The expectancy theory was proposed by Victor Vroom of Yale School of Management in 1964. Vroom stresses and focuses on outcomes, and not on needs unlike Maslow and Herzberg.

The theory states that the intensity of a tendency to perform in a particular manner is dependent on the intensity of an expectation that the performance will be followed by a definite outcome and on the appeal of the outcome to the individual.

The Expectancy theory states that employee’s motivation is an outcome of:

1. how much an individual wants a reward (Valence),
2. the assessment that the likelihood that the effort will lead to expected performance (Expectancy) and
3. the belief that the performance will lead to reward (Instrumentality).

1. In short, Valence is the significance associated by an individual about the expected outcome. It is an expected and not the actual satisfaction that an employee expects to receive after achieving the goals.

2. Expectancy is the faith that better efforts will result in better performance.

   Expectancy is influenced by factors such as possession of appropriate skills for performing the job, availability of right resources, availability of crucial information and getting the required support for completing the job.

3. Instrumentality is the faith that if you perform well, then a valid outcome will be there.

   Instrumentality is affected by factors such as believe in the people who decide who receives what outcome, the simplicity of the process deciding who gets what outcome, and clarity of relationship between performance and outcomes.

Thus, the expectancy theory concentrates on the following three relationships:

• Effort-performance relationship: What is the likelihood that the individual’s effort be recognized in his performance appraisal?

• Performance-reward relationship: It talks about the extent to which the employee believes that getting a good performance appraisal leads to organizational rewards.

• Rewards-personal goals relationship: It is all about the attractiveness or appeal of the potential reward to the individual.

Vroom was of view that employees consciously decide whether to perform or not at the job. This decision solely depended on the employee’s motivation level which in turn depends on three factors of expectancy, valence and instrumentality.

Advantages of the Expectancy Theory

• It is based on self-interest individual who want to achieve maximum satisfaction and who wants to minimize dissatisfaction.

• This theory stresses upon the expectations and perception; what is real and actual is immaterial.

• It emphasizes on rewards or pay-offs.

• It focuses on psychological extravagance where final objective of individual is to attain maximum pleasure and least pain.

Limitations of the Expectancy Theory

• The expectancy theory seems to be idealistic because quite a few individuals perceive high degree correlation between performance and rewards.

• The application of this theory is limited as reward is not directly correlated with performance in many organizations. It is related to other parameters also such as position, effort, responsibility, education, etc.

Implications of the Expectancy Theory

• The managers can correlate the preferred outcomes to the aimed performance levels.

• The managers must ensure that the employees can achieve the aimed performance levels.

• The deserving employees must be rewarded for their exceptional performance.

• The reward system must be fair and just in an organization.

• Organizations must design interesting, dynamic and challenging jobs.

• The employee’s motivation level should be continually assessed through various techniques such as questionnaire, personal interviews, etc.