Employee Motivation: Theories and Application in Business

This essay discusses three primary theories of motivation in an organization which includes: Herzberg’s Two Factor Theory, Equity Theory, and the Goal Setting Theory. The essay attempts to compare and contrast these three theories and gives an outline of the application of the three theories by managers within a business setting.

Running head: EMPLOYEE MOTIVATION 1
Employee Motivation
Name:
Institution

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Introduction
In the current organizational environment, most firms are looking for ways to increase
quality, efficiency, and productivity. There are many motivational theories that might be
employed by the managers in motivating their staff. The human resources are regarded as the
most valuable resources for any firm, and the success of that specific company hugely depends
on the ability of the staff to get the job done. This makes it important for the staffs to remain
focused on their tasks with an enhanced enthusiasm and energy. Thus, motivation is an aspect of
concern among the managers since they are tasked with the responsibility of motivating and
encouraging the staffs. The purpose of this essay is to discuss three primary theories of
motivation in an organization which includes: Herzberg’s Two Factor Theory, Equity Theory,
and the Goal Setting Theory. Further, the essay attempts to compare and contrast these three
theories. The last part of the essay gives an outline of the application of the three theories by
managers within a business setting.
Motivational Theories
Stacy Adams was a psychologist who came up with the Equity Theory. Adam argues that
striving for fairness and equity are among the core motivating forces among the employees. This
theory can be regarded to be a social comparison in terms of an input-outcome ratio. For
instance, the employee gives out inputs which comprise of labor and skills and in return, they
obtain outputs such as recognition and pay (Barrick, Mount & Li, 2013). However, the
comparison is dependent on objective data that include the staff’s salary, including the
perception of the staff. Nonetheless, dissatisfaction or inequity sets in when an employee notes
that there is a disparity with the other staffs. Gauging of equity involves four main stages. First,

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the staff gauges how they are treated by an organization. Second, the employee finds a
‘comparison other’ within the firm (CHEN, Hsieh & CHEN, 2014). Third, the employee then
compares their own conditions with their comparison other, and the final step is dependent on the
staff’s perception of either equity or inequity, and the staff may choose to act upon it or not.
The Goal-Setting Theory was proposed by Edwin Locke in the 1960s. For goals to be
considered as motivating factors within an organization, they must be specific, have a
commitment, be challenging, and there should be feedback (Ferris, et al., 2013). The
organizational goals should be specific enough to answer questions such as who, why, where,
when, what, and how of the goals’ expectations (Hsiaw, 2013). The steps in creating motivation
include: first, a committed goal is created. Being goal committed refers to a person’s
determination in achieving an accepted goal based on the self-efficacy and the important factors.
To increase every employees’ motivation, it is important that the level of the challenge be
specific to every individual. An employee becomes more focused on a specific task depending
on the level of the challenge, and they are able to avoid unnecessary distractions. Last, feedback
is important to an employee since it helps in informing them about the progress on their goals.
Fredrick Herzberg was an American Psychologist who came up with the Two Factor
theory, also known as the Dual factor theory. According to Herzberg, there are two primary
factors that impact the staff’s satisfaction or dissatisfaction within the organization. These factors
are the Motivators and the Hygiene factors (Ghazi, Shahzada & Khan, 2013). The Herzberg Two
Factor theory was developed by conducting approximately 200 interviews among accountants
and the engineers. Analyzing the responses, Herzberg noticed that Motivators and Hygiene
factors were to be accounted for the employees’ satisfaction or dissatisfaction in a firm. Thus,
from the study, Herzberg viewed motivation as a dual structured phenomenon. Motivation

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factors are intrinsic in nature and they comprise recognition and achievement (Guillén, Ferrero &
Hoffman, 2015). On the other hand, the hygiene factors are extrinsic in nature and they comprise
of job security and the pay.
Critique of the Theories
Describing the main ideas of these three theories reveal that there are certain differences
that exist between them. For instance, the difference between the Equity Theory and the Two
Factor Theory can be observed in their classification. In this case, the Two Factor Theory has
been classified as a Need-Based Motivation theory. For example, this theory assumes that all
people have got a similar set of needs. It is evident that during this theory’s formulation,
Herzberg did not consider the individual differences, making it be among the theory’s point of
criticism (Holmberg, Caro & Sobis, 2018). Additionally, Herzberg’s Two Factor Theory is more
focused on the employees’ motivation and satisfaction practical aspects of an organization. This
means that factors such as professional relationships, responsibility, along with salary have got
more or less practical applications, thus they cannot be said to have been developed out of an
individual’s own cognitive process.
On the other hand, the Equity Theory is observed to relate more to an individual’s
cognitive process. This theory is considered to be more psychological in nature. This means that
it involves a lot regarding a person’s thinking, including the manner which a person perceives
themselves within an organization, and this perception instigates motivation (Yidong & Xinxin,
2013). This theory is process-based because it intends to explain individuals’ behavior in
meeting their needs. Nonetheless, this theory is more subjective in nature, hence making it be
more dependent on a person’s perception of equity rather than the overall perception of what is

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considered to be inequitable (Perryer, Celestine, Scott-Ladd & Leighton, 2016). It uses more of
an individualistic approach compared to the Two Factor Theory that is more objective which
clearly defines the Hygiene and Motivators and their impact on a staff’s satisfaction and
dissatisfaction, not considering the individual.
In the case of the Goal Setting Theory, when two different goals are set simultaneously,
giving too much focus on one of the goals may result in difficulty in attaining the other. For
instance, if an organization sets both quality and quantity goals at the same time; focusing more
on quantity may make the quality goal to be neglected (Uzonna, 2013). Tunnel vision is among
some of the limitations that may result from this theory in the instance where the staffs focus
more intently on their goals such that they ignore other aspects of their tasks. Narrowly focus on
a goal can translate to unintentional bias.
Despite the differences demonstrated by the three theories, they also have some
interesting similarities. The most obvious similarity is that the Goal Setting Theory, Two Factor
Theory, and the Equity Theory all aim at determining what results to motivation among
employees. Herzberg in his theory, the Two Factor Theory, identified that Hygiene and
Motivators gave rise to motivation amongst staff (Jansen & Samuel, 2014). Stacey Adams in his
theory, the Equity Theory, identified that what led to staffs’ positive or negative motivation was
the social comparison process. Nonetheless, Edwin Locke noticed that employees were
motivated by having goals that were more specific, have a commitment, and be more
challenging. Additionally, the three theories have got psychological factors that motivate them.
These psychological factors are clearly brought out in the Equity Theory. In the case of the Goal
Setting Theory and the Two Factor Theory, these psychological factors are also evident because

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several motivators such as specific goals, achievement, and recognition all tend to reflect on the
needs of self-actualization among the staff.
Role of Motivation Theories in Business
In the case of the Goal Setting Theory, it is widely applied in the workplace as a way to
enhance and sustain the work performance. The assumptions of this theory are that the staffs’
conscious goals along with their intentions are reflected in their behavior (Kotlar & De Massis,
2013). Consequently, the expectations are that the staffs’ performance and the efforts within the
business environment will be impacted on by the assigned goals. Successful managers may apply
this theory to help in clarifying expectations, improving performance, and developing the staff
into stronger workers, which translates to a stronger company.
Additionally, the Two Factor Theory suggests that there are two steps which could be
applied by the managers to keep the employees’ morale high. The first step was regarded by
Herzberg to be more fundamental. In it, a manager should try and get rid of the factors that result
in dissatisfaction. For instance, they may choose to increase their employees’ salaries in the
instance where they fall below the marketplace (Lo, Lin & Hsu, 2016). This results in a
reduction in hygiene factors thus reducing dissatisfaction. The second step involves enhancing
the motivation factors such as recognition and responsibility. This theory has garnered a lot of
interest from the managers because it also offers the guidelines for effective and suitable
application in a firm.
Regardless that the Equity Theory does not offer any guidelines for the application of the
theory, it stresses that the organizational rewards and reward system are the most essential
aspects that should be addressed by managers. To achieve this, there are three basic points that

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managers need to put into consideration. First, the staffs within the business setting should
understand the criteria being used to reward them, for instance, the amount of salary received is
dependent on the quality of work (McKown, 2013). Second, the managers should understand that
every staff will individually have different equity’ ideas as well as their ideas of the ‘necessary
reward’. Lastly, the manager should consider their subordinates to be unequal. This theory is
very useful to the managers because its prediction holds true as much as in the laboratory tests.
Conclusion
Analyzing the motivation theories is helpful in a business setting since it assists the
managers to understand how they can develop a workforce that is productive and effective.
Herzberg’s Two Factor Theory is considered to be more appealing to the business environment,
particularly the workplace because it provides a framework that the managers can employ when
putting it into practice. However, the Two Factor Theory is criticized since it purports to explain
a universal application and this is considered to be inaccurate. Additionally, the Goal Setting
Theory has been observed that it positively impacts on the employees’ performance. However,
according to some academics, this theory is losing its touch since the modern workplaces have
been organized into teams, and the Goal Setting Theory does not address teams. Lastly, the
Equity Theory encourages the managers to put into consideration fairness when designing jobs
and during remuneration. This theory is simple thus leading to its acceptance by many managers.
However, this theory only considers equity as the only type of motivation at the expense of other
motivation types such as economic motivation.

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