Application of Equity Theory at Bain & Company - Case Study Example

Running Header: Organizational Behavior Student’s Name: Instructor’s Name: Institution: Course Code: Date of Submission: Application of equity theory at Bain & company: Equity theory is based on the principle of balance at workplace. It’s argued that an employee’s motivation is directly correlated with his perceptions towards equity and justice as well as fairness as demonstrated by the organisation management. It is very important to argue that this theory can be applicable in many cases including the Bain and Company. As recession continues to hit and affect many of the business organisations, equity theory can be applied at workplace to change the perception the employees have towards the management and thereby engage positively on constructive issues of the business (Smith 2008, pp. 171). Bain and Company is considering various options under this era of recession where downsizing is one of them. In addition, change of reward criteria and payment of bonuses is being used to ensure that top employees are retained. Under the equity theory, it is assumed that employees are very cautious of what they get in an organisation in comparison to the peers in the same industry. Bain and Co. is expected to review and determine the relative importance of the equity theory to its situation. According to Gill and Stone (2010, pp. 346), equity theory workplace is perceived by many employees a shepherd of the employee’s rights. This is because it addresses the issues of justice, fairness and equity. With this regard therefore, this theory can be applied in different perspectives. First, the company is lacking good policy on how employees should be recruited. Equity theory demands that fairness be demonstrated to all potential employees of the company. For instance, the company’s move to go for financial consultants who previously have worked with the financial firms but all now stranded and the plan to go for MBA students, the company, is clearly demonstrating how equal opportunity is denied all potential employees. In addition, this theory presents the relative importance of taking certain moves which are aimed at reducing the number of employees working for the company amid hard economic times. Downsizing or employee cut-down in many occasions is seen as a strategy to help the company survive during poor economic performance. As an option, this theory will inform the company on the need to work on policy that does not discriminate among individuals as some are likely to be sent home following poor performance of the business. Further, employee wages, benefits and rewards, are considered some of the management issues that cause conflicts between the employees and their employers. This is because of the assumed imbalance that exists between different companies operating within the same industry according to Parrish (2008, pp. 10). The Bain and Co. can engage this theory to come up with a policy that seeks to address the rates of its employees with those of peers in other companies. For instance, while setting employee targets for bonuses, it’s particularly important to set realistic targets which clearly compare with those of the other companies that operate in the same industry. This is will enable the company to assure the employees of their efforts by setting favourable work policy which is not isolation from the rest. Expectancy theory and motivation at Bain & company: The expectancy theory was first developed by Victor Vroom of Yale School of Management in 1964. Unlike the other theories like the Maslow’s; Victor has placed more stress and focuses on results rather than needs. According to this theory, the performance of an individual is founded on the fact that something will follow after completing a certain task. So the appeal to do something will be depended on the expected outcome. In other words, the employee is motivated with what he expects from as part of reward to his expected performance. Even though this is an expectation, it does not refer to complete satisfaction of the employee. Expectancy in general terms seeks to explain that individual efforts are stimulated by expected results in terms of good performance. Expectancy is influenced by such factors as possession of appropriate skills, availability of resources that support work, accessibility to information and availability of support by management (Massey 2009, pp. 341). Relating this theory to motivation and more particularly the Bain and Company, it’s important to highlight that this theory has been clearly manifested in the company. First and foremost, the theory of expectancy has been widely used as part of the company’s effort to motivate the employee’s motivation towards performance. This is seen under the retention program where those employees that are perceived as star performers are retained in the company. According the Michael Kesner who is the principal of the Deloitte Consulting Company, even though the economy is on the downturn, company have not completely let off its highly performing employees (Bowling and Hammond 2008, pp. 61). Based on this argument therefore, its clear that employees will be determined to work hard for good results as its expected that it will not possible to be declared redundant during recession. In addition, the application of bonuses at the company has been used as a strategy to motivate the employees towards working hard. This is because under the bonus arrangements, it is the results that will determine what an individual will get at the end of the day. Bonuses in this case can be likened to an outcome whereby the companies will be motivated to work because of what they are likely to get at the end. Further, the company is also making use of the discretionary bonus pools to motivate those employees that are likely to be poached by the rival companies. In addition, management of talent both during good and bad times has become part of the company’s work. It is believed that working and demonstrating some capabilities in certain areas will get support from the management to nurture them. This has been supported by communication which is expected to promote transparency within the organisation. Communication is particularly important in communicating results and what is expected of each employee (Wolverton 2008, pp. 341). Further, communication is used to remove any worry that may exist on the certainty of one’s job. This is important in creating confidence among the employees who want to work hard. At Bain and Company the work of the manager is to ensure that proper communication is done to the employees on their efforts and what they are likely to get at the end of the day. Maslow’s hierarchy of need theory of motivation: The Maslow’s theory of motivation explains that human beings are motivated by the existence of the unsatisfied needs. According to this theory, the needs are in hierarchical order whereby the lowest in the rank have to be satisfied first. Some of the needs that have been identified under this theory include: physiological, safety, social, esteem and self-actualisation. According to this theory, it’s not easy for one to act unselfishly before all these needs are satisfied as argued by Kjaergaad and Kautz (2008, pp. 282). Maslow referred to these needs as ‘deficiency needs.’ It’s because of these needs that individual are motivated to work further towards growing in this hierarch of needs. Self-actualisation is motivated with such factors as truth, justice, wisdom, and meaning and is the highest on the rank. On the other hand, esteem needs come second on the rank and is characterised by such factors as recognition, attention, social status, accomplishment and self-respect as well as aesthetics and knowledge. Social needs come third on the rank and they include elements such as friendship, sense of belonging and existence of love. Further, the safety needs include the desire to live in a secure place, access to medical insurance, job security and access to financial services. Lowest in the rank is the physiological needs which include: air, water, food and shelter. According to Maslow, these are basics to life (Smith et al 2008, pp. 341). Based on this brief analysis of the theory, its important identify some of the important the elements that have been identified in the case of Bain and Company. First and foremost, what has been care and food has been identified in this case as one of the needs for motivation. These two needs fall under the physiological needs of an individual and they are the basics of life. Shelter has also been identified as an issue of motivation in this case. This follows the poor performance of the housing market. Second, employment security is considered very critical in this case. It emerges as a result of recession and employees are concerned about their security in employment. Freezing of employment and downsizing does not real sound well for many of the employees who have different financial obligations to meet. According to Maslow’s theory on motivation, job security falls on the safety needs and meeting them is said to be very important as it assists in meeting other personal needs. Bonuses also form part of recognition (Mankelow 2008, pp. 2171) Bonuses is financial rewards for those employees that who meet and surpass their performance targets. Recognition falls under the esteem needs. In addition to the recognition, communication has also been identified as a very important resource for knowledge which is also identified under esteem needs. Finally, sense of belonging has also been identified in this case. This has been demonstrated through a survey that was conducted among the employees to find out ways in which costs can be minimized. According to Maslow’s theory, sense of belonging falls under the social needs and they make one feel important in a group as illustrated by Bowen (2008, pp. 9). References Bowen, S 2008, Beyond self-assessment: Assessing organizational cultural responsiveness. Journal of Cultural Diversity, Vol.15, No.1, pp. 9-15. Bowling, NA & Hammond, GD 2008, A meta-analytic examination of the construct validity of the Michigan Organizational Assessment Questionnaire Job Satisfaction Subscale. Journal of Vocational Behavior, vol. 23, no. 3, pp. 63-77. Gill, D and Stone, R 2010, Fairness and desert in tournaments. Games and Economic Behavior. Vol. 69, No. 3, pp. 346–364. Kjaergaad, A & Kautz, K 2008, A process model of establishing knowledge management: insights from a longitudinal field study, Omega , Vol. 36 , No. 2, pp. 282-298. Mankelow, G 2008, Social responsibility of small business human resource management practices, The International Journal of Human Resource Management, Vol.19 , No. 12, pp. 2171-2181. Massey, WF 2009, It's time to improve academic, not just administrative, productivity. The Chronicle of Higher Education, Vol. 55 No.18. pp. 143-187. Parrish, ML 2008, When egos collide. St. Louis Journalism Review, Vol. 38, No. 307, pp. 10- 11. Smith, F., Wright, A & Huo, YP 2008, Scapegoating only works if the herd is big: Downsizing, management turnover, and company turnaround. International Journal of Business Strategy, Vol. 8, No.3, pp. 72-84. Smith, SM 2008, The impact of structural empowerment on project managers' organizational commitment. Journal of Academy of Business and Economics, Vol. 8, No. 1, pp. 171- 179. Wolverton, B 2008, Trustees are playing a greater role in managing colleagues' risks. The Chronicle for Higher Education, Vol. 54, No.33, pp. 298-317. Read More