## **Learning Outcomes**

After reading this article, you will be able to explain how expectancy theory and goal setting theory account for motivation and performance in the workplace. You will understand the components of Vroom’s expectancy model, the impact of perceived effort–reward links, and the role of goal clarity and challenge in Locke’s theory. You will be able to apply these ideas to workplace scenarios and identify practical ways for managers to motivate individuals and teams effectively.

## **ACCA Business and Technology (BT) Syllabus**

For ACCA Business and Technology (BT), you are required to understand how psychological theories of motivation underpin effective management and performance in organisations. In particular, you should focus your revision on:

- The concept of motivation and its impact on organisational performance
- The key features and implications of expectancy theory (Vroom)
- The elements and practical application of goal setting theory (Locke)
- How managers can use these theories to encourage desired behaviours and higher achievement
- The limits of both theories and how they relate to reward system design

## **Test Your Knowledge**

_Attempt these questions before reading this article. If you find some difficult or cannot remember the answers, remember to look more closely at that area during your revision._

1. In expectancy theory, what are the three factors that determine motivation, and how does each influence effort?
2. According to goal setting theory, what makes goals most likely to improve performance?
3. True or false? Vague goals can motivate employees just as well as specific, challenging goals.
4. How might a manager use expectancy theory when designing an incentive scheme?

## **Introduction**

Motivation is key to individual and organisational performance. Effective managers understand the importance of linking rewards to performance and setting clear, challenging goals. Expectancy theory and goal setting theory are two core models explaining how people decide how much effort to put into their work. Understanding these theories helps managers design effective reward systems and encourage high achievement across the business.

> **Key Term: motivation**
> The internal drive that encourages an individual to undertake actions to achieve personal or organisational goals.

## Expectancy Theory

Expectancy theory, proposed by Victor Vroom, explains how people decide what level of effort to put into different tasks. It argues that motivation is determined by the belief that one’s effort will lead to acceptable performance (expectancy), that performance will lead to desired outcomes (instrumentality), and the value placed on those outcomes (valence).

> **Key Term: expectancy theory**
> A theory stating that an individual’s motivation is based on expectations about the likelihood of achieving desired outcomes as a result of effort.
>
> **Key Term: expectancy**
> The belief that a certain level of effort will lead to a particular level of performance.
>
> **Key Term: instrumentality**
> The belief that performing well will result in receiving a specific reward.
>
> **Key Term: valence**
> The degree of value or importance an individual places on an expected reward.

### The Three Components

1. **Expectancy**: How confident is the employee that their effort will result in the required performance? Factors include previous experience, training, resources, and perceived controllability.
2. **Instrumentality**: Does the employee believe that performing well will actually result in the promised reward? If past promises have not been kept, instrumentality falls.
3. **Valence**: Is the outcome genuinely valuable to the individual? Different employees may place different importance on financial rewards, recognition, time off, or promotion.

Motivation is strongest when all three factors are high:

- If expectancy is low, an employee may not try because they doubt effort will make a difference.
- If instrumentality is low, extra work feels pointless because rewards appear uncertain.
- If valence is low, even guaranteed rewards do not motivate if they are not valued by the employee.

### **Worked Example 1.1**

**Junaid is a sales representative. The company launches a bonus scheme for exceeding sales targets. Junaid believes he can reach the sales target with enough effort (high expectancy), trusts that the bonus will be paid promptly (high instrumentality), and values the extra cash (high valence). What should his motivation be like?**

> **Answer:** Junaid’s motivation should be high. All three components (expectancy, instrumentality, valence) are present, so he is likely to increase his effort to achieve the target.

### Managerial Application

Managers can use expectancy theory by:

- Providing clear resources, support, and training to show that effort leads to improved performance (expectancy)
- Explaining how high performance will be recognised and linking it to specific rewards (instrumentality)
- Consulting employees to ensure rewards are meaningful (valence)

If any of these factors are missing, employees’ motivation can drop sharply.

### **Exam Warning**

> When answering scenario questions on expectancy theory, you must specifically refer to all three factors—expectancy, instrumentality, and valence. Avoid general statements about rewards or effort.

## Goal Setting Theory

Goal setting theory, developed by Edwin Locke, focuses on the importance of setting clear and challenging objectives. The theory argues that specific and difficult goals, coupled with feedback and commitment, will improve performance more than vague or easy goals.

> **Key Term: goal setting theory**
> A theory that states setting clear, challenging goals with appropriate feedback increases achievement and motivation.

### Goal Characteristics

According to goal setting theory, goals are most effective when they are:

- **Specific:** Precise objectives (e.g., “increase monthly sales by 10%”) are more motivating than general aims (e.g., “do your best”).
- **Challenging but achievable:** Difficult enough to require effort, but not so hard that employees give up.
- **Agreed or accepted:** Employees perform better when they are involved in goal setting and buy in to the target.
- **Time-bound:** Goals should have clear deadlines to encourage focus.
- **Supported by feedback:** Regular information on progress keeps employees engaged and enables adjustments.

### **Worked Example 1.2**

**Sophie’s manager sets her the goal: “Submit three client reports per week for the next three months,” and reviews her progress every Friday. According to goal setting theory, how might this affect Sophie’s performance?**

> **Answer:** The goal is specific, time-bound, and progress is regularly reviewed. Sophie is likely to be more motivated and achieve better results than with a vague goal.

### Practical Steps for Managers

- Consult employees during goal setting to increase commitment
- Ensure goals are measurable and clear
- Set performance reviews to allow for feedback and course correction
- Adjust goals as necessary to keep them challenging but achievable

### Common Pitfalls

- Setting goals that are too easy or impossibly demanding
- Failing to give feedback or acknowledge progress
- Imposing goals without employee input—reducing commitment
- Ignoring individual differences in capacity and role

### **Worked Example 1.3**

**A team is asked to “improve customer service.” The instruction is unclear. What adjustment would goal setting theory recommend?**

> **Answer:** The manager should set a measurable, specific goal—such as “achieve a 95% customer satisfaction rating in the next customer survey.”

### **Revision Tip**

> Use the acronym SMART (Specific, Measurable, Achievable, Relevant, Time-bound) to check the quality of goals in exam scenarios.

## Applying Both Theories in Organisations

Expectancy theory helps managers understand why incentives might not lead to higher motivation if staff doubt the link between effort, performance, or rewards. Goal setting theory guides managers in setting objectives that encourage higher achievement.

Combining both:

- Ensure employees believe their goals are challenging, achievable, and linked directly to valued rewards.
- Address barriers to performance, offer support, and provide feedback.
- Review and update goals regularly to maintain motivation.

### **Exam Warning (Both Theories)**

> Avoid confusing expectancy theory with goal setting theory. Expectancy theory is about beliefs and perceived links between effort and reward; goal setting is about the nature of the goals themselves.

## **Summary**

Expectancy theory explains motivation through employees’ beliefs about effort, performance, and valued outcomes. Goal setting theory highlights the power of clear, challenging goals supported by feedback. Managers who apply both can better motivate staff and drive organisational success.

## **Key Point Checklist**

_This article has covered the following key knowledge points:_

- The definition and impact of motivation on workplace behaviour
- Vroom’s expectancy theory: expectancy, instrumentality, and valence
- How beliefs about effort, reward, and value combine to affect motivation
- Locke’s goal setting theory: the need for clear, challenging, accepted goals and feedback
- Practical steps to apply both theories to motivate individuals and teams
- Typical pitfalls in motivation and goal design

## **Key Terms and Concepts**

- motivation
- expectancy theory
- expectancy
- instrumentality
- valence
- goal setting theory


Motivation and performance - Expectancy and goal setting theory