Expectancy Theory

Updated on April 12, 2024
Article byKosha Mehta
Edited byKosha Mehta
Reviewed byDheeraj Vaidya, CFA, FRM

What Is Expectancy Theory?

Expectancy theory is a motivational theory by Victor Vroom that explains why employees choose to perform certain behaviors in the workplace. Its purpose is to predict human behavior as theory suggests that individuals will be motivated to put in more effort if they believe that their efforts will lead to better performance and that better performance will result in greater rewards or outcomes.

Expectancy Theory

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From a business perspective, expectancy theory can be applied by managers to increase employee motivation and performance. Setting clear performance expectations, providing resources and support, and offering meaningful rewards or incentives help achieve this. It is an important theory as after understanding it, and by aligning employee expectations with organizational goals and rewards, businesses can create a more engaged and productive workforce.

Key Takeaways

  • Expectancy Theory suggests that people are motivated by their belief that increased effort will lead to improved performance and meaningful rewards or outcomes. The theory has three key components: expectancy, instrumentality, and valence.
  • Clear performance expectations, adequate resources and support, and meaningful rewards or incentives can increase motivation and improve performance.
  • Expectancy Theory has pros and cons, including its focus on individual perceptions and the potential for unrealistic expectations or insufficient rewards.
  • The theory can be applied in different situations, such as setting challenging goals or improving employee engagement.

Vroom’s Expectancy Theory Explained

Expectancy theory is a motivation theory developed by Victor Vroom in 1964. The theory posits that an individual’s motivation to perform a specific task is based on their belief that their effort will lead to high performance and that high performance will lead to a desirable outcome. The theory focuses on three key components – expectancy, instrumentality, and valence.

Expectancy refers to an individual’s belief that increased effort will lead to increased performance. Instrumentality is the belief that increased performance will lead to a desirable outcome or reward. Finally, valence is an individual’s value on the potential reward.

According to the theory, individuals are motivated when they believe their effort leads to high performance. Also, high performance will lead to a desirable outcome, and the outcome is valuable to them. The theory is widely applicable in business and management contexts to understand and improve employee motivation and performance.

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Components

Expectancy theory consists of three main components:

#1 -Expectancy

It refers to the belief that increased effort will lead to improved performance. Employees must believe their efforts will improve performance to be motivated to put in the extra effort.

#2 – Instrumentality

This component relates to the belief that improved performance will result in specific outcomes or rewards. Employees must believe that improved performance will lead to meaningful rewards or outcomes, such as higher pay, promotions, or recognition.

#3 – Valence

It refers to an individual’s value or importance on the potential rewards or outcomes. Employees must perceive the rewards or outcomes as desirable and worth pursuing to get the motivation to put in the extra effort.

By understanding and addressing these three components, managers can create a more motivating and rewarding work environment that encourages employees to perform at their best.

Formula

To calculate expectancy theory, use the following formula:

Motivation = Expectancy x Instrumentality x Valence

Where:

Expectancy refers to the probability that increased effort will lead to improved performance. Instrumentality is the probability that improved performance will lead to specific outcomes or rewards. Finally, valence refers to an individual’s value or importance on the potential rewards or outcomes.

This formula suggests that an individual’s motivation to perform a task depends on their belief that increased effort will lead to improved performance, the likelihood of receiving meaningful rewards or outcomes for that improved performance, and the individual’s values and preferences regarding those rewards or outcomes.

Examples

Let us look at the following examples to understand the concept better.

Example #1

Expectancy theory is widely applicable in a sales context to motivate salespeople to increase their sales performance. For example, a sales manager might set clear sales targets for their team (expectancy), provide them with adequate training and resources to achieve those targets (instrumentality), and offer them significant sales bonuses or commissions for a meeting or exceeding their targets (valence).

The sales manager can create a motivating work environment encouraging salespeople to put in extra effort and achieve their sales goals.

Example #2

Consider that a software company wants to increase employee motivation. They apply the Expectancy Theory to identify three important factors: effort, performance, and rewards. To increase motivation, they implement a new incentive program to reward high-performing employees, provide training to boost employee confidence in their ability to perform and improve working conditions to create a more positive work environment.

The company believes these changes will enhance the perceived link between effort, performance, and rewards and ultimately lead to a more productive workforce.

Pros & Cons

Here are some potential pros of using expectancy theory in the workplace:

#1 – Employee Motivation

Expectancy theory can help increase employee motivation by aligning their expectations with the desired outcomes and rewards.

#2 – Performance Improvement

Organizations can improve employee performance by setting clear expectations and providing the necessary resources and incentives.

#3 – Better Goal-Setting

Expectancy theory encourages organizations to set clear, measurable goals and provides a framework for linking those goals to rewards and outcomes.

Here are some potential cons of using expectancy theory in the workplace: 

#4 – Complexity

The theory can be complex and difficult to implement, especially in large organizations with multiple departments and different types of employees.

#5 – Limited Applicability

The theory may not apply equally to all employees, as individuals may have different values, preferences, and expectations regarding rewards and outcomes.

#6 – Unintended Consequences

Using incentives and rewards can sometimes have unintended consequences, such as promoting a short-term focus or encouraging unethical behavior.

Expectancy Theory vs Equity Theory 

Expectancy Theory and Equity Theory are two prominent motivational theories in organizational psychology that attempt to explain why individuals behave in certain ways at work and how they perceive their experiences with others.

Let us have a look at the major differences between them in the following table –

Expectancy TheoryEquity Theory
People are motivated by their belief that increased effort will lead to improved performance and that improved performance will result in meaningful rewards or outcomes.People are motivated by fairness or equity in their work environment.
Expectancy, Instrumentality, ValenceInputs, Outputs, Comparison
Clear performance expectations, adequate resources and support, and meaningful rewards or incentives can increase motivation and improve performance.Perceptions of fairness or unfairness can impact employee motivation, satisfaction, and commitment. For example, employees may feel demotivated if they perceive that their inputs (e.g., effort, time) are greater than their outputs (e.g., pay, benefits) or that others receive more favorable treatment.

Expectancy Theory vs Maslow’s Hierarchy Of Needs

Expectancy theory and Maslow’s Hierarchy of Needs are two popular theories in the field of motivation that attempt to explain what drives human behavior.

Let us understand what makes them stand apart in the following table –

Expectancy TheoryMaslow’s Hierarchy of Needs
People are motivated by their belief that increased effort will lead to improved performance and that improved performance will result in meaningful rewards or outcomes.People are motivated by their needs, which are arranged in a hierarchical order.
Expectancy, Instrumentality, ValencePhysiological Needs, Safety Needs, Belongingness and Love Needs, Esteem Needs, Self-Actualization Needs
Clear performance expectations, adequate resources and support, and meaningful rewards or incentives can increase motivation and improve performance.Employees will be motivated to satisfy their basic physiological and safety needs before moving up the hierarchy to higher-level needs such as social and self-actualization. Organizations can create a more motivating work environment by addressing employees’ needs at each hierarchy level.

Expectancy Theory vs Goal Setting Theory

Expectancy theory and goal-setting theory are two prominent motivational theories that focus on individual behavior in the workplace.

In the table below, let us look at how they differ –

Expectancy TheoryGoal Setting Theory
People are motivated by their belief that increased effort will lead to improved performance and that improved performance will result in meaningful rewards or outcomes.People are motivated by setting and achieving challenging goals.
Expectancy, Instrumentality, ValenceSpecific, Measurable, Achievable, Relevant, Time-bound (SMART) goals
Clear performance expectations, adequate resources and support, and meaningful rewards or incentives can increase motivation and improve performance.Setting specific and challenging goals can lead to increased motivation and performance. In addition, organizations can increase motivation and performance by aligning individual goals with organizational goals and providing feedback on progress toward goals.

Frequently Asked Questions (FAQs)

How can expectancy theory be used to motivate employees?

Expectancy Theory can motivate employees by creating a work environment that provides clear expectations, adequate resources and support, and meaningful rewards or incentives that align with their goals and preferences.

What is expectancy theory in psychology?

Expectancy Theory is a motivational theory in psychology that suggests that people are motivated to engage in behaviors or activities when they believe that their effort will lead to improved performance and that improved performance will result in meaningful rewards or outcomes. Expectancy Theory is often used in organizational and business settings to understand and improve employee motivation and performance.

Why expectancy theory is important?

Expectancy Theory is important because it provides a framework for understanding how individuals make decisions and engage in behaviors based on their beliefs and perceptions about effort, performance, and outcomes. As a result, it can help organizations improve employee motivation and performance.

How do you use expectancy theory in the classroom?

In the classroom, Expectancy Theory can be used by providing clear expectations for performance, offering meaningful rewards or incentives, and providing adequate resources and support to students that align with their goals and preferences to increase motivation and engagement.

This has been a guide to what is Expectancy theory. We explain it with examples, components, formula, differences with equity theory, pros, and cons. You may also find some useful articles here –

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