Motivational Strategy for Retaining Employees at APL - Case Study Example

Case Study Analysis Executive Summary Organisational behaviour is a multi-faceted field of human resource management and some of its important aspects have been implemented in this paper for evaluating the case. The case has been evaluated in the light of various human resource theories associated with employee needs, such as Maslow’s hierarchy of needs and Herzberg’s two-factor theory. It was determined that the firm is facing turnover issues primarily because of job design and an inappropriate compensation structure. Based on the assessment, a requisite strategy and recommendations have been provided in the report. Table of Contents Executive Summary 2 Introduction 4 Money As a Source of Negative Motivation 4 Effectiveness of Financial Reward When Employees Are Relatively Wealthy 5 Motivational drivers of Suzanne Chalmers 6 Importance of Job Design in Context of the Given Scenario 6 Motivational Strategy for Retaining Employees at APL 7 Recommendations 8 Conclusion 9 Reference list 10 Introduction Organisational behaviour is considered as one of the most interesting areas of human resource management as it is strongly related to individuals, teams and groups within an organisation, working consistently in collaboration. Individual decisions are largely different from one another even when the situation is the same. There are various aspects of organisational behaviour, the knowledge of which enables managers to have better control over organisational culture and behaviour. The scope of organisational behaviour consists of employee motivation, leadership, job design, emotions management etc (Luthans, 2010). The case presents one of the typical examples of organisational behaviour where ineffective employee management has resulted in high turnover. The case study is based on Advanced Photonics Ltd (APL), where efficient employees tend to quit their job after some years of experience and join various start-up companies. The paper presents an analytical report to the vice president, Thomas Chan, with respect to the high employee turnover, motivation and reward system. The case highlights that most ex-employees are wealthy by means of high stock options, and rejected the company’s offers of high monetary rewards. The report presents an elaborate discussion on the situation when financial rewards or non-financial rewards are useful for motivation and employee retention. Lastly, the paper discusses retention strategies and present future recommendations for the company. Money As a Source of Negative Motivation The concept of motivation is often defined vaguely resulting to creation of an unclear picture thereof. In simple term, motivation can be defined as an inner power that influence individual to pursue certain objective or goal. Motivation is generally instigated by an individual’s ambition and desire to achieve something. Broadly, motivation can be classified as intrinsic and extrinsic motivation (Gomez-Mejia and Welbourne, 1988). Intrinsic motivation is referred to internal forces that influence an individual to achieve a goal. Intrinsic motivation mainly comprises of self-satisfaction, happiness, pleasure derived from success and other intangible rewards. It is noteworthy that these rewards are not at all external in nature. For instance, a programmer may develop a programme faster than his/her colleague only because it is enjoyable. Extrinsic motivation is largely external in nature such as award, monetary rewards and grades. In some organisation, extrinsic motivation includes punishment as well. Extrinsic motivations are lucrative in nature, but intrinsic motivation is more powerful from the perspective that unless an individual have the willpower of doing something, no extrinsic motivation can motivate that person (Park and Sturman, 2009). In the case, extrinsic motivational factor, particularly money, did not motivate Suzanne because possibly she already lost her interest in the work that she was doing for the organisation. The available facts suggest that Suzanne did not have any problem with the work environment and her colleagues. Instead, she mentioned that she found the work routine in nature. This implies that possibly she started feeling monotony at work because of doing the same thing regularly. Monotony can be a strong de-motivating factor and the same applied for Suzanne. She chose to decline the monetary offer from APL because she wanted a break from the routine job which was acting as a de-motivating factor. Effectiveness of Financial Reward When Employees Are Relatively Wealthy The compensation theory, as well as literary work regarding compensation and remuneration, suggests that linking one’s pay structure to one’s performance has significant impact on their motivation. It has also been found by certain authors that pay for performance results in positive improvement in the performance level (Park and Sturman, 2009). In the majority of scenarios, it has been observed that pay for performance strategy works perfectly fine but there are also exceptions to this. Monetary incentives are distributed in several forms such as bonuses, merit pay and stock options. Stock options are considered as long term incentives. Studies suggest that such incentives have short-lived impact on performance; and in long run, they often lead to unethical practices, development of envy and discontent among employees and employee turnover (Gomez-Mejia and Welbourne, 1988). There are several examples such as Enron and WorldCom where high level of financial crisis resulted in financial scandals. Furthermore, corporate scandals involving various investment banks, which caused financial crisis in the world economy was triggered as a result of heavy inflow of financial incentives (University of Pennsylvania, 2011). In context of wealthy employees, financial incentives may force them to do more work but often quality of performance declines. The primary reason for this is that with greater flow of monetary rewards, employees tend to be driven by greed instead of motivation to improve performance. Recent studies indicate that offering high financial incentives to employees may result in hiring of only those individuals who work for money. Such employees can never develop attachment towards the organisation (University of Pennsylvania, 2011; Chamorro-Premuzic, 2013). Motivational drivers of Suzanne Chalmers It has already been discussed that motivational factors can be classified in different categories. One of such categorization is financial and non-financial motivation. Non-financial motivation has been stressed upon various authors such as Maslow and Herzberg in their respective theories. In Maslow’s hierarchy of needs, most needs emphasized on non-monetary factors such as recognition, family support, organizational accomplishment and appreciation and challenging work. These requirements have been supported by Hertzberg as well in the two factor theory, where money is only a hygiene factor while challenges, accomplishment and appreciation are motivational factors (Gawel, 1997; Rainlall, 2004; Goodman, 2012). Suzanne Chalmers had declined financial motivational sources during her resignation; this indicates that she was possibly being driven by non-financial motivational factors such as spending time with family, taking relaxation break from work or lack of sufficient challenges at the work. The vice-president found that Suzanne joined another start-up firm after travelling with her husband for few months. This implies that she wanted to spend family time and join work afterwards. It was also gathered from the case scenario that in most start-up firms, employees need to play variety of job roles instead of a specialized one. It is possible that Suzanne was not enjoying her routine work and as a result chose a start-up firm for new job design and variation thereof. Suzanne during her informal exit interview with the vice president mentioned that her job role is repetitive and other than that, she had no issue at APL. Repetitive work can have a negative impact on an individual’s motivation and as a result, it possibly caused Suzanne to quit the organisation. Importance of Job Design in Context of the Given Scenario Job design implies various tasks that are covered within a particular job profile. Job design is developed for specifically defining various roles and responsibilities of an employee towards the organisation. Job design essentially helps in defining and developing workplace relationships between the superior and subordinates. Besides, job design provides information regarding necessary qualifications on the part of the employee as well as associated financial and non-financial benefits thereof. An essential aspect of job design is staffing. Job design will be ineffective if staffing is not appropriate. Poor job design frequently results in absenteeism and turnover. In APL, job designs are highly specific in nature so that talent of employees is appropriately used. The job designs are mainly based on knowledge of employees and do not take into their other skills (Robertson and Smith, 1985; Luthans, 2010). The job design of Suzanne was highly specialized in nature and for past four years, she has been doing the same work repetitively. There is no mention of any kind of promotion or change in designation in the case. Her resignation and that of others mildly indicates towards monotony in the existing job design. It is possible that the exiting employees were interested in greater degree of versatility at the workplace and in their job roles. A job design should not only include individual responsibilities but also responsibilities towards the organisation such as team management and leadership. Suzanne’s job design did not incorporate any of these aspects as it was strictly focused on technical competencies. Therefore, it can be argued that most employees are leaving the organisation because they are not satisfied with their respect job design. Motivational Strategy for Retaining Employees at APL There are four motivational strategies that can be recommended to Thomas Chan for retaining talented employees such as Suzanne Chalmers: Employee empowerment Effective compensation system Job redesigning Workplace flexibility Employee engagement: Employee engagement is the process of delivering significant autonomy, encouragement and authority to employees for performing their job. Under this concept, employees are empowered to make appropriate decisions so that a particular task can be accomplished appropriately. Employee engagement at APL will allow employees to take certain decision regarding their job roles and responsibilities (Luthans, 2010). Effective compensation system: The compensation or reward system at APL largely emphasises extrinsic incentives such as stock options, bonuses, occasional rewards and verbal praise. However, the employees also require intrinsic rewards such as scope of career advancement, personal development and growth, challenging task and competency. All these factors need to be implemented at APL (Gomez-Mejia and Welbourne, 1988; Guthrie, 2000). Job redesigning: APL’s job designs are highly technical knowledge and competency oriented and thereby brings about significant level of monotony when employees continue working on the same profile for long time period. The company should add managerial components as well while developing job designing. The measures can be job enlargement, job rotation, and job enrichment so that monotony at work is minimized (Robertson and Smith, 1985). Workplace flexibility: Fixed work hours do not prove useful for a number of employees, and for such individuals, workplace flexibility is very important. Workplace flexibility also can be presented by means of opportunities such as work support from home and development of virtual teams at work. Flexibility can also be implemented job roles of employees. Employees should be provided opportunity of learning about new technologies and work process (Luthans, 2010). Recommendations It was determined from the case scenario that the company is mostly offering extrinsic incentives to its employees who are interested in leaving the organization. The employees are being offered larger workspace, high stock option and monetary hike. However, this approach is completely wrong considering the employees are highly talented and drawing salary that is best as per the industry standard. Therefore, one cannot motivate an already financially stable employee by offering money. The company need to change this strategy and should implement an open communication system, where employees can openly discuss the problems that they are facing in the organization and the reason that will cause them quitting their jobs (Goodman, 2012; Luthans, 2010). A periodic survey can be undertaken, where employees will participate anonymously and present their views regarding required improvement. The job structure of employees should be redesigned at the company so that employees can pursue other activities while making maximum utilisation of their knowledge and competency. Several employee engagement programs can be implemented in APL including training and development, job rotation and empowerment so that employees feel involved in the organization. It is assumed that these recommendations will help APL in minimizing employee turnover (Luthans, 2010). Conclusion The paper presents a case analysis and report with respect to organisational behaviour at APL. The company is currently facing employee turnover issues, where its talented employees are quitting after being associated with the firm for few years. The situation is affecting the resource repository of APL. Assessment of the reasons associated turnover revealed that a number of employees are leaving the organization because of monotony in their job design. The exiting employees are mostly offered monetary rewards for retention which they decline suggesting that employees are least interested in financial reward. Overall, it was determined that rigidity in job design and emphasis on materialistic rewards are main reasons behind poor motivation and high turnover at the firm. Based on the assessment, the report provides specific recommendations to Thomas Chan for minimizing employee turnover in the long run. Reference list Chamorro-Premuzic, T., 2013. Does Money Really Affect Motivation? A Review of the Research. [online] Available at: [accessed 12 March 2015]. Gawel, J. E., 1997. Herzbergs Theory of Motivation and Maslows Hierarchy of Needs. [pdf] ERIC/AE Digest. Available at: [accessed 13 March 2015]. Gomez-Mejia, L. R. and Welbourne, T. M., 1988. Compensation strategy: An overview and future steps. Human resource planning, 11(3), pp. 173-189. Goodman, N., 2012. Inside Employee Motivation: Does Money Really Make a Difference? [online] Available at: [accessed 12 March 2015]. Guthrie, J. P., 2000. Alternative pay practices and employee turnover: An organization economics perspective. Group & Organization Management, 25(4), pp. 419-439. Luthans, F., 2010. Organizational behaviour: An evidence-based approach. New York: McGraw-Hill Irwin. Park, S. and Sturman, M.C., 2009. The Relative Effects of Merit Pay, Bonuses, and Long-Term Incentives on Future Job Performance. [pdf] Cornell University. Available at: [accessed 12 March 2015]. Rainlall, S., 2004. A review of employee motivation theories and their implications for employee retention within organizations. The journal of American academy of business, 9, pp. 21-26. Robertson, I. T. and Smith, M., 1985. Motivation and job design: Theory, research and practice. New York: Hyperion Books. University of Pennsylvania, 2011. The Problem with Financial Incentives — and What to Do About It. [pdf] University of Pennsylvania. Available at: [accessed 12 March 2015]. Read More