In this case, you’ll have an opportunity to assess a motivational program design

ID: 449848 • Letter: I

Question

In this case, you’ll have an opportunity to assess a motivational program designed to reenergize a trou- bled company’s workforce. Acting on behalf of the company’s executive board, you’ll evaluate the board’s current strategy based on survey data. You’ll also advise board members about improving the effectiveness of this program based on what you’ve learned about goal- setting and motivation in organizations.

Major Topic Areas

Changing nature of work

Diversity and age

Goal-setting

Organizational downsizing

Organizational justice

The Scenario

Morgan-Moe’s drug stores are in trouble. A major regional player in the retail industry, the company has hundreds of stores in the upper Midwest. Unfortunately, a sharp decline in the region’s manufacturing econ- omy has put management in a serious financial bind. Revenues have been consistently dwindling. Custom- ers spend less, and the stores have had to switch their focus to very low-margin commodities, such as milk and generic drugs, rather than the high-margin impulse- buy items that used to be the company’s bread and butter. The firm has had to close quite a few locations, reversing its expansion plans for the first time since it incorporated.

Being that this is uncharted territory for the com- pany, Jim Claussen, vice president for human relations, had been struggling with how to address the issue with employees. As the company’s fortunes worsened, he could see that employees were becoming more and

Managing Motivation in a Difficult Economy

more disaffected. Their insecurity about their jobs was taking a toll on attitudes. The company’s downsizing was big news, and the employees didn’t like what they were hearing.

Media reports of Morgan-Moe’s store closings have focused on the lack of advance notice or communica- tion from the company’s corporate offices, as well as the lack of severance payments for departing employees. In the absence of official information, rumors and gossip have spread like wildfire among remaining employees. A few angry blogs developed by laid-off employees, like IHateMorganMoe.blogspot.com, have made the morale and public relations picture even worse.

Morgan-Moe is changing in other ways as well. The average age of its workforce is increasing rapidly. A cou- ple of factors have contributed to this shift. First, fewer qualified young people are around because many families have moved south to find jobs. Second, stores have been actively encouraged to hire older workers, such as retir- ees looking for some supplemental income. Managers are very receptive to these older workers because they are more mature, miss fewer days of work, and do not have child care responsibilities. They are also often more quali- fied than younger workers because they have more experi- ence, sometimes in the managerial or executive ranks.

These older workers have been a great asset to the company in troubled times, but they are especially likely to leave if things get bad. If these older workers start to leave the company, taking their hard-earned experience with them, it seems likely that Morgan-Moe will sink deeper toward bankruptcy.

The System

Claussen wasn’t quite sure how to respond to employ- ees’ sense of hopelessness and fear until a friend gave him a book entitled Man’s Search for Meaning. The book was written by a psychologist named Victor Frankl, who survived the concentration camps at Auschwitz. Frankl found that those who had a clear sense of purpose,

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624 COMPREHENSIVE CASES

a reason to live, were more likely to persevere in the face of nearly unspeakable suffering. Something about this book, and its advocacy of finding meaning and direction as a way to triumph over adversity, really stuck with Claussen. He thought he might be able to apply its lessons to his workforce. He proposed the idea of a new direction for management to the company’s executive committee, and they reluctantly agreed to try his suggestions.

Over the last 6 months, stores throughout the com- pany have used a performance management system that, as Claussen says, “gets people to buy into the idea of performing so that they can see some real results in their stores. It’s all about seeing that your work serves a broader purpose. I read about how some companies have been sharing store performance information with employees to get them to understand what their jobs really mean and participate in making changes, and I thought that was something we’d be able to do.”

The HR team came up with five options for the management system. Corporate allowed individual managers to choose the option they thought would work best with their employees so that managers wouldn’t feel too much like a rapid change was being forced on them. Program I is opting out of the new idea, continuing to stay the course and providing em- ployees with little to no information or opportunities for participation. Program II tracks employee absence and sick leave and shares that information with indi- vidual employees, giving them feedback about things they can control. Management takes no further action. Program III tracks sales and inventory replacement rates across shifts. As in Program II, information is shared with employees, but without providing em- ployee feedback about absence and sick leave. Program IV, the most comprehensive, tracks the same informa- tion as Programs II and III. Managers communicate it in weekly brainstorming sessions, during which em- ployees try to determine what they can do better in the future and make suggestions for improving store per- formance. Program V keeps the idea of brainstorming but doesn’t provide employees with information about their behavior or company profits.

Since implementing the system, Claussen has spo- ken with several managers about what motivated them to choose the program they did. Artie Washington, who chose Program IV, said, “I want to have my employ- ees’ input on how to keep the store running smoothly. Everybody worries about their job security in this econ- omy. Letting them know what’s going on and giving them ways to change things keeps them involved.”

Betty Alvarez couldn’t disagree more. She selected Program I. “I would rather have my employees doing their jobs than going to meetings to talk about doing their jobs. That’s what management is for.” Michael

Ostremski, another proponent of Program I, added, “It’s okay for the employees to feel a little uncertain—if they think we’re in the clear, they’ll slack off. If they think we’re in trouble, they’ll give up.”

Cal Martins also questions the need to provide infor- mation to the whole team, but he chose Program II. “A person should know where he or she stands in the job, but they don’t have to know about everyone else. It cre- ates unnecessary tension.”

This is somewhat similar to Cindy Ang’s reason for picking Program V. “When we have our brainstorming meetings, I learn what they [the employees] think is most pressing, not what some spreadsheet says. It gives me a better feel for what’s going on in my store. Num- bers count, of course, but they don’t tell you everything. I was also a little worried that employees would be upset if they saw that we aren’t performing well.”

Results to Date

Claussen is convinced the most elaborate procedure (Program IV) is the most effective, but not everyone in the executive committee is won over by his advocacy. Although they have supported the test implementa- tion of the system because it appears to have relatively low costs, others on the committee want to see results. CEO Jean Masterson has asked for a complete break- down of the performance of the various stores over the past 4 years. She’s especially interested in seeing how sales figures and turnover rates have been affected by the new program.

The company has been collecting data in spread- sheets on sales and turnover rates, and it prepared the following report, which also estimates the dollar cost of staff time taken up in each method. These costs are based on the number of hours employees spend work- ing on the program multiplied by their wage rate. Esti- mates of turnover, profit, and staff time are collected per store. Profit and turnover data include means and standard deviations across locations; profit is net of the monthly time cost. Turnover information refers to the percentage of employees who either quit or are termi- nated in a month.

To see if any patterns emerged in managers’ selec- tion of programs, the company calculated relationships between program selection and various attributes of the stores. Program I was selected most frequently by the oldest stores and those in the most economically dis- tressed areas. Programs II and III were selected most frequently by stores in urban areas and in areas where the workforce was younger on average. Programs IV and V were selected most frequently in stores in rural areas, and especially where the workforce is older on average.

CASE 1 Managing Motivation in a Difficult Economy 625

Program

Methods

Number of Stores

Average Turnover

Weekly Pro t per Month

Monthly Staff Time Cost

Program I

Traditional management

Mean 30% SD 10%

Mean $5,700 SD $3,000

None

Program II

Share absence and sick leave

Mean 23% SD 14%

Mean $7,000 SD $5,800

$1,960

Program III

Share sales and inventory

Mean 37% SD 20%

Mean $11,000 SD $2,700

$2,440

Program IV

Share information and brainstorm

Mean 17% SD 20%

Mean $13,000 SD $3,400

$3,420

Program V

Brainstorm without sharing information

Mean 21% SD 12%

Mean $14,000 SD $2,400

$2,750

Your Assignment

Your task is to prepare a report for the company’s exec- utive committee on the effectiveness of these programs. Make certain it is in the form of a professional busi- ness document. Your audience won’t necessarily know about the organizational principles you’re describing, so make sure you provide detailed explanations that someone in a real business can understand.

When you write, make sure you touch on the follow- ing points:

Consider the five management systems as variables in an experiment. Identify the independent and dependent variables, and explain how they are related to one another.

Based on the discussion of independent and dependent variables in the textbook, is there any- thing else you’d like to measure as an outcome?

Look over the data and decide which method of management appears most effective in generating revenues and reducing turnover, and why. Which methods appear least effective, and why?

Are there any concerns you have about these data?

Does a comparison of the number of stores us- ing each method influence your conclusions

at all?

Does the fact that managers are selecting the

specific program to use (including Program I,

which continues the status quo) affect the infer-

ences you can draw about program success?
c. What are the advantages of randomly assign- ing different conditions to the stores instead of

using this self-selection process?

How does the changing nature of the workforce

and the economy, described in your textbook and in the case, affect your conclusions about how to manage retail employees? Does the participation of a more experienced workforce help or hurt these programs? Why might these programs work differ- ently in an economy that isn’t doing so poorly?

Claussen essentially designed the program on his own, with very little research into goal-setting and motivation. Based on your textbook, how well has he done? Which parts of the program appear to fit well with research evidence on goal-setting? What parts would you change to get more substantial improvements in employee motivation?

Describe the feelings employees might have when these systems are implemented that could help or hinder the program’s success. What advice would you give managers about how to implement the programs so they match the principles of organiza- tional justice described in your textbook?

Major Topic Areas

Changing nature of work

Diversity and age

Goal-setting

Organizational downsizing

Organizational justice

The Scenario

Managing Motivation in a Difficult Economy

more disaffected. Their insecurity about their jobs was taking a toll on attitudes. The company’s downsizing was big news, and the employees didn’t like what they were hearing.

The System

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Explanation / Answer

Jim Claussen, Vice President of Human Relations has come up with a few suggestions which will be helpful in trying and combating the downturn and closing down of the stores. The suggestions provided by him are comprehensive and aim to cover all the possible scenarios. However, as the case is in many situations, all suggestions might not work out; only one or two might be successful.

Consider the five management systems as variables in an experiment. Identify the independent and dependent variables, and explain how they are related to one another.

The independent variables are hours worked and stock maintenance and dependent variables are sales figures and performance.

The hours worked and stock maintenance are necessarily not related by all aspects, albeit it cannot be said that other factors do not affect them. In many situations stock may be needed to be increased or decreased even if the store has the stock of the particular product or not. Similarly, the hours worked does not depend on other factors. Whether, there are customers in the store or not the employees will need to be available.

On the other hand, sales figures are dependent on factors like availability of product, quality of product and so on and performance of employee depends on the pay he is getting, how he is being treated and so on.

Look over the data and decide which method of management appears most effective in generating revenues and reducing turnover, and why. Which methods appear least effective, and why?

One feels Program IV is more effective. The reason being, staff nowadays want to be more involved. They want to be heard. In fact, the best suggestions can come from people who are on the floor who are facing the customers and get first hand knowledge of what the customer wants. The executive is too far seated to take those decisions. When the people on the floor make suggestions they make them with their experience of interacting with the customers; hence they will be more effective. Added to that when they feel that they are being heard, they will feel important and not leave their jobs.

Program I seems least effective as nothing is changing. The reasoning is simple, that something is not correct which is why things are not working out and stores are closing. If you are going to do nothing about it then you have not corrected your mistake so people are still unhappy, you are still making a loss and the stores will continue to shut down.

Are there any concerns you have about these data?

Yes, one does have a concern about the data that how long has this exercise been taking place. Any experiment that takes place needs to be run for a long period to properly decide if it is effective or not.

Does a comparison of the number of stores using each method influence your conclusions at all?

Yes, number of stores do play a role. When the number of stores is less then, it is easier to implement any experiment and customize it according to ones liking, however, when a large number of stores implement a certain experiment it needs to be kept in mind that a common system which can be connected to all the participating stores needs to be used to come to a conclusion.

Does the fact that managers are selecting the specific program to use (including Program I, which continues the status quo) affect the inferences you can draw about program success?

Yes, it does affect as managers are only selecting those programs which they feel will suit their store. To get a wholesome idea all the practices should be implemented in all the stores, to get the correct outlook.

What are the advantages of randomly assigning different conditions to the stores instead of using this self-selection process?

The advantage of randomly assigning will mean that managers will have to face uncertain situations and in those situations how they manage will speak about the true nature of the experiment.

Conclusion

For employees this is a bit of a roller coaster ride where they are being put through different scenarios. In fact employees of one store might feel that the other store is better since they got the better management style. This will cause a bit of unrest.

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