Motivation 101- How to Apply Expectancy Theory to Your Business

Motivation is a messy subject.  Perhaps each of us has wondered, “Why do people do what they do?”   Or, “Why is my child acting like that?” or “How can I understand why I want that shiny object?”

Those three questions are mirrored by academics, who state that all definitions of motivations attempt to explain 3 qualities:

1.  What originates, and energizes human behavior

2.  What drives human behavior toward/away from goals

3.  How behavior is maintained via systems orientation.

So how do you apply these 3 qualities to your business or your life?

Start with Expectancy Theory.   It is a valuable theory because it is new, treats both internal and situational forces, and assumes that each individual is rational and capable.  Expectancy Theory assumes that behavior is determined by a combination of forces, that people make independent decisions for subjective reasons, that differences can be studied systematically, and that individuals make decisions based on their perception of a likely reward makes intuitive sense.   A rational view for any business leader.

The 3 main concepts of expectancy theory are described as:  1.  performance – outcome (the belief that behavior X will likely lead to outcome Y), 2.  Valence (different value or subjective worth,) and 3.  Effort-performance expectancy (the belief that effort level X will lead to outcome level Y.)

Let me explain expectancy theory with a common example.  Imagine a manager of sales people.  For 12 years she has monitored sales goals (e.g. reach and frequency metrics) and her district has won national awards.  But the stretch goals are created by a third party vendor, using complex algorithms, that cannot be modified by the sales representatives.  Their performance-outcome is beyond their control.  Too often, their sales goals are set 120% or more above the previous year’s goals.  The result is de-motivating.  Sales representatives hope for goal correction in the third quarter, so that they improve their national standing before the forth quarter returns.  As described by the effort-performance aspect of expectancy theory, some salespeople simply cannot exert enough effort to yield a desired outcome.   Expectancy theory assumes any value, when multiplied by zero, will yield zero motivation.   Sadly, that was true year after year for too many sales people.

Perhaps they needed to apply expectancy theory to their management tactics!

Expectancy theory has value to managers because it has predictive validity, respects subjective differences of direct reports, can be applied to SMART goals for performance reviews, outcomes can be directly linked to reward systems, and is simple to apply (especially if managers ask people, “What motivates you?)

Expectancy theory has value to organizations because outcomes can be tied to rewards and compensation, it acknowledges different designs of jobs and roles, and it acknowledges influence of groups with different membership needs.

So, can you apply Expectancy Theory to your compensation rewards?  Or to your business?

If stuck, contact Doug Gray at 704.895.6479 or at


If academic, here are some good sources:

Porter, L. W., Bigley, G. A., & Steers, R. M. (2003). Motivation in Organizations. Motivation and work behavior (6th ed.) (pp. 1-39). Boston: McGraw Hill.

Robbins, S.R., & Judge, T.A. (2012).  Essentials of Organizational Behavior (11th ed.)  (p. 18).  Saddle River, NJ: Prentice Hall.

How much is your time worth?

Recently a client was struggling with two related issues:  1.  How much to pay his employees and subcontractors, and 2.  How to manage his accountant who regularly arrived late for scheduled meetings.

I suggested that he should  bill the accountant at least $1.00 per minute that he is late.

“Huh?”  He asked.

Then I reached into a day timer and showed him the following image.  (I tried to find a better image online but was not successful.)

The column headings are Salary year/ Salary week/ Benefits= 40% Total salary/ Total week/  Value per hour/ and Value per minute.


For instance, if your salary per year is $70,000, your Salary per week is $$1,346, your Benefits are $538, your total week is $1,885, your Value per hour is $47.00 and your value per minute is $0.79.

So why wouldn’t you charge the accountant at least $1.00/ minute for being late?  His tardiness is 1) expensive and 2) unprofessional.  I urged him to charge a retroactive late fee.  And I referred him to other accountants.

The second question is more complex.  How much should you pay employees and subcontractors?   The market response is “as little as possible, according to their value.”  That is why we pay minimum wages and low salaries for remedial work.

For most business leaders, we are slow to pay others for remedial work.

The best business leaders, however, ALWAYS delegate low paying tasks to others.  And they refuse to do remedial work.

Back to my client.  I asked him, “So, what do you think your time is worth?”

He said, “At least $70,000/ year.”

I said, “OK then, why aren’t you excited about the opportunity to pay others $10-24.00 per hour to do work for you?”

And that, of course, led to a deep conversation about self-worth and the need to delegate low paying tasks to others.

So, what is your time worth?