CASE 10

Case 10 summary:

·         Wells Fargo has been accused and convicted of fraudulent behavior, selling clients by-product, opening accounts and charging unknowing customers extra for services they did not need

·         The fraudulent behavior was forced upon workers through managerial pressure and unrealistic sales targets

·         Whistleblowers were fired

·         Workers were forced to work overtime unpaid to reach targets

·         CEO was forced to step down and over 5000 people were fired

·         Many fear similar behavior is standard in banks across the nation

Challenges:

·         Setting too high sales targets leads to staff cutting corners or acting in a fraudulent way

·         Managers should always be aware of unethical behavior and react if they see any

Theory, Model and Key Concept  

The Wells Fargo case is a text-book example of bad management and HR decisions. The higher managers have set unrealistic sales targets that the lower and middle managers than have to turn into action. With pressure to succeed, they start allowing and even preferring unethical behavior. The company had a system in place for ensuring that whistle blowing was available, but the HR department then proceeded to terminate or relocate any whistleblowers once a complaint was filed. In addition, working hours weren’t monitored, staff wasn’t duly paid and there have been many examples of misconduct by manager and the HR department. Now the company’s bad practices have been brought out in clear daylight, and the picture is not pretty. What’s more, the banking industry is now starting to reveal that similar practices exists in many other banks and companies as well.

In Finland, workplaces specialized in selling via phone, and cold calling, have similarly bad reputation. Many have filed complaints about companies not paying wages, of discriminative behavior, harassment and unrealistic sales goals. Especially young people often fall victim of unethical companies, taking advantage. Many you people do not know their rights, are afraid to speak out, and fear that if they do speak up they will get fired and loose the little income that they do have. The businesses have now been under intense scrutiny and observation by the government officials, and reports and complaints have been reduced. (Yle 2015)

Many companies have introduced portals for whistleblowers to raise their concerns about unethical behavior. These portals have been set out to make sure, that reporting to a higher manager is not the only way to be heard about an issue in a company. Many countries have national laws, for protecting whistleblowers. In the Wells Fargo case, the whistleblowers were identified and consecutively fired, which is the exact opposite of the intended effect of a portal for whistleblowers. The European Commission, is looking into an EU wide legislation to protect whistleblowers, as more and more companies turn global. An EU wide legislation is curcial, when it comes to protecting whistleblowers in a new globalized world. This can also be useful, especially in terms of whistleblowing on tax evasion, corruption and fraud. According to the EU, whistleblowers are providing a great service for the Union, protecting democracy and public interest. (D. Vincenti, 2017) 

Literature:

D. Vincenti, 2017, “Commission calls for input on whistleblower protection”, EurActive https://www.euractiv.com/section/politics/news/commission-calls-for-input-on-whistleblowers-protection/ (12.3.2017)

Yle, 2015, ” Työtä ilman palkkaa, epäasiallista kohtelua ja häirintää – tehovalvonta paljasti puhelinmyynnissä rehottavat ongelmat, Yle,  http://yle.fi/uutiset/3-8086070 (12.3.17)

CASE 9

Summary of case 9

•          An investigation revealed some of the bigger clothing brands had children and refugees working in their factories or for their subcontractors
•          The factories hired refugees without work permits and children to work for less than minimum wage in sometimes strenuous and hazardous conditions
•          The companies are claiming they were unaware of such practices and are applying changes and support for the exploited workers
•          Critics say the companies are not doing enough to ensure labor rights and that “not knowing” is not enough, they need to actively monitor all subcontractors and sub-subcontractors as far as the product goes back

Challenges:

·         How can a UK based clothing company ensure its subcontractors in another country is obeying rules?

·         Is the clothing company responsible for practices that take place in another business if they have given codes of conducts for subcontractors?

·         What is enough monitoring?

·         Is an outsourced service still under the same brand and laws of ethics as a company service?

Key Concepts, Model and Theory

There are always risks when taking HR decisions, taking on someone new or outsourcing a service. When the whole production line of a company, from beginning to end, is in the hands of a company, they can be almost certain, that no unethical decisions have been made during the HR process. As soon as companies need to start outsourcing, collecting materials from others, or sub-contracting parts of their business, a problem may occur. 

In case 9, we can see that the clothing companies failed to make sure all factory workers (own and subcontracted) were treated equally and humanely. This sort of news is very bad for the company brand in today’s enlightened consumer market.

Sweatshops and inhumane factory conditions have been on the radar for some time now, yet companies have difficulties in enforcing legal and just HR processes in subcontractors. The environmental challenges that globalization entails for a company are difficult to harness. According to L. Gomez-Mejia, D. Balkin, and R. Cardy, many companies try to implement a worldwide company culture, to smooth over cultural differences in the whole company. (L. Gomez-Mejia, D. Balkin, and R. Cardy, 2012, p.35) 

Manpower, for example, uses a model called reversed-expats:

“This approach rotates a local manager, based in the emerging market, through functions outside the home market. The experiences and insights that the manager gains from this can then be adapted to the local market upon his or her return”. (J. Webb, 2011)

This is one approach to the difficulties of having different cultures in a global company. Of course, this approach is more difficult to implement, when it comes to actual outsourced activities or sub-contractors.

The opportunity for workers to be exploited in the developing nations has risen as a result of the westernized world becoming more service-oriented and less industrial. Instead, the production of products has been moved to emerging markets, where standard of living is lower, and therefore, the wages are lower. In the western world, labor unions have traditionally defended worker’s rights and have had a very strong place in society. (L. Gomez-Mejia, D. Balkin, and R. Cardy, 2012, p.36) This is not the case for the third world, where workers have little or no rights when it comes to employment practices. As union membership drops in the west, the third world is left with exploitation. In Cambodia, for example, the clothing industry exploitation and violence in connection to that, has been an ongoing issue for years. The international brands state that they pay factory workers the country’s minimum wage, but the unions in the country do not have enough power to ensure that the minimum wage is high enough to cover basic living expenses. (DW,2017)

Most companies perform some sort of monitoring to ensure legal and ethical standards are met in factories and subcontractor’s practices. They lay out codes of conducts for all subcontractors and evaluate and monitor appliance. Yet, the problem doesn’t cease to exist. Consumer’s today, are getting more and more aware of these issues, which means that companies too, start to care about their production facilities. Unethical behavior (whether it’s through a subcontractor or not) does not look good for the company brand. However, supporting ethical HR processes and legal practices, even though the company has previously been caught using child labor, can even be good for the company brand. For example, H&M is making money out of making a point of ethical behavior, therefore the company produced their brand H&M Conscious and now defend factory worker’s rights in disputes over wages. (AFP 2017) Making ethical HR decisions can therefore bring more, not less, money into the corporation.

Human Resources in a globalized company is a challenge. The most common HR processes of recruitment, legal advice, and competitive strategies, are all completely different when it comes to a global company. Add in subcontractors, and that makes Human Resources even more of a challenge. Yet, consumers see the company as a whole, wanting the HR process to maintain ethical standards, no matter where or by whom the product has been produced. The use of HR consultants is a growing business and many companies have understood, that it is often cheaper to hire an expert or a HR firm, than to deal with the legal issues and bad press after an unsuccessful HR process. The field of HR maintains a strong foothold in today’s businesses and, in tomorrow’s even more interconnected and global business world.

Literature: 

AFP, 2017, “Top brands including H&M, Zara to boycott Bangladesh garment summit”, Mail Online,  http://www.dailymail.co.uk/wires/afp/article-4249614/Top-brands-including-H-M-Zara-boycott-Bangladesh-garment-summit.html (6.3.17)

DW, 2017, Cambodian garment workers stay poor while dressing the West, DW, http://www.dw.com/en/cambodian-garment-workers-stay-poor-while-dressing-the-west/a-37796952 (6.3.17)

J. Webb, 2012, “'Reverse expat' your way to emerging markets”, Procurement Leaders, http://www.procurementleaders.com/blog-archive/blog-archive/reverse-expat-your-way-to-emerging-markets-220205 (6.3.17)

L.R Gomez-Mejia, D.B Balkin, R.L Cardy, 2012, “Managing Human Resources”, 7^th Edition, chapter 1. Pearson Education Inc. New Jersey

Case 8

Summary of case 8A

·         Nokia, the Finnish mobile phone maker, decided to transfer on of its locations from Germany to Romania in 2008

·         The transfer meant around 4000 Germans were left without jobs

·         The decision to close the factory due to economic inefficiency was made without hearing representatives of workers or the German government

·         Talks about the Romanian factory being established on EU funding, and therefore in large parts funded by Germany, has angered the community even more

Summary of Case 8B

·         Nokia made yet more cuts in 2011, due to economic reasons

·         The company closed down operations in Romania and operations in Salo and other locations were at risk to be transferred to Asia

·         Over 3500 jobs were let go of as a result

Summary of Case 8C

·         Some of the former Nokia Symbian developers were outsourced to Accenture to continue their work

·         The jobs at Accenture did not match their expectations and 40% have now taken package deals and left the company

·         Accenture was unable to provide work for all outsourced staff members

·         The outsourcing has been criticized by the labor union since the start

Challenges:

·         Communicating news of layoffs due to shift in geographical location

·         The long-term effects to a community heavily dependent on one company or factory (Salo for example)

·         The company’s obligation to produce profit vs. obligation towards a community or country

·         Building new factories and then swiftly moving on as cheaper workforce becomes available

·         A companies obligation to an employee after an employee is laid off or outsourced?

Key Concepts, Theory and Models

There are many challenges with terminating a relationship with a staff member. Sometimes the worker chooses to leave a company, other times the company is forced to reduce staff numbers. The so called voluntary separations are those, when the employee leaves the company. This can be due to quitting or retirement. Sometimes severance packages are provided for workers that volunteer to leave (L. Gomez-Mejia, D. Balkin, R. Cardy, 2012, p.232). Typical severance packages are one or two weeks’ pay for each year the employee has worked for the company, according to J. Tavanger in his article “What to do about severance pay?”. (J.Tavanger, 2015). Senior staff, managers and CEO’s receive larger severance packages. For example, the former CEO and President of Ericsson, Hans Vestberg, received 2.34 million USD in severance after he left his position in the company. (Telecomlead, 2017)

The other type of termination, is involuntary, i.e. the worker does not want to leave the company, but is forced to. This type of situation can occur due to discharge (when a staff member is a poor fit for the company), layoffs (when the company is seeking to cut costs), downsizing, or rightsizing. (L. Gomez-Mejia, D. Balkin, R. Cardy, 2012, p.233-235). Most of the time, lay-offs are explained by the company not being profitable. For example, Twitter laid of 9 % of their staff, due to an App idea failing to take off. All staff that had worked on the app were consequently laid off. (S.Fiegerman, 2016) As seen in the Cases 8A and 8B, Nokia has been forced to lay off thousands of people in different locations due to their poor growth. In addition, many people have criticized Nokia for laying off people in one location, only to set up factories in another cheaper location. Then, after a few years, they have laid off those new workers to once again move to a cheaper location.

Involuntary terminations are always a challenge, and so, many companies rely on HR specialists to make sure everything is done by the book. Before layoffs are considered all other options should be explored. These are for example, hiring freeze, changes in job design, pay and benefit policies etc. (L. Gomez-Mejia, D. Balkin, R. Cardy, 2012, p.237-238). Finnish legislation is very strict on how to handle involuntary separation. Claiming that layoffs are necessary due to economic reasons, needs to be clearly visible. An employee is obliged to find all other means, then laying off a person. This can include shifting jobs, additional training etc. If a person is laid off, the company is mandated to offer said person any similar jobs that he or she is qualified for, during the next 4 months (if the person has worked for a company more than 12 years, the time is 6 months). This is stated in the Finnish law as “takaisinottovelvoite”. (Yrittäjät, 2017) 

The procedure of laying off one or more people is very regulated, and relevant spokespersons need to be notified in advance and invited in to the discussions. The first step is to notify the employees of redundancy, the following is to develop the layoff criteria. In many cases, seniority is used to simplify the criterion. Then follows the actual discussions with worker’s representatives and communicating with the laid off personnel. It is important to have more than two people present at these discussions in order to protect the employers back and to ensure everyone understands what has been agreed upon. Coordinating with the media is also an important aspect of laying off people. Sometimes staff will be upset or try to harm the company when they have been laid off, it is therefore advisable to have security on site and escort the redundant people out of the building. In many cases, sensitive data is stored at the desk or computer of an employee, therefore one shouldn’t be allowed back to the desk. After the layoffs are completed, it is important to swiftly move back into normal working pace, to reassure the ones left behind and to make sure they have psychological support if necessary. (L. Gomez-Mejia, D. Balkin, R. Cardy, 2012, p.239-240).

Literature:
 

J. Tavanger, 2012, “What to do about severance pay?”, The Armada Group,  http://www.thearmadagroup.com/hiring-managers/what-to-do-about-severance-pay (5.3.17)

L.R Gomez-Mejia, D.B Balkin, R.L Cardy, 2012, “Managing Human Resources”, 7^th Edition, chapter 6. Pearson Education Inc. New Jersey

Telecomlead, 2017, “Ericsson’s Hans Vestberg earns 2.34$ mn as severance pay”, Telecomlead, http://www.telecomlead.com/telecom-equipment/ericssons-hans-vestberg-earns-2-34-mn-severance-pay-75075 (5.3.17)

S. Fiegerman, 2016, “Twitter Cuts of 9 % of its staff and kills off Vine app”, CNN Tech,  http://money.cnn.com/2016/10/27/technology/twitter-layoffs-earnings/ (5.3.17)

Yrittäjät, 2017, “Työlainsäädönnän muutokset 2017”, Yrittäjät,  https://www.yrittajat.fi/yrittajan-abc/tyonantajan-abc/ajankohtaista/tyolainsaadannon-muutokset-2017-546475 (5.3.17)

Case 7

Summary of Case 7 A

• Employee engagement is not the same as a happy or satisfied employee
• Engaged employees go the extra mile to complete and over exceed on their tasks
• Engaged employees leads to higher profit, 6%
• Engaged employees are loyal to the company and plan their future within, not looking at other options

Summary of Case 7B

• Less than 30 % percent of today's workforce is engaged in their work
• Engaged employees leads to better performance
• Actively disengaged workers harm a company
• To build an engaged workforce:

           1. Use relevant measurement

           2. Engage all levels of an organization every day

           3. Select engaged managers and hold them responsible for team engagement

         4. State clear and realistic goals for engagement

Challenges?

• Measuring engagement and taking it apart from satisfaction
• Getting or creating engaged employees
• What to do with actively disengaged employees
• How to make engagement part of company DNA?
• How to actively uphold engagement?

Theory, Model and Key Concepts

When talking about engagement, leadership is one key aspect to focus on. Without having a clear framework laid out by the company leaders, engagement will eventually fail. Creating an engaged workforce stems from the company strategy. Each and every employee needs to know and understand the company strategy and where the company is heading. Only then will that employee be able to identify how his or her input drives towards that goal. Once that is set, the company can pursue to engage the employees and make them want t go that extra mile to achieve the strategic goal. Taking ownership of the strategy is key in creating an engaged workforce. (D. MacLeod and N. Clarke, p. 76) Not only is strategic goals important, they can also provide a purpose for an employee. Rembach states, that giving a worker a purpose to work for and towards, will lead to more engaged staff. Therefore, the strategy needs to explain why the business is useful for the society, the environment etc, in order to be really engaged in a company. (J. Rembach, 2017)

“People join businesses but leave managers” MacLeod and Clark state in their report Engaging for Success . Managers are the link between the company leadership and the workforce. They are supposed to entail and live out the company strategy and its values. If an employee sees an engaged manager, he or she  will be of the opinion, that the company is engaged. Choosing engaged managers is therefore very important. (D. MacLeod and N. Clarke, p. 80-82)  Managers are there to motivate, offer coaching and feedback. They provide the opportunity for an employee to excel at their work. They treat employees fairly and with respect, setting the tone for the whole working environment. A bad management recruitment decision can therefore be detrimental for a company's profitability and success. (D. MacLeod and N. Clarke, p. 88) One recent example of bad management and loss of income for a company, was in the South African electricity public utility company, Eskom. Due to corruption, the company had previously overpaid for coal and truck services, and had been over producing electricity made by coal. Now that the coal mines are closing and trucker’s aren’t receiving overpay anymore, the company is facing widespread strikes, causing South Africa to have problems with electricity production for its citizens. All of these issues could have been avoided by making good management decisions ( K.Heese, K.Allan, 2017)

Being listened to and heard is an important feeling in private life, but equally so in the office. If an employee feels that managers are listening to their concerns, needs, and wants, they will be more engaged. Listening is a talent that must be actively practised by a manager or anyone in a human relationship. Really taking the time to listen, and try to understand another is not an easy task. “To be able to motivate and inspire others, you need to learn how to listen in both individual meetings and at the group level.”, says S.stibitz in the Harwards Business Review. Listening is an active decision that you have to make, and you have to set it as a priority. (S.Stibitz, 2015) According to MacLeaod and Clarke, being heard in the company is key to produce and engagement employee. “The ‘ Sunday Times Top 100 Companies to Work for’ found that feeling listened to was the most important factor in determining how much respondents valued their organisation. Being heard reinforces a sense of belonging within an organisation and a belief that ones actions can have an impact.” (D. MacLeod and N. Clarke, p. 93)

It is of course clear, that none of the discussed issues will lead to engaged employees, if the organization is not based on integrity, abying to its core values. Saying one thing, and then doing another, will not go by unnoticed by employees, eventually leaving them with mixed sensations or mistrust towards a company. If a company states that it has employee safety as a top priority, but then does not provide safety training, the integrity of the company will be diminished and the workers will no longer trust what managers say. This in terms leads to disengagement from the company. (D. MacLeod and N. Clarke, p. 104)

Literature:

(D. MacLeod and N. Clarke, Engaging for success: enhancing performance through employee engagement, http://engageforsuccess.org/wp-content/uploads/2015/08/file52215.pdf (27.2.17)

J. Rembach, 2017, “9 Devastating Thruths undermining your employee engagement”, Customer Think, http://customerthink.com/9-devastating-truths-undermining-your-employee-engagement/ (3.3.17)

K.Heese and K.Allan, 2017, “Eskom debts need switched-on action”, Business Day, (27.2.17) https://www.businesslive.co.za/bd/opinion/2017-02-15-eskom-debt-needs-switched-on-action/

S.Stibitz, 2015, “How to Really Listen to Your Employees”, Harward Business Review, https://hbr.org/2015/01/how-to-really-listen-to-your-employees (27.2.17)

CASE 6

Summary of case 6A:

·         A young man was found dead after having an epilepsy attack

·         The man was an intern at an investment back, and was said to work exceptionally long hours prior to his death

·         The bank has no way of monitoring working hours

·         Interns often work unreasonable working hours in competitive businesses to stand out and land a permanent position

·         It cannot be proved that fatigue lead to the man’s epileptic attack and premature death

Challenges:

·         Are companies to be responsible for staff hours?

·         Is it right that companies hire interns to work long hours, knowing that the same legislation does not apply to them?

·         Is it the company, the peer pressure, or the person’s own duty to monitor wellbeing?

Summary of Case 6B:

·         Wellness programs offered by companies are becoming more and more common

·         The results of the program ensuring better health and wellness are conflicted

·         Penalizing workers for unhealthy habits does not work, however motivating with carrots is more effective

·         Focus should be put on mental health as well as physical health

·         The ROI is long-term, wellness programs are not a quick fix, or an easy way to save money

Challenges:

·         Should a company invest in wellness programs to increase productivity and cut down sick-days?

·         How does a company know if is effective?

·         Is the cost of the program worth it?

·         ROI is long-term, however staff turnover is higher in todays, project-oriented employment culture

·         What kind of meters can be used for measuring wellbeing?

Key Concepts, Theory and Model

There are several national laws and guidelines for making sure workers safety and health. In the United States the Occupational Safety and Health Act of 1970 (OSHA) lays out the basic guidelines and laws at federal level. The safety at workplaces is monitored by The Occupational Safety and and Health Administration (L. Gomez-Mejia, D. Balkin, R. Cardy, 2012, p.57-574). In Finland health and safety is monitored by the The occupational safety and health authority. Their task is to enforce health and Safety laws, and conduct inspections. (Työsuojelu.fi)

Today, employees are responsible for any and all injuries, accidents and deaths at a place of work. Insurance is provided and mandatory for employees in Finland. In the US there is also a law for workers compensation, in case of an accident (L. Gomez-Mejia, D. Balkin, R. Cardy, 2012, p.568-569). Despite insurances and workers compensation laws, many employees face problems when they have an accident or injury and should be compensated. As Howard Ankin writes, “Employers and their insurance carriers have a vested interest in denying as many claims as possible to avoid having to pay large payouts”. Claims are often denied, due to reasons such as: the employee did not report the injury immediately, the injury was not witnessed, or there was a pre-existing condition, according to Ankin. (H. Ankin, 2017)

Some careers are known to be more hazardous than others. Construction sites are, places where accidents happen on a regular basis, no matter how much preventive action is taken. One issue with construction sites, is that the employees are often foreign, or the contractor is a foreign company, and may not place such strong value on ensuring health and safety laws or insurances. Salon Media recently puclished an article on safety at construction sites in New York. The article is referring to a report made by the Health and Safety Committee of New York, saying that especially non-union construction sites are increasing, and in consequence more Latino construction workers are at risk of injury. Non-union contractors do not place as much value on safety, and therefore, place workers at higher risks. While Latino workers only make up for 30 % percent of the construction workforce in New York, they account for 57 % of all fatalities due to falls at construction sites (M. Arria, 2017)

As shown in the case 6A, fatalities may also incur under uncertain conditions. A young man died due to an epilepsy attack. A tragedy that may happen on its own. But in this case, the man was an intern working for an investment bank in London, a field known for brutal intern working hours and pressure to surpass employer’s expectations.  The man had worked through the night on several occasions prior to his death. The company had no system in place to monitor employee work hours. In addition, in this field it is customary for interns to put in long hours in order to land a permanent position. It is part of the company culture. In these kinds of cases it is extremely difficult to determine whether the death was due to the inhumane working hours. In addition, if it could be established that the man did indeed die due to an epilepsy attack caused by exhaustion, is it the employers fault or is it the responsibility of the employee to make sure he or she gets enough sleep? As the employer doesn’t demand an employee to work through the night, he is not mandated to do so. Yet he or she knows, that if he or she doesn’t, someone else will take his or hers place. (E. Thomas, 2012)

Employers are not only responsible for accidents, but also for keeping employees safe from discrimination, violence, threats etc. at the workplace. In addition, employers can be found to have produced so called cumulative Trauma Disorders, such as repetitive stress injuries at factories or back pains from sitting on the job too much. Employers have a duty to alter physically strenuous work or repetitive movements in order to prohibit future damage. (L. Gomez-Mejia, D. Balkin, R. Cardy, 2012, p.581).

Many employers have introduced wellness programs, that prevent injuries and sick leaves by motivating workers to stay fit and healthy. The benefits of such programs are under dispute, but many feel it is not only beneficial in the long term, but also creates a strong company culture, making the employees feel well cared for. Preventive screening and testing, in addition to motivators for physical activity may help to reduce costs of health care when it comes to treating already existing illnesses, injuries or health problems. Many believe, it is easier and more cost effective to prevent, than to treat a problem. (L. Gomez-Mejia, D. Balkin, R. Cardy, 2012, p.587-588).

Literature:
 

E. Thomas, 2012, “ 'Exhausted' Merrill Lynch intern died from epileptic fit in shower after he 'pulled three all-nighters at bank where employees compete to work the longest hours”, Daily Mail, http://www.dailymail.co.uk/news/article-2511911/Moritz-Erhardt-exhausted-Merrill-Lynch-intern-died-epileptic-fit.html#ixzz4RTj2xoP1 (22.2.17)

H. Ankin, 2017, “Common causes of worker’s compensation Denials”, JD Supra Business Advisor, http://www.jdsupra.com/legalnews/common-causes-of-workers-compensation-96346/ (22.2.17)

L.R Gomez-Mejia, D.B Balkin, R.L Cardy, 2012, “Managing Human Resources”, 7^th Edition, chapter 16. Pearson Education Inc. New Jersey

M. Arria, 2017, “The deadly reality of construction work: Minorities suffer most from workplace negligence”, Salon, http://www.salon.com/2017/02/20/the-deadly-reality-of-construction-work-minorities-suffer-most-from-workplace-negligence_partner/ (22.2.17)

Työsuojelu.fi, http://www.tyosuojelu.fi/web/en/about-us/organisation, (22.2.17)

Case 5

Summary of case:

• Career analyst, Dan Pink speaks about traditional motivators such as salary and bonuses, as being outdated ways to motivate workers
• There is a mismatch between what science knows and business does when it comes to rewards
• Traditional carrots, in terms of bonuses, are researched to lead to poorer results instead of better, when it comes to 21^st century jobs that require innovation and creativity
• The new motivators are instead: Autonomy, Mastery and Purpose.

Challenges

• How to motivate the workforce and keep above-average workers in the business?
• Traditional business is slow to change, for many, bonuses are the only considered incentive
• Can businesses and especially managers change enough to ensure autonomy, mastery and purpose? 

Key Concepts, Theory and Model

There are many ways to motivate an employee. Traditionally, salary and other monetary incentives have been seen as the main motivators. But today, an increasing amount of (especially) young workers, are craving other motivators and benefits.

There are several different components of compensation. There is the base compensation (monthly or hourly salary for example), pay incentives (such as performance rewards) and benefits (on-site gym, insurance, or lunch restaurant, for example). The compensation system can be a mix of the three. (L. Gomez-Mejia, D. Balkin, R. Cardy, 2012, p.340-341)

The base compensation, i.e.. salary, can be based on internal company equity (where a certain job, is always paid the same, regardless of who does the job), or it can be based on external equity, whereas the compensation is based on medium pay for all persons in a country working with a similar job title. A salary can be fixed or it can vary according to performance. (L. Gomez-Mejia, D. Balkin, R. Cardy, 2012, p.341)

Pay incentives, are often based on performance. If a person, team, department or company performs well, an award is given. Often, this is some sort of a bonus on top of the base salary. It is believed, that bonuses will motivate workers to perform better. (L. Gomez-Mejia, D. Balkin, R. Cardy, 2012, p.386)

The case presented above, is of another opinion. Dan Pink is claiming the contrary, that bonuses and pay incentives in most cases reduce productivity and lower results. He claims, that the pay incentives used to be a good way of motivating workers, when the job was very monotone. Today, most people have jobs that demand some sort of creativity and innovative thinking. Studies show, that pay incentives hinder this kind of brainwork and actually lead to poorer outcomes. Dan Pink, says that jobs, that require thinking outside the box, cannot be performed if you have narrowed your vision, into only achieving the goal. (D. Pink, 2009).

Lastly, we come to the benefits. Benefits can vary from company to company. Some offer a wide range of benefits, while others do not offer any. Benefits are things that the company provides of top of the salary and pay incentives. These can include vacation days, on-site childcare, gym-membership etc. More and more companies, are starting to reward their employees with benefits. Dan Pink, also speaks about this development. He speaks of workers being motivated by autonomy, for example. Many people value being able to work when they want to or where they want to. The benefit of having flexible working hours and the permission to work outside of the office is very valuable for some. (D. Pink, 2009) Benefits can also include time spent on “own projects” such as Google allowing workers 20 % of working hours to be put towards creating new ideas and developing them. (J. D’Onfro, 2015)

The future workforce no longer stay motivated by salary and traditional incentives, but demand more. The so called Millenials, are known for their lack of motivation to stay in one company, working to achieve a successful career in a nine to five job, according to author and Public Speaker, Simon Sinek. (S. Sinek, 2016) To the horror of many, these young people are the future of our businesses. That means businesses need to change, in order to accommodate these new needs. Business News Daily lists 15 benefits, that keep employers happy and motivated. These include, among others, no official working hours, family benefits, physical activities, continued education and health care on site. (S. Caramela, 2016) Accommodating these new needs may seem daunting to some, but as Dan Pink says, it may well lead to better performance and a more successful business. 

Literature:

D. Pink, 2009, “The Puzzle of Motivation”, TedTalk, https://www.ted.com/talks/dan_pink_on_motivation?language=en#t-1099099 (6.2.17)

J. D’Onfro, 2015, “The truth about Google’s famous ‘20% time’ policy”, Business Insider, http://www.businessinsider.com/google-20-percent-time-policy-2015-4?r=US&IR=T&IR=T, (6.2.17)

L.R Gomez-Mejia, D.B Balkin, R.L Cardy, 2012, “Managing Human Resources”, 7^th Edition, chapter 10 and 11. Pearson Education Inc. New Jersey

S. Carameka, 2016, “15 Cool Job Perks That Keep Employees Happy”, Business News Daily, http://www.businessnewsdaily.com/5134-cool-job-benefits.html (6.2.17)

S. Sinek, 2016, “Millennials in the Workplace”, Youtube,  https://www.youtube.com/watch?v=hER0Qp6QJNU (6.2.17)

CASE 4

Summary of case:

·         A newly hired employee was assigned a new supervisor

·         The employee was given tasks, that he thought were not part of his job description, yet he completed them anyway

·         The employee thought he was meeting expectations

·         At the six-month performance appraisal, it turned out that employee and manager had a very different view of the situation, leading to the employee considering leaving the company

·         HR stepped in and together with the two set up a plan including performance goals

·         With clear goals to achieve, the employee knew what was needed of him, and even started exceeding employer expectations

Challenges:

·         Unclear job description leads to confusion

·         Appraisal should not take place on six-month intervals, but constant feedback is needed

·         Aligning employee performance with organizational goals is important for motivation

Key Concepts, Theory and Model

The case clearly shows an appraisal system gone wrong, but that got turned around by the Human Resources Department to benefit all. It is critical to have clear job descriptions to be able to have clear and mutually beneficial job appraisal. If the job description is clear, it is easier to identify performance dimensions to measure for the appraisal.

There are many ways to measure job performance, some better than others. In the book “Managing Human Resources” the following measurement models are presented: 1. Relative and absolute judgement, 2. Trait, behavioral and outcome data. These systems all have their benefits and downfalls.

Relative measurement, means measuring performance in relation to other employees, whereas absolute judgement is based on performance standards. Traits measure personal characteristics of an employee (energy, decisiveness for example). Behavioral measurements focus on behavior, as the name entails. Instead of characteristics, certain behaviors are measured (for example the ability to communicate in a team). Lastly, the outcome data tool, which mainly focuses on shared set goals, and to which extent they have been met. (L. Gomez-Mejia, D. Balkin, R. Cardy, 2012, p.254-260).

Although performance appraisal meetings often are held annually, or on a six-month basis, it is important to not limit feedback to these situations. Continuous feedback, goal setting and development is crucial for keeping workers motivated, on target and performing well. In the case, the worker was not given any feedback during the evaluation period, and was surprised by the outcome. Once the feedback was given on a continuingly the relationship between manager and worker also improved. But giving feedback can be tricky. Once clear goals and expectations have been set, it is easy to give feedback during the appraisal. The Entrepreneur website gives five tips on how to give feedback continuously. 1. Establish a culture of trust. Make the employee feel safe, don’t give feedback to be mean. 2. Give at least as much positive feedback as negative. 3. Be specific. 4. Give feedback immediately 5. Be encouraging, even if someone has made a big mistake. Ask for their perspective, and explain what you expect in the future. ( S. Halford)

Every organization has (or should have) a mission, vision and strategy. For performance appraisal, the vision and strategy are great starting points. By relying on the vision and strategy, clear goals can be laid out for the departments, teams and even individual workers. Say for example that the vision of a company is to become the largest shoe store in Finland. To become the largest shoe story, the company’s strategy includes selling shoes worth 1 million euros. From there we can create a KPI (Key Performance Indicator). In this case, it could be the sale of 1 million worth of shoes. Let’s say that the company has 5 stores in Finland, for each store we can then divide the sales target into a sales target of 200 000 euros per store. In each store, there are ten employees. Each employee then has to annually sell shoes worth 20 000 euros. Divided quarterly each worker’s sales target is 5000 euros. Managing that goal is easy both for the employee and supervisor of the shoe store. The KPI needs to be clearly measurable and represent the vision or strategy of the company. Setting clear KPI’s will feed into the vision of the company. (Mindtools).

There are several different kinds of tools, that can be used for implementing the vision and strategy, such as the Balanced Scorecard and OKR. The Balanced scorecard includes strategic non-financial measures to give a view of the company’s performance (Balanced Scorecard Institute). 

The OKR (Objectives and Key Results), is a management methodology, that helps workers and managers set clear goals for the work. This helps in performance appraisal. Each goal should be clearly stated, measurable and have a deadline (Better Works).

Setting clear goals and evaluations, will according to studies, keep the workers more motivated an performing higher. According to Prof. Edwin Locke and Prof. Gary Latham, and their Goal Setting theory, people who have difficult but attainable goals perform better and lack of accomplishments leads to job dissatisfaction. (D. Art)

Setting clear goals and giving feedback is not only beneficial for the company and its strategy. It also helps the manager give appropriate feedback and appraisal. And as an added bonus, the employee is more motivated, performs better and feels accomplished.

Literature:

Balanced Scorecard Institute, “Balanced Scorecard Basics", https://www.balancedscorecard.org/Resources/About-the-Balanced-Scorecard (3.2.17)

Better Works, “What are OKRs?”, https://www.betterworks.com/okr/ (3.2.17)

D.Art, “A Theory of Goal Setting By Locke & Latham”, Chron, http://smallbusiness.chron.com/theory-goal-setting-locke-latham-1879.html, (3.2.17)

L.R Gomez-Mejia, D.B Balkin, R.L Cardy, 2012, “Managing Human Resources”, 7^th Edition, chapter 7. Pearson Education Inc. New Jersey

Mindtools, “Performance Management and KPI’s”, MindTools, https://www.mindtools.com/pages/article/newTMM_87.htm (3.2.17)

S. Halford, “Five Steps For Giving Productive Feedback”, Entrepreneur, https://www.entrepreneur.com/article/219437 (3.2.17)