Case Study - Motivation - Visible Changes PDF

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Case study for Motivation Theory - based on Visible Changes...

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Case Study: Visible Changes (Motivation)

Table of Contents Table of Contents

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Introduction

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Background

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Concept 1: Herzberg’s Two-Factor Theory

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Concept 2: Adams’ Equity Theory

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Conclusion

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Appendix 1: STEPP Analysis

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Appendix 2: SWOT Analysis

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Reference List

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Introduction Motivation, as defined by dictionary.com, is “the act or an instance of motivating, or providing with a reason to act in a certain way” (Dictionary.com, n.d.). In a business context, motivation refers to how businesses keep employees engaged and productive. This report looks at two theories of motivation: Herzberg’s Two-Factor theory of motivation and the equity theory of motivation and how they apply to the company Visible Changes. Practical limitations of the theory within the company and the industry will be evaluated also.

Background Visible Changes was founded in 1977 by John and Maryanne McCormack as a hair salon with a single store in Houston, Texas (Visible Changes, n.d.). The McCormacks constructed an “incentive plan” to motivate their stylists while keeping the best interests of Visible Changes in mind. They want all of their staff members to be successful and achieve this by offering regular training to its staff and requiring all new members of staff to go through their basic training course (Visible Changes, n.d.). Visible Changes aims to provide high-quality services from highly trained staff and have now expanded to 17 salons in Texas with 800 employees. They are known for their customer service, creative stylists and talented team and have been featured in many stylist magazines (Visible Changes, n.d.). The company is located within the local Texan cosmetology industry.

Concept 1: Herzberg’s Two-Factor Theory Frederick Herzberg’s Two-Factor theory states that there are two groups of factors at play when it comes to motivation. These two groups are satisfier factors (also called motivation factors) and hygiene factors. The theory states that the presence of satisfier factors generally leads to greater job satisfaction, but employees will not be dissatisfied with their role if these factors aren’t present. Hygiene factors, on the other hand, generally do not lead to increased job satisfaction if present, but without them, employees will be heavily dissatisfied with their role. (Ewen et al., 1966). These two factors came from the results of several hundred interviews that Herzberg carried out. Hygiene factors are those that relate to the work setting and can include things such as the work environment, the quality of tools, supervision, remuneration, or other staff (Schermerhorn et. al, 2017). Satisfier factors are more to do with

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job design and how the individual feels about their work and what they do (Herzberg et al., 2011). The combination of the two factors decide how an employee feels about their job. Higher job satisfaction leads to higher motivation, while lower job satisfaction leads to lower levels of motivation. This is because those workers who are more satisfied with their job will have higher levels of commitment, more optimism about their role, and greater feelings of worth (Mooney, n.d.). Herzberg’s theory draws parallels with other theories of motivation. Maslow’s hierarchy of needs, for example, shares many of the satisfier factors in the top levels of the pyramid, such as confidence, admiration of others, and achievement. The lower levels of the pyramid, on the other hand, share many of the hygiene factors, such as salary, job security, and interpersonal relations. (Maslow, 2011)

Visible Changes as a workplace fulfils many hygiene factors, and systems are in place to maximise satisfier factors. In terms of working conditions, Visible Changes constantly updates its technology and processes to ensure their staff are ahead of the competition. Policies and procedures are clearly outlined, but each salon has a lot of freedom in how it runs. Additionally, all stylists start on a base guaranteed salary, and the company’s elaborate incentive plan allows for significant further earning potential (Visible Changes, n.d.). Visible Changes’ computer system allows information to be shared rapidly throughout the business and tracks employee performance, resulting in quick corrections if something goes wrong. In this way, the computer system assists supervision (Glazer, 1988).

In terms of satisfier factors, Visible Changes has created a comprehensive business structure that rewards effort and proficiency (Burlingham & Posner, 1988). Beyond skills-based pay (commissions on products sold and demand) the business celebrates success at its annual company conference, such as in 1998 where $1 million in profits for the year were redistributed amongst the employees (Anonymous, 1998). Top stylists can be selected for the artistic team, who travel the country. Stylists are also expected to share their expertise with newer hairdressers and act as role models. (Visible Changes, n.d.) Because the rewards are based on skill and proficiency, the responsibility for advancing lies solely with the stylist. The way the rewards are given out encourages staff to decide for themselves how hard they’re willing to work (Burlingham & Posner, 1988).

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From CEO John McCormack’s point of view, these motivating factors are there so the company can retain skilled staff. McCormack (2003, as cited in Sarnoff, 2003) said: “It's the only way I know to hold on to your valuable people, by giving them the majority of what they're making themselves.” McCormack’s driving force was to “elevate hairdressers in America.” But the employees must work for it, every bonus or prize is directly tied to performance (Burlingham & Posner, 1988).

Although Herzberg’s 2-Factor Theory is useful for managers when designing jobs and workplaces, it does have its limitations. For one, the theory is somewhat subjective – Herzberg’s original research was done with engineers and accountants, but outside those industries, the factors begin to differ. Further studies have found mixed results; one study that repeated the original experiment but with Data Analysts (French et al. 1973) claims that:

In only seven of the 12 factors, do the results obtained by the written questionnaire in this study agree with the results reported by Herzberg using the oral interview technique with accountants and engineers. This comparison becomes meaningless when one considers that the subjects are different, they work in different environments, they have different professions, and are subject to different sets of external controls on their job performance (373).

Additionally, the theory makes the assumption that the absence of satisfiers does not lead to dissatisfaction, and, the inverse, that the presence of hygiene factors do not lead to satisfaction (Ewen et al., 1966). Indeed, further studies by Friedlander (1964, as cited by Ewen et al., 1966) have found satisfier factors to account for more job satisfaction and job dissatisfaction that hygiene factors, in opposition to Herzberg’s findings that satisfier factors do not impact job dissatisfaction. This is possibly due to the satisfier factor that was compared being more ‘potent’ than the dissatisfier factor (Ewen et al., 1966, 548); i.e. it has more of an overall impact on the employees' view of their job than the hygiene factor that was being compared.

Concept 2: Adams’ Equity Theory Equity theory is a cognitive motivational theory in work process based on the workings of J. Stacy Adams. The concept is based on the notion that perceived inequity is a motivating state

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and a person who believes they are being treated unfairly will be motivated to act in ways that reduce this perceived inequity. Employees will assess the output benefits they receive from their work against their inputs, compare these with other, and if the later is seen to be inequal the person will be in a motivated state to make adjustments (Equity Theory, 2016). Equity comparisons are especially common wherever managers allocate extrinsic rewards. It is important that managers communicate clearly the intended value of the extrinsic rewards given and clarify what the performance appraisal is based on. (Schermerhorn et al., 2017). This diminishes the negative consequences of equity theory in practise such as jealousy and unproductive internal rivalry. Visible Changes offers extrinsic rewards that purposefully create a divide in workplace hierarchy and increasing the perceived inequity between employees, resulting in a motivating state. All employees start out on a basic guaranteed salary and are then offered a well-defined incentive plan for rewards. Stylists receive bonuses aligned with the certain percentage of the time they are requested by name and are able to achieve promotion by bringing in 50% repeat clients within a certain period (Ryan, n.d.). Once each quarter stylists are rated on a scale of 1 to 10 in relation to attitude, customer service and extent of goals met. “If a 10 is received a 10% bonus of annual commission is given” (Burlingham & Posner, 1988, p. 48) Superbonuses are also given for the most-requested hairdressers and best achievers in product sales (Sarnoff, 2003). Awards, trophies and jewellery are given out and milestones are celebrated during the company’s annual conference (Visible Changes, n.d.).

Although the equity concept is often associated with negative emotions such as anger or guilt, by carefully communicating the intended value of the rewards and the performance appraisal standards, the McCormacks and Visible Changes have created a positive rivalry between staff that in turn commands their motivation. They are creating positive inequity by setting clear standards that stylists can fall into based on performance standards and providing incentives to move up these levels. Each reward is tied absolutely to the action or specific achievement that is recognised by the company (Burlingham & Posner, 1988). Equity theory has also been applied within individual salons. Each salon is set apart through rankings and the top 50 and bottom 50 salons are made public within the company. (Burlingham & Posner, 1988). It is an example of clan culture, where the culture of an 5

organisation is set by the expectations and standards of its members and the way they share and pass these on to new members. Organisations with a strong clan culture are called ‘clan organisations’ where individuals are bound by strong psychological contracts rather than physical ones. (Chan, 1997). The culture of Visible Changes is set through the expectations of management, such as public rankings, but maintained through the standards employees set for themselves to achieve their own goals of achievement. This motivates individuals in the salon and reinforces the aim to positively work together towards the common goals of the salon. Employees believe working for Visible Changes is ‘like one big family” and “the sense of respect and professionalism is always there” (Ryan, n.d.) The attention received from setting apart individuals and salons also calls on them to perform highly, known as the Hawthorne effect. Satisfier factors relate closely to equity theory and Visible Changes have been able to use both in a highly positive and motivating way. Their environment is an incredibly attractive one to potential employees through the increase in the value of satisfier factors resulting in the increase of job satisfaction and a highly compelling employment offer. The standard income after benefits is 3 times higher than the industry standard (Burlingham & Posner, 1988). They have created value for the employee by improving external factors and rewarding positive behaviour.

Whilst being an effective motivation tool, equity theory has limitations that should be considered. The theory assumes that inequity only results in a negative output from workers. Consideration should be taken that workers may want to change their input to then receive the rewards and create equity themselves. This is especially prevalent when satisfier factors, such as in Visible Changes, are high and the person wants to stay in the environment. It is interesting to see the company use the theory in conjunction with other motivating factors to create a highly profitable and successful company in a service industry where it’s people are the key.

Conclusion Visible Changes successfully implements several motivational factors throughout their organisation. These factors are in line with Herzberg’s Two-Factor Theory and Adams’ Equity Theory; the former being a content theory (dealing with what motivates employees) and the

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latter a process theory (dealing with how the process sustains itself) (Schermerhorn et al., 2017). Although both theories have their limitations, they’re useful ways to think about the workplace and provide managers with the tools they need to motivate staff and design jobs with these motivating factors built-in. Visible Changes is a prime example of designing rewarding jobs such as that intrinsic satisfaction is achieved and amplified through extrinsic factors. Motivation is important to the workplace and has a key part in retaining and developing staff.

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Appendix 1: STEPP Analysis Socio-cultural ● The significant rise in social media use has resulted in constantly changing trends and styles (Salon Invi, n.d.). This is positive for the local cosmetology industry as it exposes potential clients to a diverse range of celebrity styles and trends that are constantly changing, therefore encouraging them to utilise the cosmetology industry services more frequently due to increased consumer demand. ● Heath, beauty and science are converging and consumers are becoming more aware of the health impacts of certain beauty products (Vocke, Fricker, Williams, & Dimitrova, 2017). This is a negative industry trend as it means consumers are less likely to believe all marketing information/promotion around beauty products and practices. This will result in a need for businesses in the local cosmetology industry to ensure their products and practices comply with consumer wellbeing standards, which could be costly. Technological ● Social media is beginning to have influence over the local cosmetology industry in the way of brand promotion (Gilliland, 2016). This is a positive industry trend because it provides avenues of inspiration for stylists and beauticians, and encourages potential clients to want the latest trends and styles that are constantly being set by famous figures. In turn, this results in higher demand for the services provided in the local cosmetology industry. ● Advancing technology allows for businesses in the local cosmetology industry to “sell directly through their site” (Frue, 2018). This is known as e-commerce and is a positive trend because “it’s both expensive and extremely difficult to get shelf room in retails stores.” (Frue, 2018) and it’s no longer crucial for these companies to do in order to generate revenue from product sales as it can be done online. Economic

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● The local cosmetology industry is known to be “recession proof” as during economic hardships consumers still look for inexpensive ways to keep up their appearances and self-confidence. (Evergreen Beauty College, n.d.) This is a positive industry trend because it means that financial crises do not pose a significant threat to the industry and sales can be maintained along with stable business confidence. ● The local cosmetology industry is expecting future growth regardless of near recession concerns (Evergreen Beauty College, n.d.). By 2020 a need for 15.7% (or 98,400) more hairdressers, hairstylists and cosmetologists are expected in the U.S. alone (Bureau of Labor Statistics, 2012, as cited in Evergreen Beauty College, n.d.). This is a positive industry trend as with industry growth comes the opportunity for greater sales, however, is arguably negative as it will increase competitiveness. Political-legal ● In the United States, under Personal Care Product Safety Act companies in the local cosmetology industry are required to report product ingredients, recalls, and register manufacturers” (Frue, K., 2018) to ensure product safety. When importing ingredients or selling on foreign land, each country’s political and legal requirements must also be followed (Frue, 2018). This potentially results in more time and money being invested into reporting, recalling, and only using registered manufacturers (who may be more costly) to comply with the Act, therefore a negative industry factor. ● According to John (2018), there are five different licenses/permits required to open a salon in the U.S. costing approximately $12,000 in total. This is a negative industry trend as it is very costly, particularly for a new salon without any existing clients or goodwill. These licenses alone will also not provide any economic benefit to salons as they are purely legal requirements before any sales can be made. Arguably this is a positive industry trend as it provides legitimacy, increasing reputability and customer trust. Physical-natural ● In recent years the local cosmetology industry has developed an environmentally sustainable focus due to consumer values (Mulhill, 2018). Consequently, the U.S. introduced the Microbead-Free Waters Act of 2015, banning the use of plastic microbeads (often present in exfoliators and other cosmetic products) because of their pollution threat (Mulhill, 2018). Microbeads are known to be “fast and cheap to produce” (Kimbell, n.d.) so costs of production are likely to increase for local cosmetology businesses as manufacturers and retailers are now forced to seek more costly substitutes, leading to lower profit margins, making this a negative industry trend. However, this is also a positive industry trend as consumers who value the environment will want to buy from eco-friendly suppliers. ● Climate change has already seen increased unseasonal weather and pests that directly impact cost, availability and quality of natural ingredients (Murray, n.d., as cited in McDougall, 2015). “Natural”

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beauty is on the rise (Wischhover, 2018) along with scarcity for natural ingredients, while “societal and governmental pressures are accelerating the push to go green” (Snelling, n.d.). This puts businesses in a difficult position; increasing pressures to use natural ingredients which are also becoming more scarce due to issues such as climate change. Costs of materials can be expected to increase alongside rising scarcity, decreasing profit margins for businesses in this industry, therefore a negative industry trend.

Appendix 2: SWOT Analysis Strengths

Weaknesses

Staff motivation and care

Restricting business model

Staff feel respected and cared for within Visible

The current business model only works for

Changes which encourages them to do their best for

Visible Changes at its current size. They are a

the business with a member of staff saying “I love

medium sized business in the industry and they

this place, and I’m here to stay” (Ryan, n.d.).

would need to reconsider their business plan if

Staff training and maintenance

they wanted to expand and become a large

All stylists at Visible Changes have completed a “3

business.

to 6 months basic training” which is a program

High-end hair salon with no required booking

established by the company giving stylists all the

Although there are strengths with Visible

basic requirements for “successful hairdressers”

Changes allowing walk-ins, there may be

(Ryan, n.d.).