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Valassis Communications: A Case Study in Motivating for Performance

(Video available on VHS Tape)

chapter 5: Motivation at work

Chapter 5 Summary

▪ Early economic theories of motivation emphasized extrinsic incentives as the basis for motivation and technology as a force multiplier.

▪ Early psychological theories of motivation emphasized internal needs but did not take into account individual diversity in these needs.

▪ Maslow’s hierarchy of needs theory of motivation was the basis for McGregor’s Theory X and Theory Y assumptions about people at work.

▪ According to McClelland, the need for achievement, power, and affiliation are learned needs that differ among cultures.

▪ The two-factor theory found that the presence of motivation factors led to job satisfaction, and the presence of hygiene factors prevented job dissatisfaction.

▪ Social exchange theory holds that people form calculated working relationships and expect fair, equitable, ethical treatment.

▪ Expectancy theory says that effort is the basis for motivation and that people want their effort to lead to performance and rewards.

▪ Theories of motivation are culturally bound and differences occur between nations.

Learning Objectives

After reading this chapter, students should be able to do the following:

1. Define motivation.

2. Explain how Theory X and Theory Y relate to Maslow’s hierarchy of needs.

3. Discuss the needs for achievement, power, and affiliation.

4. Discuss the two-factor theory of motivation.

5. Describe how inequity influences individual motivation and behavior.

6. Explain seven different strategies for resolving inequity.

7. Describe the expectancy theory of motivation.

8. Describe the cultural differences in motivation.

segment summary: Motivating for performance – A Study of Valassis communications

Valasis Communications has been a leader in the sales promotion industry for 27 years. The company produces inserts which are distributed in newspapers to over 57 billion households. Valassis Communications has been voted one of Fortune Magazine’s best 100 companies in the United States for which to work. What motivational strategies does Valassis use to achieve such a high rate of job satisfaction by employees, a low turnover rate, and a match between the company’s performance goals and its performance results?

The first part of the video explains that Valassis considers it important to manage the corporate culture and the work ethic so as to make employees smile. By hiring goal-oriented people who enjoy setting and achieving goals, Valassis is able to have satisfied employees. “This is not for people who do their job and go home,” says Valassis’ CEO. The company employs people with like values—a strong work ethic—to help Valassis respond to market needs and to organizational needs. Valassis’ CEO wants the employees to behave like owners whose interests are aligned with his. He hires those who love the work, and he consistently recognizes and rewards them.

The second part of the video describes the company policies to foster motivation. Everyone earns a raise. Rewards are both individual and team-based. The Total Performance Plan is a performance-based reward system which includes base pay plus benefits. Valassis has a unique bonus in its reward system called Champion Pay. This reward is designed to catch people in the act of doing something good. Most managers feel they have to catch people in the act of doing something bad and punish them. If someone saves the company money, for example, money is given to that employee on the spot. And it’s done publicly with all the employees present. The idea is to reinforce behavior so that other employees will be motivated to do something exemplary.

The third section of the video describes the Team Achievement Dividend. Since all employees are members of the Valassis team, they receive financial rewards when the company does well. Company performance is compared to company targets every 6 months, and dividends are paid according to levels of participation. Receptionists, secretaries, and maintenance crews—everyone is included. The final section of the video describes the policy of celebrating successes with company parties. “Before we just run on to the next hurdle, we need to take time to focus and learn,” says Valassis’ CEO.

The company also provides other motivators such as career advancement, promotion from within, flexible hours, a work-out room, and a hair salon with a manicurist. Management tries to add convenience to the lives of the employees.

preViewing Activities

I. Before Class Preparation for Students

A. Review Chapter 5.

B. Define the following key terms: 1) motivation; 2) Theory X and Theory Y; 3) Two-Factor Theory; and 4) need for achievement.

C. Students will check with local business to find out how they motivate their employees. Examples will be shared with class.

▪ Ask students to see if any of the motivation techniques reflect the theories discussed in the chapter.

II. In-Class Previewing

A. What is motivation?

▪ Motivation is the process of arousing and sustaining goal-directed behavior. Motivation is one of the more complex topics in organizational behavior. Motivation comes from the Latin root word movere, which means “to move.”

B. Using Figure 5.3, The Motivation-Hygiene Theory of Motivation, students will explain this theory.

▪ The underpinning idea is that people have two sets of needs—one related to the avoidance of pain and one related to the desire for psychological growth. Conditions in the work environment would affect one or the other of these needs. Work conditions related to satisfaction of the need for psychological growth were labeled motivation factors. Work conditions related to dissatisfaction caused by discomfort or pain were labeled hygiene factors.

C. Define need for achievement. Would a person with a high need for achievement be a desirable employee?

▪ A person with a high need for achievement is one who seeks excellence in performance, enjoys difficult and challenging goals, and is persevering and competitive in work activities. McClelland found that people with a high need for achievement perform better than those with a moderate or low need for achievement, and he has noted national differences in achievement motivation.

▪ Individuals with a high need for achievement have three characteristics: 1) They set moderately difficult yet achievable goals because they desire a challenge but want to be successful; 2) They like to receive feedback; and 3) They do not like having external events or other people interfere with their progress toward the goals.

viewing activities

I. Does Valassis Communications have a Theory X or Theory Y view of its employees? Explain your answer.

▪ It is clear that Valassis believes his employees have a “can do” attitude toward their job. They are not passive or resistant to organizational needs. The motivation, the potential for development, the capacity for assuming responsibility, and the readiness to direct behavior toward organizational goals are all present in people. This is clearly a Theory Y view of employees. People who are not self-starters are typically not hired or do not stay very long at Valassis. Valassis tries to hire people who will “behave like owners” and have interests aligned with company interests.

▪ Also, Valassis feels that it is the company’s task to arrange conditions and methods of operation so that people can achieve their own goals best by directing their own efforts toward organizational objectives.

II. Describe the ways Valassis Communications motivates employees.

▪ Valassis has a Total Performance Plan, a reward system based on employee performance. There is a base pay plus benefits, plus a special category called Champion Pay. This is an attempt “to catch people in the act of doing something good.” Most managers try to catch employees in the act of doing something bad. If a person saves money for the company, for example, money is given to that employee on the spot in front of everyone else. In this way others are motivated to make individual contributions to the firm.

▪ Valassis also has a Team Achievement Dividend given to all members of the team—i.e., all employees. Every 6 months the company compares performance to targets and bases rewards upon the results. Everyone in the company—including the receptionist and the building maintenance crew –is rewarded at some level.

▪ Valassis also provides amenities such as a work-out room, flexible hours, and a hair salon to make the work environment convenient for the employees.

III. Why is celebrating an important part of Valassis’ motivational strategy?

▪ Money is not the only motivator in this company. The CEO feels strongly that before the company runs on to the next hurdle, it is important to take time to focus on the company success and learn from it. This implication is that one success can lead to another if the employees remain at a high level of performance. Celebration is a way for employees to build relationships and have a positive feeling about their job.

follow-up activities – students apply & extend

I. An out-of-class activity, students will apply the Two-Factor Theory to Valassis Communications. This can be done in small work groups. Students will list the motivation factors and the hygiene factors.

II. Using Fig. 5.6, students will explain the Expectancy Theory of Motivation and apply it to Valassis Communications.

▪ The Expectancy Theory of Motivation focuses on personal perceptions of the performance process. The theory is founded on the basic notions that people desire certain outcomes of behavior and performance, which may be thought of as rewards or consequences of behavior, and they believe that there are relationships between the effort they put forth, the performance they achieve, and the outcomes they receive. Expectancy theory is a cognitive theory of motivation.

▪ Valassis uses individual rewards called Champion Pay to reward individual acts that help the company reach its goals. Champion Pay sends a message to all employees that they too can expect financial rewards if they do something extra at Valassis. “If I try harder, I can do better.”

▪ Celebrating is a way of rewarding the employees because the whole company can expect a reward if the whole company exceeds performance goals.

How might cultural differences among Valassis’ employees affect motivation?

▪ Most motivation theories in use today have been developed by Americans in the United States and are about Americans. For example, while self-actualization may be the pinnacle need for Americans in Maslow’s need hierarchy, security may be the most important need for people in cultures such as Greece and Japan who have a high need to avoid uncertainty. Although achievement is an important need for Americans, other cultures do not value achievement as much as Americans do.

▪ Expectancy theory may hold up very nicely in cultures that value individualism while breaking down in more collectivist cultures that value cooperative efforts. In collectivist cultures, rewards are more closely tied to group and team efforts, thus obviating the utility of expectancy theory.

▪ Vlassis offers employees both individual and team rewards to meet the needs of individualistic and collectivist cultural differences among employees.

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