Apply motivation theories to explain how rewards, job design, leadership and workplace conditions influence employee effort and performance.
Frez PLC (FR) has 6000 employees in its 100 supermarkets and 250 in its head office. FR operates a 360-degree feedback appraisal system for head office employees. FR’s directors believe that this system has improved retention and morale of head office employees. This year, to reduce head office costs, FR offered head office employees the option of teleworking, which 60 % accepted. They will work at the head office only one day per month.
Frez PLC (FR)
Frez PLC (FR) has 6000 employees in its 100 supermarkets and 250 in its head office. FR operates a 360-degree feedback appraisal system for head office employees. FR's directors believe that this system has improved retention and morale of head office employees. This year, to reduce head office costs, FR offered head office employees the option of teleworking, which 60 % accepted. They will work at the head office only one day per month.
Each FR supermarket has 10 departments. Departmental managers have concerns about their workload caused by their large span of control. Labour turnover at FR supermarkets is increasing each year because departmental managers are leaving. In January, FR increased its supermarket opening hours and hired an additional 1000 part-time employees. FR is considering extending its 360-degree feedback appraisal system to all supermarket employees.
Recently, demand from supermarket shoppers for a home delivery service increased, although industry experts disagree on whether this demand will continue. FR's main competitors already provide delivery services.
FR has decided to launch a home delivery service. It will require 500 vans, which would be replaced every five years. FR is considering two options:
- Option 1: purchase the vans at a unit cost of each, financed by a five-year bank loan at 3 % interest.
- Option 2: Lease the vans at a unit cost of per year per van. The minimum term for the lease will be 24 months.
FR already borrowed $50 million in 2019 to finance the modernization of its supermarkets.
Explain, with reference to Maslow's motivation theory, how teleworking may damage employee motivation at F R 's head office.
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 AFA 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 AFA.
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, AFA 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 had similarities: they were the same age, had similar university educations, and neither fitted perfectly well in Kenyan society. They had, however, an important difference: their leadership style. Susan, though efficient, hard-working and committed, was very task-oriented. She liked bureaucracy, formal accountability, and a clear chain of command. She had a scientific approach to decision-making. Her staff found her cold, official and impersonal. Martin, on the other hand, had a much more laissez-faire style. He believed in empowerment and delegation. Though he felt anxious when he saw there were minor problems that he knew he could fix quickly, he was always careful to let supervisors resolve problems. He was also warm, friendly and outgoing. Susan liked The Imperial very much; however, she still resented the fact that Martin had been appointed manager instead of her. As a result, she wanted others to think that GP had made a mistake in selecting Martin instead of her. She focused harder than ever on her job. She demanded more of the employees and was intolerant of even minor mistakes. The hotel, she was determined, should always be absolutely spotless and shining. However, as she became more demanding, the employees perceived her as too autocratic. They began to complain amongst themselves. The networks of informal communication amongst the employees enabled gossip and messages to move quickly through the hotel, such as stories and anecdotes of Susan acting overly autocratic. Fearing that the situation would soon become a major problem, Martin suggested that she should soften her leadership style. However, in every appraisal meeting, she resisted any discussion about how she managed staff. Martin did not want to dismiss her; he highly regarded her as a valuable member of staff, whose role in the Housekeeping Department was essential. A French travel journalist who had recently stayed at The Imperial had written an article praising the high quality of its housekeeping: “We reach here the top of the highest international standards”, he wrote, “in terms of benchmarking, The Imperial is très magnifique”. Martin fully appreciated the professional importance of Susan. However he believed that, professionally, she needed leadership training. In November 2013, a particular situation brought these tensions to the surface. One employee in the Housekeeping Department, Guthoni, was frequently calling in sick and did not come to work. Rather than enquiring about the reason, Susan dismissed Guthoni for repeated absenteeism. What Susan did not know is that Guthoni had been diagnosed with a terminal illness and required frequent medical treatment. Upon news of her dismissal, the other employees were outraged. They decided to go on strike in December, one of the busiest months of the year for The Imperial. When Martin heard of the planned strike, he was very worried. If it occurred in December, The Imperial would not be able to reach its annual target profits. He started negotiations with employee representatives. He realized that the collective action was giving the employees a sense of solidarity that they previously never displayed. He also noticed that many other frustrations were coming out into the open – and he ironically saw the threat of strike action as empowering for the employees. They seemed to be taking responsibility for the operations of the hotel to a far greater degree than before. Martin wanted to channel their frustrations toward constructive ends. He believed that The Imperial would emerge stronger from the conflict. He knew that he needed the full commitment and support of all the employees because big changes were on the horizon.
Equally important, he had to address the long-term external issues facing The Imperial because of changes in the external environment. Strategic decisions were necessary. He considered three options for The Imperial. Option 1: Make the case to GP that The Imperial needs to close for a whole year to allow for mass renovations in order to upgrade the hotel and reposition it to its former place as the premier hotel in Mombasa. Martin had recently travelled to Dubai and Muscat to see the most luxurious hotels in these regions. He understood that The Imperial had reached the decline phase of its product life cycle and needed rejuvenation. He believed that it was possible, although this would require substantial investment: • in the physical condition of the hotel almost to rebuild it entirely • in its marketing in order to relaunch it, maybe even with a new brand name. The new hotel would attract the same customer types, but the product would be much improved. It would also need an improved workforce to match its new vision. Martin sketched out two possible approaches for a Human Resources Strategic Plan (Appendix 3). Option 2: Change the nature of the hotel by transforming all the rooms into self-contained apartments with small kitchens. The target market for these apartments would be business travellers staying at least one week. The marketing audit had revealed that: • there is an increasing demand for such apartments • very few hotels in Mombasa offer such apartments • the market is still small • the market has high growth potential. The revenue from these apartments would almost match the revenue from the current hotel operations; it would be more stable, with fewer seasonal fluctuations; both fixed costs and variable costs for cleaning and maintenance would be much lower. The apartments would be serviced once a week, rather than daily. According to Martin’s workforce planning, this option could reduce the housekeeping staff by 70 %. Option 3: Form a strategic alliance with the famous safari tour company KenSafar. Together they would offer a two-week package tour. Customers would arrive in Mombasa, spend three nights at The Imperial, go on a seven-day safari tour, and then return to The Imperial for four more nights. This would allow tourists to go on a safari, first getting adjusted to the time zone and climate and later rest for four days before returning home. The owner and manager of KenSafar was Kamau Onyango, a spontaneous, dynamic and charismatic Kenyan who had many networks and contacts, and intuitively knew market trends, even without market research. Kamau insisted that if the strategic alliance were to go ahead The Imperial would have to: • make some improvements to the appearance of the hotel • pay Kensafar a 20 % commission for all hotel guests staying at The Imperial and booking through KenSafar • undertake a marketing audit.
Explain how being empowered by Martin Kimathi can positively affect the job satisfaction, motivation and productivity of the employees at The Imperial.