Business Management and Organizational Behaviour - Case Study Example

? XXXX XXXX Organisational Behaviour 09/11/11 Organisational Behaviour 0 Executive Summary This report gives an analysis of the current HR problems being faced at the Lucky Lion casino from the organisational behaviour perspective. Having identified a key problem with one of the reward mechanisms, which appears to be causing conflict amongst staff and reduced profitability for the company. The report recommends an immediate cessation of the bonus scheme and the search for an alternative reward scheme so as to encourage greater profitability within the business. The report recommends a three tier approach towards changing including the immediate cessation of the current bonus scheme, the implementation of a new bonus scheme in the mid-term and finally a reappraisal of the reward mechanisms used at the Lucky Lion Casino over the long term, i8ncluding a period of consultation with existing members of staff. In informing the outcomes of the report, the report has made use of several sources of data including, the material presented in the case study as well as references to the appropriate models and frameworks as presented in the academic literature on organisational behaviour, management and leadership. 2.0 Problems and Issues Having considered the facts of the case study one can see that there are a wide number of issues to be addressed from an organisational behaviour perspective, many of which spring from the current bonus system. In the first instance, the casino offers a single bonus pool which is to be awarded to the team which generates the most revenue in comparison to other teams within the business. From the outset this creates a divided workforce in which individual members of teams are encouraged to work together with their fellow team members, yet the separate teams which make up the business as a whole are encouraged to compete rather than collaborate. One of the issues this may be seen as creating for the organisation is that at the total level teams are competing in a “zero sum” game in which a greater level of revenue is not actually being generated per customer at the business level. Instead teams are simply competing for the revenue of individual customers to come through their particular gaming station. Worse than this, in some cases in encouraging revenues to come through a particular gaming station, some team members have resorted to bad practises such as giving away drinks and free accommodation which results in a net loss for the organisation as a whole. In addition to the animosity created between teams at the organisational level, it has also become apparent that that the bonus system has created a culture of blame within individual teams. As has been demonstrated with the case of Laura, where teams have failed to achieve the bonus, individual members of the team have sought to make certain members of the team a scapegoat, blaming the individuals for the inability of the team as a whole to win the bonus. As such, this may be seen as a costly problem for the casino which has already lost a team member due to the public disgracing of the team member who was held responsible for the loss of bonus due to a refusal to engage in what other may see as unethical practises. Other key problems which may be seen in the casino relate to the individual relationships which exist amongst owners, managers and family members. For instance, in the incident with Laura, Ron who has sought to make use of a personal relationship between himself and his uncle in order to facilitate the outcome of Laura either leaving or engaging in the unethical style behaviour in which Ron himself has made use of in the past. This is an issue which Jennifer as a responsible agent will now find increasingly difficult to deal with. For instance, should Jennifer choose to criticise Ron’s actions and take appropriate actions, one consideration is that Jennifer may worry that Ron will similarly seek to make use of his personal relationship with his uncle so as to counteract the effectiveness of any action taken by Jennifer. 3.0 Theoretic Models Having identified the key problems which are afflicting the casino, the researcher considers that there are a number of key theoretical concepts which may inform and aid the development of solutions to the problems witnessed. One key theoretical consideration from the literature on organisational behaviour is the concept of the principal agent problem (Eilifsen et al, 7). Here the literature considers that where there is a divorce of ownership between the owners of a business (The Principal) and the day to day running of the business, conducted by managers and employees (The Agent). There can be a lack of congruence between the interests of both parties. This can be seen in relation to the activities of the casino where team members and managers have put their own personal interests ahead of those of the businesses owners. For example, in offering free drinks and accommodation, the personal needs of the agent in this case have been put ahead of the profitability of the business as a whole. As such, this demonstrates the need for those who are designing reward packages to do so in a way which creates an alignment between the needs of the agent and the principal. Other key issues to consider in the literature include the concept of motivational theory and reward. Here theorists are divided as to how and what motivates individuals to perform to a greater level. Classical theories such as those associated with Taylor and scientific management emphasised the importance of extrinsic rewards (Ivancevich et al, 191, Handy, 32). Here the theory is relatively simple and considers that increasing levels of extrinsic reward either in salary or through a bonus system will result in higher levels of motivation. In the case of the casino in question, it would appear that such theories have been used to inform the decision of the management in designing the current bonus system. However, others in the literature such as Maslow and later theorists concluded that such extrinsic theories alone were too simplistic and that there are other factors which serve to increase the motivational levels of employees without having to issue an extrinsic reward (Handy, 32, Mullins 257). Other motivational factors include the sense of belonging which comes from being part of a team, the motivation gained from recognition amongst one’s peers and the ability to achieve one’s potential, often referred to as self actualisation. As such, in analysing the case study, it would seem that these later theoretical approaches have been little referred to in considering how managers may seek to improve performance amongst their teams. This may be seen as a costly mistake for the management team of the casino given that they are currently offering a large reward in the form of a bonus when it may be the case that equal levels of motivation can be generated simply through the consideration of better leadership which encourages team work, the fostering of an internal community amongst team members and the issue of some sort of recognition of the key achievements of team members as an when such recognition is appropriate. 4.0 Recommendations Having analysed the case study, it would seem that the fundamental problem is that the motivational methods being made use of are creating animosity between rival teams and internal team members within each of the gaming teams. As such, the recommendations of this report are that the current bonus system should be scraped and that the casino should look for alternative ways of trying to encourage each team to maximise revenues from its customers. However, while the analyst believes that the current bonus system should be scraped, it is also recognised that such a model of reward through extrinsic means has significant motivational value. As such, it is believed that a performance related bonus should be implemented in which the pool of money is divided by each of the teams. Each of the teams will then have the opportunity to “unlock” their share of the bonus based upon a set of agreed performance related targets which have been agreed between team members and the manager and are based upon outperforming past financial performance indicators. As such, this would still allow managers to encourage greater levels of performance and motivation through the provision of an extrinsic reward. However, the reward mechanism would encourage team members to compete against themselves, rather than against other teams which has thus far resulted in conflict and cannibalisation of efforts. 5.0 Implementation In implementing the recommendations, the report recommends that in the immediate term the current bonus system should be suspended with immediate effect. It is evident from the case study that at present the bonus system is causing conflict amongst the teams and resulting in sub-optimal profitability for the business as a whole. In the short term, the casino should reform the bonus system, looking to implement a new bonus scheme within the next three months in which all members are able to receive a bonus based upon objective performance rather than competition. In the long term, the casino should consider revaluating its reward and bonus schemes all together. In order to redevelop a package which aligns the motivation of employees to the needs of the owners of the business. It is advised that the HR team should engage in a period of consultation which is designed to assess the best methods of motivating the employees of the casino though the reward mechanism used by the company. Such methods to be considered may include, individual and team based bonuses, share options, non-financial rewards such as additional holidays as well as well simple recognition exercises to be carried out on the behalf of mangers within the teams. Bibliography Eilifsen, A, Messier, W, F, Glover, S, M, Prawitt, D, F. Auditing and assurance services. 2010 Slough: McGraw Hill. Handy, C. Understanding organizations. 4th ed. 1999 London: Penguin Books. Ivancevich, J, M, Konopaske, R, Matteson, M, T. Organisational behaviour and management. 9th ed. 2010. New York: McGraw Hill Irwin. Mullins, L, J. Management and organisational behaviour. 8th ed. 2009. Harlow: FT Prentice Hall. Read More