Mr. Brad Holden is the executive vice president of the family-owned business chain of six branches, Plaza Grocery, in the metropolitan area. Mr. Holden’s recently been swamped with problems regarding his employees, specifically the stock employees considering they are paid according to what is stated in the hourly wage rate in the Federal Law. He observed that they are not efficient and effective enough in their jobs, which resulted to empty shelves and slow service most of the time.
He also had a hard time in obtaining enough applicants for Plaza Grocery and worse is his employees are doing only the menial level of effort in their jobs. He also noticed that his employees are lacking motivational drives to strive harder in performing their jobs.
With all these that he is facing through, he finally decided to look for possible solutions to these problems. He came up with consulting to a local compensation expert and talking to a small group and personally asking them what can remedy their slow and poor performance.
The compensation expert recommended to Mr. Holden that he resort to the more contemporary compensation system. In the small group, some suggested an increase in their hourly wage rate, the others pitched in about incentives to be given for them to be motivated and work faster, while others did not have any comment.
For this case study, we will be identifying the likely issues and problems. After which, we will provide the framework or basis of argument which will relate the lack of motivation or drive of the stock employees to the various models, theories and concepts discussed in class. We will recommend and suggest certain alternative courses of actions which might help Mr. Holden to properly motivate his employees as well as his employees to improve their performance.
Brad Holden is facing a situation in his grocery store where there is trouble obtaining enough stock clerks/carryout workers to apply for the job. And when these applicants get hired they seem to lack the motivation to carry out their job which led to inefficient service and long checkout lines. These minimum hourly wage workers have expressed a desire for additional compensation. The problem that Brad needs to solve is which of the major economic incentive system he can use to motivate his employees to become productive and also to attract other applicants to apply for the job.
The objective of this study is to identify different theories, concepts and models under human behavior that can be applied to understand the situation Brad is facing. It will also identify and discuss what possible economic incentive system the management can use and then provide system recommendation that would lead to the best way in solving the problem.
IV. FRAMEWORKS/BASIS OF ARGUMENTS
The difficulties that arise in Brad Holden’s family-owned grocery stores are attributed to the lack of motivation of employees. Lack of motivation can be a result of poor rewarding of employees. In Plaza Grocery, employees are only paid the usual wage rate or the minimum federal hourly wage. This can be a factor as to why the workers lack motivation in performing an effective and efficient job. Money, as a means of rewarding employees may serve as a great help for the company. It has status value and it represents to employees what their employer thinks of them. Using money as a reward is applicable in some of the motivational models previously studied.
The expectancy model can be related to the company’s situation. Employees in Plaza Grocery wanted a higher hourly wage rate which implies that money can act as a strong motivator. If an employee wants more of it (valence), he believes that putting up an effort will produce successful desired performance (expectancy) and he trusts that monetary reward will follow better performance (instrumentality).
Brad Holden can also consider the concept of incentives linking pay with performance. In order to get the employees motivated, he can adopt profit sharing. For profit sharing, employees are given a portion of the business’s profits. An implementation of this would get them encouraged to work harder and do whatever it takes to increase the sales of the business since they are looking after the possible income at the end.
In addition, once the issue on wage is settled, the management can also do performance appraisal. Through this, performance of the employees can be evaluated and certain information about their work and its improvement will be discussed. This will make way for the employees to be more motivated and get rewarded.
The concept of performance feedback can also be related to the situation of Plaza Grocery. With proper implementation of feedback, employees will be aware of what to do and how well they are meeting their goals. Some of the guidelines in giving feedback are the following: be specific, allow room for choices, include positive factors to praise, establish priorities for change, and check for understanding to name a few.
V. ALTERNATIVE COURSES OF ACTIONS
Nowadays, we can find different kinds of grocery stores around us and the supermarket is being dominant than local market in terms of quickness and accessibility to people. As we mentioned, it is not wrong that quickness of the market is one of the crucial thing that has to be maintained first. To solve Plaza Grocery’s problem about its workers’ lack of motivation, we would like to recommend three alternative courses of action.
First, Brad Holden should figure out why employees seem to lack motivation once he hired them because motivation can be the core of the power source that can make the work environment vivid or dull. Hence, we would like to state our first course of action, which we call “ownership project”. Brad Holden should encourage and convince the workers to think of themselves as a co-owner of the company or workplace. Before the hired applicants become permanent employees, they would undergo an assessment. Their behavior in the workplace would be examined for at least one month to evaluate their attitude toward their work. After the examination, Brad can educate the qualified employees through orientations on how to work efficiently and effectively.
Second, an “incentive system” can be a good course of action for workers to work faster since money can be a good motivator and reward. If Brad Holden continues to pay the employees at the minimum wage without bonus, the employees would not exert effort to do their work harder and faster. Increasing of hourly wage rate can be a course of action, along with providing incentives. When the hourly wage rate is increased alone, all employees would benefit. This may increase the workers productivity and motivation, but not fully since the benefit applies to all. Therefore, it will be better if Brad Holden applies an incentive system or bonus system. The incentives given would be based on the employee’s performance, measured by his/her productivity. Through this, it can be more assured that the workers will be motivated in their work to earn their money more.
Third, under incentive system, manager should appraise who got the highest performance result among the workers, and provide incentives like support for old parents or education of children. This alternative course of action is enough to motivate workers because these concern their families. Brad Holden will have to make records of each employee to check their performance and growth and this environment can create competition among workers.
Plaza Grocery experiences problems with its employees due to low compensation and lack of incentives. Even after consulting a local expert, the same causes are pointed as the reason for the employees’ poor performance. Given this situation, we recommend the company to apply the second alternative course of action, which is to increase the wage rate and apply an incentive system.
The store, having only six branches, can easily increase the wages due to the relatively small number of workers. However, once an increase is implemented in one branch, the same shall be applied in the other branches to emphasize the sense of equity among the employees of all branches. Although this may entail costs for the company, the increase in workers’ productivity may lead to higher sales, providing more revenue. In the long-run, the benefits would outweigh the costs.
Although increasing the wage rate may motivate the employees to work harder, it is not enough because it would not always and ultimately lead to the satisfaction of their needs. What the company can do is to adopt an incentive system. The incentives the company can offer may be financial or non-financial in nature. Financial incentives would include performance bonuses, social security benefits, and paid absences. Non-financial incentives would include recognition and feeling of achievement, advancement opportunity, and flexible scheduling.
Even though it is said that money is one of the best rewards, the non-financial rewards can also stimulate the employees’ motivation. It is not enough that employees are financially well-off. For them to stay long in the company, both the salary and the working conditions have to be satisfied. However, as we learned in class, according to Herzberg’s Two Factor Model, the pay is part of the hygiene factors, while the work itself is a motivational factor. Therefore, the employees must first be satisfied with their wage before the company can meet the motivational factors.
In conclusion, Plaza Grocery has to strengthen its workforce’s motivation by providing them just wages and work incentives. This entails an investment on the part of Plaza Grocery. But once the workers are motivated and their productivity gradually increase, Plaza Grocery will see itself being better-off in the future.