Equity Theory in Ultimate Software - Case Study Example

Motivation Assignment Table of Contents Motivation Assignment Table of Contents 2 Introduction 3 Expectancy Theory of Motivation 3 Vroom’s Expectancy in ‘Ultimate Software’ 5 Equity Theory of Motivation 6 Equity Theory in Ultimate Software 8 Conclusion 11 References 13 Introduction In every organization motivation is required for increasing productivity. It is based on requirement which may be primary or secondary. The requirement of people may differ according to the intensity and individual perceptions. It is the duty of organization to gratify the needs of employees and encourage them to perform in the desired way (Koontz, H., & Weihrich, H., “Essentials of Management”). If employee expects productive and desirable result, they will habitually perform hard according to the expectation of organization. Motivation of employees includes three aspects which are effort, performance and outcome. These aspects can determine the level of motivation among employees (The Certified Accountant, “Expectancy Theory”). Expectancy Theory of Motivation There are several disciplines in the field of motivation and one of them is the expectancy theory. This theory is devised by Victor Vroom. He assumed that motivating an employee requires making a connection between effort, performance and inspiration. The productivity of employees depends on aspects like employee behavior, ability, knowledge, experience and proficiency. Vroom’s expectancy theory is made on the basis of three attributes which are Valence, Expectancy and Instrumentality (The Certified Accountant, “Expectancy Theory”). Valence: It is the emotional direction which employee embraces with respect. The desire of employee can be extrinsic benefits like higher income, job promotion, free leisure time or intrinsic benefits like job satisfaction. Organizations need to determine the acts that can make an employee more grateful. Expectancy: Expectancy deals with the faith of employee about his/her ability. Each employee possesses dissimilar expectations and degree of confidence about their capability. Expectation is illustrated as the strength of an employee’s faith if a particular task is achievable or not. Organization must find out the materials, training and administration requirement of employee for a particular task. Instrumentality: Instrumentality is the idea of gaining something after completing a task. An employee always thinks that if he/she performs well, a worthy result will be gained. Thus, it is the perception of employee that whether he/she will gain the expected result even it is assured by the organization. It is the responsibility of organization to make sure that promised compensations are realized. The following figure shows the relationship between Valence, Expectancy and Instrumentality. Source: (The Certified Accountant, “Expectancy Theory”). The instrumentality is impacted by the belief among people in the organization and transparency of the organization’s procedure. According to Vroom, every employee relate with the above three aspects sensitively. These are the forces which generate motivation among employees and are able to bring enjoyment as well as evade trouble of employees. The theory can be expressed by following formula Motivation = Valence × Expectancy × Instrumentality (The Certified Accountant, “Expectancy Theory”). This formula signifies job satisfaction, occupational selection, and employee retention. Vroom’s Expectancy in ‘Ultimate Software’ Ultimate Software is one of the best SMEs with respect to employee satisfaction and developing a family environment. It successfully motivates the employees with best practices and support the workers at each level. Valence: Ultimate Software always attempts to evade dismissal of employees and do not involve in reducing the key benefits. It provides employees with tuition support, compensating health insurance for employees and their kin, etc which is exceptional (SHRM, “Best Medium Companies to Work for in America”). Expectancy: Ultimate Software recognizes the significance of employees. To increase the expectancy of employees it provides employees with training when needed. The company teaches employees about private finance and the ways to manage with limited budget. The employees are provided with various technical and skill development training modules in order to become a good team member (Lyman, “Ultimate Software: They’re At It Again”). Instrumentality: Apart from the standard compensation, the employees of Ultimate Software gain benefit beyond the usual expectations. Ultimate Software provides monetary aid as well as emotional assistance to employees for any uncertain incidents which create a sense of responsibility towards organization. The company is very popular for a caring of employees. It provides every possible help for any personal requirement and gives flexible work opportunity until the condition improves (Lyman, “Ultimate Software: They’re At It Again”). The above aspects can help to motivate the staff force for better performance. The better treatment of employees in Ultimate Software helps to influence them to put much effort in the organizational tasks. Equity Theory of Motivation Equity Theory of Motivation is another theory of motivation formed by J Stacy Adams. According to this theory, employees in an organization strive for equality and impartiality. This theory is developed on the basis of cognitive disagreement approach. The cognitive disagreement approach says that employee can be motivated to uphold uniformity between the cognitive trusts and activities. Apparent discrepancy can generate cognitive disagreement which motivates remedial action. Adams called for equity opinion in the place of work (Kinicki, A. & Kreitner, R. “Organizational Behavior Key Concepts, Skills and Best Practices”). Equity theory concentrates on employees’ insight about how reasonably they are treated with contrast to other organizations. Employees are always very much anxious about social impartiality and compensation they anticipate for the given performance. If the anticipated compensation is similar to other organization then employee thinks that the treatment in the organization where he/she work is rational and equitable (Daft, R. & Et. Al., “Management-International Edition”). According to equity theory, there are two key elements of employee motivation which are inputs and outcomes. Input is the employees’ contribution to organization with respect to training, experience, ability, skill creativity, efforts, and individual appearance. The outcome is the exchange of employees input from organization’s point of view like salary, bonus, fringe benefits, recognition, promotion, job security, better work environment etc. It differs according to organization’s financial conditions and position. In any job, the sense of inequity can impact on the inputs towards organization. An employee basically measures equity in term of ratio. There are three kinds of equity namely fair equity, negative inequity and positive inequity which are showed in following diagram: Source: (Kinicki, A. & Kreitner, R. “Organizational Behavior Key Concepts, Skills and Best Practices”). A fair equity appears when the output that is perceived by employee is reasonable and impartial. A negative inequity occurs when employee feels that the input-output ratio is injustice. It can interrupt the motivation and employee might seek for integrity. A positive inequity is when an employee gets excess compensation compared to other employees who had given similar input in the organization. It might be disadvantageous for employee if he/she moves to other organization. Employee can get deprived from the benefits of the features in other organization (Leeds Business, “Equity Theory (Adams, 1963)”). Equity Theory in Ultimate Software Ultimate Software treats employees fairly and equitably. The ‘input’ Ultimate Software expects from their employees include good efforts, performance and jobs and in return, it provides employees with every possible ‘outcome’. Beside other common benefits like compensation, recognition, Ultimate Software provides financial help, work flexibility, and leave benefit to employees (Great Place to Work Institute, “Ultimate Software – It’s all in the teamwork”). Ultimate Software provides employee equitable compensation to motivate them for exceptional performance. In this organization each employee has the right to nominate other employee whom he/she considers as a symbol of passion, devotion, qualities, thoughts and work principles. An employee who is devoted in the organization with hard work can receive (Most Valuable Player) MVP Award i.e. tour packages in any places of USA, Mexico and Alaska. Thus, every employee has equal opportunity to grasp the award and it helps to motivate them. From acknowledgment for success in business to accomplishing employee’s personal target, Ultimate Software recompenses and celebrates every occasion. It recognizes the obsession of the company and each decision made by it reflects the employees’ happiness and care for them as well as the organization. Thus, employees are motivated to win the heart of Ultimate Software and perform hard with honesty and sincerity (Great Place to Work Institute, “Ultimate Software – It’s all in the teamwork”). The model of Ultimate Software is exclusive which includes extraordinary and meaningful payback for employees. It has strong leadership and employee focused culture which creates a sense of loyalty and passion for every staffs. The family type culture in Ultimate Software results in highly motivated employees. The organization understands the need for fair equity and thus it provides different prospect for different employees to relieve them from any work pressure. The equity theory can be applied in Ultimate Software from the following diagram: Source: (Great Place to Work Institute, “Ultimate Software – It’s all in the teamwork”). Input: Employees receive training in orgnization for developing themselves and subsequently they put much effort to their work. They are given freedom to express their views and credibility for accomplishing any task. Employees have the capability in organizing resources. Employees choose their task and manage them and get tasks done perfectly. Outcome: Employees are treated with respect in the organisation. Ultimate Software demonstrates admiration to employees, collaborate with important decisions and care for them in any of their personal problems. With respect to reward system Ultimate Software provides balanced measures. There are no impartiality and injustice in terms of recruitment or promotion. It generates a sense of pride among employees for individual job and involvement. The following graph shows the fairness of Ultimate Software: Source: (Great Place to Work Institute, “Ultimate Software – It’s all in the teamwork”). By providing great work environment and fair treatment Ultimate Software successfully motivates the staffs to direct their maximum effort in organizational objectives and goals. For this reason, it has appeared to be number one with respect to ‘Best Medum Companies to Work For in America’ in the year 2008 (Zeidner, “Uncommon Benefits”). Conclusion Employee motivation has helped Ultimate Software to attain dramatic performance in the IT sector. The profit of the company has also increased by 33%. It is important for organization to employ training to enhance the ability of employees and fuel better performance. Ultimate Software provides better place of work for employees with better strategy that bring employees closer and unite them and thus enhance loyalty (Zeidner, ““Uncommon Benefits”). References Daft, Richard L. & Et. Al. Management-International Edition. Cengage Learning EMEA, 2010. Great Place to Work Institute. Ultimate Software – It’s all in the teamwork. August 25, 2011. Article, 2008. Koontz, Harold, & Weihrich, Heinz . Essentials of Management. Tata McGraw-Hill Education, 2006. Kinicki, Angelo & Kreitner, Robert. Organizational Behavior Key Concepts, Skills and Best Practices. Tata McGraw-Hill Education, 2009. Lyman, Amy. “Ultimate Software: They’re At It Again”. August 25, 2011. Great Place to Work Institute, 2009. Leeds Business. Equity Theory (Adams, 1963). August 25, 2011. Management 40130 - Motivation Theories, No Date. SHRM. “Best Medium Companies to Work for in America”. August 25, 2011. Small and Medium Companies to Work For in America. The Certified Accountant. “Expectancy Theory”. August 25, 2011. Motivate Your Team by Linking Effort with Outcome, 2008. Zeidner, Rita . “Uncommon Benefits”. August 25, 2011. HR Magazine, 2008. Read More