Being an effective leader is about two core tasks: making decisions to address threats and opportunities, and implementing those decisions. Implementing decisions is about the willingness of the targets of implementation to exert effort. It is not enough for the targets of implementation to know what to do (information) – they also have to want to do it (motivation). 

The Law of Effect and Expectancy Theory

The foundations of motivation are captured in the Law of Effect. The Law of Effect says that motivation – an individual’s willingness to exert effort – is controlled by contingencies and consequences. Contingencies are “if…then…” relationships that connect behaviors/actions to outcomes. According to the Law of Effect, effort is controlled by the consequences (outcomes) that are contingent on it. 

An important distinction is between intrinsic and extrinsic consequences. Extrinsic consequences are received in exchange for behaviors; intrinsic consequences occur as a natural consequence of engaging in behaviors. For example, a professor might teach a course in exchange for a paycheck (an extrinsic reward), or a professor might teach a course because doing so is enjoyable (an intrinsic reward). 

Expectancy theory articulates an important improvement to the Law of Effect. According to expectancy theory, an individual’s willingness to exert effort is not a function of contingencies and consequences, but instead a function of an individual’s perceptions of contingencies and consequences. According to expectancy theory, receiving a reward for putting forth effort is important to an individual’s motivation because it makes that individual perceive that his/her effort controls access to desired consequences. 

There are three types of perceptions that are critical to an individual’s belief that her/his effort controls access to desired consequences. Expectancies are about the link between effort and performance. Instrumentalities are about the link between performance and consequences. Valences are about the desirability of consequences. According to expectancy theory, an individual is more likely to be motivated to exert effort when that individual believes that she/he is capable of good performance (expectancy), when that individual believes that good performance will be rewarded (instrumentality), and when the rewards being offered are desirable (valence). For example, Sam offers a year of free oil changes to next month’s best performer in Sam’s company. Sam’s subordinate Tom will be motivated to expend effort IF Tom thinks he has the skill necessary to being the firm’s best performer next month (expectancy), IF Tom thinks Sam will actually give a year of free oil changes to next month’s best performer (instrumentality), and IF Tom thinks a year of free oil changes is a desirable reward for such good performance (valence). 

Expectancy theory suggests that good leadership is not just about identifying the right (high valence) consequences and making those consequences contingent on desired behaviors. Instead, good leadership is also about managing others’ perceptions of those contingencies and consequences. This suggests that self-efficacy – an individual’s confidence that she/he is capable of rewardable performance – is a critical perception that needs to be fostered by leaders. This in turn suggests that training and mentoring in organizations serves two very different but equally critical roles. First, training and mentoring provide individuals the skills they will need in order to be able to translate their effort into rewardable performance. Second, training and mentoring also provide individuals an opportunity to grow confidence in their ability to translate their effort into rewardable performance. 

Externalities

Externalities are factors that disrupt an individual’s beliefs that her/his effort will translate into rewardable performance. In an organization, other people are a critical externality that can disrupt an individual’s belief that her/his effort alone can control access to desired consequences. We form organizations because groups of individuals working together can achieve more than any individual can hope to achieve alone. But working together means being dependent on others (interdependence), and that means that desired consequences are a function not only of an individual’s effort but also the efforts of others. The problem of dependence on others is captured in the idea of a social dilemma. A social dilemma is about how individuals allocate their scarce personal resources (such as time and effort) among group and individual initiatives. A social dilemma is a choice between doing what is best for the individual versus doing what is best for the group. Often there is an incentive to do what is best for the individual – but if everyone does what is best for the individual, then there is no opportunity for synergy and everyone is worse off. 

An example of a social dilemma is a team meeting. In order for a team meeting to be most productive, team members need to expend their personal resources to prepare for the meeting. Any member of the team may be tempted to not prepare for the meeting – to spend time and effort on other tasks – in the hope that enough others will prepare for the meeting that the meeting will productive anyway. But if NO ONE prepares for the meeting, then the meeting will not be productive, no synergy of cooperation will be achieved, and everyone will be worse off. The problem of social dilemmas is free riding – any individual’s willingness to hope that others will do the work of creating synergy so that individual can take advantage of the rewards of synergy without expending personal resources to create that synergy. Related to free riding is social loafing, which is free riding disguised as appropriately contributing. Social loafing is particularly problematic with cognitive effort tasks, where it may be difficult to tell if an individual is appropriately contributing or just free riding. Free riding and social loafing are a problem because if enough people free ride or socially loaf, synergy may not be realized. But the possibility of free riding or socially loafing is also a problem because the fear that others might free ride or socially loaf and take advantage of an individual’s effort may also lead that individual to not contribute, so as not to be taken advantage of. In the end, whether effort is not expended because individuals are trying to take advantage, or out of fear that others will take advantage, the result is the same: effort is withheld and the possibility that synergy will be realized decreases.