Fall 2014 - Expectancy Theory - Case Study

Expectancy Theory

Introduction
The Expectancy Theory is a prominant motivational approach used in I/O psychology (PSU WC PSYCH 484, 2014, L4, P.2). Also referred to as
VIE, it is a cognitive theory that links effort, performance, and outcome The theory suggests that people are motivated by their perception of how
their efforts will improve performance, and in turn lead to desired outcomes (rewards). Perception is the key word. People will be more productive
if they believe that their expectations will be realized. That is, the belief in the possibility is of more importance than the reality of the
possibility (PSU WC PSYCH 484, 2014, L4, P.2). The Law of Effect principle of reinforcment theory predicts that people will act to avoid pain and
maximize pleasure. Similarly, the Expectancy Theory predicts that people will increase effort if they believe that performance will be enhanced
and that higher performance will lead to a reward that is of personal value. From that perspective, expectancy theory can also be seen as a
process theory (Expectancy Theory, n.d.).

Vroom (1964, 1995 as cited in PSU WC PSYCH 484, 2014, L4, P.2) introduced the Expectancy Theory to I/O psychology in the 1960's, and
suggested that "the source of motivation is the mulitiplicative function of valence, instrumentality, and expectancy." It is the perception of the
individual for these factors that must be positive. In order to preserve the largest motivational force of an employee, the perceived outcomes
resulting from perceived performance must also be desirable for the employee. Many times there is more than one single desirable outcome.
Outcomes can be combined, such as:

receiving a paycheck,
receiving a raise,
keeping a job,
earning additional paid time off,
reaching a bonus incentive,
receiving praise from a manager.

If the belief of the employees is that the outcomes will not produce the desired result, motivation is not produced. In order for employees to
perceive outcome, the details in their performance must be clear from management.
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VIE Theory Components

Expectancy

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Expectancy is the belief that more effort will lead to enhanced performance.

Expectancy can be influenced by factors such as past successes, compentencies, interests, and situational constraints.

Example: If I study and learn about checking accounts, then I will make my sales goals by getting more people to open accounts.

(PSU WC PSYCH 484, 2014, L4, P.2).

Instrumentality
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The belief that the performance will result in the desired outcome

Beliefs about the outcome are more important than the outcome in itself.

Example: If I smile and greet every customer, I will receive a positive performance review

(PSU WC PSYCH 484, 2014, L4, P.2).

Valence

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The outcome must be something of value, different people have different preferences

It is the level of satisfaction that is expected, not that is actually found

Example: A positive performance review is important to me because I want to keep my job

(PSU WC PSYCH 484, 2014, L4, P.2).

Case Study

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Wiki Bank is a local bank with a small town feel. Each client is warmly greeted by name, and they often receive courtesy calls when their account
balances are low or negative to not cover any incoming transactions. The compensation and salary programs are based on work effort and length
of employment. Based on the local reach of Wiki Bank and its growth potential, ABC Bank has proposed a merger which is accepted by Wiki
Bank. The two banks then become ABC-Wiki Bank.

The work conditions and compensation program changes rapidly after the merger to match the competition. The employees are expected to do
more work in the same amount of time with the same pay. The new incentive plan is based on achieving 90%, 100% and 120% of goal. While the
incentive plan is based on a quarterly basis, each employee is expected to achieve at minimum 60% of goal monthly to avoid a write up 2
consecutive months of achieving 60% of goal or below leads to job termination.

These changes have caused the employees to feel they are no longer able to communicate honestly with the leadership team for fear of losing
their jobs. More stress is also felt by the team due to the lack of job security, time constraints, and increasing month and quarterly goals.

Tom is a personal banker who began with ABC-Wiki Bank 30 years ago and has been merged into the workforce with the employees of ABC-Wiki
Bank. Tom is 62 years old and began contemplating retirement at the beginning of the merger. He has consistently achieved the goals set at a
rate of 90-100%. Tom has been married for 35 years and his children have long since moved away from home. The compensation and incentives
are not as important to Tom as they were early in his career. Tom is more interested in spending time traveling with his wife and preparing for
retirement.

Susan is the Teller Lead at age 40. ABC-Wiki Bank has been Susan's work home for 15 years. She began as a teller and has been an inspiration
to employees in their handling of customer issues and overall interaction. After the merger, Susan has been increasingly flustered with the
expectations. She tries very hard not to show the other employees her frustrations however at times it does show. Susan values the position she
has and feels positive when she is praised by management.

Mary is a teller. Mary is 35 and new to the banking industry. She began at ABC-Wiki Bank less than one year ago. She is a single mom with two
children in daycare. Mary is concerned that her regular compensation will not always be enough to provide for her family. The quarterly incentives
would make a huge difference in her financial means. She works hard to complete the monthly and quarterly goals to reach the incentive pay.

April is a teller who has worked with ABC-Wiki Bank for 7 years. April, who is 28, lives with her fianc and plans to get married next Spring. She
has been diligently working to make her way up through the ranks at the bank but is starting to feel as though she is not appreciated for the work
she does. April is confused about what she can do to increase her promotion opportunities.

Edith is the Branch Manager for ABC-Wiki Bank. She is 50 years old and lives alone. She began working in the bank industry as a personal
banker 20 years ago and worked her way up to branch manger. Edith has no dependents at home to care for and work is her only source of social
activity which makes her want to be liked by all who works under her. She often finds the demands of her position to be overwhelming and does
not feel compensated for her work there. Edith knows that she has invested a lot of her life to her job and knows she will not find a better position
somewhere else. Due to fatigue from her work demands, Edith does what she needs to in order to maintain her job on a daily basis.

Theory Application

Expectancy (EP) in followers can be influenced by the leaders understanding of the concept (Expectancy Theory, n.a.).

Leaders should provide the follower with stimulating assignments.

Leader should provide assignments in line with the follower's competency level.
Leader should consider the follower's level of self-esteem and confidence.
Leader should clearly and specifically define acceptable/unacceptable performance.
Leader should remember that, for many followers, job satisfaction comes from putting forth effort.

Instrumentality (PO) is contingent upon follower beliefs (Expectancy Theory, n.a.)

 The follower must have trust in the leaders ability and intention to deliver the promised outcome.
The follower must have trust in the leaders ability and intention to ensure fair and consistent treatment.

Valance (value to the follower) should be considered by the leader (Expectancy Theory, n.a.)

The leader should discover the personal value of an outcome to the individual follower.
The leader should work to align follower goals with organizational goals.

The Expectancy Theory can be applied to improve motivation at the ABC-WIKI Bank as
follows:
(Fall 2012 Case Study, 2012)

Name Age Position Years with Current Expectancy Instrumenta Valence Motivationa
lity l strategy
ABC-Wiki Level of
Bank
Motivation

Edith 50 Bank 20 years Low- Medium Low Medium Edith is

Manager Medium mostly
Edith knows Edith knows Edith values rewarded by
from her that pushing her job the social
past that herself enough to aspect of
working hard harder will keep it, but work so a
can show not have any not enough great
good more to pursue motivation
performance desirable more. She for her
, hence her outcomes. values the would
working her She wants social include
way up to to maintain interactions social
branch the position she has at events such
manager. At she has and work due to as lunches,
her current feels harder no friends or or work
state she work would family parties.
feels be outside of
exhausted unappreciat work, yet
from work ed and she feels
which unnecessary she is
hinders her . under-comp
effort ensated in a
leading to job that
just enough leaves her
performance exhausted.
to keep her
job.
Tom 62 Personal 30 years Low- High Medium Low Tom is
Banker Medium Medium currently
Tom is Tom is no planning for
internally longer Tom is more retirement,
motivated motivated by interested in to keep him
therefore he incentives spending engaged in
will continue yet he time maintaining
to achieve continues to traveling his sales
his goals achieve with his wife goals, Edith
while he 90-100% of and can let him
plans for his sales preparing for leave at 3pm
retirement. goals. retirement on a Friday
twice a
month.

Tom will be
able to use
this time off
to go fishing,
early golf
game,
spend time
with his wife
and
grandchildre
n.

Susan 40 Teller Lead 15 years Medium-Hig Low Low Medium Susan

h Medium needs clear
Susan Her value is and concise
doesnt Susan is not tied to praise job
expect to clear of her and descriptions
meet her job new role approval which will
role since the from upper provide
requirement merger managemen direction. Sh
s and is which leads t e will also
afraid to ask to frustration benefit from
for help. weekly and
monthly
development
al sessions
with Edith.

Susan will
gain more
confidence
and this will
reflect in her
interactions
with the rest
of the team.
 Mary 35 Teller Less than High High High High Mary will
one year meet with
Mary knows Mary Mary values Susan mont
if she understands the hly to
performs that her additional prepare and
well and incentive income review a
meets her pay is achieving plan that
sales goal, directly tied her sales allows her to
she will to her goal achieve her
receive her performance provides. sales goals
incentive. which and earn her
causes her incentives.
additional
stress With this
guidance
Mary can
see
immediate
and
sustained
goal/incentiv
e
achievement
which can
lead her to
feeling
less stresse
d.

April 28 Teller 7 years Medium- High Medium High April is most

High highly
April feels April works April values rewarded by
that by hard being receiving
working hard because she promoted promotions
she will wants to and climbing at work.
perform well succeed, but the ranks Edith as a
which is a she feels would be manager
key factor to unappreciat very could talk to
climbing the ed and that satisfactory April and tell
ranks of the her hard for her. her where
branch work may she needs to
which is a not be improve in
goal for noticed. order to be
April. promoted
and help
achieve her
goals.

Conclusion
As shown by the case study, the Expectancy Theory (VIE) can be a valuable tool in the workplace. Here it was used to analyze job performance
and develop effective systems of reward ((PSU WC PSYCH 484, 2014, L4, P.7). The ABC-WIKI Bank recognized the importance of
understanding what outcomes are most valued by their employees. A great example of this would be Edith. By history. we know that she values
socializing. In order to align her personal goals with the company goal of effectively motivating employees to achieve excellence in job
performance and service delivery, social events can periodically be built into the work environment for the enjoyment of Edith and her peers
(Expectancy Theory, 2012).
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REFERENCES:

Expectancy Theory (n.d.) In PSYCH 484: Work Attitudes and Motivation. Retrieved September 21, 2014 from https://wikispaces.psu.edu/display/
PSYCH484/4.+Expectancy+Theory

Fall 2012 Case Study (2012) In PSYCH 484: Work Attitudes and Motivation. Retrieved September 21, 2014 from https://wikispaces.psu.edu/displ
ay/PSYCH484/Fall+2012+Expectancy+Case

Pennsylvania State University World Campus, PSYCH 484: Work Attitudes and Motivation, Lesson Four: Retrieved September 21, 2014 from http
s://courses.worldcampus.psu.edu/fa14/psych484/001/content/lesson04/lesson04_01.html