way, your role and the manner in which you operate within an organization factors into what decision you make and when.

Two leadership styles that fit this paradigm include:

• Pacesetter leadership: This approach is geared toward driving fast results from team members where they hold high standards for you and your colleagues for meeting your goals. Your manager can change a weekly staff meeting from one hour in the boardroom to a 15-minute standup meeting to go over the past week’s performance.
• Transactional leadership: This method is also centered on a leader who is only measuring the performance of their team. This leader offers predetermined incentives, usually a monetary one for success or disciplinary action for failure. However, the leader still provides mentorship opportunities to achieve those goals. A sales director meets with their team biweekly to see how they can exceed their targets to earn their bonuses. This is not an optimal management style if you’re seeking to move into a creative field.

Criticism of the Behavioural Approach

(i) This approach does not take into consideration the situational variables. A particular leadership style may be effective in one situation, but it may not be so effective or ineffective in another situation. In fact, the situation determines the effectiveness of a particular leadership style.

(ii) This approach does not consider the time factor also. A particular behaviour or action of the leader may be effective at one point of time while the same may be ineffective at some other point of time. Several theories where developed during 1950s and 1960s that approached leadership from the standpoint of actual behaviour of leaders.

Two important behavioural theories are:

• Michigan Studies
• Ohio State University Leadership Studies

1. Michigan Studies

These empirical studies were conducted slightly after World War II by the Institute of Social Research at the University of Michigan. The purpose of these studies was to identify styles of leadership behaviour that results in higher performance and satisfaction of a group.

These studies distinguished between two distinct styles of leadership:

(i) Production Centered Leadership

This leadership is also known as task oriented leadership.

The production oriented leadership stressed on certain points:

• Rigid work standards, procedure and rules
• Close supervision of the subordinates
• Technical aspect of the job
• Employees were not to be considered as human beings but as tools to accomplish the goals of the organizations.

(ii) Employee Centered Leadership

This style is also known as relation oriented leadership because it emphasize on human relations.

The main parts which are concentrated upon in this approach are:

• To treat subordinates as human beings.
• To show concern for the employees needs, welfare, advancement etc.
• To encourage employee participation in goal setting and in other work related decisions.
• To help ensure high performance by inspiring respect and trust.

2. Ohio State University Leadership Studies

The Bureau of Research at Ohio State University conducted these studies. The main objective of the studies was to identify the major dimensions of leadership and to investigate the effect of leader’s behaviour on employee behaviour and satisfaction.

Ultimately, these studies narrowed the description of leader behaviour to two dimensions:

(i) Initiating Structure

(ii) Consideration

(i) Initiating Structure

It refers to the leader’s behaviour in defining and organizing the relationship between himself and members of the group.

The purpose of initiating structure is to:

• Establish well defined patterns of organization.
• Develop channels of communications and methods or procedures.
• To supervise the activities of employees.

Consideration

Consideration refers to the behaviour which can be characterised by:

• Friendliness
• Mutual trust
• Respect
• Supportiveness
• Openness
• Concern for the welfare of employees

The basic feature of this theory is that leadership behaviour is plotted on two axes rather than on a single continuum.

The Trait Theory asserts that an individual is composed of a set of definite predisposition attributes called as traits. These traits are distinguishable and often long lasting quality or a characteristic of a person that makes him different from the others.

Trait theorists are primarily interested in the measurement of traits, which can be defined as habitual patterns of behavior, thought, and emotion. According to this perspective, traits are aspects of personality that are relatively stable over time, differ across individuals (e.g. some people are outgoing whereas others are not), are relatively consistent over situations, and influence behavior. Traits are in contrast to states, which are more transitory dispositions.

In some theories and systems, traits are something a person either has or does not have, but in many others traits are dimensions such as extraversion vs. introversion, with each person rating somewhere along this spectrum.

There are two approaches to define traits: as internal causal properties or as purely descriptive summaries. The internal causal definition states that traits influence our behaviours, leading us to do things in line with that trait. On the other hand, traits as descriptive summaries are descriptions of our actions that don’t try to infer causality.

The two most common trait theories are:

1. Allport’s Trait Theory

This theory is given by Gordon Allport. According to him, the personality of an individual can be studied through a distinction between the common traits and the personal dispositions.

The common traits are used to compare the people on the grounds of six values, such as religious, social, economic, political, aesthetic and theoretical. Besides the common traits, there are personal dispositions which are unique and are classified as follows:

• Cardinal Traits: The cardinal traits are powerful, and few people possess personality dominated by a single trait. Such as Mother Teressa’s altruism.
• Central Traits: These traits are the general characteristics possessed by many individuals in the varying degrees. Such as loyalty, friendliness, agreeableness, kindness, etc.
• Secondary Trait: The secondary traits show why at times, a person behaves differently than his usual behavior. Such as a jolly person may get miserable when people try to tease him.

2. Cattell’s Trait Theory

This trait theory is given by Raymond Cattell. According to him, the sample of a large number of variables should be studied to have a proper understanding of the individual personality.

He collected the life data (everyday life behaviors of individuals), experimental data (standardizing experiments by measuring actions), questionnaire data (responses gathered from the introspection of an individual’s behavior) and done the factor analysis to identify the traits that are related to one another.

By using the factor analysis method, he identified 16 key personality factors:

• Abstractedness: Imaginative Vs Practical
• Warmth: Outgoing Vs Reserved
• Vigilance: Suspicious Vs Trusting
• Tension: Impatient Vs Relaxed
• Apprehension: Worried Vs Confident
• Emotional Stability: Calm Vs anxious
• Liveliness: Spontaneous Vs Restrained
• Dominance: Forceful Vs Submissive
• Social Boldness: Uninhibited Vs Shy
• Perfectionism: Controlled Vs Undisciplined
• Privateness: Discreet Vs Open
• Sensitivity: Tender Vs Tough
• Self Reliance: Self sufficient Vs Dependent
• Rule-Consciousness: Conforming Vs Non-Conforming
• Reasoning: Abstract Vs Concrete
• Openness to Change: Flexible Vs Stubborn

The trait theory is based on the assumption that the traits are common to many individuals and they vary in absolute amounts. Also, the traits remain consistent over a period of time, and thus can be measured through the behavioral indicators.

Traits of Effective Leader

Leadership traits refer to personal qualities that define effective leaders. Leadership refers to the ability of an individual or an organization to guide individuals, teams, or organizations toward the fulfillment of goals and objectives. It plays an important function in management, as it helps maximize efficiency and achieve strategic and organizational goals. Leaders help motivate others, provide guidance, build morale, improve the work environment, and initiate action.

List of Effective Leadership Traits

A common misconception is that individuals are just naturally gifted with leadership skills. The truth is that leadership traits, like other skills, can be acquired with time and practice. Below are seven traits of an effective leader:

1. Effective Communicators

Leaders are excellent communicators, able to clearly and concisely explain problems and solutions. Leaders know when to talk and when to listen. In addition, leaders are able to communicate on different levels: one-on-one, via phone, email, etc.

2. Accountable and Responsible

Leaders hold themselves accountable and take responsibility for any mistakes. Leaders support and encourage individuality while abiding by organizational structure, rules, and policies that need to be followed.

3. Long-term Thinkers

Leaders are visionaries. This is evidenced by the leadership trait of being able to plan for the future through concrete and quantifiable goals. They understand the need for continuous change and are open to trying new approaches to solve problems or improve processes.

4. Self-motivated

Leaders are self-motivated and are able to keep going and attain goals despite setbacks. In addition, good leaders try their best to exceed, not just meet, expectations.

5. Confident

Virtually all good leaders share the leadership trait of confidence. They are able to make tough decisions and lead with authority. By being confident, leaders are able to reassure and inspire others, establish open communications, and encourage teamwork.

6. People-oriented

Leaders are typically people-oriented and team players. They’re able to foster a team culture, involve others in decision-making, and show concern for each team member. By being people-oriented, leaders are able to energize and motivate others. By making each individual feel important and vital to the team’s success, they secure the best efforts from each member of the team.

7. Emotionally Stable

Leaders exercise good control and regulation over their own behavior and are able to tolerate frustration and stress. Leaders are able to cope with changes in an environment without having an intense emotional reaction.

Motives of Effective Leader

As well as providing direction, inspiration, and guidance, good leaders exhibit courage, passion, confidence, commitment, and ambition. They nurture the strengths and talents of their people and build teams committed to achieving common goals. The most effective leaders have the following traits in common.

1. Share Their Vision

A leader with vision has a clear idea of where they want to go, how to get there and what success looks like. Be sure to articulate your vision clearly and passionately, ensuring your team understands how their individual efforts contribute to higher level goals. Personally working toward your vision with persistence, tenacity, and enthusiasm will inspire and encourage others to do the same.

2. Lead By Example

As a leader, the best way to build credibility and gain the respect of others is to set the right examples. Demonstrate the behavior that you want people to follow. If you demand a lot of your team, you should also be willing to set high standards for yourself. Aligning your words and actions will help to build trust and make your team more willing to follow your example.

3. Demonstrate Integrity

A leader with integrity draws on their values to guide their decisions, behavior, and dealings with others. They have clear convictions about what is right and wrong and are respected for being genuine, principled, ethical and consistent. They have a strong sense of character, keep their promises, and communicate openly, honestly and directly with others. Displaying integrity through your daily actions will see you rewarded with loyalty, confidence, and respect from your employees.

4. Communicate Effectively

The ability to communicate clearly, concisely and tactfully is a crucial leadership skill. Communication involves more than just listening attentively to others and responding appropriately. It also includes sharing valuable information, asking intelligent questions, soliciting input and new ideas, clarifying misunderstandings, and being clear about what you want. The best leaders also communicate to inspire and energize their staff.

5. Make Hard Decisions

To be an effective leader, the ability to make fast, difficult decisions with limited information is critical. When facing a tough decision, start by determining what you are trying to achieve. Consider the likely consequences of your decision and any available alternatives. Make your final decision with conviction, take responsibility for it and follow it through. Being a resolute and confident decision-maker will allow you to capitalize on opportunities and earn the respect of your team.

6. Recognize Success

Frequently and consistently recognizing achievement is one of the most powerful habits of inspiring leaders. For people to stretch themselves and contribute their best efforts, they need to know their work will be valued and appreciated. Find ways to celebrate the achievements of your people, even if it’s through a simple ‘well done.’ As well as boosting morale, it will also strengthen their motivation to continue giving their best.

7. Empower Others

Great leaders understand that for people to give their best, they must have a sense of ownership over their work and believe that what they’re doing is meaningful. Communicate clear goals and deadlines to your team, and then give them the autonomy and authority to decide how the work gets done. Challenge them with high expectations and encourage them to be creative and show innovation.

8. Motivate and Inspire

The best leaders drive their team forward with passion, enthusiasm, inspiration and motivation. Invest time in the people you lead to determine their strengths, needs, and priorities. As well as making them feel valuable, this will help you to understand the best way to motivate them. Continually reinforce how their efforts are making a difference, and encourage the development of their potential with meaningful goals and challenges.

Around the world, there are hundreds of thousands of community workers making up the front line of the development effort. As teachers, health workers, administrators, and auditors, these workers help to bridge the ‘last mile’ problem in development. Working with limited technology and scarce resources, they are responsible for actually providing the services, as well as monitoring and evaluating. It is no exaggeration to say that, with out them, development would fail to reach some of the most difficult, remote, and needy places in the world.

India is an epicentre of this reality. Consider, for example, the day-to-day roles of female community leaders working with an education non-profit such as Pratham. These project leaders form a core part of many of Pratham’s activities, enabling the organization to serve 19 states across the country. Their work is by no measures easy or inconsequential. They must convince their families to leave their village districts and relocate to new corners of their state, entrusting their fate to a new organization. As they walk from hamlet to hamlet in India’s mid-summer heat, Pratham’s project leaders serve as daily role models to community members, providing constant support that enables change to be catalysed from within. This isn’t a romanticised view of Indian development – it is the nuts and bolts of what it takes to administer India’s social welfare programmes, which are some of the largest in the world. In aggregate, the numbers in both the government and non-for-profit sectors are staggering. The Indian government employs 20 million government servants in administrative and bureaucratic functions and it is often cited that India is home to upwards of three million NGOs, or one NGO for every 400 people.

Despite their critical role, little is really understood about what motivates these community-based workers. Identifying what drives them (rather than assuming their motivation is immeasurable or unchangeable) could ultimately transform service delivery to the poor in India and around the world.

All about the money?

Providing attractive financial incentives for these workers and in particular, offering pay-for-performance schemes, may improve the quality of service provision by increasing the effort of workers. For example, evidence suggests that modest bonuses based on improvements in student test scores led to better outcomes in government schools in rural Andhra Pradesh (Muralidharan and Sundararaman 2009). Often, however, the opportunity to successfully implement this type of variable financial remuneration in India is limited; entrenched political attitudes and administrative constraints make the adoption of pay-for-performance in the country’s civil service and not-for-profit sector possible only with unyielding effort and patience.

Even if financial incentives could be implemented more easily in India, it is not certain that they would always be the most effective mechanism for motivating behaviour that has a social benefit rather than a private one. In the case of the teachers in Andhra Pradesh, for example, pay-for-performance incentives were successful but they were not evaluated against non-financial rewards.

‘Altruistic capital’

Our results suggest that there is tremendous unexplored potential in non-financial incentives. Community recognition or public expressions of gratitude, reflections or reminders that help us remember the purposeful nature of our work, and social competition are all non-financial incentives that could have a serious role to play in alleviating problems that plague Indian public service delivery to the poor –across health, education, access to finance, and infrastructure.

The internal barometers for action within each of us – a confluence of our sense of justice, morality, purpose, and enjoyment comprise our intrinsic motivation. When our internal motivation seeks to positively impact our community, we possess an asset I call ‘altruistic capital’. A key contribution of our study with hairdressers was that our design enabled us to decipher whether the non-financial incentives brought out people’s intrinsic motivation for contributing to the fight against HIV.

Motivation was measured in several ways, including by hairdressers’ responses to a contextualized game where they were given money and asked how much they would like to donate to a well-known charity providing care to HIV patients. By this measure, motivated agents sold nearly three times as many condoms when presented with non-financial incentives than under the high financial-reward treatment. This suggests that non-financial incentives are able to bring out internal motivation. Indeed, altruistic capital, like all forms of capital, can be nurtured or destroyed by an organization’s policies.

Can it work in India?

Though experience in Zambia shows much promise, many questions remain to be answered, particularly for the Indian context, where deeply entrenched norms surrounding civil service may pose a different opportunity for non-financial incentives. Rather than lament the inefficiency of a bloated bureaucracy, a better pursuit would be to use the availability of workers to adapt and test successful non-financial incentives that researchers have identified in other contexts. In the face of bureaucracy, corruption, rising inequity, and poor service delivery outcomes (even for proven interventions), we should focus academic and policy effort on innovation in precisely this area. To help India achieve greater literacy rates, improved child nutrition, increased sanitation, and so on, we can benefit from looking deeper at ourselves and treating ourselves as complex human beings with multiple motivations that drive our behaviour.

Equity theory is based in the idea that individuals are motivated by fairness, and if they identify inequities in the input or output ratios of themselves and their referent group, they will seek to adjust their input to reach their perceived equity. Adams suggested that the higher an individual’s perception of equity, the more motivated they will be and vice versa: if someone perceives an unfair environment, they will be de-motivated.

The easiest way to see the equity theory at work, and probably the most common way it does impact employees, is when colleagues compare the work they do to someone else that gets paid more than them. Equity theory is at play anytime employees say things like, ‘John gets paid a lot more than me, but doesn’t do nearly as much work,’ or ‘I get paid a lot less than Jane, but this place couldn’t operate without me!’ In each of those situations, someone is comparing their own effort-to-compensation ratio to someone else’s and is losing motivation in the process.

This Theory show:

• Inputs: Inputs include all the rich and diverse elements that employees believe they bring or contribute to the job – their education, experience, effort, loyalty, commitment.
• Outcomes: Outcomes are rewards they perceive they get from their jobs and employers outcomes include- direct pay and bonuses, fringe benefit, job security, social rewards and psychological.
• Over rewarded: if employees fell over-rewarded equity theory predicts then they will feel an imbalance in their relationship with their employee and seek to restore that balance.
• Equity: if employees perceive equity then they will be motivated to continue to contribute act about the same level.
• Unrewarded: unrewarded who feel they have been unrewarded and seek to reduce their feeling in equity through the same types of strategies but same of this specific action are now reverse.

This theory is based on the following two assumptions about human behavior:

Individuals make contributions (inputs) for which they expect certain outcomes (rewards). Inputs include such things as the person’s past training and experience, special knowledge, personal characteristics etc. Outcomes include pay, recognition, promotion, prestige, fringe benefits etc.

Individuals decide whether or not a particular exchange is satisfactory, by comparing their inputs and outcomes to those of others, in the form of a ratio. Equity exists when an individual concludes that his/her own outcome/input ratio is equal to that of other people.

The essential aspects of the equity theory may be shown by an equation;

There should be a balance of the outcomes/inputs relationship for one person in comparison with that for another person. If the person thinks that the rewards are greater than what is considered, he/she may work harder.

If the person perceives the rewards as equitable, he/she probably will continue at the same level of output.

If the person feels that he/she is inequitably rewarded, he/she may be dissatisfied, reduce the quantity or quality of output, or even leave the organization.

The three situations of equity theory are illustrated in the following figure:

Roles played by equity in motivation:

1. Employees make comparisons between their job inputs and outcomes relative to those of others.

• If we perceive our ratio to be equal to that of the relevant others with whom we compare ourselves, a state of equity is said to exist. We perceive our situation as fair.
• When we see the ratio as unequal, we experience equity tension.

2. Additionally, the referent that an employee selects adds to the complexity of equity theory. There are four referent comparisons that an employee can use:

• Self-inside: An employee’s experiences in a different position inside his or her current organization.
• Self-outside: An employee’s experiences in a situation or position outside his or her current organization.
• Other-inside: Another individual or group of individuals inside the employee’s organization.
• Other-outside: Another individual or group of individuals outside the employee’s organization.

3. Which referent an employee chooses will be influenced by the information the employee holds about referents, as well as by the attractiveness of the referent. There are 4 moderating variables: gender, the length of tenure, level in the organization, and the amount of education or professionalism. Men and women prefer same-sex comparisons. This also suggests that if women are tolerant of lower pay, it may be due to the comparative standard they use. Employees in jobs that are not sex-segregated will make more cross-sex comparisons than those in jobs that are either male- or female-dominated.
4. Employees with a short tenure in their current organizations tend to have little information about others.
5. Employees with long tenure rely more heavily on coworkers for comparison.
6. Upper-level employees tend to be more cosmopolitan and have better information about people in other organizations. Therefore, these types of employees will make more other- outside comparisons.
7. When employees perceive an inequity, they can be predicted to make one of six choices:

• Change their inputs.
• Change their outcomes.
• Distort perceptions of self.
• Distort perceptions of others.
• Choose a different referent.
• Leave the field.

8. The theory establishes the following propositions relating to inequitable pay:

• Given payment by time, over-rewarded employees will produce more than will equitably pay employees.
• Given payment by the quantity of production, over-rewarded employees will produce fewer, but higher quality, units that will equitably pay employees.
• Given payment by time, under-rewarded employees will produce less or poorer quality of output.

9. Given payment by the quantity of production, under-rewarded employees will produce a large number of low-quality units in comparison with equitably paid employees.
10. These propositions have generally been supported with a few minor qualifications.

• Inequities created by over-payment do not seem to have a very significant impact on behavior in most work situations.
• Not all people are equity-sensitive.

11. Employees also seem to look for equity in the distribution of other organizational rewards.
12. Finally, recent research has been directed at expanding what is meant by equity or fairness.

• Historically, equity theory focused on distributive justice or the perceived fairness of the amount and allocation of rewards among individuals.
• Equity should also consider procedural justice, the perceived fairness of the process used to determine the distribution of rewards.
• The evidence indicates that distributive justice has a greater influence on employee satisfaction than procedural justice,
• Procedural justice tends to affect an employee’s organizational commitment, trust in his or her boss, and intention to quit.
• By increasing the perception of procedural fairness, employees are likely to view their bosses and the organization as positive even if they are dissatisfied with pay, promotions, and other personal outcomes.

A process theory is a system of ideas that explains how an entity changes and develops. Process theories are often contrasted with variance theories, that is, systems of ideas that explain the variance in a dependent variable based on one or more independent variables. While process theories focus on how something happens, variance theories focus on why something happens. Examples of process theories include evolution by natural selection, continental drift and the nitrogen cycle.

How Process Theory Works in Measuring Work Motivation?

Using process theory, a type of scientific observation, individuals measure how events in a specific process lead to an outcome. According to this theory, when a company wants to reproduce an outcome, the company must duplicate the process used to derive this objective. When it comes to motivation, process theory provides a means to explain how the needs of workers change.

Equity Theory

Equity Theory within Process Theory measures work motivation by the amount of skills an employee possesses and the efforts of the employer. When an employee feels that she and her employer have made equal investments in each other, she is more likely to feel motivated. Investments on an employer’s behalf can include worker benefits, salaries and promotions. The Equity Theory measures an employee’s perception of workplace fairness and inequalities and looks at how each factor can cause an employee to adjust her behavior. When an employee feels a work situation is unfair, she may reduce her productivity level, feel she is entitled to a high compensation or look for work elsewhere.

Expectancy Theory

Using the Expectancy Theory within Process Theory helps explain how particular efforts link to the desires for specific outcomes as they monitor the success of an outcome. The Expectancy Theory uses the assumption that employers try to predict outcomes and create perceived expectations about future events that are realistic. Therefore, if an outcome looks feasible and an employee knows how to achieve it, he will feel motivated to use the information known to make the predicted outcomes become a reality. Three variables within the Expectancy Theory can affect Process Theory and worker motivation — valence, instrumentality and expectancy. Valence focuses on the outcome or reward an employee anticipates. Instrumentality is an employee’s belief that repeating specific actions will help him achieve the result desired. Expectancy refers to an employee’s belief in his own capabilities. Therefore, an employee finds job satisfaction and motivations from his job performance.

Theory of Goal Setting

Setting goals can help motivate an employee because it makes her feel needed. This feeling can translate in goal-driven behaviors that continue until the employee no longer feels needed. The type of goal can dictate an employee’s level of motivation when she faces more than one objective. Similarly, an employee will increase her level of participation in setting a goal if she feels the process includes fairness and autonomy.

Variance Theory

Variance Theory within the Process Theory compares an employee’s motivation to his behaviors and needs. An employee feels more motivated when he believes that the rewards of achieving a goal will materialize, will meet his needs and will match the energy he put into accomplishing tasks.

The Four Drive model presents human aspirations as a set of fundamental needs. The theory was introduced in the 2002 book titled Driven. These dynamic needs were acquired over time from human evolutionary past and became a part of the mental stock meant to serve as an advantage in the epochs to come.

The derived drives are elemental and cannot be broken down into smaller elements, yet provide a comprehensive understanding of what is behind human motivation. These complete drives are: acquire, bond, learn, and defend. Each of them is characterized by features influencing communication with other humans, in the workplace included.

Acquire

Acquire is the drive to gain material possessions, achieve a position, or be awarded a status. On one side, it can lead to increased performance, but on the other, lead to detrimental competition. The drive to acquire combines both basic and complex wants varying from essentials for survival to accomplishments and power. Understanding this drive and providing necessary conditions to fulfill the “acquisition” by means of job performance should be at the core of creating any satisfying job. To balance out unhealthy competition you can use another drive the drive to bond.

It is completely fine to evaluate the perception of the workplace environment based on these Four Drives. If that is your intention, you will find the four fundamental drives job satisfaction survey below. The content of the survey is meant to point managers to the potential areas of interest and help formulate the right questions to get more accurate results.

The Drive to Acquire and Achieve

• Does your organization offer monetary rewards for exceptional performance?
• Is your salary competitive?
• Are your performance evaluation criteria defined clearly?
• Does your organization clearly define the need for high performance?
• Is your performance getting the recognition it deserves?
• How happy are you with the payment for your work?

Bond

The drive to bond determines the need to find and engage in mutual relationships with others. Extensive research has revealed that we are inclined to bond with other individuals similar in worldview and demographics. People who have a neck for establishing relationships soon can grow to include groups in the workplace. Bonds are, generally, healthy and result in workers supporting each other. The drive to bond is aimed towards other people, while the drive to learn is more personal, directed at work activities for the most part.

The Drive to Bond

• Does your organization encourage employees to support each other?
• How does your organization recognize teamwork efforts or collaborations?
• Does your company encourage best practices and knowledge sharing?
• Is friendship among employees supported by your organization?
• Do you see yourself as an indispensable part of the team?
• Would you define your management as people-oriented?
• Would you agree with the statement that your management cares for you on a personal level?

Learn

Workplace environments that encourage curiosity and provide means for exploration to improve understanding are perfect for satisfying the drive to learn. This particular drive is also behind the urge to understand one’s role in the organization and what that role is meant to contribute to the greater goal. The satisfaction workers get from taking up challenges at the workplace is a perfect representation of the drive to learn effect. It also works wonders coupled with the drive to bond. The effects of the first three drives we have gone over are all desirable in the workplace. However, the last one — the drive to defend — you would not want triggered in the work environment.

The Drive to Learn and Comprehend

• Does your job give you the opportunity to do work that interests you?
• Is there an opportunity to learn new things at your job?
• Do you think the work that you do accomplishes something meaningful for your organization?
• Would you consider your assignments to be challenging?
• Is there a variety of the assignments you are getting at work?
• Is personal development and growth supported at your organization?
• Are you acquiring new skills or knowledge at work?

Defend

Contrary to the active drives to acquire, bond, and learn which people seek to fulfill, the drive to defend is subtle and becomes active only when triggered by a threat. The stimulation to defend can be a result of a threat to the organization, the group, or the individual. In this scenario, it is best for the organization to work out an environment that minimizes or eliminates the source of these threats. With misguided and unintentional triggers handled, the drive to defend allows workers to effectively respond to genuine threats.

The Four Drive model presents human aspiration to acquire, bond, learn, and defend as elemental psychologically engraved needs, either of the drives can be expressed at a different level compared to others. The influence of any given drives varies over time too. A consistent predominant manifestation of one of the drive can be detrimental for organizational as well as personal outcomes. Once a person gets captivated by, for instance, the drive to acquire it can lead to unhealthy competition and greed. The absorption with the drive to defends leads to a person becoming socially distanced or even paranoid. The key aspect of the theory revolves around balancing out all four drives and using them to regulate one another. The same objective should be pursued when structuring a job position and creating a workplace environment.

The Drive to Defend

• Does your organization have a transparent performance rating system?
• Do you work in a non-intimidating and welcoming environment?
• Is your organization’s performance rating system fair?
• Does your manager play favorites or everyone is treated fairly?
• Do you personally trust organization’s approach to performance rating?
• Does everyone, including yourself, have the right to speak up at your organization?

In business, people may choose either to work together as a team or work separately to attain goals. Synergy occurs when a company chooses to utilize teams to increase performance, drive strategic growth and reach common goals. Companies may use a synergistic approach to enhance communications, promote knowledge sharing, streamline processes and bridge the generation gap.

Enhance Communications

Synergy extends communications across departments, and teamwork is encouraged to reach strategic goals. For example, the sales department and IT department work together and share skill sets to create a new customer service portal and increase market share. A company that promotes synergy could use technology, such as tablet computers and video conferencing, to provide mobility, ease of access and real-time discussions. This may help employees improve communication skills and deliver exemplary customer service.

Promote Knowledge Sharing

Knowledge sharing permits feedback from co-workers and collaboration between internal and external stakeholders. Synergy may involve the of use customer relationship management products such as Salesforce.com and social networking sites such as Facebook, Twitter and LinkedIn to facilitate the exchange of ideas and to solidify relationships. When individuals work together in a synergistic fashion, expectations, rules and best practices are apparent. This environment fosters learning and growth and spurs innovation, which is advantageous to a company’s competitive standing and strategic value.

Streamline Processes

Collaboration and knowledge sharing across the organization can lead to business process improvement by eliminating redundancy, reducing cycle times and increasing efficiency. If, for example, a marketing department and sales department enter customer account information on separate computer systems, streamlining the process will prevent duplication of efforts and free up resources. This poses opportunities for process automation and a reduction of labor costs, which can positively affect a company’s bottom line.

Efficient Performance

Eliminating structural redundancy also can increase synergy by identifying ways to streamline operations, allowing each department to focus on being maximally efficient within its own role. For instance, forcing several departments to deal with customers in addition to their production responsibilities is less efficient than creating a single, dedicated department for handling customer service. With the creation of the new customer service department, the other departments can hand off difficult client issues to the experts.

Bridge the Generation Gap

A synergistic environment helps bridge the gaps among multiple generations, such as millennials, Generation X and baby boomers. Without it, each group might adapt, communicate and work in different ways. This could negatively affect a company’s productivity and the way it functions as a whole. For example, according to a study published by Ernst & Young, 78 percent of respondents perceive millennials as the most technically capable, but only 45 percent of respondents agree that the same generation works well in teams. A synergistic approach would pair the group with another generation that has strong team skills and poor technical skills, and facilitate team-building exercises and social media activities to encourage members to learn from each other.

Alliances

You also can create synergistic alliances with other businesses that have resources or strategies that sync well with yours. A chocolate maker, for example, might supply its products at a steeply discounted rate to a local bakery, which in turn will promote the chocolate supplier to its patrons. Both businesses benefit from the synergistic connection in ways that neither could alone.

When a company acquires another business, it is often justified by the argument that the investment will create synergies. The primary source of synergy in an acquisition is in the presumption that the target firm controls a specialized resource that becomes more valuable if combined with the acquiring firm’s resources. There are two main types, operating synergy and financial synergy, and this guide will focus on the latter.

Value can be created, for example, through revenue enhancement, cost reductions, increased operating cash flow, improved managerial decision making, or the sale of redundant assets. However, the value created from proposed synergies also may have an additional investment cost as well.

Synergy takes the form of revenue enhancement and cost savings.

When two companies in the same industry merge, such as two banks, combined revenues tend to decline to the extent that the businesses overlap in the same market and some customers become alienated.

For the merger to benefit shareholders, there should be cost-saving opportunities to offset the revenue decline. In other terms, the synergies deriving from the merger must exceed the initially lost value.

As a rule of thumb, synergy is a business combination where 2+2 = 5.

Many analysts, however, do not consider these incremental investments or “hidden” costs when performing a pricing analysis or valuation of a potential target. Failure to consider the hidden costs often causes the overvaluation of a potential target, which may lead to destroying value rather than creating it.

Synergy appeared due to acquisition should include higher results then it was originally expected.

Acquisition process should be well-planned. Mark Sirower, the US leader of the Merger & Acquisition Strategy and Commercial Diligence practice, named 4 components which should take place in order to achieve successful synergies:

• Strategic vision
• Operating strategy
• Systems integration
• Power and culture

The buyer should pay out the premium to shareholders of merged company. The higher the premium, the lower the potential benefit for the buyer. Therefore, synergies should not be intangible. It should be carefully forecast and discounted from net cash flows which are feasible within the chosen time frame.

Post-merger integration issues, as well as competitors’ reactions, can contribute to the hidden costs of an acquisition.

Besides the positive impact of revenue enhancements, cost reductions, and other efficiencies, valuation analysts need to price them in, too.