Expectancy theory explains the process by which people make motivational choices. According to this theory, people make motivational choices based on how they perceive (1) the value of rewards, (2) the instrumental relationship between performance and rewards, and (3) the chance of getting the job done.
The expectancy theory starts with the assumption that people are rational beings who want to maximize their gains in their goal-directed endeavors. Therefore, when they are faced with a number of behavioral options leading to need satisfaction, they will evaluate the potential outcomes of these options and select one that promises an optimal result. In evaluating these behavioral options, a rational person will analyze (1) the value of the rewards that the organization offers (valence), (2) the relationship between performance and rewards (instrumentality), and (3) the perceived chance of accomplishing the required task (expectancy). The tendency to act (motivation) is said to be a function of the valence (V), the instrumentality (I) and the expectancy (E). Using the initials of these three variables, expectancy theory is often called the VIE theory. Now let's discuss each of these key elements.
Valence of Rewards
Valence is a subjective value attached to an incentive of reward. People attach a valence to an incentive because they believe it satisfies some of their needs. Since it is subjective, people differ in the value they attach to a given incentive. For example, one person may attach a high value to a promotion, while another person can avoid it. The former may like it because it brings money and power, while the latter dislikes it because it means more responsibility or the headaches of dealing with other people's problems.
Also since it is subjective, managers have little control over the valences their employees attach to organizational incentives. However, managers can influence the valence if incentives by matching rewards to employee needs. Valence usually increases when (1) an employee has strong needs, (2) the incentive matches one or more needs, and (3) the size of the incentive is large enough to satisfy the aroused needs. For example, an employee will probably attach a high valence to money if (1) he or she has a strong economic need, (2) money used as an incentive, and (3) the size of the monetary incentive is sufficiently attractive.
Performance-Reward Instrumentality
Instrumentality refers to the ralationship between performance and raward. People ask, "Will I be rewarded if I perform the job well?" If the answer is affirmative, they will be motivated to exert an effort and increase the level of task performance. If the answer is negative, their motivational efforts will be reduced. As with valence, the measures of instrumentality can be positive or negative. If people perceive that their performance is generally rewarded, the perceived instrumentality will be positive. If they perceive that performance does not make any difference to their rewards, or if poor performers are rewarded as much as or more than high performers, the instrumentality will be low.
Since perceived instrumentality is a subjective judgment, managers do not have direct control over it. But they can positively influence their subordinates' perception of the instrumental relationship by matching rewards to rerformance and by communicating this fact effectively to the subordinates. For example, managers can improve instrumentality by using performance-contingent pay systems such as piece rates, merit rates, or performance bonuses, and by managing such systems fairly.
Effort-Perfirmance Expectancy
Expectancy is the belief that effort leads to performance. It is a subjective feeling that people attach to the likehood of accomplishing a task. They may ask, "Can I perform and accomplish the task goal?" "How much effort would the task reqiure?" If they feel there is a close relationship between their effort and task accomplishment, expectancy will be favorable. However, if the task is too simple or too complex relative to their ability, then they may feel that their effort is not related to task performance.
Like other motivational concepts, expectancy is subjective; people attach varying expectancies to an outcome. A task may seem simple to some but not to others. A person's ability and personality influence his or her effort-performance expectancy. Competent and secure individuals tend to perceive expectancy more positively than incompetent and pessimistic individuals.
Managers have no direct control over how their employees perceive the chance of achieving an outcome or task, but they can influence the employee's expectancies positively by matching people to jobs. When people are matched with jobs, employees can utilize their job skills and energies effectively. Consequently, effort-performance expectancy will be increased.