CASE STUDY ASSIGNMENT

MGHB02
Professor Saks
Employee Mo>va>on at DataCom

DataCom is a company started by Grace Lin and Annie Pan, two friends who had just
graduated with degrees in business administra>on and saw an opportunity to start their
own business. With an increasing number of organiza>ons conduc>ng employee aPtude
surveys, they saw a need for data input and analyses as well as for the design of web-based
surveys. With a loan from their parents, they rented space, purchased 20 used computers,
and set up shop. They hired some students whom they knew at the university and began
adver>sing their services. Employees were paid minimum wage and usually worked three-
hour shiRs in the mornings and aRernoons several days a week.

The assignment of projects to employees was fairly straighSorward. Whenever a new

project was received, Annie would review the job and then set a deadline for comple>on
based on the nature of the project and the customer’s needs. While some employees only
worked on web-based surveys, all employees were able to input data and conduct some
basic data analyses. If a project required more advanced data analysis, it was assigned to
one of a handful of employees who were able to do it. It was Grace’s responsibility to check
on the progress of projects and make sure they were completed by the deadline. Once a
project was completed, Annie would review it and check for mistakes and errors. If a project
was found to have errors, Annie would send it back to the employee who worked on it, with
instruc>ons on what needed to be corrected and the new deadline. If the correc>ons were
minor, then the employee would be asked to do them immediately and put aside what they
were currently working on. If the correc>ons were more substan>al, then the employee’s
current project would be assigned to another employee so that the employee could work on
the project that required correc>ons.

Within a rela>vely short period of >me, DataCom was having trouble keeping up with
demand. In fact, business was so good they had to hire more employees and purchase more
computers. ARer about six months, however, they began to no>ce some problems. An
increasing number of projects were not being completed on >me, and customers were
beginning to complain. In some cases, Grace and Annie had to give big discounts to
customers who threatened to take their business elsewhere.

In order to try to deal with the increasing missed deadlines, Grace decided to keep a close
eye on employees during their shiRs. ARer several days, she reached the conclusion that
many of them were friends and spent too much >me talking and socializing when they were
supposed to be working.

ARer discussing the problem with Annie, it was decided that the best thing to do was to
keep a closer eye on employees while they were working. The next day, Grace began
watching employees and even standing over them while they worked. Whenever some of
the employees began to talk with each other, Grace rushed over to remind them that they
were there to work and not to talk. Some of the employees were surprised at this sudden
change and didn’t understand what the problem was. Grace told them that too many
projects were not being completed on >me and that talking would no longer be tolerated
while employees are working. “You get paid for working here, not socializing and talking to
your friends,” Grace was oRen heard saying. “Stop talking and get back to work.”

By the end of the month, however, things had s>ll not improved. While the employees were
no longer talking to each other when Grace was watching them, many projects were s>ll not
being completed on >me. Grace and Annie decided that they should focus on those
employees who were the main source of the problem. ARer reviewing the records of all
employees, they made a list showing the number of projects each employee had completed
on >me as well as the number that were late. They then posted the list on a large board at
the front of the room. Employees were told that from now on, Grace and Annie would be
keeping track of how many employees’ projects were completed on >me and that they
would fire people who were late comple>ng more than one project a month.

This did not sit well with the employees. Many of them complained that it was unfair to
blame them for being late because some projects were much more demanding than others
and the deadlines were oRen unreasonable. However, Grace and Annie insisted that the
deadlines were based on the size and difficultly of the projects.

Many of the students relied on the extra money they made from DataCom to pay for their
books, supplies, and the occasional dinner or night out, so being fired was a big concern to
them. Within a few weeks, almost all projects were being completed on >me. Grace and
Annie concluded that their latest strategy was working, and the list of employee names
posted at the front of the room was showing a marked increase in projects completed on
>me for all employees.

However, by the end of the month there was a new problem. Many of the completed data
files were full of mistakes, the data analysis was oRen incomplete and incorrect, and the
web-based surveys were oRen missing ques>ons and contained many errors. As a result,
almost 50 percent (15 jobs per month) of all jobs had to be completely redone. This turned
out to be a costly problem. Each job took between 10 and 50 hours and cost DataCom
hundreds of dollars to fix. This also meant that projects were not being completed on >me
because they had to be redone and checked aRer the deadline. More and more customers
began to complain and to demand a reduc>on in the cost of their projects.

To make ma`ers worse, some of the best employees decided to quit. Over a period of three
months, DataCom lost an average of three employees a month. Every >me an employee
quit, they had to replace them, and the cost of replacement was gePng very expensive. The
cost of adver>sing, interviewing, and hiring a new employee was es>mated to be about
$5000.

While employees were at one >me bringing their friends to DataCom, this was no longer
enough to fill all the job openings. As a result, it became increasingly difficult to find and hire
new workers. In despera>on, Grace and Annie decided to increase the pay to new hires to
above minimum wage. This, however, did not sit well with current employees, some of
whom had been with DataCom since it opened. Some of DataCom’s experienced employees
threatened to quit if they did not receive a pay increase. Grace and Annie did not see how
they could increase the pay of all their current employees. However, they realized that
something had to be done—and fast.

They came up with a three-pronged approach. First, they decided to give those employees
who were threatening to quit a pay increase equal to what new hires were receiving.
Second, they decided to offer a $100 bonus at the end of every month to the employee who
performed best on comple>on >me and quality. The employee with the most projects
completed with the fewest errors would receive the bonus. And third, they decided that
employees who turned in projects with substan>al errors would be required to correct them
on their own >me, without pay.

When the employees heard about these changes they became less coopera>ve with each
other and less willing to offer help and assistance. Before the announcement, although
employees engaged in less socializing during working hours, they maintained a friendly and
collegial atmosphere, with workers frequently asking each other for help, and offering to
help new hires. However, with the new bonus program and the possibility of having to
correct errors without pay, this was no longer the case. Employees not only stopped talking
to each other, they also stopped helping each other. This was especially hard on the new
hires, who oRen needed help and advice from the more experienced employees.

At the end of the first month under the new bonus program, Grace and Annie held a
mee>ng and told the employees that Mika Solomon had completed three projects and had
made only one error. She happily accepted her bonus cheque for $100 and was
congratulated for her excellent performance. Some of the other employees clapped and
congratulated her, but others were not so happy. Nonetheless, the number of mistakes and
projects that had to be returned to workers for correc>ons began to decline.

Grace and Annie felt that they had finally found the solu>on to solving the problems at
DataCom. However, by the end of the week, three other employees demanded a pay
increase and several others complained that they should have received the bonus because
their performance was just as good as Mika’s. To make ma`ers worse, three new hires and
two of DataCom’s most experienced employees decided to quit.

Grace and Annie couldn’t understand how something so good had become so bad. They
wondered whether they should give all employees a pay increase equal to the new hires. Or
maybe they need to do something about the bonus program. They were at a loss as to what
to do next and wondered if maybe it was >me to end their business adventure.
QUESTIONS
1. What factors do you think contribute to the performance of employees at DataCom?
Refer to Exhibit 5.1 to explain your answer.

In analyzing the factors that contribute to the performance of employees at

DataCom, using Exhibit 5.1 as a framework, we can delve into several aspects that
interplay to influence how employees perform.

Firstly, the amount of effort that employees put into their work is crucial. If the
reward systems at DataCom are designed in a way that employees feel their efforts
are recognised and rewarded accordingly, it is highly probable that their moEvaEon
levels will increase. The Expectancy Theory supports this idea, indicaEng that when
individuals have confidence in the connecEon between their efforts, performance,
and rewards, their moEvaEon to work harder is enhanced.

The Persistence of Effort is another factor. At DataCom, employees are expected to

maintain a consistent level of effort and dedicaEon, going beyond just working hard.
Goal SeMng Theory offers a framework that suggests seMng specific and challenging
goals, along with providing feedback mechanisms, can help sustain effort in the long
run. DataCom's management can establish effecEve systems to provide consistent
feedback, which will help employees maintain their focus and determinaEon.

The DirecEon of Effort is where employees decide to focus their energies. Ensuring
that employee efforts are in line with organisaEonal goals is crucial for DataCom. This
can be accomplished by fostering effecEve communicaEon regarding the significance
of each person's role in relaEon to the overall goals of the organisaEon. It is crucial to
ensure that employees are assigned tasks that will have the most significant
influence on the company's success.

Regarding personal maPers, one's personality traits can significantly impact their
level of moEvaEon and performance in their work. Certain people may inherently
possess a greater level of moEvaEon and dedicaEon towards their responsibiliEes.
Understanding and embracing the unique qualiEes of each person can enhance job
fulfilment and effecEveness.

General cogniEve ability and emoEonal intelligence play an essenEal part in this
context. Individuals who possess a greater cogniEve ability tend to excel in their
performance as they have a heightened capacity to process informaEon and find
effecEve soluEons to problems. Likewise, individuals who possess a strong sense of
emoEonal intelligence are able to effecEvely navigate the complexiEes of workplace
dynamics and overcome obstacles with greater skill. InvesEng in training that
develops these aspects can greatly enhance overall performance.
Task Understanding is crucial for employees to have a clear grasp of their job
requirements. Improving performance at DataCom involves clearly defining and
communicaEng job responsibiliEes, as well as offering ongoing training to address
any uncertainEes.

Lastly, Chance recognises that there are external factors that can affect performance,
which are beyond the control of the company and employees. Although it is
impossible to eliminate these factors, DataCom is commiPed to providing support
and being flexible in order to minimise any potenEal negaEve impact on
performance.

2. Consider the needs of the employees at DataCom. What is most likely to mo>vate
them? How important are intrinsic and extrinsic mo>vators? Is their mo>va>on
autonomous or controlled?

IniEally, DataCom employees enjoyed a collegial environment, highlighEng the

significance of intrinsic moEvators such as camaraderie, job saEsfacEon, and a sense
of accomplishment from mutual support and friendly workplace relaEons. This
moEvaEon is in line with Self-DeterminaEon Theory, which suggests that fulfilling our
natural psychological needs - feeling competent, having autonomy, and connecEng
with others - can enhance our moEvaEon and involvement in our tasks.

However, the introducEon of a bonus system and the potenEal for terminaEon
shiVed the focus towards external moEvators. Although there was a slight
improvement in project compleEon Emes, there was also a noEceable increase in
errors and a decrease in overall quality. This indicates that the use of external
moEvators may have had a negaEve impact on internal moEvaEon and self-
regulaEon.

The transiEon from internal to external moEvators at DataCom also signifies a shiV
from autonomous to controlled moEvaEon. Under the new measures, employees no
longer derived saEsfacEon from their work or enjoyed the workplace culture. Their
moEvaEon shiVed towards avoiding penalEes or earning financial rewards. This type
of controlled moEvaEon, which is externally imposed, has been found to have
negaEve effects on employee well-being. It can result in increased stress levels and a
decline in job performance. This is clearly demonstrated by the rise in errors and
quality problems that occurred aVer the introducEon of the bonus program.

The moEvaEon at DataCom seems to be largely controlled at this point, driven by

external factors such as bonuses and the threat of being fired. This may result in a
decline in overall employee saEsfacEon and well-being. Therefore, it is important for
Grace and Annie to strike a balance between uElising different types of moEvators to
ensure that employees stay moEvated and perform well in the long run.
Intrinsic moEvators are vital for long-term job saEsfacEon and can foster a more
profound commitment to work quality. Nevertheless, external moEvators play a
crucial role in moEvaEng desired results and can be harmonised with intrinsic
goals to maximise their impact. An ideal approach for Grace and Annie would be to
create a system that rewards performance but also builds a sense of community,
personal growth, and acknowledges the inherent saEsfacEon of the work itself.

3. Discuss the mo>va>onal strategies being used at DataCom. What are employees
mo>vated to do? How do the theories of work mo>va>on help us understand
employees’ mo>va>on and performance and the effec>veness of the mo>va>onal
strategies?

DataCom's management, Grace and Annie, implemented a three-pronged

moEvaEonal strategy to tackle concerns regarding project compleEon Emeliness and
quality. The iniEal approach entailed providing a salary increase to individuals who
expressed intenEons of leaving, ensuring their compensaEon matched that of newly
hired employees who were being offered higher remuneraEon. The second approach
involved implemenEng a monthly $100 bonus for outstanding performance in
project compleEon Eme and quality. This iniEaEve aimed to moEvate employees to
not only increase their efficiency but also uphold excepEonal standards. The third
approach involved implemenEng a disciplinary acEon, where employees who
submiPed projects with significant errors were expected to recEfy them on their own
Eme, without any extra compensaEon.

Workers were driven to finish projects promptly and with minimal mistakes in order
to either earn a bonus or prevent the burden of unpaid overEme. The
implementaEon of these strategies resulted in a decline in collaboraEon among
colleagues and a noEceable shiV in the once friendly work environment. Although
the strategies iniEally appeared to be effecEve in improving on-Eme compleEon
rates, they unintenEonally resulted in an upEck in errors. This was due to employees
rushing to finish projects, which ulEmately led to expensive reworks. Furthermore,
the alteraEons resulted in discontent among the staff, resulEng in the departure of
top performers and challenges in hiring new talent due to the unfavourable work
atmosphere.

The theories of work moEvaEon can provide insights into why DataCom's strategies
yielded varied outcomes. According to Expectancy Theory, individuals are more likely
to be moEvated to work when they have confidence that their efforts will result in
posiEve outcomes. However, if the percepEon of fairness or aPainability is lacking in
the expectancy or instrumentality, moEvaEon can decrease. This was apparent at
DataCom, where the employees expressed their frustraEon with the Eght deadlines
and perceived inequity in bonus distribuEon. As a result, their morale and moEvaEon
suffered.
In addiEon, the strategies failed to consider the importance of internal moEvators
and instead placed too much emphasis on external moEvators. This approach, as
explained by Self-DeterminaEon Theory, can actually hinder autonomous moEvaEon
if intrinsic rewards are not given equal aPenEon. This imbalance can lead to a decline
in job saEsfacEon and intrinsic moEvaEon, as evidenced by the decrease in
employees' willingness to help and the subsequent rise in resignaEon rates.

The effecEveness of DataCom's moEvaEonal strategies varies. Although they did

result in a temporary improvement in meeEng project deadlines, they also caused an
upEck in expensive mistakes, reduced internal drive, and higher staff aPriEon rates.
A well-rounded perspecEve that takes into account various factors and the unique
requirements of individuals may yield bePer results in the future.

4. Using the theories of mo>va>on, what advice would you give Grace and Annie on how to
mo>vate their employees? Be sure to refer to the need theories and the process theories of
work mo>va>on when answering this ques>on.

Grace and Annie have the opportunity to uElise moEvaEon theories to improve their
approach to employee moEvaEon at DataCom. The need theories, such as Maslow's
Hierarchy of Needs and Alderfer's ERG Theory, along with process theories like
Expectancy Theory and Goal SeMng Theory, offer a comprehensive framework for
comprehending the factors that influence employee behaviour and performance.

Applying Maslow's Hierarchy of Needs, it is crucial for Grace and Annie to prioriEse
fulfilling the fundamental needs of employees, such as fair compensaEon and job
stability, before anEcipaEng their moEvaEon to be driven by higher-level needs like
recogniEon and personal growth. The discontent among employees concerning pay
dispariEes suggests that there is a lack of aPenEon being given to these fundamental
needs.

As per Alderfer's ERG Theory, it's crucial to acknowledge that individuals have various
needs for their well-being, social connecEons, and personal development. These
needs are not strictly ranked and can be pursued concurrently. Grace and Annie
should strive to establish a work environment that offers fair compensaEon,
encourages a strong sense of community and belonging, and provides opportuniEes
for personal and professional growth.

McClelland's Theory of Needs highlights the significance of the desires for

accomplishment, social connecEons, and influence. Grace and Annie can cater to
these needs by implemenEng a system that acknowledges and incenEvizes both
individual and team achievements. They can foster a collaboraEve work environment
that appeals to those who value teamwork and camaraderie. AddiEonally, they can
offer opportuniEes for employees to have autonomy and influence over their work
and surroundings, which would be aPracEve to individuals who seek power and
control.

According to the Self-DeterminaEon Theory (SDT), fostering employees' autonomy,

competence, and relatedness can lead to increased intrinsic moEvaEon. Grace and
Annie should explore methods that foster independence by offering greater flexibility
in task compleEon, offer training and resources to improve skills, and culEvate a
supporEve and cooperaEve environment to fulfil the need for connecEon.

According to Expectancy Theory, individuals are more moEvated when they can
clearly see how their efforts, performance, and rewards are connected. Grace and
Annie should make sure that employees feel confident that their hard work will
result in strong performance and that they will be fairly compensated for their
efforts.

According to Goal SeMng Theory, having clear and ambiEous goals can be a great
source of moEvaEon for employees. This is especially true when employees are
acEvely involved in seMng these goals and receive regular feedback on how they're
doing. Grace and Annie should consider involving employees in goal-seMng
processes and implemenEng a structured feedback system to ensure their
engagement and keep them well-informed about their performance.

PracEcally speaking, Grace and Annie could consider reassessing their bonus and
penalty systems to ensure they are equitable and transparent. They could also foster
a collaboraEve environment instead of a compeEEve one, and create avenues for
employees to enhance their skills and advance within the organisaEon. By taking
these steps, individuals can boost their drive and producEvity, decrease the rate of
employee departures, and tackle the expensive mistakes that have been affecEng
DataCom's financials and standing.

5. What would you do to mo>vate the employees at DataCom? Be specific in terms of how
to mo>vate employees to complete projects on >me without errors and to stay at the
company. Be sure to support your answer using the theories of work mo>va>on.

By incorporaEng theories of moEvaEon into the specific examples given for

moEvaEng employees at DataCom, we can significantly improve the effecEveness of
these strategies.

• Bonuses for Projects with No Errors (Goal SeMng Theory): This strategy is designed
to moEvate individuals by establishing clear, ambiEous, yet aPainable objecEves, in
line with Goal SeMng Theory. The strong connecEon between reaching these goals
and earning a bonus provides a direct incenEve for employees to aim for top-notch,
punctual work.
• Personal Development Plans (Self-DeterminaEon Theory): By emphasising the
importance of autonomy, competence, and relatedness, PDPs help individuals in
their personal and professional growth. These plans foster a sense of appreciaEon
and connecEon with employees, strengthening their commitment and dedicaEon to
the company.

• Peer RecogniEon Programs: This program allows employees to acknowledge and

appreciate each other's contribuEons, fostering a sense of affiliaEon and boosEng
esteem. It emphasises the importance of social moEvaEon, recognising
accomplishments and culEvaEng a nurturing community.

• Flexible Work Schedules (Self-DeterminaEon Theory): Providing flexibility addresses

the desire for independence, enabling individuals to have greater control over their
work-life balance. This independence is vital for internal drive, ensuring that
employees feel valued and esteemed.

• Learning and Error CorrecEon Workshops (Expectancy Theory): These workshops

showcase the connecEon between employees' efforts to learn from mistakes and
enhance their skills, and the posiEve outcomes they can achieve, such as recogniEon,
personal growth, and potenEal promoEons or bonuses.

• 'Project of the Month' Showcase (Equity Theory): Showcasing a successful project

and its team helps ensure that employees who make significant contribuEons to the
company's success receive the recogniEon they deserve. This recogniEon can serve
as a source of inspiraEon for others, encouraging them to pursue their own
achievements with the confidence that their hard work will be recognised and
rewarded.

• Professional Mentorship Program (Alderfer’s ERG Theory): Mentorship programs

address the needs of less experienced employees, fostering a sense of connecEon
and support within the company. This also gives mentors a feeling of achievement
and importance within the organisaEon, fostering growth and development for both
individuals involved.

• Providing Clear Career Paths: By outlining career paths within the company,
employees can have a clear route to achieving their professional goals, which can
help meet their esteem and self-actualizaEon needs. This level of openness and
transparency serves as a strong moEvator for employees to remain commiPed to the
organisaEon and strive towards fulfilling their higher-level needs.

By connecEng these strategies to theories of moEvaEon, Grace and Annie can

develop a thorough moEvaEon plan that not only tackles the immediate objecEves of
minimising errors and enhancing Emeliness, but also culEvates a construcEve,
encouraging, and progressive company culture.