Roger Harris is the founder and managing partner of a large health management consulting firm that specializes in strategic planning for hospitals. The firm has six partners, including Roger, and 20 professional staff members (all with graduate degrees in health administration). The staff, which is evenly divided between males and females, consists of single and married individuals between 25 and 35 years of age. Of the 10 married staff members, two of their spouses work outside the home. All the married individuals have families of at least two children, and all the children are under 10 years old.

The philosophy of the firm is to serve the needs of its clients and have fun serving those needs, all while making a profit. Because of the tight labor market, the firm’s salaries for its professional staff are well above the market rate in order to attract and retain the best talent. In addition, each employee has a private office, breakfast served daily, free weekly car washes, and their dry cleaning delivered to the office.

The firm also offers the staff home computers if they prefer to work at home on weekends during the firm’s busy time, which usually runs from October to May.

During the busy period, staff members are required to work approximately 55–60 hours per week.

They receive 2 weeks of vacation annually, in addition to 1 week for continuing professional education and 1 week for personal time, which is utilized by 100% of the staff. Roger was concerned because, although the partners’ billable hours (i.e., hourly rates charged to clients for services rendered) had increased 12% over the past 2 years, the staff’s billable hours had decreased by 14%. In addition, the turnover rate (i.e., the percentage of the newly hired graduates who stay with the firm for approximately 3–4 years before taking a position in one of their client’s hospitals) had increased to 50% (from 10%

5 years earlier).

In order to increase the firm’s productivity and retention rate, Roger initiated a bonus program as follows: If a staff member billed out 2000 hours annually, they received a bonus equal to 5% of their annual salary. For every hour billed over the minimum 2000 hours, the employee would be paid twice the hourly rate.

Under the new program, all employees earned the 5% bonus, but no one’s productivity increased over the minimum 2000-hour base.

Roger was concerned by this lack of improvement in productivity and the turnover rate. Thinking that the staff needed outside professional recognition, he encouraged everyone to publish articles for the various health management journals discussing aspects of their most interesting cases. All staff members were willing to do so, as long as the time required to develop the articles would be applied toward their minimum 2000 hours’ bonus calculation.

Roger also told the staff that anyone who demonstrated technical competence and the ability to attract and retain clients to the firm would have the opportunity to become a partner. Even though individuals from the outside had filled the last two senior management-level positions, four of the six partners had been promoted from within (after 8–10 years of continuous employment with the firm). However, the most recent promotion to partner was made to an individual who had been hired from the outside after only 3 years of employment with the firm.

Roger thinks that the consulting firm is a great place to work, with interesting and challenging cases, an excellent compensation package, and growth opportunity. He cannot understand why the staff’s productivity continues to decline and the turnover rate continues to increase.

Using Expectancy Theory, explain to Roger why non partner productivity level is low and why the firm is experiencing a high turnover rate among its professional staff.