Managing Motivation in a Difficult Econo PDF

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Term Paper On Managing Motivation in a Difficult Economy Submitted To Professor Dr. M. Mahmodul Hasan School of Business, AUST MBA-610: Organizational Behavior Submitted By Boom-Al-Habibi

Date of submission: 27th February, 2017

Letter of Transmittal 27th February, 2017 Professor Dr. M. Mahmodul Hasan School of Business, AUST AUST-Ahsanullah University of Science & Technology 141 & 142, Love Road, Tejgaon Industrial Area, Dhaka-1208. Subject: Submission of Term Paper. Dear Sir, We would like to thank you for assigning us this topic to prepare the term paper. This task has been given us the opportunity to explore one of the most important aspects of OB. We have completed the term paper on “Managing motivation in a difficult economy”. It was a great pleasure for us to have the opportunity to work on the abovementioned topic. We have endeavored our best to come out with a good one. We tried our best to put meticulous effort for the preparation of this term paper. Any shortcomings or flaw may arise as we are very much novice in this aspect. We will wholeheartedly welcome any clarification and suggestion about any view and conception disseminated in our paper. We hope this term paper will attract your kind appreciation. Yours sincerely, Boom Al Habibi

No . 1. 2. 3. 4. 5.

Name Tahmina Rahman-Mina Nusrat Kamal Mitul Tahmina Akter Popi Kazi Dilshad Trisha Sk. Masud Rana

ID 16-02-51-019 16-02-51-009 16-02-51-049 16-02-51-034 15-02-52-009

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Acknowledgement

At first we would like to express our gratitude to almighty Allah who has given us the opportunity to go through the total process of term paper and to write a report in this regard. We would like to acknowledge our deepest gratitude to the honorable course teacher Professor Dr. M. Mahmodul Hasan, School of Business Administration, AUST who has given us suggestions regarding the writing of the term paper and to go through the process, which has become an excellent way of understanding the topic of our paper.

Finally our appreciation and thanks to all our friends who have helped and supported us all the way, while doing the paper.

Executive Summary

This term paper has addressed financial crisis of Morgan Moe’s stores as a difficult economic situation in an organization where the economic downturn led to a reduced demand specially for high margin impulse product. The chain had to reverse its strategy of expansion and cut down on jobs. Employees’ insecurity about their jobs was leading to dissatisfaction and negative attitudes. The company was likely to lose more employees, particularly older and more experienced ones, due to the uncertainty. This would push them further towards bankruptcy. To fix the situation, Morgan Moe’s instituted five variants of a performance management system. This report has outlined the results of implementing these systems and their relative effectiveness. It has also focused on how motivation can change the attitude of the employee to find the way out from difficult economic situation of an organization.

Table of Content

Introduction

Organizational Behavior Organizational behavior (OB) is the study of the way people interact within groups. Normally this study is applied in an attempt to create more efficient business organizations. The central idea of the study of organizational behavior is that a scientific approach can be applied to the management of workers. Organizational behavior theories are used for human resource purposes to maximize the output from individual group members. And it is a combination of psychology, sociology, economics and communication. OB strives to improve human efficiency in workplace settings. Human resource manager use OB analysis in improving training programs or increasing job satisfaction and thus reducing employee turnover. In addition the research and discoveries from OB help organizations develop leaders and promote innovation. Applying OB findings helps managers revise their methods of compensation employee evaluation and even the ways in which the organization is configured all and order to improve the formats. OB takes a long term view of enhancing a company’s profitability.

Figure 1.1: A Basic OB Model The basic OB model in figure 1.1 proceeds from left to right, with inputs leading to processes and processes leading to outcomes. Notice that, the model also shows that outcomes can influence inputs in the future. Inputs are the variables like personality, group structure, and organizational culture that lead to processes. These variables set the stage for what will occur in an organization later. If inputs are like the nouns in organizational behavior, processes are like verbs. Processes are actions that individuals, groups, and organizations engage in as a result of inputs and that lead to certain outcomes. Outcomes are the key variables that you want to explain or predict, and that are affected by some other variables. The primary outcomes in OB are the scholars have emphasized individual level outcomes like attitudes and satisfaction, task performance, citizenship behavior and withdrawal behavior. At the group level, cohesion and functioning are the dependent variables. Finally at the organizational level we look at overall profitability and survival. n e a tm v c d A

w G o r th

is b o ln e p R ty

to ivM n a

S a o tJ b ifc s n

n e tm v c ih A

n g c o te iR

Figure 1.2: Cycle of Motivation & Job satisfaction

Overall profitability of an organization can be enhanced through the activities of satisfied employees. Increasing the work participation of employees can improve business competitiveness, while positively impacting the well being of employees. Job satisfaction of employees can be accomplished through motivation. Satisfied employees of an organization start to take the responsibility as he or she owns the organization. More responsible employees lead to organizational advancement. As a result a growth of employees in interpersonal level and for the organization can be achieved. Recognition is one of the key elements of motivation. If the achievements of the employees are recognized, that can motivate them and the outcome is job satisfaction of those employees. Figure 1.2 explains the relation between motivation and job satisfaction combining other virtues of satisfied employees.

Figure 1.3: Joints effects of goals and self efficacy on performance Joints effects of goals and self efficacy can make a significant change in the performance of employees. Self-efficacy refers to an individual’s belief that he or she is capable of performing a task. By bringing goal setting theory and self efficacy together a manager can help their employees to achieve high levels of self efficacy. Goal setting theory and self-efficacy theory don’t compete, they complement each other. As figure 1.3 shows, employees whose manager sets difficult goals for them will have a higher level of selfefficacy and set higher goals for their own performance.

Chapter: One

In this case five management systems have been observed. The management programs with their methods are shown in table 2.1. Each system has combined different dependent and independent variables to run their management program. Different dependent and independent variables to run a management program is shown in figure 2.1. Table 2.1 Management

Methods

Programs Program I Program II Program III Program IV Program V

(combination of dependent and independent variables) Traditional management Share absence and sick leave Share sales and inventory Share information and brain storming Brainstorming without sharing information

Variables

Independent Variables     

Absence and Sick Leave Management Style Employee satisfaction Employee Age Employee Tenure

Dependent Variables     

Average Turnover Rate Sales and Inventory Employee Productivity Weekly Profit per Month Monthly Staff Time

Figure 2.1: Dependent and Independent variables Absence and sick leave is an independent variable in program I that is traditional management. Sales and inventory is a partly dependent variable in program III. It is related to higher absences and sick leave which can affect in lower sales.

Employee turnover rate is considered as dependent variable. Older employees are more experienced; they can provide better feedback, have a strong work ethic, commitment to quality, lower rate of absence, and are more satisfied of their work. But at the same time, they are lacking in flexibility and resistance to new technology. Management Style has a large impact on independent variables. The more the employees feel engaged, empowered, participate in decision making, the more management is open, fair, transparent, supportive, shares information and provides clear communication messages, interacts with staff; the more the employees are satisfied with their job and they lead to not interested in less turnover and more productivity. Area as an independent variable contributes to the dependent variables; urban areas are most likely to have a younger force on average, whereas rural areas the workforce is older in average their jobs which will lead to fewer turnovers and more productivity. Tenure is positively related to both employee productivity and job satisfaction and negatively related to turnover and absenteeism. When age and tenure are treated separately, tenure is considered a more stable & consistent predictor of job satisfaction than age. Weekly profit per month and monthly staff time cost both are dependent variables. These two dependent variables are linked to the performance management system which they are selected.

Chapter: Two

Apart from motivation, based on the discussion of independent and dependent variables which has been found in the case “Managing Motivation in a Difficult Economy”, there are some additional outcomes such as job satisfaction, leadership behavior, job involvement and change process can be added as other measuring outcomes.

Job In vo L e a dl v e e r s h im e n t p Job B e h aS a t i v io r s fa c tio n

C ha nge pro ces s

O th e r m easu r in g o u tc o m es

Figure 2.2: Other measuring outcomes 

Job satisfaction: Job satisfaction refers to how well a job provides fulfillment of a need or want, or how well it serves as a source or means of enjoyment. And also it is the degree to which individuals feel positively or negatively about their jobs. If employees are not satisfied with their existing jobs, how will they perform well? Their job satisfaction feedback and outcome will be in good term when they will be fully satisfied with their job satisfaction.



Leadership Behavior: Leadership behavior can be a measuring outcome to find out an organization’s variables. Leadership is the ability to influence a group toward the achievement of a vision or set of goals. That means, a leader can influence a group of employees and motivate them to turn in best. Morgan-Moe’s drug stores employees were lacking in good leadership behavior. They were worried in job security and upset. Cindy Ang’s, one of the manager of MorganMoe’s Drug store said that employees do not tell them anything and they are worried and upset when they saw themselves that they are not performing well.

Good behavior of a leader can help employees to perform well in jobs and feel free to share ideas with co-workers. 

Job Involvement: Job Involvement refers to a participative process that uses the input of employees and is intended to increase employee commitment to an organization’s success. That means, organizations must need to involve their all employees in every decision making steps especially on how they value their employees and their views, this can assist in lowering the number of employees leaving and increase its weekly profits.



Change Process: The process of change is making things different. MorganMoe’s drug Store can change their running activities by using this process:

Figure 2.3: Change process

Chapter: Three

After observing the data in table 3.1, it has been decided that program IV (Share information and brainstorm) and program V (Brainstorm without sharing information) appear to be more effective.

Table3.1 Number of

Average

Weekly Profit

Monthly Staff

Program

Stores

Turnover

per Month

Time cost

Program I

83

Mean=30%

Mean=300000

None

SD=10%

SD=100000

Mean=23%

Mean=400000

SD=14%

SD=280000

Mean=37%

Mean=620000

SD=20%

SD=250000

Mean=17%

Mean=790000

SD=20%

SD=300000

Mean=21%

Mean=820000

SD=12%

SD=240000

Program II

27

Program III

35

Program IV

67

Program V

87

100000

224000

300000

250000

They have the highest profits as well as the lowest employee turnover. The trade-off between the two is that while program V has a higher turnover. It also has led to better profitability.

This

establishes

a

correlation

between

involving employees

in

brainstorming and a lower employee turnover rate. This could be because employees wish to be consulted and made to feel a part of the organization. Program III is the least effective in terms of turnover. Although there is an improvement in the profitability of the stores where this is implemented. This could be because sharing sales and inventory data is creating greater insecurity and tension among employees about the company future and their jobs.

Most effective method of management: Program V: Brainstorming without sharing information this method appears most effective because:

1) Monthly staff is second highest at 2,50,000 2) Average turnover is second lowest at 21% 3) Weekly profit per month is highest at 8,20,000 4) Standard deviation of turnover is only 21% 5) Weekly profit per month is highest at 3,00,00 Method IV is most effective. In this method, managers share information and conduct brainstorming sessions. This method increases the motivation level and they feel participative. Program V there should be organizational justice as while we are conducting the brain storming sessions there might be conflict between the employees regarding their ideas and opinion. Management should give proper explanations that why they are accepting a particular idea. By analyzing the data the most effective methods seems to be program V as it provides the biggest profit to cost ratio with the second best turnover rate. Program IV had the lowest employee turnover rate of 17% .but the cost of monthly, staff times cost was the highest, which reduced the net profits of the 67 stores that chose that program. The three least effective programs were I, II and III because they do not provide considerable net profits compared to turnover rates. Program IV, the most comprehensive, tracks the same information as programs II, III .Managers communicate it weekly brainstorming session, during which employees try to determine what they do better in the future and make suggestions for improving store performance. Sharing the performance information of the company with the employees get them to understand what their job means to the company and that their work serves a broader purpose and helps in the growth of the company. The employees give their feed-back on how improve their company’s performance. This program gives a sense of purpose and responsibility to the employees towards the company future. It asks the employees feedback on the various issues they would help the company performance in weekly brain storming meeting. This program was the second most profitable program.

Program V keeps the idea of brainstorming but does not provide employees with information about their behavior or company profit. Appears least effective method: Program I: Traditional Method. This method appears least effective because: 1) Monthly staff cost is lowest at 0. 2) Average turnover is second highest at 30% 3) Standard deviation of turnover is 10% 4) Weekly profit per month is lowest at 3,00,000 5) Standard deviation is 1,00,000  As in the case the HR team came up with the 5 options for the management system. They think that method IV, sharing information and brainstorming is the most effective method.  We feel that method V (brainstorming without sharing information) is better is some aspects because some information should be kept confidential with the company otherwise there might be misuse of information. According to human resource method IV is the greatest appreciated technique but rendering to my estimation we examine that method IV had always enhanced in several appearances, for the reason that corporation have to deliver fairness when we are applying the brain storming gathering, 1) Have an apparent and programmatic vision of what the company wants to accomplish and locate targets consequently. 2) Communicate the assessment of the plan successfully to employees to guarantee engagement. 3) Incentivize unexpectedly as well as when it is predictable.

In this method, executives continuously segment some applicable evidence and they behaviors brain storming session on weekly basis. This method simplifies to increase the inspiration level and employees feel participative. Employee involvement is necessary in this organization. The underlying logic is that if we involve workers in the decisions that affect them. This will make employee motivated committed, satisfied and more productive. Traditional method is least effective as in this no information is shared with the employees and no participation in decision making. As the turnovers are high and revenue is low in this method.

Chapter: Four

Morgan-Moe’s authority has implemented five performance management system to get employees into the idea of performing so that they can see some real results in their hundreds of stores. It is all about to seeing that their employees work serve a broader purpose. Jim Claussen, Morgan-Moe’s vice president for human relation said in this case said that some companies have been sharing store performance information with employees to get them understand what their jobs really mean and participate in making changes. The number of stores using each method set ranges from 27 to 87. But it does not influence our conclusion. Based on the number of stores where each program was not implemented equal stores. From table 3.1 in chapter 3 it has been found that a comparison of the number of stores using such method does not influnce the conclusion. We are comparing profitibility per store and average turnover as

a

percentage. For a fair comparison, each sample should be equally sized. The fact that managers are selecting the specific program to use (including program I, which continues the status quo) may affect the inferences. It introduces bias into the experiment and affects the results with objectivity errors. Managers may be biased towards a particular way of working. The choices made by managers also indicate what is likely to be best received by the employees. Self- selection by managers mean that other external variables are not being appropritely controlled. It means that mangers prefers that methods which could be affected the outcomes m...