Exam 3 Notes

Motivation
 Motivating Employees
o This is part of the leadership function of management.
o In motivating employees, we talk about two kinds of motivational theories:
1. Content theories- focus on what motivates employees
2. Process theories- focus on how employees are motivated
o Content Theories of Motivation
1. Maslow’s Hierarchy of Needs
o Maslow believed that human beings were motivated to satisfy 5 different
categories of needs at work- not everyone is motivated by the same thing-
different strokes for different folks
 One of the 1st theorists to suggest the platinum rule with respect to
motivating employees.
o These needs were arranged in the form of a hierarchy/pyramid; most
important at the bottom, least important (gratification can be delayed the
longest) at the top

o Maslow believed that humans are motivated to fulfill the lowest

unsatisfied need in the hierarchy- different for everyone
o Once a need is satisfied according to Maslow, it’s no longer motivational-
unless it’s self-actualization b/c it can never fully satisfied.
o If a need is frustrated, the individual will be stuck and experience
demotivation.
o Finer Points Concerning Maslow’s Theory:
 Given that most individuals hold specialized jobs, esteem and self-
actualization needs are typically unmet for most employees.
 1. Enriched jobs could satisfy esteem and self-actualization
needs
 Few people reach self-actualization at work and if they do reach it,
it’s only temporary.
1. Self-actualization is different from the other needs in that,
it’s never fully satisfied.
o Research on Maslow’s Hierarchy of Needs:
 Research has only found 2-3 needs that motivate behavior rather
than the 5 proposed by Maslow.
 Everyone does not climb the hierarchy in the same progression.
 Satisfied needs can still motivate an employee’s behavior.
o Application of Maslow’s Hierarchy of Needs:
 Not every employee is motivated by the same needs
1. As a result, a manager must tailor the reward (the
motivator) to fit the individual.
2. In doing so the manager must tie the reward to good
performance.
 What motivates an employee today may not motivate them in a
week, a month, or a year.
1. As a result, a manager must be flexible in motivating the
same employee over time.
2. Alderfer’s ERG Theory
o This theory is a reformulation and extension of Maslow’s Hierarchy of
Needs.
o It reworks Maslow’s Hierarchy of Needs to be more consistent with the
research on motivation:
 Proposing three needs instead of 5 needs
 Stating that a satisfied need can still motivate behavior
o ERG Theory’s Three Needs:
 Existence needs are similar to Maslow’s physiological and safety
needs.
 Relatedness needs are similar to Maslow’s social and esteem
needs.
 Growth needs are similar to Maslow’s self-actualization needs.
 o ERG Theory’s Major Contribution:
 Frustration-Regression Principle
1. If a higher-level need is frustrated, the employee can
regress to lower levels needs, attain additional
gratification of these needs and still be motivated.
2. Positive view of need frustration (unless we’re talking
about existence needs; in that case, you’re probable not
going to be around for very long).
o Application of ERG Theory:
 Not every employee is motivated by the same needs.
 What motivates an employee today may not motivate them in a
week, a month, or a year.
 Employee can still be motivated when a need is frustrated.
1. The frustration of a higher level need can be compensated
for by the additional satisfaction of a lower level need.
3. Herzberg’s 2-Factor Theory
o This theory is really a theory of job satisfaction more than it is a theory of
motivation.
o Traditionally, job satisfaction and job dissatisfaction have been viewed as
opposites, but Herzberg broke away from this view.
o Herzberg’s View of Job Satisfaction:

o Herzberg’s View of Satisfaction Substituting Motivational Terms:

o Herzberg’s 2-Factors
 He believed that the factors that caused an employee to be
satisfied (motivated) were different from the ones that caused
them to be dissatisfied (demotivated).

o Motivator Factors:
 Interesting, Challenging work
 Autonomy
 Achievement
 Recognition
 Sense of fulfillment

o Hygiene Factors: associated with job dissatisfaction; external factors

 Pay and Benefits
 Co-workers
 Supervisors
 Working Conditions
 Company Policy

o 2-Factor Theory and Employee Motivation:

  Herzberg believed the only way to motivate employees is thru job
enrichment.
 Herzberg believed that hygiene factors such as pay and benefits
merely prevent demotivation in employees and cannot motivate
employees.
 According to Herzberg, an employee who holds an enriched job
that pays well and has good benefits would experience:
1. Enriched job= Job satisfaction
2. Good hygiene (external factors) = no job dissatisfaction
 According to Herzberg, an employee who holds an enriched job
that pays poorly and has few benefits would experience:
1. Enriched job= job satisfaction
2. Few benefits= bad hygiene= job dissatisfaction
 According to Herzberg, an employee who holds a specialized job
that pays well and has good benefits would experience:
1. Specialized job= no job satisfaction
2. Pays well & good benefits= good hygiene= no job
dissatisfaction
 According to Herzberg, an employee who hold a specialized job
that pays poorly and has few benefits would experience:
1. Specialized job= no job satisfaction
2. Poor pay & few benefits= bad hygiene= job dissatisfaction
o Problems with Herzberg’s 2-Factor Theory:
 It’s a one best way theory of motivation.
1. Assumes expressive motivation
 This theory was based on interviews with accountants and
engineers.
1. Sample wasn’t representative of entire work force.
 The way he conducted the interviews led to biased responses.
1. Self-serving bias
 Some people’s hygiene are other people’s motivations.
1. Ignores instrumental motivation
o Application of 2-Factor Theory:
 2-factor theory advocates job redesign (specifically, job
enrichment) as the primary way to motivate employees.
1. Works well with expressively motivated employees
 A lot of the current employee engagement research/practice has 2-
factor theory as its theoretical underpinnings.
 Process Theories of Motivation
1. Locke’s Goal Setting Theory
o Based on one simple premise: there is a direct connection between what
we intend to do and what we do.
o In this theory, we try to specify those goal setting conditions that will
maximize effort and performance
 o SCARF Model of Goals:
 S-goals should be specific in terms of what’s desired and when it’s
desired by
 C-goals should be challenging yet achievable
 A- goals should be accepted by the person (ownership)
 R-goal attainment should be rewarded
 F- one should receive feedback on goal related performance
o 3 Ways to Increase Goal Acceptance:
1. Rewards for goal attainment (WIFM)
2. Participation in goal setting by the employee
o The manager and the employee meet and
jointly determine what the employee’s goals
will be
o The belief here is that since the employee is
given a say in determining what his/her goals
will be, this will cause the employee to have
greater ownership of his/her goals- based on
the principle “people will support what they
helped to create.”
o There are conditions under which participation
does not lead to greater employee acceptance
of goals: low trust b/w management and labor;
the employee doesn’t want to participate; the
manager is a control freak/autocrat
3. Autocratic tell and sell method of goal setting
o In this method of goal-setting, there are 3 steps:
(1) manager sets the goal for the employee, (2)
manager tells the employee what the goal is, (3)
manager sells the employee on the goal (selling
involves explaining the reasons for the goal, the
importance of the goal, and the value of
achieving the goal)
o The selling component increases employee
acceptance of the goal; if a manager tells the
employee what the goal is without selling the
employee on the goal, goal acceptance is not
typically increased.
o Research has demonstrated that the autocratic
tell and sell method and participation in goal
setting by the employee are equally effective in
terms of increasing goal acceptance.

2. Skinner’s Reinforcement Theory

o Based on one simple law: Thorndike’s Law of Effect
o Thorndike’s Law of Effect: states that behaviors that are followed by
positive consequences are followed by positive consequences will tend to
be repeated whereas those behaviors that are followed by negative or no
consequences will tend not the be repeated.
o In this theory, managers must manage consequences for employee
behavior.
 They act as transactional managers; when an employee performs
well, the manager should provide a positive consequence for this
behavior; when the employee performs poorly, the manager
should provide a negative or no consequence for this behavior.
o 3 components:
 StimulusBehaviorConsequence
 Stimulus: a signal from the environment for the behavior to occur
 Behavior: the action taken by the individual
 Consequence: the outcome the follows the behavior; 4 types of
Consequences:
1. Positive reinforcement- when behavior occurs, it’s
followed by a positive consequence for the individual;
with positive reinforcement, the behavior’s frequency will
increase.
2. Negative reinforcement- when behavior occurs, a
negative consequence is withdrawn (not given); with
negative reinforcement, the behavior’s frequency will
increase; not receiving a negative consequence is a
positive; also known as avoidance learning
3. Extinction- when the behavior occurs, its followed by no
consequence (“ignore it long enough and it will go away”);
with extinction, the behavior’s frequency should decrease
over time; the problem with use of extinction is that the
behavior’s frequency may actually increase before it
decreases (known as an extinction spike).
4. Punishment- when the behavior occurs, it’s followed by a
negative consequence for the individual; with
punishment, the behavior’s frequency will decrease over
time; there are a number of problems associated with the
use of punishment
o Problems with Punishment: it only tells you
what you’re doing wrong- doesn’t replace the
bad behavior with a good behavior; it can cause
the person being punished to feel either sad or
mad- it can lower productivity through lower
self-confidence or through retaliation; it may
 only decrease the frequency of the behavior
when the punisher is around
 Traps to Avoid in Managing Consequences for Behavior:
1. Leave-Alone Zap Trap: when the employees perform well,
they are left alone (get no consequence from their
manager); when the employees make a mistake or
perform poorly, they are zapped (get negative
consequences from their manager); this zap trap creates a
climate based on fear and avoidance- employees engage
in CYA behaviors- over time, performance will suffer.
o The manager uses extinction and punishment to
manage employee behavior- fails to use positive
reinforcement
o How does a manager overcome the leave-alone
zap trap? (1) MBWA (2) catch people doings
thing right, and (3) when they do things right,
provide positive reinforcement; 4 to 1 ratio for
positive to negative consequences given
2. Jelly-Bean Motivation Trap: in the jelly-bean motivation
trap, the manager passes out positive consequences
without regard to employee performance; high
performers, average performers, and poor performers all
receive the same positive consequences for their
performance
o Jelly-bean motivators are afraid of conflict; but
in trying to avoid conflict, they create more
conflict and lower motivation/ productivity in
their units.
o How does a manager overcome the jelly-bean
motivation trap? (1) managers cannot shy away
from conflict-they must hold individuals
accountable (2) managers must tie rewards to
performance-their motto should be “the more
you do, the more you get”- high performers
should get more rewards than average
performers, who in turn should get more
rewards than poor performers.
3. Rewarding on Assumed Needs Trap: the rewarding on
assumed needs trap, the manager assumes what
motivates her motivates her employees; the manager
practices the golden rule in rewarding employee’s good
performance.
o So when the manager wants to positively
reinforce the employee’s good performance,
 she provides a reward that he likes; the
problem with providing a reward you like as a
manager doesn’t mean the employee will also
like it or find it rewarding
o When a manager rewards on assumed needs,
the manager’s reward for the employee’s good
performance could be considered by the
employee as:
 Positive reinforcement
(+consequence) if the employee
has similar likes/dislikes in
terms of rewards
 Punishment (-consequence) if
the employee has dissimilar
likes/dislikes in terms of
rewards.
 Extinction (no consequence) if
the employee has dissimilar
likes/dislikes in terms of
rewards
o Example: Ralphie from the Christmas story
o How does a manager overcome the rewarding
on assumed needs trap? The manager should
get to know their employees likes and dislikes
so they can tailor the reward to fit the
employee; the manager, when in doubt, should
ask employees what they find rewarding- give
employees the option to choose among
rewards, if possible.
3. Adams’ Equity Theory
o Equity theory is concerned with: (1) what people perceive as fair at work
(2) how people react to being treated unfairly at work
o Two components of Equity Theory:
 (1) Exchange Relationship Component- individuals think about
what they contribute (inputs) to the organization and what they
receive in return (outcomes) from the organization: Equity Ratio=
outcomes/ inputs
 (2) Social Comparison Component- these individuals then compare
their input-outcome ratio to the input-outcome ratio of relevant
others to determine if they have been treated fairly or not.
o Equity vs. Equality
 Equity: inputs should determine outcomes received; the more you
do, the more you should get; the less you do, the less you should
get.
 o Equality (outcomes: same)
o Inequality (outcomes: different)
 Equality: inputs have no bearing on outcomes received; everyone
gets the same outcomes regardless of what they do.
o Equity (ratios: same)
o Inequity (ratios: different)
o 4 Basic Tenants of Equity Theory:
1. People strive to create and maintain a state of equity.
2. When an individual perceives inequity, it creates tension
that the individual is motivated to reduce or eliminate.
3. The greater that magnitude of the perceived inequity, the
greater the motivation to reduce or eliminate it.
4. Individual more readily perceive an unfavorable inequity
than a favorable one.
o Two Types of Inequity (Unfairness):
 Unfavorable inequity: occurs when the unfairness hurts the
individual; underpayment / under-reward
o Unfavorable (ratio less than others)
 Favorable inequity: occurs when the unfairness benefits the
individual; overpayment/ over-reward
o Favorable (ratio greater than others)
o Reactions to Unfavorable Inequity:
 Equity theory hypothesized that when individuals experience
unfavorable inequity, they will become angry and will (1) reduce
their inputs or (2) increase their outcomes or (3) do both to restore
equity.
 Research shows that individuals who experience unfavorable
inequity will: reduce the quantity/ quality of their work; take
longer work breaks; have greater absenteeism and turnover rates;
be more likely to steal from their employer; ask their boss for a
raise.
o Reactions to Favorable Inequity:
 Equity theory hypothesized that when individuals experience
favorable inequity, they will feel guilty and will (1) increase their
inputs or (2) decrease their outcomes or (3) do both to restore
equity.
 Research shows that individuals who experience favorable
inequity: will not feel guilty; will rationalize the overpayment/
over-reward as being fair; will not change their behavior in a
positive way (e.g. increase their productivity and take
shorter/fewer breaks); will not volunteer to give the over-reward
back.
o Major Problem with Equity Theory:
  The problem is that fairness like beauty lies in the eye of the
beholder; it is based on the individual’s perception of the situation.
 This perceptual issue concerning fairness leads to situations where
managers can treat individuals fairly in reality but these individuals
wind up believing that they’ve been treated unfairly; this is a
particularly bothersome issue for managers.
o Equity Sensitivity Theory:
 Equity sensitivity theory addresses the perceptual issue
surrounding the definition of fairness.
 It proposes that even when individuals are treated fairly in reality,
not all individuals will perceive fairness.
 It postulates that there are three different types of individuals,
each with a different definition of fairness.
1. Entitled: “the takers”- they are more focused on what
they can take at work rather than what they can give at
work; they overestimate their level of contribution and
the value of their contribution; when they’re treated fairly
in reality, they perceive unfavorable inequity (feel angry
and reduce their contributions).
o Managing the Entitled: their perceptions of
their contributions need to be recalibrated-
need a lot of performance feedback to create
an accurate view of the entitled’s performance;
management an human resources must be
onboard before starting this process.
o They make it difficult for their manager to get
work done through them- don’t reallocate their
work to others; otherwise, you’re reinforcing
bad behavior; don’t allow others to do their
work; message to the entitled must be: move
your performance up or we’ll have to move you
out.
2. Equity Sensitives: “give and take equally”- they have a
realistic view of their contribution and the value
associated with it; when treated fairly in reality, they will
perceive fairness; they have “comparisonitis” and are
most bothered when the entitled are coddled by
management.
o Managing the Equity Sensitive: they want
management to make sure that everyone is
doing their jobs and to hold everyone
accountable; they are a “barometer” of how
well a unit is managed—they can shift
depending on the quality of management
 received; poor management moves them
toward entitlement; good management moves
them toward benevolence.
3. Benevolents: “The givers”- they are more focused on
what they can give at work rather than what they can
take at work; they underestimate their level of
contribution and the value of their contribution; when
they’re treated fairly in reality, they will perceive
favorable inequity- feel guilty and increase their
contributions.
o Managing the Benevolent: “No” is not part of
their vocabulary; they can become the “path of
least resistance” for their manager; other co-
workers can take advantage of them; their
workload needs to be managed.
o Equity Sensitivity Theory Overview:
 So if they manager treats employees fairly in reality, the entitled
will perceive unfavorable inequity, the benevolent will perceive
favorable inequity, the equity sensitive will perceive equity.

Leadership
 What is it? Leadership is the art of influencing individuals and groups to willingly pursue
organizational goals.
o Leadership involves:
1. Goal-setting
2. Communicating
3. Motivating
 Leadership and Management: Are they the same thing?
o Leadership is just one of the five functions of management.
o Just because you’re a great leader, that doesn’t necessarily mean that you’re going to be
a great manager.
 Leadership vs. Supervision
o When a manger leads an employee, the employee complies with the request because
they want to comply. VOLNTARY COMPLIANCE
o When a manager supervises an employee, the employee complies with the request
because they have to comply. FORCED COMPLIANCE
 Leadership & Supervison: French & Raven’s Five Bases of Power
o Managers can use five different bases of power to gain compliance from their
employees
1. Reward power
 When the manager uses rewards to gain employee compliance with the
manager’s request.
 The power of positive reinforcement
  Example: the employee complies with the manager’s request so as
to get a better performance evaluation and a bigger pay raise from
the manager.
2. Coercive power
 When the manager uses punishment or the threat of punishment to gain
employee compliance with the manager’s request
 The power of punishment and negative reinforcement
 Example: the employee complies with the manager’s request
because he doesn’t want to be fired from his job.
3. Legitimate power
 When the manager relies upon the authority associated with the
manager’s forma; position to gain employee compliance with the
manager’s request.
 “do it because I’m the boss”
 Example: the employee complies with the manager’s request
because of manager’s formal position.
4. Expert power
 When the manager utilizes their knowledge, skill and experience
(expertise) to gain employee compliance with the manager’s request.
 Knowledge/ expertise is power
 Example: the employee complies with the manager’s request
because the manager knows what is best to do in the situation.
5. Referent power
 When the manager relies upon the power of example to gain employee
compliance with the manager’s request.
 The employee identifies with the manager (admires the goals the
manager is achieving and the personal qualities that she possesses)
 The employee complies with the manager’s request because they
look up to the manager and desires the manager’s approval.
 There is a high level of trust between the manager and the
employee.
 Leaders and Supervisors Use Different Bases of Power to Compliance
o Supervisors primarily rely on:
 Legitimate power (position power)
 Coercive Power (punishment/threats)
 Reward power (positive reinforcement)
o Leaders primarily rely on:
 Expert power (knowledge/ expertise)
 Referent power (example)
o Supervision is positional whereas leadership is personal; one is given and the other is
earned.
 The Five Power Bases and Their Relationships to Productivity
o Coercive power has a negative impact on productivity.
o Legitimate and reward power have no significant impact on productivity.
 o Referent and expert power have a positive impact on productivity.
 McGregor’s Theory X and Y
o McGregor believed the assumptions that managers make about other people can affect
their leadership behavior.
o McGregor developed two opposing sets of assumptions about what people are like at
work.
o These sets of assumptions are called Theory X and Theory Y.
o Theory X is a negative view (low trust) of what people are like at work.
 Results in the manager supervising employees
o Theory Y is a positive view (high trust) of what people are like at work.
 Results in the manger leading employees
o These assumptions that managers hold about people can become self-fulfilling
prophecies
 Assumptions affect managerial behavior and managerial behavior affects
employee behavior
 For example, if I think you’re going to be lazy, I will treat you like
you’re lazy and you’ll act lazy.
 Trait Theory of Leadership
o This theory of leadership has tried to identify those traits (characteristics) that separate
leaders from followers.
o In the beginning, it started off as a “great man” theory
o In the end, it became a “learned traits” theory
 Research on Trait Theory
o In general, it found that leaders were slightly taller, slightly more intelligent, slightly
more socially adept, and slightly more visible than followers.
o One trait was recently identified that does reliably separate leaders from followers: the
trait of behavioral flexibility.
 Behavioral Theory of Leadership
o Rather than focusing on what leaders are, this theory focuses on what leaders do
(behavior).
o This theory is known as the Ohio State Studies because most of the research was
conducted at Ohio State University.
o This theory identified two key dimensions of leadership that affected subordinate
satisfaction and performance:
1. Initiating structure: task oriented leadership behavior
 Examples: scheduling the employee’s work; determining the employee’s
work methods and procedures; checking the quality of the employee’s
work; providing task oriented feedback to the employee
2. Consideration: people-oriented leadership behavior
 Examples: listening to the employee’s concerns; providing emotional
support and encouragement to the employee; engaging in give and take
discussions; facilitating interactions with others
o In this theory, each of the leadership behaviors can take on
 Values (low and high) and the behaviors were independent of one another
o In this theory there are 4 possible combinations of leadership behavior:
1. High initiating Structure High Consideration
2. High Initiating Structure Low Consideration
3. Low Initiating Structure High Consideration
4. Low Initiating Structure Low Consideration
 Research on Behavioral Theory
o This theory started off as a “one best way” theory, believing that the combination of
High Initiating Structure and High Consideration from the leader would result in the
highest subordinate satisfaction and performance across all situations.
o But as research was conducted on the theory, the research showed that there was no
one best way to lead
 Each of the 4 leadership combinations could be the best way to lead
depending on the situation
 So, it started off as a one best way theory, ended up as contingency (“it
depends”) theory.
 Fiedler’s Contingency Theory of Leadership
o This is a situational leadership theory
 There is no one best way to lead
o Work group performance depends on the match between a leader’s style and the
favorableness of the situation
 Good match= high performance team
 Bad match= low performance team
o Fielder believed that leadership style was based on one’s personality and was therefore
relatively fixed.
o Thus, Fiedler believed that most leadership training programs were useless.
 Most leadership programs teach managers how to change their behavior
to fit the situation.
o Fiedler developed the Least Preferred Co-Worker (LPC) scale to measure one’s
leadership style
o It askes the leader to describe his/her least preferred co-worker using a series of bipolar
adjectives (positive/ negative)
 How the leader describes his/her LPJC is indicative of his/her leadership
style.
 Least-Preferred Co-Worker (LPC) Scale: Determining Leadership Style
o Least Preferred Co-Worker (LPC) Scale is a measure of one’s attitude toward others (i.e.,
value system)
 If you described you LPC in mainly negative terms, you have a low LPC
score and are considered a task-oriented leader.
 If you described your LPC in mainly positive terms, you have a high LPC
score and are considered a relationship-oriented leader.
 So in this theory, there are only 2 leadership styles (task-oriented &
relationship oriented leadership) and the leader can only be one or the
other.
 Situational Favorableness: Looking for the Right Match
o Situational favorableness was determined by 3 factors:
1. Leader-Member Relations
2. Task Structure
3. Position Power
o Each of these 3 factors had two values and thus 8 situations were possible.
 Situational Favorableness: Leader- Member Relations
o Leader-member relations is the most important determinant of situational
favorableness.
o It is the extent to which followers trust the leader and as result, are willing to follow the
leader.
o It can take on two values: good or poor.
 Situational Favorableness: Task Structure
o Task structure is the second determinant of situational favorableness.
o It is the extent to which the followers’ tasks are performed according to step by step,
well-defined procedures.
o It can take on two values: high or low
 If it’s high, the followers have specialized jobs.
 It it’s low, they followers have enriched jobs.
 Situational Favorableness: Position Power
o Position power is the third and least important determinant of situational favorableness.
o It is the extent to which the leader can hire, fire, promote, and demote and get support
from upper management for these decisions.
o It can take on 2 values: strong or weak.
 The Eight Situations of Situational Favorableness
o Situational favorableness is really a measure of how much control the leader has over
the work situation.
 Research Results: Where Do the Best Matches Occur?
o Fiedler put both task oriented and relationship oriented leaders into each of the 8
situations and looked at the group performance that resulted. Below are the results of
his research:
 Fiedler’s Contingency Theory of Leadership
o Fiedler’s research on the theory found that:
 Low LPC (task-oriented) leaders were best in the very favorable and very
unfavorable situations.
 High LPC (relationship-oriented) leaders were best in the moderately
favorable conditions.
o Kennedy’s research on the theory found that:
 Middle LPC (behaviorally flexible) leaders were best in all 8 situations.
 This is a HUGE blow to the main premise of the theory.
o Here are the 2 major implications of this theory:
 Anyone can be a leader if they find the right situation (match).
 Leaders must select themselves into the right situations.
  If the work group isn’t performing well, then the situation (not the leader)
is at fault.
 There are no effective/ineffective leaders just effective/ineffective
situations.
 If a work group isn’t performing well, then the situation rather than
the leader needs to change.
 Leader Match: Fiedler’s Leadership Training Program
o Leader match teaches leaders: 1) how to identify and select situations that are best for
their style and 2) how to change the situation to fit their style.
o The problem is that its recommendations may often be impractical or illogical.
 Recent Developments in Leadership Theory
1. Reciprocal Theory
 This theory criticizes other leadership theories because other leadership
theories assume only a one-way influence process (e.g., the leader
influences the follower).
 In this theory, there is a two-way influence process. The leader influences
the follower but the follower also influences the leader.
 In this theory, a manager can either lead or supervise the subordinate.
 In-group/out-group membership determines whether the employee is
lead or supervised.
 Of course, the in-group over time will out perform the outgroup.
 Leadership is associated with high performance outcomes whereas
supervision, at best, is associated with the average performance
outcomes.
 The manager determines whether an employee is in the in-group or the
out-group, depending upon the perceived quality of the relationship with
the employee.
 This theory suggests that any factor the manager deems relevant can
determine in-group/out group membership, even if the factor is not, in
fact, relevant to the effective management of the group.
 Here are some factors that may influence managers in determining in-
group/out-group membership:
 likeability
 biases (racial, gender, age, religious, etc.)
 nepotism
 competition (perceived threat to manager’s position)
 performance
 The result can be, for example, a good performer who is disliked is placed
in the out-group and a poor performer who is liked is placed in the in-
group.
 This can be blatantly unfair and affect productivity negatively.
 Research has revealed that when managers are instructed to lead their
out-group members just like they lead their in-group members, the
performance differences between the 2 groups often disappears.
  This suggests many times employees are placed in the out-group
not because of a performance issue rather the placement has more
do to with the manager’s likes/dislikes and/or personal biases.
 When managers place individuals in the out-group that doesn’t
deserve to be there, these managers are also hurting themselves.
 The recommendation from reciprocal theory is that managers need
to start off with treating everyone like an in-group member and the
only time an individual is placed in the out-group is because of a
performance issue.
2. Implicit Theory
 This theory states that just like beauty leadership is in the eye of the
beholder (follower).
 This theory believes that people have stereotypes about how leaders
should look and act.
 Managers need to tap into these stereotypes so employees will
more readily accept their influence.
 Thus, in this theory’s view, it may be more important to look like a leader
than to actually be one.
 Crafting the right leadership image is important.
 Makes a case for image consultants.
 Ronald Reagan
3. Substitutes for Leadership Theory
 There are factors in the situation that can neutralize a leader’s influence
over subordinates’ satisfaction and performance.
 The leader becomes irrelevant to subordinate satisfaction and
performance.
 Thus, sometimes leaders receive credit and blame for their subordinate’s
performance when they don’t deserve it.
 Some management experts consider this an anti-leadership theory.
 Factors that substitute for leadership:
 Experienced and knowledgeable employees
 Substitutes for initiating structure
 Technology
 Substitutes for initiating structure
 Cohesive work groups
 Substitutes for initiating structure & consideration
 Self-motivated employees
 Substitutes for consideration

Groups
 What is a Work Group?
o It’s defined as two or more people who interact regularly to achieve some common
goal.
o What’s the difference between a formal group and an informal group?
 Formal vs. Informal Work Groups
o Formal: deliberately created by the organization; emphasizes authority and position;
focused on specialized roles and duties
o Informal: Develop naturally; may not support the organization’s goals; emphasizes
personal and social relationships.
 Personal Needs Satisfied By Work Groups
o Safety: The group provides a sense of security.
o Social: The group provides friendship and belongingness.
o Esteem: The group recognizes one’s unique contributions to the group.
o Reality: The group provides a sounding board, so as to test one’s perceptions of reality
to see if they’re accurate or not.
 The Stages of Group Development
1. Forming
2. Storming
3. Norming
4. Performing
5. Adjourning
o The name of the stage describes what happens during the stage.
o Not all groups get thru all the stages.
o Interpersonal and intragroup conflict is the greatest at the storming stage.
o Cohesiveness is the greatest at the norming stage.
o Teamwork is the best at the performing stage (highest stage of group development).
 Factors Impacting Group Effectiveness
o Group Size
o Cohesiveness
o Norms
 The Relationship Between Group Size and Effectiveness
o As group size increases,
 the friendliness of the group decreases.
 member satisfaction decreases.
 there is less participation/less effort by group members (social loafing).
 there is more domination by one or a few group members.
 decision-making and teamwork become more difficult.
 sub-groups/cliques form.
o Upper limit to effective teamwork is 12.
 What is Cohesiveness?
o Cohesiveness refers to the desire of the group members to remain part of the group.
o When a group has a high level of cohesiveness, the group sticks together and has a
strong sense of “oneness.”
o The greater the cohesiveness of the group, the more influence it has over its members.
 Benefits and Drawbacks of Highly Cohesive Groups
o Benefits: High morale/job satisfaction; Higher member self-esteem; Greater sense of
security; Low absenteeism and turnover; Better teamwork/decision-making
 o Drawbacks: Limits creativity/originality due to conformity
 Factors that Increase/Decrease Group Cohesiveness
o Increase cohesiveness: Small group size; Winning; High status group; Attractive group
goals; External threat; Severe initiation; Lots of time spent together
o Decrease cohesiveness: Large group size; Losing; Poor public image; Unattractive group
goals; Disagreeable tasks/demands
 What is a Norm?
o A norm is a unwritten rule about how group members should behave in the group.
o Norms can be either prescriptive (what you should do) or proscriptive (what you
shouldn’t do). They define what’s acceptable and what’s not acceptable in the group.
 Norms and Cohesiveness Interact to Determine Work Group Performance
o High cohesiveness groups are a double-edged sword.
 High cohesiveness groups with high productivity norms are high
performance teams.
 High cohesiveness groups with low productivity norms are low
performance teams.
o Low cohesiveness groups have very little influence over their members performance.
 Low cohesiveness groups with high productivity norms are average
performance teams.
 Low cohesiveness groups with low productivity norms are average
performance teams.

Review Questions:
1) In the jelly-bean motivation trap, high performers receive _____ inequity and low performers
receive ______ inequity.
a. Favorable; unfavorable
b. Favorable; favorable
c. Unfavorable; favorable
d. Unfavorable; unfavorable
2) Which of the following is not an aspect of an effective goal setting program in all situations?
a. Subordinate participation in goal-setting
3) The autocratic tell and sell method works to improve employee performance by increasing
a. The acceptance of goals
4) Which of the following conditions is appropriate for the use of participation in goal-setting?
a. The manager’s style is autocratic
b. There is low trust between management and labor
c. The employee doesn’t desire added responsibility
d. None of the above
5) When a worker performs poorly and is terminated, this is known as _____.
a. Punishment
6) A slacker realizes that the poorer he performs, the more tasks his manager takes away from
him. This is an example of _______.
a. Negative reinforcement
7) Which of the following is not true concerning punishment?
a. It replaces the bad behavior with a good behavior
8) Which of the following is also known as avoidance learning?
a. Negative reinforcement
9) Which of the following is true concerning reinforcement theory?
a. The consequence for the behavior determines its frequency.
b. The person receiving the consequence determines whether its positive or negative.
c. When using extinction, the behavior may actually increase before it decreases.
d. All of the above.
e. Only 1 and 2.
10) In the leave-alone zap trap, good performance receives _____ whereas poor performance
receives ______.
a. Extinction; punishment
11) High performance under the leave-alone zap manager ______.
a. Increases then decreases
12) When a manager falls victim to the leave-alone zap trap, he fails to use which consequence for
managing behavior?
a. Positive consequences
13) Under the jelly-bean motivation trap which individual is the most dissatisfied?
a. High performer
14) When rewarding on assumed needs a manager’s reward to an employee for good performance
could be considered by the employee as all of the following except __________.
a. Negative reinforcement
15) According to Maslow’s hierarchy of needs theory,
a. the lowest unsatisfied need in the hierarchy motivates your behavior.
b. a satisfied need can motivate your behavior.
c. the highest level of motivation is self-actualization.
d. All of the above.
e. Only 1 and 3.
16) Given that most jobs are specialized, what needs are typically frustrated for most employees?
a. Social
b. Esteem
c. Self-Actualization
d. All of the Above.
e. 2 and 3
17) A peak experience is momentary satisfaction of which of the following needs in Maslow’s
hierarchy?
a. Self-actualization
18) In Alderfer’s ERG theory, growth needs are equivalent to what needs in Maslow’s hierarchy of
needs?
a. Self-actualization
19) In Herzberg’s 2 factor theory, what motivates employees?
a. Job enrichment
20) Which of the following is not a hygiene factor?
a. Autonomy
21) If a person held a enriched job that had good pay and benefits, this person would experience
which of the following states according to 2-factor theory?
a. Job satisfaction and no job dissatisfaction
22) According to 2-factor theory, which of the following is the best a person could hope for on a
specialized job?
a. No job satisfaction and no job dissatisfaction
23) Which of the following is not a criticism of 2-factor theory?
a. It assumes everyone has an instrumental motivate toward work
24) Which of the following is the appropriate leadership style when the employee is able and willing
to do the task?
a. Low Initiating Structure & Low Consideration
25) Which of the following is the appropriate leadership style when the employee is unable to do
the task and is lazy/unwilling to learn the task?
a. High Initiating Structure & Low Consideration
26) Which of the following is the appropriate leadership style when the employee is unable to do
the task but is willing to learn how to do the task?
a. High Initiating Structure & High Consideration
27) Which of the following is the appropriate leadership style when the employee is able to do the
task but lacks the self-confidence to do the task?
a. Low Initiating Structure & High Consideration
28) Theory X Managers will exhibit which of the following leadership styles?
a. High Initiating Structure & Low Consideration
b. Low Initiating Structure & High Consideration
29) Customer service employee A works 60 hours/week and is paid $1200 whereas customer service
employee B works 30 hours/week and is paid $1800. This situation creates
a. inequity and inequality
30) According to equity theory,
a. when people perceive inequity it creates tension that they’re motivated to reduce or
eliminate
31) When employees are faced with unfavorable inequity, which of the following may occur?
a. Reduced quantity/quality performance.
b. Extended work breaks.
c. Stealing from the employer.
d. Increased absenteeism and turnover.
e. All of the above.
32) When employees are faced with favorable inequity, which of the following will likely occur?
a. Increased confidence in the worker that they deserve the rewards given
33) If you treat benevolents fairly in reality and give them the rewards they deserve based on their
performance, benevolents will perceive?
a. Favorable Inequity
34) If you treat equity sensitives fairly in reality and give them the rewards they deserve based on
their performance, equity sensitives will perceive?
a. Equity
35) To treat entitled fairly in their minds, you must give the entitleds which of the following?
a. Actual Favorable Inequity
36) Jelly-bean motivators encourage the development of what type of individual?
a. Entitled
37) Which of the following is a characteristic of an informal group?
a. It may not support the organization’s goals
38) Which of the following needs fulfilled by a group is associated with using other group members
to see if one’s perceptions of work situations are accurate or not?
a. Reality needs
39) During which stage of group development, does the group experience the highest level of
cohesiveness?
a. Norming
40) During which stage of the group process, does the group experience a lot of conflict over who’s
going to do what tasks and who’s going to be in charge?
a. Storming
41) Which of the following does not occur as group size increases?
a. There is less domination by one or a few group members
42) What’s the upper limit for group size as it pertains to effective teamwork?
a. Twelve members
43) Which of the following factors will decrease a group’s cohesiveness?
a. Large group size
b. Losing
c. Disagreeable tasks/demands made by the group.
d. The group has a poor public image.
e. All of the above will reduce the cohesiveness of the group.
44) Which of the following is NOT true concerning highly cohesive groups?
a. They increase their members’ sense of security/unity.
b. They have less absenteeism and turnover.
c. They can limit creative thinking due to their focus on conformity.
d. They will always lead to higher productivity for the organization
45) Which of the following combinations of cohesiveness and norms will lead to the lowest level of
productivity?
a. High cohesiveness group with a low productivity norm
46) According to Fiedler, leadership training _______.
a. should focus on training leaders to be flexible.
b. is for the most part a waste of time.
c. should train leaders to be more democratic in their leadership style.
d. should teach leaders how to change the situation to fit their style.
e. b and d.
47) Using the least preferred co-worker (LPC) scale, if you describe your LPC in very negative terms,
you have a ______ LPC score and are a ______ leader.
 a. Low; task-oriented
48) Which of the following is not true, concerning Fiedler’s contingency theory?
a. High LPC leaders perform best in very favorable conditions
49) Given what is known about middle LPC leaders, which of the following combinations of
leadership behaviors will they engage in?
a. Hi Initiating Structure and Hi Consideration
b. Hi Initiating Structure and Lo Consideration
c. Lo Initiating Structure and Hi Consideration
d. Lo Initiating Structure and Lo Consideration
e. Any of the above depending on the situation since middle LPC leaders are behaviorally
flexible.
50) Which of the following determines whether a subordinate is lead or supervised in reciprocal
theory?
a. In-group, out-group membership
51) Which of the following could determine in-group/out-group membership?
a. Likeability
b. Stereotypes/Biases
c. Performance
d. Nepotism
e. All of the above
52) Which theory states that leadership is in the eye of the follower?
a. Implicit theory
53) Which leadership theory suggests that there are times when leaders may have little influence
over the actual outcomes of a work situation?
a. Substitutes for leadership
54) A manager believes that “it’s better to be feared than to be loved” is relying heavily on which of
the following power bases?
a. Coercive power
55) Which of the following power bases are associated with supervision?
a. Legitimate power
b. Reward power
c. Coercive power
d. All of the above
56) When managers use coercive power, they are using _____ to gain compliance.
a. positive reinforcement.
b. punishment.
c. negative reinforcement.
d. all of the above.
e. both b and c.
57) Which power base best exemplifies leadership?
a. Referent power
58) According to the research on power bases and productivity, which of the following power bases
was shown to have no significant relationship to productivity but if used properly will actually
increase productivity?
 a. Reward power
59) Which of the following beliefs is inconsistent with a Theory Y viewpoint?
a. Employees need to be supervised closely
60) In the end, which style combination is the best according to the behavioral theory of leadership?
a. Hi Initiating Structure and Hi Consideration
b. Hi Initiating Structure and Lo Consideration
c. Lo Initiating Structure and Hi Consideration
d. Lo Initiating Structure and Lo Consideration
e. None of the above; the best style combination depends upon the situation.
61) Theory Y Managers will exhibit which of the following leadership styles?
a. Lo Initiating Structure and Hi Consideration