Term Paper

On

Managing Motivation in a Difficult Economy

Submitted To

Professor Dr. M. Mahmodul Hasan

School of Business, AUST

MBA-610: Organizational Behavior

Submitted By

Boom-Al-Habibi

Date of submission: 27th February, 2017

 Letter of Transmittal

27th February, 2017

Professor Dr. M. Mahmodul Hasan

School of Business, AUST
AUST-Ahsanullah University of Science & Technology
141 & 142, Love Road, Tejgaon Industrial Area, Dhaka-1208.

Subject: Submission of Term Paper.

Dear Sir,

We would like to thank you for assigning us this topic to prepare the term paper. This
task has been given us the opportunity to explore one of the most important aspects of
OB. We have completed the term paper on “Managing motivation in a difficult
economy”. It was a great pleasure for us to have the opportunity to work on the above-
mentioned topic. We have endeavored our best to come out with a good one.

We tried our best to put meticulous effort for the preparation of this term paper. Any
shortcomings or flaw may arise as we are very much novice in this aspect. We will
wholeheartedly welcome any clarification and suggestion about any view and conception
disseminated in our paper.

We hope this term paper will attract your kind appreciation.

Yours sincerely,

Boom Al Habibi
No. Name ID Sign
1. Tahmina Rahman-Mina 16-02-51-019
2. Nusrat Kamal Mitul 16-02-51-009
3. Tahmina Akter Popi 16-02-51-049
4. Kazi Dilshad Trisha 16-02-51-034
5. Sk. Masud Rana 15-02-52-009
 Acknowledgement

At first we would like to express our gratitude to almighty Allah who has given us the
opportunity to go through the total process of term paper and to write a report in this
regard. We would like to acknowledge our deepest gratitude to the honorable course
teacher Professor Dr. M. Mahmodul Hasan, School of Business Administration, AUST
who has given us suggestions regarding the writing of the term paper and to go through
the process, which has become an excellent way of understanding the topic of our paper.

Finally our appreciation and thanks to all our friends who have helped and supported us
all the way, while doing the paper.
 Executive Summary

This term paper has addressed financial crisis of Morgan Moe’s stores as a difficult
economic situation in an organization where the economic downturn led to a reduced
demand specially for high margin impulse product. The chain had to reverse its strategy
of expansion and cut down on jobs. Employees’ insecurity about their jobs was leading
to dissatisfaction and negative attitudes. The company was likely to lose more
employees, particularly older and more experienced ones, due to the uncertainty. This
would push them further towards bankruptcy. To fix the situation, Morgan Moe’s
instituted five variants of a performance management system. This report has outlined
the results of implementing these systems and their relative effectiveness. It has also
focused on how motivation can change the attitude of the employee to find the way out
from difficult economic situation of an organization.
Table of Content
Introduction
 Organizational Behavior

Organizational behavior (OB) is the study of the way people interact within groups.
Normally this study is applied in an attempt to create more efficient business
organizations. The central idea of the study of organizational behavior is that a scientific
approach can be applied to the management of workers. Organizational behavior
theories are used for human resource purposes to maximize the output from individual
group members. And it is a combination of psychology, sociology, economics and
communication. OB strives to improve human efficiency in workplace settings. Human
resource manager use OB analysis in improving training programs or increasing job
satisfaction and thus reducing employee turnover. In addition the research and
discoveries from OB help organizations develop leaders and promote innovation.
Applying OB findings helps managers revise their methods of compensation employee
evaluation and even the ways in which the organization is configured all and order to
improve the formats. OB takes a long term view of enhancing a company’s profitability.
 Figure 1.1: A Basic OB Model

The basic OB model in figure 1.1 proceeds from left to right, with inputs leading to
processes and processes leading to outcomes. Notice that, the model also shows that
outcomes can influence inputs in the future. Inputs are the variables like personality,
group structure, and organizational culture that lead to processes. These variables set
the stage for what will occur in an organization later. If inputs are like the nouns in
organizational behavior, processes are like verbs. Processes are actions that individuals,
groups, and organizations engage in as a result of inputs and that lead to certain
outcomes. Outcomes are the key variables that you want to explain or predict, and that
are affected by some other variables. The primary outcomes in OB are the scholars have
emphasized individual level outcomes like attitudes and satisfaction, task performance,
citizenship behavior and withdrawal behavior. At the group level, cohesion and
functioning are the dependent variables. Finally at the organizational level we look at
overall profitability and survival.

Figure 1.2: Cycle of Motivation & Job satisfaction

Overall profitability of an organization can be enhanced through the activities of
satisfied employees. Increasing the work participation of employees can improve
business competitiveness, while positively impacting the well being of employees. Job
satisfaction of employees can be accomplished through motivation. Satisfied employees
of an organization start to take the responsibility as he or she owns the organization.
More responsible employees lead to organizational advancement. As a result a growth of
employees in interpersonal level and for the organization can be achieved. Recognition
is one of the key elements of motivation. If the achievements of the employees are
recognized, that can motivate them and the outcome is job satisfaction of those
employees. Figure 1.2 explains the relation between motivation and job satisfaction
combining other virtues of satisfied employees.

Figure 1.3: Joints effects of goals and self efficacy on performance

Joints effects of goals and self efficacy can make a significant change in the performance
of employees. Self-efficacy refers to an individual’s belief that he or she is capable of
performing a task. By bringing goal setting theory and self efficacy together a manager
can help their employees to achieve high levels of self efficacy. Goal setting theory and
self-efficacy theory don’t compete, they complement each other. As figure 1.3 shows,
employees whose manager sets difficult goals for them will have a higher level of self-
efficacy and set higher goals for their own performance.
Chapter: One
In this case five management systems have been observed. The management programs
with their methods are shown in table 2.1. Each system has combined different
dependent and independent variables to run their management program. Different
dependent and independent variables to run a management program is shown in figure
2.1.

Table 2.1

Management Methods
Programs (combination of dependent and independent variables)
Program I Traditional management
Program II Share absence and sick leave
Program III Share sales and inventory
Program IV Share information and brain storming
Program V Brainstorming without sharing information

Variables

Independent Dependent
Variables Variables

 Absence and Sick  Average Turnover

Leave Rate
 Management  Sales and
Style Inventory
 Employee  Employee
satisfaction Productivity
 Employee Age  Weekly Profit per
 Employee Month
Tenure  Monthly Staff Time

Figure 2.1: Dependent and Independent variables

Absence and sick leave is an independent variable in program I that is traditional

management. Sales and inventory is a partly dependent variable in program III. It is
related to higher absences and sick leave which can affect in lower sales.
Employee turnover rate is considered as dependent variable. Older employees are more
experienced; they can provide better feedback, have a strong work ethic, commitment to
quality, lower rate of absence, and are more satisfied of their work. But at the same
time, they are lacking in flexibility and resistance to new technology.

Management Style has a large impact on independent variables. The more the
employees feel engaged, empowered, participate in decision making, the more
management is open, fair, transparent, supportive, shares information and provides
clear communication messages, interacts with staff; the more the employees are
satisfied with their job and they lead to not interested in less turnover and more
productivity.

Area as an independent variable contributes to the dependent variables; urban areas are
most likely to have a younger force on average, whereas rural areas the workforce is
older in average their jobs which will lead to fewer turnovers and more productivity.

Tenure is positively related to both employee productivity and job satisfaction and
negatively related to turnover and absenteeism. When age and tenure are treated
separately, tenure is considered a more stable & consistent predictor of job satisfaction
than age.

Weekly profit per month and monthly staff time cost both are dependent variables.
These two dependent variables are linked to the performance management system
which they are selected.
 Chapter: Two

Apart from motivation, based on the discussion of independent and dependent variables
which has been found in the case “Managing Motivation in a Difficult Economy”, there
are some additional outcomes such as job satisfaction, leadership behavior, job
involvement and change process can be added as other measuring outcomes.
 Figure 2.2: Other measuring outcomes

 Job satisfaction: Job satisfaction refers to how well a job provides fulfillment
of a need or want, or how well it serves as a source or means of enjoyment. And
also it is the degree to which individuals feel positively or negatively about their
jobs. If employees are not satisfied with their existing jobs, how will they perform
well? Their job satisfaction feedback and outcome will be in good term when they
will be fully satisfied with their job satisfaction.
 Leadership Behavior: Leadership behavior can be a measuring outcome to
find out an organization’s variables. Leadership is the ability to influence a group
toward the achievement of a vision or set of goals. That means, a leader can
influence a group of employees and motivate them to turn in best. Morgan-Moe’s
drug stores employees were lacking in good leadership behavior. They were
worried in job security and upset. Cindy Ang’s, one of the manager of Morgan-
Moe’s Drug store said that employees do not tell them anything and they are
worried and upset when they saw themselves that they are not performing well.
 Good behavior of a leader can help employees to perform well in jobs and feel
free to share ideas with co-workers.
 Job Involvement: Job Involvement refers to a participative process that uses
the input of employees and is intended to increase employee commitment to an
organization’s success. That means, organizations must need to involve their all
employees in every decision making steps especially on how they value their
employees and their views, this can assist in lowering the number of employees
leaving and increase its weekly profits.
 Change Process: The process of change is making things different. Morgan-
Moe’s drug Store can change their running activities by using this process:

Figure 2.3: Change process

 Chapter: Three

After observing the data in table 3.1, it has been decided that program IV (Share
information and brainstorm) and program V (Brainstorm without sharing information)
appear to be more effective.
Table3.1

Number of Average Weekly Profit Monthly Staff

Program Stores Turnover per Month Time cost

Program I 83 Mean=30% Mean=300000 None

SD=10% SD=100000
Program II 27 Mean=23% Mean=400000 100000
SD=14% SD=280000
Program III 35 Mean=37% Mean=620000 224000
SD=20% SD=250000
Program IV 67 Mean=17% Mean=790000 300000
SD=20% SD=300000
Program V 87 Mean=21% Mean=820000 250000
SD=12% SD=240000

They have the highest profits as well as the lowest employee turnover. The trade-off
between the two is that while program V has a higher turnover. It also has led to better
profitability. This establishes a correlation between involving employees in
brainstorming and a lower employee turnover rate. This could be because employees
wish to be consulted and made to feel a part of the organization. Program III is the least
effective in terms of turnover. Although there is an improvement in the profitability of
the stores where this is implemented. This could be because sharing sales and inventory
data is creating greater insecurity and tension among employees about the company
future and their jobs.

Most effective method of management:

Program V: Brainstorming without sharing information this method appears most

effective because:
 1) Monthly staff is second highest at 2,50,000
2) Average turnover is second lowest at 21%
3) Weekly profit per month is highest at 8,20,000
4) Standard deviation of turnover is only 21%
5) Weekly profit per month is highest at 3,00,00

Method IV is most effective. In this method, managers share information and conduct
brainstorming sessions. This method increases the motivation level and they feel
participative.

Program V there should be organizational justice as while we are conducting the brain
storming sessions there might be conflict between the employees regarding their ideas
and opinion. Management should give proper explanations that why they are accepting
a particular idea.

By analyzing the data the most effective methods seems to be program V as it provides
the biggest profit to cost ratio with the second best turnover rate.

Program IV had the lowest employee turnover rate of 17% .but the cost of monthly, staff
times cost was the highest, which reduced the net profits of the 67 stores that chose that
program. The three least effective programs were I, II and III because they do not
provide considerable net profits compared to turnover rates.

Program IV, the most comprehensive, tracks the same information as programs II,
III .Managers communicate it weekly brainstorming session, during which employees
try to determine what they do better in the future and make suggestions for improving
store performance. Sharing the performance information of the company with the
employees get them to understand what their job means to the company and that their
work serves a broader purpose and helps in the growth of the company. The employees
give their feed-back on how improve their company’s performance. This program gives a
sense of purpose and responsibility to the employees towards the company future. It
asks the employees feedback on the various issues they would help the company
performance in weekly brain storming meeting. This program was the second most
profitable program.
Program V keeps the idea of brainstorming but does not provide employees with
information about their behavior or company profit.

Appears least effective method:

Program I: Traditional Method.

This method appears least effective because:

1) Monthly staff cost is lowest at 0.

2) Average turnover is second highest at 30%
3) Standard deviation of turnover is 10%
4) Weekly profit per month is lowest at 3,00,000
5) Standard deviation is 1,00,000

 As in the case the HR team came up with the 5 options for the management
system. They think that method IV, sharing information and brainstorming is the
most effective method.
 We feel that method V (brainstorming without sharing information) is better is
some aspects because some information should be kept confidential with the
company otherwise there might be misuse of information.

According to human resource method IV is the greatest appreciated technique but

rendering to my estimation we examine that method IV had always enhanced in several
appearances, for the reason that corporation have to deliver fairness when we are
applying the brain storming gathering,

1) Have an apparent and programmatic vision of what the company wants to

accomplish and locate targets consequently.
2) Communicate the assessment of the plan successfully to employees to guarantee
engagement.
3) Incentivize unexpectedly as well as when it is predictable.
In this method, executives continuously segment some applicable evidence and they
behaviors brain storming session on weekly basis. This method simplifies to increase the
inspiration level and employees feel participative.

Employee involvement is necessary in this organization. The underlying logic is that if

we involve workers in the decisions that affect them. This will make employee motivated
committed, satisfied and more productive.

Traditional method is least effective as in this no information is shared with the

employees and no participation in decision making. As the turnovers are high and
revenue is low in this method.
Chapter: Four
Morgan-Moe’s authority has implemented five performance management system to get
employees into the idea of performing so that they can see some real results in their
hundreds of stores. It is all about to seeing that their employees work serve a broader
purpose. Jim Claussen, Morgan-Moe’s vice president for human relation said in this
case said that some companies have been sharing store performance information with
employees to get them understand what their jobs really mean and participate in
making changes.

The number of stores using each method set ranges from 27 to 87. But it does not
influence our conclusion. Based on the number of stores where each program was not
implemented equal stores. From table 3.1 in chapter 3 it has been found that a
comparison of the number of stores using such method does not influnce the
conclusion. We are comparing profitibility per store and average turnover as a
percentage. For a fair comparison, each sample should be equally sized.

The fact that managers are selecting the specific program to use (including program I,
which continues the status quo) may affect the inferences. It introduces bias into the
experiment and affects the results with objectivity errors. Managers may be biased
towards a particular way of working. The choices made by managers also indicate what
is likely to be best received by the employees. Self- selection by managers mean that
other external variables are not being appropritely controlled. It means that mangers
prefers that methods which could be affected the outcomes more than the actual
methods. On the other side, this self-selection process involve managers empowering
themselves in goal setting and decision making. In this case, managers do not choose to
share any information. It could indicate that the organization’s culture which is not open
with emplyees.

Randomly assigning different conditions to the stores can eliminate any preferences and
biases on the part of the managers. Managers might give methods a more fair chance. By
removing self selection, it makes managers actually change what they are doing. It will
help Morgan-Moe’s select most effective program across all its stores. It will make out of
control zone of old ways.
Chapter: Five
The diversity of the workforce is a major influence on any company, even more when
managing customer-facing retail employees. Diversity is important not only when
concerned with employees, but also in respect to customer’s cultures and diversity and
regional demographics. In figure 5.1 here is shown the process model of diversity that
describes the flow from dimension of diversity to the outcomes. Managing diversity is
defined has the planning and implementing organizational systems and practices to
manage people so that the potential advantage of diversity are maximized while its
potential disadvantages are minimized.

Figure 5.1: A process model of Diversity

The altering nature of workforce and the economy has leaded us to the conclusion that
employees should be authorized to a certain level of transparency and respect in the
business place or organization. When these stores initially started to show declines in
sales, the employees should have been notified that things within the company were
starting to change.
By leaving the employees ignorant to the “big picture” of the company, Morgan Moe’s
effectively created a large amount of distrust for the company amongst these employees.
By being more open and honest with the employees, the company could have avoided
the lack of goodwill, whilst also finding ways to keep employees happy and motivated.
They can proactively engage employees by giving them opportunities to brush up their
skills to keep developments in the company. They can maintain an open environment
and clear communication channels to build up positive behaviors within organization
and employees.

The implementation of a more experienced workforce under these circumstances seems

to have benefited the company from the effects of the new programs. Programs IV
(share information and brainstorm) and V (Brainstorm without sharing information)
showed the least average employee turnover, while also showing substantial profit as
well as profit margins.

Under different economic circumstances, we believe that programs I (Traditional

management) and II (share absence and sick leave) would not have revealed such poor
numbers. We believe that these younger managers in a buyers’ market would have felt
the interest and trust they would need to stay with the company, and also to perform at
a higher level. Also, we believe that programs III (Share sales and inventory) and IV
(share information and brainstorm) would have still done satisfactory, however we
believe the turnover rate would be slightly higher.

These programs might work differently in an economy that is doing severely poor
because there might be less employees on hand due to possible cutoff and less chances
to meet all at once to brainstorm and share ideas and suggestions. It would be hard to be
use when the store is running on minimum employees and available resources on a
minimum financial budget.
Chapter: Six
The development of a team will be more effective if members have some idea about
how groups and teams are typically operate. A team is a group of different people who
collaborate together to achieve the desired goal for managing organization outcome.

Many researchers suggest that group formation and performance are both important
in determining the success of the team in terms of existing as a part. Its development
should be based on core objective criteria, wherein members are chosen based on their
contribution to the team in terms of skill set and ability to co-exist with others.

For example, a band is created as a group of people who creates music together. A
band member thus needs to know how to play an instrument or sing. The manager is
not included in the band, even if he is one of the members’ best friends or he is the one
who promotes the group, because he does not make the music with the other members.
Meanwhile, for a team that has different objectives as it goes, the team is formed with
a core of able people, and then is extended based on the skills set and the preliminary
results of the team’s activities.

Aside from having the skill relevant to the team, the team member must also be open to
share his ideas with others and to listen to what others have to say. If one of the
members is dissenting and unhappy, he leaves, and is replaced with someone more
amenable to what the group wants to do. Once formed, the team must be able to share
ideas on how to achieve the team’s goals. It has been shown that an initial personal
meeting is more helpful than a virtual one. A structured team building increases the
productivity of the team. Individuals need to have their expectancy and
instrumentality belief bolstered. Managers need to ensure the individual employee
valance is set high. Employees must have a clear knowledge in their role and that their
actions will have significant outcomes on the success or failure of the company. Asking
individuals to set their own goals would be a good start. “Goal-setting theory contends
that performance goals play a key role in motivation. Research convincingly shows
that specific, difficult, and employee-accepted goals will lead to higher levels of
performance than easy. This research also demonstrates that the presence of feedback
enhances the effectiveness of goal setting and achievements.
In this case, Claussen has essentially designed the five performance management
program on his own and hope to motivate his employees well. There is a very little
research into goal setting and motivation. Claussen did the best with the limited
knowledge he had without prior exposure to organizational behavior. Store managers
were given the ability to choose any program as they were desired. The term
“Motivation” regarding our text book “Organization Behavior” says that the processes
that account for an individual’s intensity, direction and persistence of effort toward
attaining a goal.

 Individual’s
intensity


Direction
Persistence of effort
Motivation
 Toward attaining a
goal

Figure 6.1

The parts of the programs that appear to fit well with research evidence on goal setting
are brainstorming and shared information. In order to get more substantial
improvements in employee motivation we would increase the intrinsic rewards and job
engagement to improve motivation within the organization. He could also implement
the goal setting theory.

The “Goal Setting Theory” regarding our test book is “a theory that says that specific
and difficult goals, with feedback, lead to higher performance”. That means goals tell an
employee what needs to be done and how much effort is needed.

With each program employees should be responsible for setting a specific and
challenging goal themselves.
 Figure: 6.2

During the brainstorming program, they should discuss their progress toward their
goals which will need to be obtained. And also, organization should provide feedback to
employees regarding their goals.
Chapter: Seven
Vice president Jim Claussen wanted to implement these five performance management
program for the betterment of their organization. But only implementing new program
will reduce to help organization from financial bind? Not only mangers but also
employees would not like too much a rapid change in working environment.

How the employees react, understand and commit to the new programs that are
implemented are the most crucial to the program success. Some of the things managers
need to consider are the employee’s level of self-efficacy and probability of resist change.
Employees may be in fear of losing job because of job security, pure economy, economic
factors, selecting method information.

The feelings employees have would help the program’s success in that some employees
would have self-motivation to achieve their own goals and embracing change that will
increase more productivity. Employees feel good when they are being respected by their
other employees.

Managers should consider the employee’s efficiency and potential and to ensure the
maximum attribution clear and understandable the communication between them must
be clear.

Equity theory that is described in our text book refers to “a theory that says that
individuals compare their job inputs and outcomes with those of others and
then respond to eliminate any inequities”.

Organizational justice refers to “an overall perception of what is fair in the

workplace, composed of distributive, procedural and interactional justice”.

That means this theory refers to an employee’s overall perceptions of what is fair in the
workplace in organizations. Employees compare themselves to friends, neighbors, co-
workers in other organizations and compare their present job with past job. They
perceive what they get from a job situation (salary, levels, raises, recognition) in
relationship to what they put into it (effort, experience, education, competence) and
then they compare their outcome- input ratio with that of relevant others.
 Figure: 7.1

In our study, we have found that employees are more become committed, organized and
satisfied after implementing the program. Generally, maintaining good organizational
justice can lead to ideal and favorable outcomes in the organizations. In research, it has
been showed that, they have more trust and have more satisfied when justice is
perceived as being fair.

Here, we would give advice to manger how they implement the programs. These are:

 Motivate to foster employees’ perception of justice.

 Maintain a positive identity and establish fairness at work.
 Realize employee’s sensitivity.
 Follow consistent and unbiased procedures.
 Need to focus their actions on the source of the problem.
Recommendation
Program V keeps the idea of brainstorming but doesn’t provide employees with
information about their behavior or company profits.

In recommendation, we can say that before implementing Program V, which is the most
effective, managers can think about some suggestions. These can be:

 Allow all employees to participate in organization’s decision making.

 Managers need to recognize individual employee’s performance.
 Managers must use goals to achieve and give employee feedbacks.
 Managers link rewards to employee performance.
 Managers check the system for equity.
 Organization needs to utilize appropriate organizational change strategies.
 Managers should maintain good communication with employees.
 Besides the job involvement, Managers must monitor employee satisfaction.
 Organization needs to encourage managers for implementing goal setting process
properly.
 Managers measure employee’s job attitudes effectively.
Conclusion
This term paper looked at the financial crisis in the Morgan Moe business as a
difficult economic situation in an organization in which the economic recession led
to a reduction in product demand mainly for high-margin impulse. The chain had to
change its expansion strategy and reduce work. Organizational behavior teaches us
how manager should react in different situation of an organization and motivate
their employees to increase their skills, taking responsibilities to profitability of the
organization. As it is found in the case study it is obvious that everybody in an
organization react nervously in difficult economy situation. As a result few initiatives
from the management towards the employee to overcome the situation can create
uncertainty in the mind of the employees about their work led to dissatisfaction and
a negative attitude. The company was likely to lose more employees, especially older
and more experienced, because of the uncertainty. To solve the situation, Morgan-
Moe’s opened five variants of a system of performance management. It has been
mentioned that under difficult economy situation program V played the most
effective role of all. In that situation, a manager with good communication skills,
goal setting ability. Interactive relation with employees to know about their job
satisfaction can encourage to improve their attitude to overcome the situation.
References:
1. Stephen P. Robbins, Timothy A. Judge and Neharika Vohra, Organizational
Behavior (15/e) Prentice Hall

2. Organizational Behavior - OB Definition | Investopedia

3. http://www.investopedia.com/terms/o/organizational behavior.asp#ixzz4Z8zUIDEK

4. http://smallbusiness.chron.com/difficult-situations-managers-can-face-deal
74683.html

5. https://jacobsononline.com/uploadfiles/leader165.pdf

6. http://eprints.kingston.ac.uk/5852/1/Kitching-J-5852.pdf

7.http://www.cimaglobal.com/Documents/Employer%20docs/R268%20Economic
%20recession%20final%20V2.pdf

8. http://www2.ca.uky.edu/agcomm/pubs/FCS5/FCS5457/FCS5457.pd

9.https://www.researchgate.net/publication/255961311_Business_Strategies_and_Perf
ormance_during_Difficult_Economic_Conditions

10.https://books.google.com.bd/books?
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anisational+behavior&ots=akyLGTxK8H&sig=aAJLwYPViJM115wnnJy1kEe2WYM&re
dir_esc=y#v=onepage&q=how%20motivation%20helps%20in%20organisational
%20behavior&f=false
Appendix:
1. https://independent.academia.edu/RahmanMina
2. https://independent.academia.edu/tahminaakter28
3. http://aust.academia.edu/MasudRana
4. http://independent.academia.edu/KazidilshadTrisha
5. http:aust.academia.edu/NusratKamalMitul