CSUN Nazarian|College of Business & Economics
MGT 360 · Fall 2026
Chapter03
Chapter Three
Motivation
Needs. Expectancy. Equity. Goals. Purpose. Pay.
Can you buy motivation — and what exactly do you get for the money?
Prof. Deone Zell
Department of Management
Department of Management
Week 4 · Fall 2026
Motivation
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03 · Chapter 3
03 · The road so far
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01 · How each week works
How each week works
Why your deadlines fall where they do
Before-class activity · Tuesday 11:59 PM
Due the night before class, so you have read the chapter and tied it to your own experience before the presentations on it. Missed it? It stays open one more week for half credit, then it closes.
After-class activity · Wednesday 11:59 PM
Opens when class starts and is due that night. It depends on being in class: your feedback on the presenters you watched, and what you learned. It also counts as attendance, so it does not stay open.
01 · Why the deadlines fall where they do
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02 · Your experiences
Ch 1 · Your Experiences
What 128 of you described
Concept
What you described
What to take from it
The four functions
A classmate assigned parts, checked progress and chased deadlines, and you thought they were being controlling.
They were planning, organizing and controlling. Managing happens with or without a title.
Mintzberg’s roles
Calming a customer over a sold-out product. Checking with three departments before changing an order.
You don’t need the title to play a manager’s role.
Katz’s skills
A manager who stayed in the office while the floor fell behind. A shift lead who pushed for speed and missed the stress.
Front-line managers need technical and human skill. Human skill matters at every level.
Successful vs. effective
The one who networked with the higher-ups got promoted. The one who trained you and did the work did not.
Organizations often reward visibility. In Luthans’ study, fewer than 10 percent ranked high on both.
Span of control
One manager stretched across every shift. What looked like a staff shortage was “a coordination failure.”
Too few managers costs you. So do too many layers.
Do managers matter?
Some of you doubted that a boss adds much beyond the work everyone else does.
In one firm’s data, a top-10% boss added more than hiring a tenth worker would.
02 · Ch 1 - Your Experiences
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02 · Your experiences
Ch 2 · Your Experiences
What 135 of you described
Concept
What you described
What to take from it
Fundamental attribution error
A teammate who seemed lazy. A slow station upstream. A prospect who missed a self-guided tour.
Write down the situational explanation first, then check it. The tour directions never said which side gate.
Emotional labor
Smiling through angry customers, ninety-degree days, and “Are you stupid?” thirty minutes before closing.
It is work. One of you, once promoted, stopped making cashiers smile all shift.
Surface vs. deep acting
A coworker who decided the table was “just hungry and stressed.” Empathizing with an upset customer “feels less taxing.”
Faking the feeling is what exhausts people. Changing how you read the situation costs far less.
Situation strength
Strict rules at a new counter, and outgoing and quiet staff started acting the same. A hands-off new manager, and personalities came out.
Strong situations mute personality; weak ones amplify it. Managers set the situation.
Conscientiousness
The well-liked coworker lost the promotion to the organized, dependable one.
The one Big Five trait that predicted performance in every occupation studied (Barrick & Mount 1991).
Self-views
Crediting a good presentation to an easy assignment. Deciding you are not “the study type.”
Write down what you actually did, rather than argue with the feeling.
02 · Ch 2 - Your Experiences
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03 · Your experiences
Ch 3 · Your Experiences
What 124 of you described
Concept
What you described
What to take from it
Goals gone wild
A loyalty-card quota when nearly every customer already had the card, and coworkers turned to misleading pitches.
In your words: “The incentive structure directly manufactured the bad behavior.”
Expectancy
A monthly sales target nobody could honestly hit. Hours of studying that never seemed to move the grade.
When effort can’t reach the result, effort stops. Check the target, and the strategy.
Instrumentality
Lease bonuses that were never paid. A promotion that went to someone else.
People act on the link they believe in. One of you: “I ask for it in writing first.”
Equity
Equal grades for unequal work. Same job, but someone else got the high-tip weekend shifts.
People compare what they put in and get back with others. Unfairness costs effort.
Crowding out
Cooking for fun became cooking for likes. Washing the dishes felt different once you were told to.
The undermining effect: a controlling reward can replace the reason you liked the task.
Goals done right
Strength targets tracked week by week. A clear number of calls, realistic goals, and feedback when you need it.
Specific, difficult, reachable, with feedback. Right dose, monitored side effects.
03 · Ch 3 - Your Experiences
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03 · Chapter 3
Key topics
Ch 3 Overview
- 3.1Needs Theories: The Pyramid and Its Problems
- 3.2Expectancy Theory: The Manager’s Diagnostic
- 3.3Equity and Organizational Justice: Motivation by Comparison
- 3.4Goal-Setting Theory — and Goals Gone Wild
- 3.5Intrinsic Motivation and Self-Determination Theory
- 3.6What Money Actually Buys
03 · Ch 3 Overview
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03 · Chapter 3
Ch 3 Cheatsheet
Needs theories
Maslow 1943 · McClelland
Needs are real. The staircase is not. Ask what this person needs now.
Expectancy theory
Vroom 1964
Three links multiply. A zero at any one link zeroes motivation.
Equity theory
Adams 1965
You judge your ratio of outcomes to inputs against someone else’s.
Organizational justice
Colquitt et al. 2001
Distributive, procedural, interactional. Fair process buys what money cannot.
Goal-setting theory
Locke & Latham 2002
Specific, difficult, reachable goals raise output — given commitment, ability, feedback.
Goals gone wild
Ordóñez et al. 2009
Same mechanism, read in reverse. Dose it, and monitor the side effects.
Self-determination
Deci & Ryan
Autonomy, competence, relatedness. Control withers it. Demand does not.
What money buys
Judge et al. 2010
Pay level and satisfaction: r ≈ .15. Contingency is the active ingredient.
03 · Ch 3 Cheatsheet
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03 · Chapter 3
Two answers to one question, ten years apart
The quota and the gift
Wells Fargo · 2002–2016
Buy the effort
- Daily cross-selling quotas, with pay, promotion and employment tied to the numbers
- Roughly 3.5 million accounts customers never asked for — forged signatures, unauthorized debit cards, “simulated funding”
- Employees who said the goals were unreachable were ignored by top executives
- $3 billion criminal and civil settlement, 2020
Patagonia · 14 September 2022
Remove the payoff
- Yvon Chouinard gave the $3 billion company away — 98% to a nonprofit, 2% voting stock to a purpose trust
- Roughly $100 million a year in profit goes to fighting the climate crisis
- No employee can ever get rich from the equity
- “Earth is now our only shareholder.”
On 3 June 2025 the Federal Reserve lifted the asset cap it had imposed on Wells Fargo in 2018. The CEO marked the moment by giving $2,000 to each of 215,000 employees.
03 · The quota and the gift
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03 · Chapter 3
The lazy conclusion is sitting right there
“Incentives bad, purpose good”
It is the reading everyone reaches for. Resist it — it fails in both directions.
Incentives are not the villain
Goal-setting with incentives is among the most replicated performance tools in all of organizational research. Anyone who tells you incentives do not work has not read the evidence. Wells Fargo’s system did exactly what it was built to do. That was the problem.
Purpose is not the hero
Purpose without a paycheck motivates no one for long. Patagonia pays competitive wages inside a premium brand with strong margins. The mission is riding on top of a sound financial floor — not replacing it.
The puzzle is conditional: when does pay for performance energize, and when does it corrupt?
03 · The lazy conclusion
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03 · Chapter 3
The question for the hour
Can you buy
motivation —
and what exactly do
you get for the money?
03 · The chapter’s question
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03 · Chapter 3
How we get there
The road through the chapter
- 01What people need, and why the pyramid failsMaslow 1943 · McClelland
- 02The manager’s diagnostic for effortVroom 1964 · expectancy
- 03Motivation by comparisonAdams 1965 · Colquitt 2001
- 04The field’s best tool — and its dark sideLocke & Latham · Ordóñez et al.
- 05Does pay crowd out the love of the work?Deci & Ryan · Cerasoli 2014
- 06What money actually buysJudge et al. 2010
03 · Roadmap
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03 · Chapter 3
Maslow, 1943 · the textbook must be honest here
Needs theories — and the pyramid problem
Maslow proposed five needs in 1943. The famous drawing is not his.
What survives
Needs are real, and they differ by person and life stage — and no mission statement substitutes for fair pay.
What aged better
McClelland: learned needs for achievement, affiliation and power. Individual differences, not a ladder. Sets up Week 5.
The takeaway is diagnostic humility: ask what this particular person needs now, not which rung.
03 · Needs theories
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03 · Chapter 3
The most famous diagram in management
Fame is not evidence.
The pyramid is famous.
As a staircase,
it failed.
03 · Fame is not evidence
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03 · Chapter 3
Vroom, 1964 · the manager’s diagnostic
Expectancy theory — one chain, three links
Motivation is not one thing that is present or absent. It is a chain, and it fails at a link.
Three ways to break it
Impossible goal → expectancy 0
Broken promise → instrumentality 0
Prize nobody wants → valence 0
03 · Expectancy theory
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03 · Chapter 3
The same chain · one link snapped
Wells Fargo, diagnosed
03 · Expectancy at Wells Fargo
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03 · Chapter 3
Adams, 1965 · motivation by comparison
You don’t evaluate your pay. You evaluate your ratio.
People judge rewards not absolutely but as a ratio of outcomes to inputs, measured against a referent other — and they act to correct what looks unequal.
Five ways people restore the balance
Work less
Demand more
Distort the perception
Change the comparison
Leave
03 · Equity theory
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03 · Chapter 3
Colquitt et al., 2001 · 183 studies, 25 years of research
Organizational justice — three kinds of fair, three different payoffs
People can accept an unfavorable outcome delivered through a fair process: legitimacy money cannot buy.
Where it gets slippery
Comparisons are perceptual
Referents are unstable
Social media exploded the comparison set
03 · Organizational justice
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03 · Chapter 3
The most portable finding in the chapter
People can accept
an unfavorable outcome
delivered through
a fair process.
Underpayment reliably demotivates. Overpayment produces guilt-driven extra effort only briefly, if at all.
03 · Fair process
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03 · Chapter 3
Locke & Latham, 2002 · 35 years, more than a thousand studies
Goal-setting — three conditions, then four mechanisms
Specific, difficult goals produce higher performance than easy goals, vague goals, or “do your best” — reliably, across tasks, countries and settings.
The conditions are not fine print. Money strengthens goals mainly by strengthening commitment.
03 · Goal-setting theory
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03 · Chapter 3
Ordóñez, Schweitzer, Galinsky & Bazerman, 2009 · “Goals Gone Wild”
Same property. Two directions.
Not a rival theory: the side-effect profile. Wells Fargo is the standard overdose.
03 · Goals gone wild
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03 · Chapter 3
The metaphor to keep
Goals are the
medication of management.
Effective at dose.
Toxic in overdose.
03 · Dose and monitor
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03 · Chapter 3
Deci & Ryan · self-determination theory
Three needs — and one thing the environment decides
Intrinsic motivation is doing something for its own interest and satisfaction. Extrinsic motivation is doing it for separable consequences.
Intrinsic motivation withers under control, not demand. A hard, autonomous job is not the enemy.
03 · Self-determination theory
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03 · Chapter 3
The famous battleground · and where it settled
Does pay crowd out the love of the work?
128
experiments. Tangible rewards made contingent on doing an interesting task reliably reduced later free-choice interest in it — the undermining effect.
Deci, Koestner & Ryan, 1999 · meta-analysis
.21–.45
Intrinsic motivation predicts performance at roughly this correlation — whether or not incentives are present. 40 years, 183 studies, 212,000+ people.
Cerasoli, Nicklin & Ford, 2014 · meta-analysis
The settlement: both are real, and they specialize. Intrinsic motivation predicts quality; incentives predict quantity.
Read the caveats with the finding
Much undermining evidence comes from lab tasks that were interesting to start with
SDT’s needs are easier to invoke than to measure
03 · The undermining effect
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03 · Chapter 3
The design implication is precise — and it depends entirely on the work
Two kinds of work, two different levers
Routine, countable work
Quantity is the outcome that matters
Performance-contingent pay is effective. The output is measurable, the link between effort and result is visible, and goal-setting and expectancy theory both make clean predictions. Pay for it, and you get more of it.
Creative, complex, quality-sensitive work
Judgment is the outcome that matters
Heavy-handed contingent rewards are at best inert and at worst corrosive. The leverage lies in autonomy, mastery and purpose — and in the metric you are not able to write down.
No serious reading concludes that pay does not matter. Pay is necessary, hygiene-like, and insufficient.
03 · Which lever, which work
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03 · Chapter 3
Opposite ends of the design space this chapter maps
Two systems, side by side
Wells Fargo · 2002–2016
Patagonia · 2022–
Motivation design
High-powered extrinsic: daily quotas, pay and employment contingency
Purpose-anchored: the ownership payoff removed, the mission made legally permanent
Theory that explains it
Goal-setting + expectancy — and their failure modes
Self-determination: autonomy, purpose, credible commitment
What happened
~3.5M unauthorized accounts; $3B settlement; a 7-year asset cap, lifted 2025
~$100M/yr of profit to climate work; values locked via trust; workforce devotion sustained
The hidden condition
Goals were unreachable honestly; no integrity counterweight; complaints ignored
Competitive pay and premium margins underneath the purpose
Generalizes when…
Never as run. Sales goals generalize only with reachable targets and monitored side effects
The product supports margins and the purpose is credible — rarer than the press coverage implies
Resist the morality tale. Wells Fargo proves impossible goals with lethal contingencies corrupt, not incentives.
03 · Wells Fargo vs Patagonia
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07 · Check your understanding
Check your understanding · 1 of 5
In expectancy theory, what happens to motivation when one of the three terms is zero?
AIt drops by about a third
BNothing, if the other two are high
CThe whole product is zero
DOnly valence decides it
07 · Check 1 of 5
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07 · Check your understanding
Check your understanding · 2 of 5
Which kind of justice best predicts commitment and trust in management?
ADistributive — the outcome was fair
BProcedural — the process was fair
CInteractional — the treatment was fair
DAll three equally
07 · Check 2 of 5
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07 · Check your understanding
Check your understanding · 3 of 5
Specific, difficult goals beat “do your best” provided which three conditions hold?
ACommitment, ability and resources, feedback
BPay, praise and punishment
CAutonomy, competence, relatedness
DVision, mission and values
07 · Check 3 of 5
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07 · Check your understanding
Check your understanding · 4 of 5
Thousands of banks use sales goals without fraud. What was different at Wells Fargo?
AIt had sales goals at all
BUnreachable goals, lethal contingency, no integrity counterweight
CEmployees were paid below market
DThe bank was too large to manage
07 · Check 4 of 5
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07 · Check your understanding
Check your understanding · 5 of 5
How strongly does pay level correlate with job satisfaction?
AAbout .15 — a small slice
BAbout .45 — moderate
CAbout .70 — strong
DIt has never been measured
07 · Check 5 of 5
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Extra slides
Chapter 3 · for reference
Extra slides
Material from the chapter we did not cover in class.
What money buys, the two cases, and the synthesis.
Extra slides
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03 · Chapter 3
Judge et al., 2010 · assembling the pieces
What money actually buys
Pay level correlates with satisfaction at only about r = .15. Pay contingency is the active ingredient — and the same dollars arrive carrying three messages at once.
Wiring pay to real-time metrics imports Wells Fargo’s failure mode. Firm-level evidence is observational.
03 · What money buys
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03 · Chapter 3
Case A · a test, not an illustration
Wells Fargo — the machine that worked too well
The system
Roughly 2002–2016. The Community Bank — then more than half of company revenue — ran an aggressive cross-selling regime with daily sales quotas backed by compensation, promotion and termination.
What people did
About 3.5 million accounts and products opened without authorization. Forged signatures. PINs created for unissued debit cards. Customer money moved into unauthorized accounts — “simulated funding.” Contact details altered so customers would not find out.
The bill
$3 billion criminal and civil settlement, 2020. An unprecedented Federal Reserve asset cap from 2018 to June 2025. A decade of remediation, CEO turnover, and a franchise-defining reputational wound — closed out only in March 2026.
Thousands of banks use sales goals without mass fraud. Dosage, not the existence of goals.
03 · Case A · Wells Fargo
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03 · Chapter 3
Every theory in this chapter saw its prediction confirmed — that is what makes the case canonical
Four theories, one branch
1Goal-setting
Specific, difficult goals directed attention and energized effort — and the narrowing excluded ethics, precisely as Goals Gone Wild warns.
2Expectancy
Honest expectancy near zero, instrumentality lethal. Fraud was the rational restoration of the effort–reward link.
3Equity and justice
Front-line workers watched executives collect bonuses on revenue the workers manufactured under threat — distributive and procedural injustice, surfaced in complaints management ignored.
4Self-determination
The system was maximally controlling. Controlled motivation produces compliance with the letter of the metric, never its spirit.
03 · Case A as a theory test
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03 · Chapter 3
Case B · a test, not an illustration
Patagonia — removing the prize
The structure
14 September 2022. The Chouinard family transferred 100% of a roughly $3 billion company into two entities: the Purpose Trust — 2% of shares, all the voting stock, existing to lock the values in place — and the Holdfast Collective, a 501(c)(4) nonprofit holding the other 98%.
The flow
Every dollar of profit not reinvested — a projected ~$100 million a year — goes to fighting the climate crisis. Chouinard framed it as the alternative to selling or going public, either of which risked the values and the workforce.
The critical read
The family paid $17.5 million in gift taxes on the trust transfer while avoiding an estimated $700 million had they sold. Praised as precedent-setting; criticized as tax-advantaged. And a 501(c)(4) can fund political activity.
A live SDT experiment at firm level: the trust makes purpose credibly permanent.
03 · Case B · Patagonia
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03 · Chapter 3
The design insight both cases share, and it is easy to miss
Motivation systems run
on what people believe
will actually happen —
not on what leaders announce.
Wells Fargo’s employees believed the threat completely. Patagonia’s believe the purpose completely.
Both are Vroom’s instrumentality, doing all the work.
03 · Credibility
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03 · Chapter 3
Read the case honestly, or it teaches you the wrong thing
What the purpose is standing on
A sound extrinsic floor
Patagonia’s workers are paid competitive wages in a premium brand with strong margins. Purpose rides on top of that — exactly as the needs tradition predicts. Remove the floor and the mission does not hold anyone.
Customers who fund it
The company’s customers pay prices that pay for the mission. That is a luxury unavailable to a commodity business competing on cost — which is most businesses you will work in.
The dark twin
Devotion to a mission can shade into self-exploitation — the shadow side of intrinsic motivation, and exactly what Hochschild’s emotional-labor lens from Week 3 would flag. “We’re a family” has a cost.
Purpose multiplies the fundamentals, never replaces them. A permanent purpose behaves differently from marketing.
03 · Case B · the honest limits
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03 · Chapter 3
Back to the question: can you buy motivation?
A four-part answer
1You can buy direction and quantity
Specific, difficult, reachable goals with meaningful rewards reliably raise measured output — the most replicated result in the field.
2You cannot buy quality, judgment or care
But you can rent the conditions for them: autonomy, competence, relatedness and a credible purpose. Controlling, output-salient rewards crowd them out.
3Every incentive is also a message
The same dollar reads as recognition or insult. An unreachable target converts an incentive system into a fraud-generation system. Design the meaning, not just the amount.
4Dose and monitor
Watch for the side effects actively — the narrowed attention, the gamed metric, the ethical corner quietly cut. Most organizations you manage live between these two cases.
03 · Synthesis · four conclusions