Apply motivation theories to explain how rewards, job design, leadership and workplace conditions influence employee effort and performance.
AFA’s growth created diseconomies of scale, declining gross and net profit margins, management unhappiness and concerns about recruitment. Sam and Finn disagreed about fringe payments, a worker cooperative and a possible takeover. The potential international retailer could provide fresh capital, online presence and intangible assets, but might not retain employees or managers and could threaten AFA’s fair-trade mission and stakeholder relationships. The existing financial data and takeover details in this question’s root must remain available to the user.
AFA was at a critical point. Sam and Finn had not fully resolved their disagreements. They seemed to be constantly arguing but Sam could also see that new issues were emerging. At their most recent meeting in early 2018, Finn provided the following financial information to illustrate the declining trend in gross profit margin.
Table 1: Selected financial information for A F A
In addition, the recruitment of new staff was becoming a problem, as the wages that A F A offered were much lower than fair trade competitors. In a meeting between Sam and Finn, they argued over the best way to financially reward and motivate newly recruited workers, given the lower wages paid by A F A.
Finn argued for a reward system based on fringe payments (perks), as this was being offered by AFA's main competitors, the supermarkets. Sam countered that AFA should form a cooperative involving all physical stores. He argued that creating a worker cooperative could give all members a sense of community and fulfillment and motivate them so that all members of the cooperative would benefit. There would also be additional stakeholder benefits. Finn argued that a worker cooperative was too difficult to organize and operate and would not solve the problem of recruiting staff.
In the meantime, A F A was continuing to attract a good deal of publicity. Sam had appeared on a national television show about young, innovative entrepreneurs. After the television show ended, one very large international retailer with a strong online presence contacted Sam about the possibility of a takeover. Sam initially refused, but as the details of the takeover became clear he started to seriously consider the opportunity. By selling the business Sam would have enough fresh capital to start new, innovative businesses and make some of his other visions and ideas into reality. In addition to the corporate social responsibility (CSR) AFA was generating, the takeover would give AFA access to other intangible assets. However, the international retailer had indicated that it could not guarantee keeping all existing and newly recruited employees and managers. Finn and Kim were both very worried that Sam would even contemplate the takeover, which they felt was an act of betrayal to all the stakeholders of AFA.
Explain one benefit and one cost to AFA of using fringe payments (perks) to financially reward staff.
Martin and Susan were internal stakeholders with a conflict over Martin’s appointment, Susan’s resentment, her task-oriented and increasingly autocratic management, and Martin’s laissez-faire style, empowerment and delegation. The Imperial’s fixed costs could include the salaries of hotel staff, fixed electricity or internet charges, local property taxes and contracted promotional costs; under Option 2, fixed costs and variable cleaning and maintenance costs would be lower because apartments would be serviced weekly rather than rooms daily. Martin considered three Ansoff choices: Option 1 would renovate and relaunch the existing hotel for similar customers, Option 2 would transform rooms into apartments for business travellers, and Option 3 would form a strategic alliance with KenSafar to reach package-tour customers. Empowerment could give employees authority, responsibility and autonomy, increasing job satisfaction and motivation and encouraging better productivity. Susan was efficient, hard-working and committed but bureaucratic, formal, cold and autocratic; Martin was warm, friendly and laissez-faire, allowing supervisors to resolve problems. Martin’s leadership could support empowerment, while Susan’s task focus could protect housekeeping standards but damage morale.
Explain how being empowered by Martin Kimathi can positively affect the job satisfaction, motivation and productivity of the employees at The Imperial.
Green Clean (GC)
Green Clean (GC) is a private limited company controlled by the Hitta family. Its unique selling point (USP) is offering high-quality, reliable cleaning services by teams of professional cleaners who clean offices and houses.
GC has strong ethical objectives. They only use eco-friendly cleaning products and pay their employees fair wages. Labour turnover is low and many cleaners have worked for the company for over two decades.
However, the cleaning market has become very competitive. GC has been slow to react. Other cleaning companies are beginning to offer a wider range of services. GC's management has decided to introduce a gardening service to maximize profit.
GC will recruit professionally trained gardeners. As it is very difficult to find professional gardeners in the market, G C will pay them 20 % more than its cleaners. G C prefers to use external recruitment. GC's management will also offer cleaners the opportunity to become gardeners even though off-the-job training costs are very high. If most of GC's cleaners choose training, the company could fall short of workers to meet the demand for cleaning services.
The cleaners are becoming demotivated because they are unhappy about the difference in pay between cleaners and future gardeners. They believe that gardeners are not more skilled than cleaners but just have a different skill set. Human resource managers are concerned about the potential impact of demotivated cleaners and are looking for ways to improve morale. One option they are considering is to offer cleaners an employee-share ownership scheme. Shareholders, however, are opposed to this proposal.
Explain one advantage and one disadvantage for GC of using off-the-job training for the cleaners who would like to become gardeners.