Managing Performance and Motivation

Mabel M. Miguel Professor of Organizational Behavior miguel@unc.edu

©2013 Mabel Miguel

Road Map for Today
• Motivation and the EPO framework: – Definitions and Examples – Hausser Foods Case • A more detailed look at the application of EPO – Five common problem areas applying EPO
1. 2. 3. 4. 5. Opportunity & Ability Goal Setting / Expectations Feedback Metrics and Equity Incentives and Rewards

If a pretty poster and a cute saying are all it takes to motivate you, you probably have a very easy job. The kind robots will be doing soon.

• Application to own challenges
2

What Factors Influence Employee Performance?
• Turn to your neighbors • Take 2 min to: – Generate a list of factors that affect employee performance The Takeaway:  Many (or most) of the factors that influence employee performance are controlled by management  Thus, the performance of your subordinates is mostly in your hands and the key question becomes: How do I lead & motivate members of my organization so that they perform well?
3

Relationship of Motivation and Performance
• Motivation: Desire to put effort toward achieving a goal
– Direction (what should I do?) – Intensity (how hard should I work?) – Persistence (how long should I work?)

• This often results in higher…
– Performance: quality of work produced – Productivity: quantity of work produced
4

EPO: How Individuals Determine Effort (Direction, Intensity & Persistence)

Effort
Q1: (E-P) If I put forth effort, will I succeed?

Performance
Q2: (P-O) If I perform, will I be rewarded? (If I don’t perform will I be punished?) Metrics & Equity
5

Outcome
Q3: (O) Do I value the outcome? Incentives, Rewards, work outcomes

Goals/Expectations/ Feedback & Ability

EPO Equation
Motivation =
Expectancy

X

Instrumentality belief that performance will lead to outcomes and rewards (P-O)

X

Valence belief that outcomes and rewards are valuable (O)

belief that effort will lead to better performance (E-P)

At a minimum, for employees to be motivated they must believe all 3 to be true. That is, if one of these is zero motivation is zero.
6 Source: Vroom, 1964

I’m Feeling Generous Today…

7

EPO is in the Eye of the Beholder
Why doesn’t anyone want my dollar?
– I’m in the back row (E-P) – I don’t trust you (P-O) – It’s only a dollar (don’t value (O) outcome) – You may make me do something; I may look foolish, greedy…(negative O) As management, I don’t think I can be more clear, but you don’t see things the way I do: Employee perception of the answers to the 3 questions is what matters, even if they’re wrong
8

EPO and the 4-Minute Mile
• 1950s common belief: it is physically impossible for a human to run a mile in less than 4 minutes • May 6, 1954: medical student / track star Roger Bannister runs a mile in 3:59.4 • What does this have to do with EPO?
9

EPO and the 4-Minute Mile
• Before May 6, many world-class athletes had failed to break the barrier – Just 6 weeks after Bannister’s success, John Landy ran a 3:57.9 – In the following 3 years, 16 different runners broke the 4-minute barrier • Why? – Bannister’s feat increased E-P beliefs: “If I train harder, I can run faster” – Today’s world record: 3:43.13 (1999) Hicham El Guerrouj July 7, 1999, Rome
10

EPO in Office Space
 How would you explain Peter’s lack of motivation using expectancy theory?  For which of the three questions does he think the answer is “no”?  How would you use expectancy theory to motivate Peter more effectively?
11

Doing an EPO Diagnosis
Performance Indicators (expectations) bosses have for Peter? Answer to Q1 (E-P) (from Peter’s Perspective) If I put forth the effort, will I succeed in meeting expectations? Prepare minimum # of TPS reports Exceed minimum number of TPS reports Answer to Q2 (P-O) (from Peter’s Perspective) Answer to Q3 (O) (from Peter’s Perspective)

If I meet expectations will I be rewarded? (If not, punished?)

Do I value the outcome? (reward or punishment)

12

Put Yourself in Brenda’s Shoes
1. If you are Brenda Cooper at Hausser Foods, what do you want your district managers & sales people to do? How is performance defined? 2. Why haven’t you been successful so far in achieving these goals? (See diagnostic questions on the next page) 3. What would you do differently to get your sales teams to accomplish these goals?
13

Applying EPO to Hausser Foods
1. How is performance defined for the Florida Sales Team? From the perspective of senior management, what does it mean for a FST salesperson to perform? 2. How strong is the effort-to-performance link? (E-P Q1) 3. What are the outcomes of performance for the FST? Are there any negative O’s? (O Q3) 4. How strong is the performance-outcomes link? (P-O Q2) 5. How much do FST members value (or devalue) outcomes? What is the balance between positive and negative O’s?
14

Doing an EPO Diagnosis
Performance Indicators (expectations) Brenda has for the Florida Team? Answer to Q1 (E-P)
(from Fla. Team’s Perspective)

Answer to Q2 (P-O)
(from Fla. Team’s Perspective)

Answer to Q3 (O)
(from Fla. Team’s Perspective)

If we put forth the effort, will we succeed in meeting expectations? Exceed sales quota Share New Ideas Complete Timely, Accurate Paperwork

If we perform (meet expectations) will we be rewarded? (If not, punished?)

Do we value the outcome? (reward or punishment)

15

EPO at Hausser Foods
Defining performance • Selling (meeting plan), generating new ideas, submitting paperwork E-P • Salespeople believe they can succeed in selling and paperwork, and have at least one new idea P-O • Selling increases quotas but low effect on salary • New ideas generate bonus but increase quota • Paperwork not linked to positive outcomes & could have negative outcomes (less time for selling + secret found out) Os • Salary (small), commission (large), bonus (500 max), no promotions • Quota increase when sales are high (negative outcome) Do salespeople value or devalue Os? • Commission: strong positive, Salary: weaker positive, Bonus: mixed/ negative • Quota increase: strong negative • Negatives of quota increase outweigh positives of commission
16

How do you fix the problem at Hausser Foods?
• • • • • • • •
17

Exercise: Applying EPO to Diagnose a Personal Problem or Challenge
• Pick a problem or challenge that you’re facing in motivating others. • Define desired performance: What are you trying to motivate people to do but aren’t seeing the results you hoped for? • Use EPO to diagnose your motivation problem
18

Doing an EPO Diagnosis
Performance Indicators How do you define performance for your employees? What does success look like? Answer to Q1 (E-P) (from your ee’s Perspective) If I put forth the effort, will I succeed in meeting expectations? Answer to Q2 (P-O) (from your ee’s Perspective) If I perform (meet expectations) will I be rewarded? (If not, punished?) Answer to Q3 (O) (from your ee’s Perspective) Do I value the outcome? (reward or punishment)

Your performance indicator Your performance indicator Your performance indicator

19

Additional Diagnostic Tool
Poor performance may result from:
1. Failure to satisfy individual’s needs through organizational rewards (O) – Do you know what intrinsic and extrinsic rewards your people value? – Have you provided valued rewards? 2. Failure to see relationship between P and O – Are rewards provided on performance-contingent basis? – Do your people understand how differential rewards result from differential performance? 3. Failure to see relationship between E and P – Do your people have the necessary ability (resources, skills, aptitude)? – Do your people believe that they have the resources, skills and aptitude necessary to perform well? 4. Failure to understand performance requirements – Are your people clear on what performance is expected of them? – Have you set a few inspiring, SMART goals? – Specific ongoing feedback being given?
20

A More Detailed Look at the Application of EPO

Problems, Examples & Tools

21

Four Common Problem Areas Applying EPO
1. Ability not fully considered 2. Performance not clearly defined
– – – Setting dumb or not sufficiently SMART goals Having goals that are not inspiring Giving and receiving feedback poorly E-P

3. Metrics poorly designed or utilized
– – – Measuring what is easy to measure, not what should be measured Lack of transparency of metrics or their use Rewards not tied to desired performance O P-O

4. Offered rewards are not valued Valued rewards are not offered
22

Step 1 – Strengthen E-P
• Strengthening E-P
– Opportunity – Ability – Goal Setting – Expectations – Feedback

Effort

Perfor mance come

Out

Step 1

23

Problem 1: Ability Not Fully Considered
Opportunities and Ability should be closely linked: Native skills and capacities a person brings to a job Enhancement of our inherent aptitude by education Technical, human, political, physical, economic… (Time, Information, People, Money, Skills, Tools)
24

Aptitude Training Resources

Problem 2: Performance Not Clearly Defined
1. Setting dumb or not sufficiently SMART goals 2. Having goals that are not inspiring a) Just numbers and results no sense of purpose or mission (too narrow) b) Too many goals and/or Always the same goals 3. Giving and receiving feedback poorly

25

Solution 2.1 Set Really SMART Goals
• “Dumb” goal
– – – – – – Do your best Increase your sales volume Be a team player Be more data-driven Close more prospects Be more responsive to resident concerns

• SMART Goal?
– By December, your monthly sales average should be $100k (a 20% increase over last year’s monthly average), and you should maintain that level for all of next year.
26

More Intrinsically Motivating Goals: Autonomy, Mastery & Purpose
• S ignificant & Stretching. Choose demanding, important goals • M easurable & Motivational. • A ttainable, Actionable & Agreed upon.
Make goals results-oriented so you can measure both progress and eventual success. Choose goals people are truly motivated/eager to achieve. • While stretch goals are desirable you need to keep goals realistic for the individuals’ situation and skill. The goal needs to be ready to be acted upon or put into action. Key people involved need at least to agree with the goal (ideally participate in its setting.)

• R elevant & Resourced. • Time-bound & Timely.

Pick goals that are in-line with individuals’ life and career goals.
Make sure you think of the resources needed to reach the goal.

Goals need to have a time element so they don’t breed procrastination. Definite starting and ending points as well as milestones along the way. Pick goals that are opportune and well-timed given a person’s situation.
27

Solution 2.2a: Make Goals Inspiring rather than Narrow
• People don’t deviate from the goal • No exceeding the goal • No sense of bigger picture • No creativity or exploration • Can lead to unethical behavior when no concern for process

Narrow goals may work for ‘algorithmic’ tasks (set steps— checklist type jobs) But seldom work for ‘heuristic’ tasks (no set steps –sense of bigger picture and creativity needed)
Source: Camerer et al.,1997: : Pink, 2009; McLean and Nocera 2010

28

Two Recent Updates
Simons, D.J. (2010) i-Perception, Vol.1 http://www.youtube.com/watch?v=IGQmdoK_ZfY Familiar people were no more likely to see the other unexpected events. Thus, “looking for an expected unexpected event has an unexpected effect on the detection of other unexpected events.”

Anything unusual about this lung scan?

Harvard Researchers found that 83% of Radiologists did not notice the gorilla: “…what we're thinking about — what we're focused on — filters the world around us so aggressively that it literally shapes what we see.”
(Feb. 2013)

29

29

[link]

Solution 2.2b: Have Few Well-Thought Out Goals and Refresh Them
• When a goal is achieved celebrate & reframe!
• Sharing too many goals with your people is the same as sharing no goals. Energy, enthusiasm, and attention all dissipate when they are spread too widely. • Choose no more than 2-3 clearly articulated objectives “ • If you try to do everything, you’ll accomplish nothing. • “It's much harder to keep a championship than to win one. After you've won once …it's harder to keep the team focused on doing what it takes to win. Also, you've already done it, so you can't rely on the same drive that makes people climb mountains for the first time; winning isn't new anymore.”
Bill Russell, Second Wind 30

Solution 2.3: Improve Giving and Receiving Timely Feedback
GIVING • Being specific, giving examples • Focusing on behavior • Being descriptive of scope & impact of the problem (including on feelings) • Being future-oriented • Being sensitive, not talking down • Being constructive RECEIVING • Staying calm and in control • Listening carefully • Requesting clarification, asking for examples • Summarizing what was said • Acknowledging their opinions • Checking others' perceptions of the feedback.

“Puppy principle” of effective feedback
Carol Bartz, Yahoo! Ex-CEO

Formal performance reviews should supplement, not replace, ongoing informal feedback

31

Whether Formal or Informal Feedback Succeeds when there is…
• A helpful and constructive attitude on the part of the feedback giver
    Positive feedback must be sincere Negative feedback must be clear, candid and tactful Concentrate on behavior the individual can control Focus on future, rather than past

• A high degree of receiver participation in the conversation
 Don’t just lecture, ask questions to ensure clear understanding  Learn their side of the story – how they perceive the situation

• A focus on solving job problems which may be hampering present job performance • Mutual setting of actionable goals or objectives • (See Supplementary Slides for a lot more on feedback)
32

Problem 2: Summary of Solutions
1. Set really SMART goals
– Include employees in goal-setting process to encourage commitment and ensure goal is really SMART – Work with them to develop action plans (daily or weekly tasks) – Focus on process not just results (the ‘how’ not just the ‘what’)

2. Make goals inspiring
– – – – – Have few well-thought out goals Go beyond #s and results; instill a sense of purpose or mission Incentives for exceeding the goals, not just meeting them Make sure people understand big picture & leave space for creativity If a goal is achieved, celebrate…then develop a new goal

3. Have a participative approach to constructive, actionable feedback.
– – Give proximal, ongoing feedback on goal progress Teach managers how to give & receive feedback 33

Step 2 – Strengthen P-O
• Strengthening P-O – Metrics Effort – Rewards contingent on Performance – Equity: transparency, consistency and fairness

Perfor mance come

Out

Step 2

34

Problem 3: Metrics Poorly Designed or Utilized
1. Design
a) Measuring what is easy to measure, not what you really want. Metrics shape behavior. You get the behavior you inspect & reward, not the behavior you hope for. Rewarding luck instead of skill

b)

2. Utilization
a) b) Keeping rewards a secret (transparency problems) Trying to improve poor performance by giving a reward before performance is achieved (at best you are rewarding effort) • Ex. Saying “good job!” even when it isn’t. Paying for a dirty house Not differentiating rewards based on performance (equity problems) • Everyone gets the same raise this year • Not holding employees accountable to development plan in performance review (or not having performance review) • Any other version of having an unfair reward system

c)

35

Solution 3.1: Measure What You Really Want
Management Wants Long-term growth Teamwork High quality Creativity Surfacing bad news early Shareholder value (maximizing long-term cash flows) Teachers & Scholars Learning But Rewards Quarterly earnings Individual effort Shipping on time Avoiding mistakes Reporting good news Customer satisfaction or Employee turnover (has causality been verified or just assumed?) Publications Test-taking
36

Kerr, S. “On the Folly of Rewarding A, While Hoping for B” AMJ, Dec. 1975

Solution 3.2: Be Transparent and Fair
• • What I put into an organization should be proportional to what I get out of it And…other people shouldn’t get better ratio of inputs to outputs than I do or else… Most common response
– Reducing effort to match rewards (input-output ratio)

MONKEYS REJECT UNEQUAL PAY Monkeys have a sense of justice!! They will down tools if they see another monkey get paid more for the same job.

•

•

Other responses
– Ask supervisor for a raise – Ask supervisor to cut others’ rewards – Leave the organization – Steal more rewards

Inputsme Outcomesme

Inputsother Outcomesother
37

Problem 3: Summary of Solutions
• Have good metrics
• • • Develop metrics that measure what you really want to achieve, not the easy-to-measure behavior. Remember: You will get what you inspect. Beware of unintended consequences of measures.)

• Be as fair as possible
• Use Equity Theory

• Make the reward system as transparent as possible
• People assume lack of transparency means you have something to hide

• Do not give rewards before they are earned • Reward skill, not luck
• Process-oriented incentives preferable when luck plays a large role e.g. investing, sports 38

Step 3 – Strengthen O
• Strengthening O – Identify and provide what people value-both intrinsic & extrinsic: • Rewards • Reputation • Responsibilities • Rest & Relaxation • Relationships
39

Effort

Perfor mance come

Out

Step 3

Problem 4: Offered Rewards Are Not Valued / Valued Rewards Are Not Offered
• Assuming everyone is motivated by the same things • Too much application of the ‘golden rule’ • Forgetting there are two types of motivation • Overemphasizing the importance of monetary rewards • Not knowing what individuals working for you really value
40

Valued Rewards Are Not Offered
The Risks of Incentives
• Can undermine feelings of choice
– Lead people to feel controlled and manipulated

• In order to motivate effectively, incentives must be…
Apprentice Season 2  Pepsi challenge  Design a new bottle for Pepsi  Andy Litinsky, team leader


Why are the incentives having this effect?

– Delivered in a supportive, respectful manner – Tied directly to performance (PO) (be equitable & fair) – Valued by the employee (O) – Not work against intrinsic motivation…

41

Designing Jobs to Increase Intrinsic Rewards
Two Types of Motivation:
• Intrinsic – love of the task itself
– E.g., Challenge, meaningfulness, personal growth

Skill variety
• Different activities using many of the employee’s skills and talents Completing an entire piece of work from beginning to end Impact the job is believed to have on others Employees have freedom & discretion to plan, schedule, and perform their jobs as desired Job provides people with information about the effectiveness of their performance
Hackman & Oldham Model of Job Enrichment

Task identity
•

Significance
•

• Extrinsic – desire to attain outcomes
– E.g., Money, Status & respect, Career advancement

Autonomy
•

• When task is inherently enjoyable, adding extrinsic rewards can reduce intrinsic motivation

Feedback
•

42

An Update: Intrinsically Motivating Jobs • Autonomy
– Task – latitude to decide what to do (e.g. free time to innovate) – Technique - latitude to decide how to do it (e.g. meet goal your way) – Time flexibility– latitude to decide when to do it (e.g. Results Only Work Environment (ROWE) outputs measured not time spent on them) – Team self-organization - latitude to decide who to do it with

• Mastery – progress toward a goal that is not fully attainable. Key:
– Growth/improvement mindset – effort as part of the reward – Quality feedback to measure progress

• Purpose / Passion– working for something bigger
– Meaningfulness (social norms not just market norms)

Various sources: 2004-2011

43

What Outcomes Should I Consider? The 5 Rs Tool
• Rewards
– Salary, incentives, bonuses, benefits

• Responsibilities
– Variety, autonomy, challenge, promotions, learning

• Relationships
– Coworkers, supervisors, clients & customers

• Reputations
– Image, respect, appreciation, feedback

• Rest & Relaxation
– Hours, scheduling, flexibility, travel, location
44

Problem 4: Solutions
• “Different strokes for different folks”
– Know what individuals working for you value. (Don’t assume because you value something they do as well.)
• What do you hope to get out of this job? • What are your values? What’s important to you at work? • What rewards and incentives would you like to see in place here? • What would motivate you to work harder? • Others? What questions have you used effectively?

• Use a good balance of extrinsic and intrinsic rewards
– Don’t over rely on extrinsic motivators (particularly money) – Design jobs so they are intrinsically motivating
45

Four Common Problem Areas Applying EPO & Summary Solutions
1. Ability not fully addressed (select & train carefully: you need people who fit their jobs; resource appropriately) 2. Performance not clearly defined (have good goal-setting & feedback practices) 3. Metrics poorly designed or utilized Rewards not tied to desired performance (tie rewards to performance, reward after people perform, have good metrics, be transparent and fair) 4. Offered rewards are not valued. Valued rewards are not offered (know what your people value (extrinsic & intrinsic), avoid unwelcome rewards, be respectful & supportive)
46

Final Discussion
Use EPO to develop a (draft) plan to solve your performance problem. (hint: see next slides for summary ideas)

47

Using EPO in Your Organization
1. Strengthen E-P beliefs
– – – – – Provide more opportunities to use and grow skills Increase ability (appropriate resourcing & skills training) Define P clearly and carefully (well thought-out goals and expectations) Communicate how E leads to P (particularly important with millennials) Give appropriate feedback

2. Strengthen P-O
– Have clear metrics for evaluation performance – Make rewards contingent on P (on what you really want) – Make procedures for earning rewards transparent, consistent and fair

3. Strengthen O
– Identify and provide what people value—both intrinsic & extrinsic: rewards (salary, incentives, bonuses, benefits); reputation (image, respect, appreciation, feedback) responsibilities (variety, autonomy, challenge, promotions, learning); rest & relaxation (flexibility, hours, scheduling, travel, location) relationships (supervisors, coworkers, clients, customers, community)… 48

Always a Good Idea to Ask Yourself the Following
1. Do you know what intrinsic and extrinsic rewards each team member values? 2. Does each team member understand how differential rewards result from differential performance? 3. Does each team member believe that they have the resources and skills necessary to perform well? 4. Are they clear on what performance is expected of them? If answer to any of these is “no,” set up a meeting with those team members asap.
49

Key Take-Aways
• Selection is Key – choose people who fit jobs and culture/values & keep their skills current • Performance Management system needs to be aligned with vision & strategy of the organization • Performance Management system needs to – Be comprehensive (address all parts of the EPO model) – Be internally consistent (complementary and reinforcing not have pieces working against each other) – Be culturally flexible/adaptable • Leadership needs to be credible and trustworthy – Apply the Performance Management system transparently and fairly
50

Kenan-Flagler Business School The University of North Carolina at Chapel Hill Chapel Hill, NC 27599-3445 www.kenan-flagler.unc.edu

Supplementary Slides on Feedback
McKinsey survey of 12,000 managers. Summary conclusions:
• Feedback critical for development • Feedback not done well
– Many challenges giving & receiving feedback (see next slides for summary findings & recommendations / tools)
52

Challenges of Giving Feedback
• Fear of looking bad to your manager • Fear of being inaccurate or inconsistent
Too many subordinates to observe Teamwork makes individual performance hard to assess Too infrequent to be specific – leads to global generalities Have not addressed previous similar problems Confidentiality leads to accusations of inconsistency

• Fear of confrontation, lingering resentment or bad behavior • Fear of overreacting
53

Challenges of Receiving Feedback
• Negative feedback seems inaccurate
– Actor/observer bias: Observers make dispositional attributions for actors behaviors – Self-serving bias: Take credit for successes, blame others for failures – The most incompetent don’t understand difference between good and bad performance

• Negative feedback undermines self-esteem and efficacy
– Positive self-illusions: Only want to hear and selectively recall positive information about the self

• Perceived as a personal attack
– Creates stress, defensiveness is automatic response
54

Responsibilities of the Feedback Givers Receivers
• Although feedback is a two-way process, it is the primary responsibility of the “giver” to establish a positive, pro-active tone. • To maximize the benefits, be sure the environment is appropriate, pay particular attention to your posture, tone, and expressions, and be sure the feedback is both well-timed and welcome. • Receiving feedback with an open mind is by far the most difficult component of effective communication. • It is also our best opportunity to gain new information and perspectives. • Our challenge is to view feedback as an opportunity rather than a personal attack. • Managing our emotions is our greatest challenge.
55

Giving Feedback
Helps
• • • • Being specific, giving examples Focusing on behavior Being descriptive Being constructive, futureoriented • Having a positive intent to be helpful & focus on solutions • Being sensitive, not talking down • Describing scope & impact of the problem (including on feelings)
56

Hinders
• Giving vague feedback, providing old examples. • Making global statements • Discussing behaviors that can’t be changed, focusing on personality • Unloading personal hostility • Evaluating & judging-labeling Fault-finding & blaming • Talking down to them • Denying your emotion

Receiving Feedback
Helps
• Staying calm and in control • Listening carefully • Requesting clarification, asking for examples • Summarizing what was said • Acknowledging their opinions • Checking others' perception of the feedback.

Hinders
• Getting defensive, justifying your actions • “Shutting down” or Interrupting • Simply agreeing or disagreeing • Simply apologizing of promising to change • Over-internalizing feedback (assuming it is all true)

57

Summary of What Helps Giving
• • • • • • • Being specific, giving examples Focusing on behavior Being descriptive Being future-oriented Being sensitive, not talking down Being constructive Describing scope & impact of the problem (including on feelings) • Having a positive intent to be helpful & focus on solutions
58

Receiving
• Staying calm and in control • Listening carefully • Requesting clarification, asking for examples • Summarizing what was said • Acknowledging their opinions • Checking others' perception of the feedback.

Tool: Questions for Feedback Giver
• How did I arrive at this conclusion? • What illustrations, examples would I need to share with the other person for him or her to understand why I see it this way? • Under what conditions have I observed this behavior? • What do I see as the specific, undesirable consequences of this behavior? • What would be the most constructive way to help this person achieve better results? • How might my emotions be affecting my evaluations and intentions?
59

Tool: Questions for Feedback Receiver or Observer
• Can you give me an example of the behavior that concerns you? • Can you help me understand how you came to that conclusion? • Can you help me understand the situations in which you have seen the behavior and what you see as the impact? • Can you clarify what you would like to see me (or the receiver) do differently?
60