Managing Organizational Behavior - Coursework Example

Managing Organizational Behavior and Section # of This paper aims at creating a comparative analysis of the F W Taylor’s Scientific Management Theory vs. the idea offered by Needs Theorists, in light of the recent issues whereby the incentives, bonuses and money given to financial sector executives have been criticized as a major cause of the recent global financial crisis. Introduction Often it is witnessed at work places that bonuses are a major influencing factor towards motivating employees and getting the best work out of them. In accordance with Hill (2006), the world, in the past decade or two, has moved to a much more materialistic stance that it was before that. Previously, individuals joined a single organization after their graduation and spent their lives serving the same, retiring from the same firm, but things have drastically changed now. In the present scenario, the weight-age of monetary terms has increased to a much higher extent; employee loyalties towards an organization in terms of sticking to it, have declined, and switching jobs has become very common – even in the days of current global financial crisis. In the decade of boom, as it was from 1995-2005, Kinicki (2008) states that the financial sector individuals were considered the highest earners of all times, with outstanding bonuses, tremendous salaries, and a lifestyle that many university graduates would have loved to follow. This stood particularly valid for bankers and fund managers. However, the reality is much beyond this money. Making money from money in a short span of time, and bearing risk of varying level is a pretty tough job, and thus, for equilibrium, it requires an appropriate compensation. The most interesting fact remains that till the time, investors and stakeholders were getting above average returns, no one complained about the excessive salaries and bonuses, but when the down turn hit, and the money managers (this is the term the assignment would refer for the financial sector executives in this assignment) could not attain the above average returns due to the poor market conditions, they were criticized as a prime cause, basing their arguments on the excessive bonuses pay out. This paper aims at analyzing the same situation, taking into account Taylor’s scientific management theory vs. the ideas offered by the Need Theorists. The underlying theme, in brief, is to judge the appropriateness of monetary vs. non monetary rewards in the corporate world today. Taylor’s Model Briefly, Benowitz (2001) states that Taylor’s model of scientific management has four major objectives: i. Abolishing the rule of thumb philosophy and development of science ii. Training and development of employees rather than try-yourself iii. Cooperation between management and workers iv. Each individual and group taking up their respective and appropriate responsibilities Taylor was, as the name of the theory suggests, an organized kind of a theorist; he identified and applied scientific and streamlined processes and procedures. Rue (2008) suggests that Taylor’s framework that laid the foundation of the contemporary management practices included the following: i. Defining authorities and hierarchies ii. Defining roles and responsibilities iii. Segregation of planning and operational activities iv. Incentive planning v. Exception handling vi. Specialization of task forces The fourth point, as laid by Taylor i.e. incentive planning is the critical and significant aspect of management today. Jones (2008) states that in accordance with Taylor, it will not be completely wrong to suggest that Taylor’s model of scientific management actually is about tying monetary incentives with the employee performance, as it can be viewed that it does not lay much stress on non monetary terms. Need Theorists When referred to need theory, there are various authors and their researches have been widely acknowledged. Ghillyer (2008) considers that the most common ones include those of Maslow and McClelland. Following is a brief description of their need theories In accordance with Ghillyer (2008), Maslow proposed a hierarchy of needs, presented by five steps in a pyramid as stated in points-form below: i. Self actualization ii. Esteem iii. Love/Belonging iv. Safety v. Physiological The detailed discussion of these variables is beyond the scope of discussion at this point in time, however, in accordance with Maslow, as stated by Ghillyer (2008), the journey for satisfaction or need starts from bottom to top and he assumed this hierarchy to be rigid i.e. an individual without completely satisfying one point in the pyramid, cannot move to the other, while satisfaction of one need makes him jump to another. And it is also important here to suggest that these variables, or achievement of needs for these variables does not depend on monetary terms, but the satisfaction is achieved through other terms such as organizational non-monetary benefits for example ergonomics, etc. And subsequently, simpler acts can fulfill one need category and get the employee to ‘jump’ to the other category. Ghillyer (2008) also explains that McClelland’s theory of needs suggests that the needs of an individual shape their lifestyles and experiences. He also suggested that these needs can be broadly classified into three major categories i.e.: i. Need for Achievement ii. Need for Affiliation iii. Need for Power In accordance with Ghillyer (2008), the noticeable point here is that each of these needs can primarily be fulfilled using non-monetary terms. For example, those in need of achievement can be given challenging tasks, those in the need for affiliation need to be kept in a cooperative environment, while those in need of power should be given opportunities to manage teams or sub-units. These all, and many more such examples can be generated for satisfying similar needs of such employees; however, none would require the monetary incentive plan to be associated. As a bottom-line, it can be concluded that need theorists have a stronger believe that non monetary rewards such as increasing responsibility, fulfilling the ‘needs’ basically, may lead to satisfaction amongst employees. Critical Analysis Carrying the Conclusions / Background After briefly over viewing the theories as presented in the previous two sections, this section of the paper aims at critically analyzing the two theories to conclude on their effectiveness in the present scenario, to conclude that have these excessive bonuses led to the current financial crisis? Employee Retention – the hard way As concluded in the bottom-line of the scientific management theory, money is the prime motivational factor, while need theory suggests that satisfying the ‘needs’ of non-monetary terms is what employees value the most. Also mentioned previously that in earlier days, employees used to stick to a single organization literally from graduation to retirement; while in the modern corporate world of today, employees hardly stick to an organization for a span of five years. A number of researches, promptly by Baldwin (2007) and Dessler (2007), have been made that suggest a comparative statement: is it that the organization fails to retain employees or employees like switching around? Seemingly, these are two sides of the same coin. But consider the scenario when the global economy was booming five years ago; inflation was rising and so were the investment opportunities, and at the same time, the firms were earning, therefore, they could afford to offer employees monetary enhanced benefits to stay with them for longer periods of time. Economic Growth – reasons for bonuses and incentives In economic boom, inflation is created by demand; therefore, it shows economic growth. Money managers were the money makers for people, as individuals and groups of individuals invested in firms through their various modes of investment, in search of higher returns and profitability, since the economy was booming. They expected above average returns, which is why certain firms were preferred over the other for investment. The question remains, why were some firms preferred over the other? Simple because investment and higher returns are a smart game, not dependent on the investment firm but truly dependent on the gaming mind of the human invest – the money manager. Smart moves by money managers would turn thousands into millions in a day. Therefore, it was a definite plus point to retain smart brains within the organization, because smart brains would make profits, attracting more clientele, and more investment, thus, making more fees out of their portfolios, and more money to play with. However, just to add money to the basic salaries would not have done the job, and would have become a hassle in the downturn times. Subsequently, the factor of performance based incentive came into existence, whereby the incentives were tied with the performance of the money managers. Applying the theories of Taylor vs. Needs In accordance with the need theorists, fulfilling the needs mainly by means of non-monetary incentives can yield better performance by individuals. However, Jones (2010) states that contemporary business practices show that long gone are the days when non monetary incentives were highly valued. Today, even non monetary incentives are attached with monetary rewards for example employee of the month in itself is a non monetary reward but those getting this award today also get a bonus attached to their salary like a 25% bonus of their basic salary. Subsequently, such a theory would not remain valid at a mass scale, as there might still be some individuals for whom recognition and non monetary rewards matter. According to Taylor, the performance based incentives scheme is a trial-and-tested mechanism for motivating employees and boosting their morals. Subsequently, if monetary incentives are attached to the performance of employees then let them run as hard as they want and as long as they want, because ultimately, their performance is yielding benefits to the firm of which certain proportion is share by means of incentives. It is similar to a sales person’s job, whereby, they get a fixed salary and a variable portion that varies in proportion to the sales targets that they achieve. In such a scenario, if one day a sales person sells 1,000 units, he gets salary accordingly, while if the next day, there is no sales, then there is no variable portion in the salary. There is quite no harm in using this approach, till the point in time where it yields the required outcome. The phenomenon is commonly termed as perform-and-earn by many gurus of sales management. Employee Retention in Business World – today Bateman (2010) states that in today’s business world, competitors, have an eagle’s eye on the performing employees of the other competing firms, and seek opportunity to hire these candidates to lift their own performances. Noe (2007) states that in the times of cut throat competition, where information technology has lifted the curtains, making the world of competition fairly transparent, and firms fighting for market share and customer base, it becomes critical for firms to retain their employees because human resource is one resource that can truly not be replicated in absolute similarity. Additionally, as stated by Armstrong (2008), the growing needs of employees in terms of life style and to deal with the growing inflation, it is critical to have salaries up to a level that is affordable for organizations during the varying business seasons. Subsequently, performance based incentives gain critical importance for the same. Recession and Bonuses Batement (2010) states that the real issue for investors, as for the bonuses of money managers, can on the scene when the markets failed to perform posterior to the global financial crisis. This was the time when huge names went bankrupt and there was hardly anything anyone could do about saving the money that was invested in the roots of the economy. When these situations were audited, the investors realized that had the excessive bonuses not been granted to the money managers, things would have been much different. At the same time, critically, they did not analyze the returns they achieved during the booming years of the economy, against which the money managers got the incentives, and that was their right because they outperformed markets, gained extra ordinary returns on investments and turned ordinary people into millionaires. The standing point remains that today, during the times of recession, the money managers are only charging the respective fees for maintenance of the portfolio rather than incentives, unless their performance is better than the benchmarks that they have constituted comparative to the global economic conditions. Seemingly, it becomes unfair to be judgmental on grounds without considering the whole picture, and solely relying on part of it. Conclusion Conclusively, it can be stated that for some employees, satisfaction is achieved when they see their work visible in the output produced, while for some, money is the prime motivator. There can be various rationales behind why money becomes a prime motivator for individuals; Mathis (2007) states that some might assume that their efforts are worth-it, some would want to beat inflation, while others would want to secure their future and the future of their families. It also lays off a lot of responsibility from the firm itself, with a realization that their care for the employees is visible in the net package offered to the employees. Having discussed everything that has been mentioned in this paper, it would truly be correct to suggest that during the booming economy times, had investment firms not gone for performance based incentives for money managers, their performance would not have been so much extra ordinary. Additionally, had one firm not paid such bonuses, some other would have offered the likings to the deserving candidates, making employee switch from one firm to the other. At the same time, another scenario could have been that had none of the firms offered added benefits to the money managers, no money manager would have worked out so much for such amazing returns that they offered during the booming economies. References Andrew W. Ghillyer (2008) Management - A Real World Approach. McGraw Hill (pages 200-320) Angelo Kinicki, Brian K. Williams (2008) Management. McGraw Hill (pages 87-159) Charles W. L. Hill, Steven McShane (2006) Principles of Management. McGraw Hill (pages 302-409) Ellen A. Benowitz (2001) Principles of Management. Cliffs Notes (pages 75-157) Gareth R Jones, Jennifer M George (2010) Essentials of Contemporary Management. McGraw Hill (pages 274-399) Gareth R Jones, Jennifer M George (2008) Contemporary Management. McGraw Hill (pages 573-609) Gary Dessler (2007) Human Resource Management. Prentice Hall (pages 222-398) Leslie W. Rue, Lloyd L. Byars (2008) Management. McGraw Hill (pages 97-157, 205-398) Raymond Noe, John Hollenbeck, Barry Gerhart, Patrick Wright (2007) Human Resource Management. McGraw-Hill/Irwin (pages 338-399, 504-669) Robert L. Mathis, John H. Jackson (2007) Human Resource Management. South-Western College Pub (pages 99-209) Sharon Armstrong, Barbara Mitchell (2008) The Essential HR Handbook: A Quick and Handy Resource for Any Manager or HR Professional. Career Press (pages 72-129) Thomas S Bateman, Scott A Snell (2010) Management - Leading & Collaborating in the Competitive World. McGraw Hill (pages 173-209, 298-357) Timothy Baldwin, Bill Bommer, Robert Rubin (2007) Developing Management Skills - What Great Managers Know and Do. McGraw Hill (pages 199-257) Read More