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Managing Motivation in a Difficult Economy

Learning Goals

In this case, you'll have an opportunity to assess a motivational program designed to re-energize a troubled 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 regionalplayer in the retail industry, the company hashundreds of stores in the upper Midwest. Unfortunately,a sharp decline in the region's manufacturingeconomy has put management in a serious financialbind. Revenues have been consistently dwindling. Customersspend less, and the stores have had to switchtheir focus to very low-margin commodities, such asmilk and generic drugs, rather than the high-marginimpulse-buy items that used to be the company's breadand butter. The firm has had to close quite a few locations,reversing its expansion plans for the first timesince it incorporated.

Being that this is uncharted territory for the company,Jim Claussen, vice president for human relations,had been struggling with how to address the issue withemployees. As the company's fortunes worsened, hecould see that employees were becoming more andmore disaffected. Their insecurity about their jobs wastaking a toll on attitudes. The company's downsizing wasbig news, and the employees didn't like what they werehearing.

Media reports of Morgan-Moe's store closings havefocused on the lack of advance notice or communicationfrom the company's corporate offices, as well as thelack of severance payments for departing employees. Inthe absence of official information, rumors and gossiphave spread like wildfire among remaining employees.A few angry blogs developed by laid-off employees, likeIHateMorganMoe.blogspot.com, have made the moraleand public relations picture even worse.

Morgan-Moe is changing in other ways as well. Theaverage age of its workforce is increasing rapidly. A coupleof factors have contributed to this shift. First, fewerqualified young people are around because many familieshave moved south to find jobs. Second, stores havebeen actively encouraged to hire older workers, such asretirees looking for some supplemental income. Managersare very receptive to these older workers becausethey are more mature, miss fewer days of work, and donot have child-care responsibilities. They are also oftenmore qualified than younger workers because they havemore experience, sometimes in the managerial or executive ranks.

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

The System

Claussen wasn't quite sure how to respond to employees' 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, 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 company 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. ProgramI is opting out of the new idea, continuing to stay the course and providing employees with little to no information or opportunities for participation. Program II tracks employee absence and sick leave and shares that information with individual 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 employee feedback about absence and sick leave.Program IV, the most comprehensive, tracks the same information as Programs II and III. Managers communicate it in weekly brainstorming sessions, during which employees try to determine what they can do better in the future and make suggestions for improving store performance. 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 spoken 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 employees' input on how to keep the store running smoothly. Everybody worries about his or her job security in this economy. 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 uncertainif 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 information 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 creates 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. Numbers 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 implementation 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 breakdown 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 spreadsheets 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 working on the program multiplied by their wage rate. Estimates 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 terminated in a month.

To see if any patterns emerged in managers' selection 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 distressed 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.

Program	Methods	# of Stores	Average Turnover	Weekly Profit per Month	Monthly Staff Cost Time
Program 1	Traditional Management	83	Mean=30% SD=10%	Mean=$5,700 SD=$3,000	None
Program 2	Share absence and sick leave	27	Mean=23% SD=14%	Mean=$7,000 SD=$5,800	$1,960
Program 3	Share sales and inventory	35	Mean=37% SD=20%	Mean=$11,000 SD=$2,700	$2,440
Program 4	Share information and brainstorm	67	Mean=17% SD=1020	Mean=$13,000 SD=$3,400	$3,420
Program 5	Brainstorm without sharing information	87	Mean=21% SD=12%	Mean=$14,000 SD=$2,400	$2,750

report to the company's executive committee on the effectiveness of these programs. Make certain it is in the form of a professional business 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 following points:

CC-1. 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.

CC-2. Based on the discussion of independent and dependent variables in the textbook, is there anything else you'd like to measure as an outcome?

CC-3. 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?

CC-4. Are there any concerns you have about this data?

CC-5. Does a comparison of the number of stores using each method influence your conclusions at all?

CC-6. 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?

CC-7. What are the advantages of randomly assigning different conditions to the stores instead of using this self-selection process?

CC-8. 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 differently in an economy that isn't doing so poorly?

CC-9. 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?

CC-10.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 organizationaljustice described in your textbook?

Organizational Behavior, 18th Edition

ISBN: 9780134729749

By: Stephen P. Robbins; Timothy A...