The Need to Motivate Employees in Small Companies Essay Example
The Need to Motivate Employees in Small Companies Essay Example

The Need to Motivate Employees in Small Companies Essay Example

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  • Pages: 13 (3314 words)
  • Published: September 20, 2017
  • Type: Case Study
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Introduction
The assignment focuses on a company called OBC, which is an abbreviation for its actual name. To maintain confidentiality, the true name will not be disclosed and it will be referred to as OBC. OBC has been operating for six years and specializes in providing various beauty products including cosmetics, skin care items, hair care products, and beauty equipment specifically used in salons and barber shops.

OBC markets its merchandise in Muscat, Sohar, Nizwa, and other locations. They also import, sell, and install sauna and steam bath equipment for families. In the first three years, the company was highly successful with excellent sales revenue and profitability. However, sales have been declining, seemingly due to increased competition. From 2004-2007, OBC averaged monthly sales of around 14,000 Omani Rials with

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a sales staff of three: one sales director and two sales representatives who work in the field. Currently, they have a sales director, a brand director, two sales executives, and one counter helper in their Al Khoud showroom. According to the accountant of OBC, monthly sales have declined to 3-4 thousand rials. However, during the peak months of the two Eids, sales reached 7,000 rials with 60% of that coming from showroom sales.

The company started selling Philip Martin's cosmetics from Italy in August 2010. It is still too early to determine the success of this trade name. A trade name director with a high salary of 800 Omani Rial has been hired to oversee this aspect of the business. However, she is currently in the process of establishing herself at the Oman Beauty Center and promoting this product in Oman. The company does not advertise or

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engage in promotional and public relations activities, but it has participated in two exhibitions. No promotion activities are carried out.

Terms of Reference

Due to declining sales, there is significant pressure on the sales team from the owner and managing director who also works full-time in the aviation industry. He visits the showroom and sales office during evenings to supervise and monitor company operations.

Over the past three years, the managing manager made changes to the wage structure for the sales team. These changes included implementing performance-based adjustments and two wage reductions, resulting in a significant decrease in base salary. However, the manager also introduced sales incentives based on preset sales targets of at least 3000 Rials. This decision caused dissatisfaction among the sales team and despite these incentives, their performance has not improved. Additionally, the sales team is constantly under pressure to enhance their performance or risk losing their jobs. Lastly, there is increased scrutiny of their expenses which has led to delayed payments.

Other Issues: The gross revenues director and his team lack the necessary sales management skills and expertise. The company does not engage in promotions, advertising campaigns, or other marketing activities. This suggests that either the employees lack the required skills or they are unable to carry out these activities due to internal factors. Interviews during the research process will further evaluate these aspects.

CEO and Challenges The CEO himself lacks expertise in sales and marketing management, financial systems ; procedures, and is lacking knowledge in human resources functions. Additionally, he has not provided guidance as a leader nor knows how to motivate his team.

The staff at OBC is concerned about the lack of understanding in managing and leading the entire team. The Accountant at OBC is also part of the senior management team and reports directly to the CEO. However, he too is demotivated because the CEO does not make decisions that inspire or guide the company.

The company's performance decline is believed to be caused by deficiencies in HRM systems, financial management, strategic direction, sales, and leadership. These issues are worsened by the indecisiveness of the managing manager. Furthermore, it is believed that the managing manager restricts the controller, sales director, and brand director from using their initiative to achieve company goals and objectives.

Exploration and Investigation of the Problem - The Implication and Effects of Behaviour

What are the consequences of indecisiveness? Indecisiveness leads to a lack of growth within the company as organizational members are not empowered to make decisions that propel it in the right direction.

The Chief Executive Officer (CEO) himself is not making decisions or delaying them and does not allow employees to do the right things to enhance the profitability and growth of the company. Consequently, the Sales Director, Brand Director, and Controller are feeling frustrated, unmotivated, and lacking job satisfaction. Assuming that these employees have the skills and ability to improve the profitability and growth of the company, not being given the responsibility and authority to do so makes them feel insignificant and unwanted. As an unidentified writer once said, people don't leave companies, they simply leave other people (managers).

The core team of employees at the company is experiencing significant job dissatisfaction due to a lack of proper systems and procedures for effective management

of human resources. This issue is not limited to HR, as other functional activities such as inventory management also suffer from inadequate systems and procedures. For example, the inventory management system is crude, resulting in difficulties managing fast-moving stocks, excess stocks, and slow-moving stocks. Consequently, the efficient tracking of inventory movement is not possible, making profitability measurement ineffective. Despite efforts to develop an in-house information management system, the CEO insists on using an unlicensed system, which does not receive support from the vendor in terms of training and installation. The blame for this situation falls on the accountant, who is burdened with inventory management, sales invoicing, treasury function, and general accounting responsibilities due to understaffing in the finance department.

When the CEO criticizes the comptroller for not fulfilling all of his responsibilities, including tasks such as software installation, data entry, inventory management, as well as performing administrative and treasury functions, the comptroller feels demoralized and overwhelmed. The CEO has even threatened to dismiss the comptroller if he does not improve his performance. Consequently, the comptroller is considering quitting his job.

Among these jobs, the main issue appears to be a lack of focus and direction from the CEO and his inability to effectively communicate with his people. Both of these factors demoralize the team of directors and other employees since the CEO's actions impact the entire organization.

Underpining Management Knowledge and Issues

Examining the entire process from a management standpoint involves the skill of getting work done by others, as discussed earlier in this paper. A manager should be proficient in this process of getting his staff to work for him (some unknown writers also attribute this concept to

Mary Parker Follet).

The requirement for a director to possess various essential skills and achievements include motivational, interpersonal communication, effective planning, leadership qualities, basic management skills, employee engagement and empowerment, as well as the ability to motivate and retain individuals. As stated by Daft (2000), Mullins (2007), and Huczynski and Buchanan (2008), effective management necessitates a diverse range of skills and abilities that can be acquired through an MBA program. Intrinsic and extrinsic motivation play a crucial role in motivating employees, with academics and practicing managers suggesting that intrinsic motivation, driven internally by oneself, leads to better performance and job satisfaction (Armstrong, 2007). However, critics argue that human behavior is complex and cannot easily be categorized into two distinct motivational categories. Reiss (2004) believes that individuals differ in what brings them happiness, suggesting that it is inappropriate to make value judgments regarding what motivates people.Extrinsic motivation pertains to external incentives like rewards and incentives, which may be temporary and may not inspire someone to engage in activities they do not enjoy.

According to Herzberg's two-factor theory (Daft, 2000) and (Mullins, 2007), it is important to note that money, inducements, and position alone are not enough to motivate individuals. Managers face the challenge of understanding what motivates their employees since different factors can drive different people. This makes the manager's job even more difficult. There is an old saying that perfectly illustrates this dilemma: "Remember, you can lead a horse to water, but you cannot make it drink." In OBC, managers need to understand the various motivations of their subordinates. Considering intrinsic and extrinsic concepts provides a comprehensive perspective on how employees may be motivated under a manager's

supervision. By using the intrinsic/extrinsic framework along with Herzberg's two-factor theory and considering hygiene factors and incentives, motivation among subordinates can be thoroughly examined. Hygiene factors include elements such as status, salary, benefits, and job security; however, their mere presence does not guarantee satisfaction or dissatisfaction (Mullins, 2007). Specifically in OBC, senior employees hold positions like Sales Director, Accountant,and Brand Managers while receiving wages and enjoying perks such as company cars,mobile bill payments,housing,and medical benefits. The organization's systems and procedures ensure that the hygiene factors in OBC are addressed.
Furthermore, incorporating incentives and benefits into the Organizational Vision and Motivation is another way to motivate employees. The organization's vision and leadership also play a significant role in employee motivation. It is the leader's responsibility to establish a compelling vision and goals that drive employees towards desired results. Robert Chapman, CEO of Barry Wehmiller Group, emphasizes the importance of creating motivational programs that foster behaviors aligned with the organizational vision.

Chapman (2008) asserts that the effectiveness of motivation programs heavily depends on strong leadership. The CEO must have a clear vision and the ability to identify critical factors impacting the business's vision. Moreover, they should possess a deep commitment and desire to motivate individuals towards achieving goals. Thus, it is the responsibility of leadership to establish a business with a strong vision and drive that vision through motivation. The CEO plays a vital role in designing a feasible business model for success. Leaders need to grasp that individuals desire to be part of successful organizations and seek meaningful engagement with a proud vision (Chapman, 2008). Richter (2010), an experienced performance management consultant who has collaborated with Fortune 500

companies, proposes using intrinsic motivation to steer teams towards organizational objectives. Academic disciplines such as strategic management, leadership, and psychology support the concept of leveraging strategic leadership, vision, and goals for motivating people. Interestingly, military leaders also share similar ideas on motivating subordinates through clear visions and missions. Leaders who possess clarity of thought and direction can inspire numerous individuals to take action (Einstein; Richter, 2010). According to Professor Steven Reiss' research conducted on 6000 people in the USA (Humphreys, 2001), there are 16 fundamental human desires.The text presents a list of desires represented by the following and their contents:

  • Credence, the desire for blessings
  • Curiosity, the desire to learn
  • Eating, the desire for food
  • Family, the desire to raise children
  • Honor, the desire to be loyal to one's clan/ethnic group's traditional values
  • Idealism, the desire for social justice
  • Independence, the desire for individualism
  • Order, the desire for organized, stable, and predictable environments
  • Physical activity, the desire for exercise
  • Power, the desire for influence
  • Love affair, the desire for sex
    < li > Salvaging , desire < / li >
    < li > Social contact , desire < / li >
    < li > Status , desire < / li >
    < li > Tranquility , desire < / li >
    < li>Vengeance,desire -->to retaliate or win< /

      According to this model of

human behavior motivation is based on people having different desires. These sixteen desires are believed to represent intrinsic motivations that directly drive human behavior. The model assumes that these desires are not meant to indirectly fulfill other desires. Furthermore individuals can be motivated by higher levels of these desires.

However, Professor Reiss believes that these basic desires do not pertain to deep motives but rather serve as a means to fulfill other basic needs (Reiss, 2004). Criticisms can be made against this construct as it is somewhat similar to the ideas of basic needs advocated by Abraham Maslow and his followers who expanded on the Hierarchy of Needs to the ERG theory, as the 16 desires reviews these basic needs. Therefore, senior managers could potentially use this model to reassess their rewards and incentives in terms of salary allowances and benefit shares of the hygiene factors, although money is not considered the most important motivator (Daft, 2004) - a person needs a living wage. The underlying knowledge and issues in management are supported by all these skills. While all these skills are critical in effectively leading and managing people, some skills can be considered more important and relevant. For example, the ability to communicate effectively and motivate people. If these two elements are in place, many problems in OBC can be avoided and solved through the natural process of organizational development. However, dealing with people requires the ability to effectively communicate and motivate individuals and teams within the company. Effective communication is not taking place in OBC, resulting in conflicts, misunderstandings, and unmet objectives.Improving the public presentation of individuals and enhancing their levels of motivation should

be prioritized.

Analysis of Questionnaire and Findings

Using an inquiry to interview the managerial staff of the company, the researcher discovered detailed perspectives on various issues pertaining to the company.

OBC employee interview Questionnaire internal usage merely for usage with management staff

  • Are you satisfied with your salary scale?
  • Are you satisfied with the allowances and benefits?
  • Is there a good internal relationship between the employees?
  • If not, what are the causes for a poor relationship with the management?
  • Is there transparency in communication within the company?
  • Does the company have proper systems in HRM, Finance, Marketing, and information systems?

Senior Management

  • Does your manager communicate effectively with you?
  • Does your manager provide proper instructions?
  • Does your manager involve you in the planning and performance management processes?
  • Does he/she inspire and motivate you?
  • What factors motivate you?

The analysis and findings from the interview questionnaires are compiled below. Six employees were interviewed, of which one employee was female in the group of six. They were all directors and executives. A summary of the findings is provided below.The responses were split, with 50% neutral and the other 50% of employees expressing negativity towards the company and its direction. During the interviews, the researcher formed a friendly connection with the comptroller who believed that all employees, including salespeople and brand managers, would leave the company at the earliest opportunity. Some employees are idle and it is known by the CEO.

The main reason for job dissatisfaction is the CEO's lack of action. He fails to implement recommendations or make decisions on his own, which supports previous statements made in this paper.

Wages

Out of the six employees interviewed, three believed that their wages were appropriate for their job positions. These employees include the Accountant, who is

the second highest-paid staff member, the Brand Manager, who is the highest-paid employee, and the Sales Director, who is the third highest-paid individual with a good salary. Other employees received significantly lower wages, less than 200 Omani Yemeni rials.

Allowances and Benefits

The three directors are satisfied with their allowances and benefits, and one employee mentioned receiving company accommodation. However, Herzberg's two-factor theory suggests that hygiene factors, such as wages and benefits, do not lead to employee satisfaction. Therefore, they may not necessarily motivate the company's employees (Daft, 2000). Additionally, these factors may only fulfill basic desires according to Reiss and might not be sufficient for OBC's managerial staff. Instead, they could be potentially motivated by incentives.


Relationship among employees

All employees unanimously agree that their relationships with each other are excellent, and they enjoy working together as a team.

Relationship with Management

Research has shown that the relationship with management is not good due to several reasons, including poor communication, indecisiveness, delays, inadequate planning, lack of employee recognition, and deficiencies in human resource and finance systems. The managers are not empowered to make decisions and move forward, leading them to feel unimportant and demotivated. They also express dissatisfaction with the CEO, who lacks focus, planning, vision for the company's growth, and long-term development. According to the employees, the CEO's main concern is solely focused on generating cash inflow and profits, disregarding long-term sustainability. The incentives outlined in Herzberg's two-factor theory, such as responsibility, authority, and challenging work, are nonexistent for these employees at OBC. Additionally, from a strategic or transformational leadership perspective, the employees are not inspired by their leaders

or CEO due to a lack of vision, values, and challenges. Consequently, they have lost interest and become demotivated.

It is the responsibility of the CEO to inspire employees through shared values, vision, critical success factors, and way (Chapman, 2008) and (Einstein & Humphreys, 2001).

Decisions

The motivation of employees in OBC is a challenging task. Several important considerations, starting with leadership's success, depend on leadership (Huczynski and Buchanan) and (Chapman, 2008). The role of the CEO is crucial in establishing direction through vision and motivation. However, OBC and its managers are concerned about the lack of vision from their CEO, which demotivates the entire team. Effective people management and human resources systems are necessary for organizational success (Armstrong, 2007), but OBC lacks this. For example, discrepancies in salary scales, allowances, and benefits among employees at the same level indicate a lack of proper human resource management systems.

The lack of communication and the absence of a relationship between senior management and employees are clear indications that there should be improvements in human resources management systems (Armstrong, 2007). Additionally, the absence of Marketing, Finance, and Information systems suggests that the company may also be weak in planning and forecasting, indicating a lack of proactivity and focus on the key elements of the value chain from an operations management perspective. This also suggests that there is a lack of systems for performance management, measurement, and control. In such situations, it becomes difficult for a company to survive in the long term. Lack of communication is a serious concern because it is crucial for coordination and effective management of people and resources. When communication fails, every other aspect in a group

or team will also fail. Effective communication should be ensured at every level in an organization since it is essential for organizational success.

In summary, communication is crucial for successful operations in OBC. Many issues in the company stem from a lack of communication between management and staff. Ideas are not shared, and instruction manuals are not effectively provided. This lack of communication is a major concern and may also be a reason for the lack of motivation among employees. The operational directors believe that the increase in competition is the cause of decreased sales.

The company should be capable of adapting to the changes happening in the environment. However, despite acquiring a new agency, the company is lacking in brand building, marketing its products, and visibility in the market. Therefore, managers should cultivate a culture of embracing change, increasing awareness, building corporate and brand image, and communicating with external markets. These issues are not currently being addressed. Perhaps the organizational culture in OBC needs to change to have a proactive attitude that supports people and prioritizes effective people management. This will improve the company's operational effectiveness.
Recommendations
Unfortunately, the best recommendation, changing the CEO, cannot be implemented because the CEO is also the owner of the business. However, one of the directors could write an effective business plan for OBC that discusses areas for improvement such as communication and long-term planning. This plan could be presented to the CEO for consideration.

Besides discussing in the program the need to be effective in HRM management practices, including the need to improve leadership and management of individuals and teams from a motivational standpoint, this may be the

best option available. Some employees also require training in planning and decision-making, marketing, and communication to enhance the effectiveness of the company. It is important to make recommendations that can be effectively implemented and that would resolve the problems in the organization. Several other recommendations can be made, but they will not add value to the company in any way; therefore, they are not applicable.

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