Expectancy Theory

What motivates employees to perform over and above expectations? 

What makes someone get up in the morning to go to work? And when they arrive at work, what makes them want to perform at their highest level? Is it because they have a nice boss? Is it because they like their co-workers, office space or perhaps the free coffee in the employee breakroom? While all these things contribute to creating an enjoyable workplace, studies have shown employees are motivated to perform based on what they expect they will receive in return for their extra efforts.  

This concept was formally introduced in 1964, and it is known as the Expectancy Theory. The Expectancy Theory was developed by Victor Vroom, who was a business school professor at the Yale School of Management. Today, the Expectancy Theory continues to be an effective approach for motivating employees.   

There are three elements within the Expectancy Theory that are essential to have when you want employees to perform over and above expectations. The three elements are expectancy, instrumentality and valence. 

Expectancy

When an employee believes in or can expect an increase in the reward for the increase in their efforts, then the desired behavior or outcome is achieved. A pay-for-performance reward system is a great example of this. According to a recent Salary.com survey, 77% of companies in the U.S. are using variable pay programs, such as a pay-for-performance reward system.

When setting performance goals for employees, it is important to keep in mind that the goal’s difficulty level will influence how much effort will be expended. The higher the goal, the more effort will be required; thus, the higher the reward needs to be. I have personally reviewed pay-for-performance programs where the goal was extremely high, but the reward was marginally better than what was provided to standard performers, and the company kept wondering why no one achieved the desired outcomes. I love the saying, “Go big or go home!”

Instrumentality 

When employees believe they will be rewarded if they meet specific goals, the employees will continue to stretch themselves, but this is only if there is an instrument in place to reward them for their increased effort. If you want to motivate employees to continue achieving the desired business outcomes, be sure you provide the reward timely and consistently with what the employee was expecting. Clearly explain the reward system, define clear expectations about the reward system and keep your word by giving rewards when they are due.  

Valence 

Valence refers to how much an employee values the reward. Employees may value and appreciate rewards differently. The employee may place a higher value on receiving recognition and praise over a financial reward. Someone in a sales role may place a higher value on total earnings potential as a reward.  For an employee to be motivated to perform a desired business result, they must place a value on the reward. 

In summary, for the past 20 years, I have been involved with helping to design and build employee reward systems. I have utilized the Expectancy Theory as an effective tool to help leaders put in place reward systems that will achieve the desired business outcomes. 

Employees will perform over and above performance expectations when they can expect a reward for their increased effort, when they have a tangible reward system in place and when they have placed a high value on the reward offered.