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  • 4. Expectancy Theory Case Study Summer 2013
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Introduction

 

This case will study will focus on how expectancy theory can be used to help identity and fix productivity problems in Lion Enterprises. By analyzing the lack of proper motivation using the ideas of expectancy theory, solutions will be identified to help resolve the issues and make the company productive again.

 

Case Scenario

 

Lion Enterprises is a national sales & marketing firm that operates with one main branch location as well as two supporting locations. The main facility is where all the sales representatives are based from and is also where meetings are conducted with teammates and managers to discuss current sales campaign. The second facility involves graphic design artists who handle all print products while the third office houses the IT department that manage website design and all other internet marketing concerns including technological support. This is a fast paced work environment in which pay structures vary amongst and within departments due to seniority. Motivation is the key to keeping operations moving smoothly because all three areas are dependent on one another. The Sales team is compensated using salary and commission pay structure, graphic design and website design is paid by salary and IT is paid hourly.  The main location’s efficiency is lacking on key elements involved in the sales campaign, such as closing accounts, new sales and increase customers internet exposure. Management faces the challenge of increasing everyone’s production effectively as this has been a reoccurring problem that national headquarters has become aware of.

Jess (Sales) Jessica is behind in her campaign due to several reasons, including customer complaints regarding technical issues not working properly, slow turn around on ad-design, and lack of motivation to meet her sales needs but putting in enough effort to look for new clients.

Paula (graphic Design) Paula is the only graphic design artist for 18 sales representatives. Since she is salaried employee, her office hours are from 8-5pm.  The company policy mandates that she completes 10 ad designs a day. She is completing 5 great and 5 of poor quality ones, in which she is fully utilizing all the sales reps changes or suggestions. The “crappy” ones most often have to be reworked before the customer will commit to the design, which significantly hampers the company’s effectiveness and productivity.

Brad (website Design) Brad is the only web designer for 18 sales representatives. Since he is salaried employee his office hours are from 8-5pm.  The company policy mandates that he completes 10 websites a day but is not reaching his daily or weekly goal. This is causing website launch delays. As a result, the company has the added challenge of frustration from current clients and which requires time and effort on behalf of the sales representative to have to go revisit these customers who are at risk of taking away from their current campaign.

Keith (IT) Brad handles all technology issues for the employees and is sometimes called in to see why an internet marketing campaign isn’t working properly. There are times when the explanation of the problem includes poor website creation or a result of sales reps not providing the information necessary for the website to function properly. He is paid hourly but overtime is frowned upon since it takes away from company profits. Due to the nature of his position, it is almost impossible to impose a quota for Keith like the other staff members. Due to the lack of a quota, Keith is able to work at his own pace, without the pressure of making a time limit imposed by the quota and is thus accumulating a significant amount of overtime hours.

Lauren (local district manager) Lauren is responsible for the overall campaign. This included ensuring the campaign reaches objectives and stay on pace, especially since there are product deadlines to contend with. In the event that the campaign experiences any difficulties, it is Lauren’s responsibility to figure out the underlying issues that are causing the office to run so far off pace and fix it.

Analysis of problems using the expectancy theory

There are several problems that Lauren is faced with, especially in terms of the motivation of her employees. Most of the problems deal with that the current situation leads to low motivation is from policies that drop the employee's expectancy, instrumentality, valence, or a combination of the three. As expectancy theory uses all of these factors multiplicatively to determine motivational force (Vroom, 1964, 1995), having a policy that lowers just one of these can result in employees not being motivated.

 

One of the first things Lauren will need to address is the expectancy of the employees.  Expectancy is the perceived link between effort put in and performance accomplished (PSU WC L.4). This is a particular problem with the artist and Jess the sales rep. With Jess she puts in a lot of effort and finds new accounts but is having trouble closing sales due to things out of her control. Since her commission is based off of closing sales, Jess’ expectancy is being negatively affected. She works really hard and puts in effort but not being as successful as she would like due to things she cannot change. The link between hard work and success is low which leads to lowering her overall motivation.

 

With the artist, they have a quota that is not possible for them to adequately obtain. Even though they can put in a lot of effort they can still fall behind and on work with returns of sub-par work. In the case of Paula, she does not link high effort with performance. She can put in a lot of effort by producing all good work and fall behind, or she can slack on some and meet her quota. Since Paula is associating quantity as the measure of good performance over quantity, she is motivated to produce more rather than produce better ads. On the other hand, Brad perceives quality work as a better measure of performance rather than meeting his quota. It is important to note that expectancy is based on perception of what is good performance (PSU WC L.4). As with Brad and Paula, both have the same goal and company measure of good performance, (10 good ads and websites a day), but both have a different personal idea of what is a good performance. Brad measures performance by the quality and Paula, use quantity to measure performance.

 

Instrumentality is also a factor that Lauren must increase. As defined in the lesson commentary (PSU WC L.4), instrumentality is the link between what is done and what I received. As the reward system is usually a cause for low instrumentality and the reward system at Lion enterprises does little to encourage quick, quality work. First, the pay scale is not based on the quality of work. It is instead based on how long one has been with the company. As the lesson notes (PSU WC L.4), pay based on seniority makes the relationship between high performance and good reward weak. Also, it can lead senior members to not work hard anymore since they have reached the highest level of reward for their work.

 

Another thing lowering the instrumentality of the employees is the lack of any reward for good work in a timely fashion. The artist for example has no reason to make 10 quality ads and websites since there is no reward for doing such. It is perceived to the employees to just finish the work so they avoid the negative attention of not meeting their quota. Brad for example, focuses on quality and does not submit a finished product until it is ready. While what he produces is good he gets in more trouble since he doesn’t produce enough. On the other hand, Paula produces 10 ads a week but some are bad. While others may not like her bad work, to her it is better to produce 10 ads rather than less really good ads. This leads to the perception that the performance of quantity is better for the individual employee rather than the production of quality.

 

Furthermore, especially in the case of Keith, there is no reason for him to work quickly. While the money produces a good instrumentality for him to work a lot, in his mind, it benefits him to work slow and collect more overtime as he values that extra money over his free time. There is nothing that raises his instrumentality to work faster. If he had an incentive to work faster, such as a bonus for working quickly or even a negative consequence for using too much overtime, it might encourage him to work better and faster.

 

Lastly, in order to better motivate her employees to work the way she needs them to, Lauren will need to identify what the employee’s value as an incentive. As each employee will prefer different things, simply just giving everyone more time off for good work, or a monetary bonus, may not work. This perceived value of what is received is known as valence (PSU WC L.4). Unlike the other factors, valence can be positive or negative. With positive valence outcomes being something the employees want, and negative valence being outcomes the employees would like to avoid.

 

Consider Keith, he obviously values the extra money he gets from overtime. Since he uses so much overtime, giving him a monetary bonus would be attractive but giving him a vacation or extra time off for a good job might not be as effective as he seems to be ok with being at work. Also since he works so much, it is safe to assume he needs or really want the money. So, something like being fired may be a very successful deterrent. As an example of using both positive and negative valence to motivate the employees, Lauren could perhaps give a bonus to Keith for completing his work quickly and having few complaints. Since he values money, this bonus would be a positive valence motivator to make him work quicker. Lauren could also put in a policy of firing people who abuse overtime as it hurts the company. As Keith seems to need the money, this negative valence

 outcome could cause him to avoid using a lot of overtime.

 

It is important to reiterate the point that all of the factors must be addressed. As noted by Vroom, motivation is a multiplicative function of expectancy, instrumentality, and valence. If any of these are low it will cause an employee to be less motivated (Vroom, 1964, 1995).A good example is Jess. She has good instrumentality in that her pay is based on the number of sales she has. She values the pay so the valence is good. However, she is losing motivation to her low expectancy factor. She has the perception that her hard work won’t lead to high performance and she doesn’t have the opportunity to succeed, due to other issues in the company. Even though she has things to motivate her, it doesn’t seem possible to her to succeed and all the bonuses in the world could not motivate her more since she perceives she doesn’t even have the opportunity to obtain them.

Policy Changes to Increase Motivation

After much consideration and research into the issues that were counterproductive for the company as a whole, management has decided to implement the following policies for the company as a whole:

 

Given the fact that production has been a major issue and that the company has taken on a work load that is not matching the employee’s abilities, the following policy will be implemented until the company is in a position to hire more employees:

 

1. The target range for output will be temporarily lowered to five a day. The past output of 10 has been too pressing for the employees, and the objectives have not been reached, or have been reached with poor work that has been rejected by the customers, causing further delay. Those employees who are able to meet the output requirement of 5 a day will be rewarded. Each quarter those who have had a positive evaluation pertaining to production will receive a bonus, whether they are a salary employee or an hourly employee.

 

By lowering the target range for ads, the employee’s expectancy will rise. As now they can see that they have the ability to actually meet their quota, unlike when the quota was too high and the employees believed they did not have a chance to succeed.

By offering a bonus for employees that do more quality work their instrumentality for quality has also raised. As now they have a reason to produce more good work.

2. Sales employees will have different criteria for quota. They will be rewarded for consistency and reaching fiscal goals per quarter. Commission and base pay will begin at 50/50 ratio and move up  to 65/35% ration when the employee can meet a goal of $25,000 in sales within a single quarter and progress to a cap of 75/25% when sales of $50,000 are met within a quarter. They will also be subject to the bonuses offered company-wide for production, revenue etc.

 

This change will help the sales staff stay motivated by putting them more in control of their commission. Before commission was just based on closing sales this depended too much on the success of the artist and IT. Now the sales staff has the opportunity to have their effort directly reflect their performance.

3. Those employees who are able to produce more towards the quota in saleable work, such as 6 a day instead of 5 will receive a higher bonus. (Those who increase the income of the revenue of  the company will get a higher percentage of that revenue in their bonus!)

 

This change will raise instrumentality of the artists as it gives them a reason and incentive to go above and beyond. This change also emphasizes quality to prevent workers from just making a bunch of ads in order to get a bonus.

4. For those employees who are willing to work overtime, the overtime will need to be shown as productive. If any employee is utilizing company overtime with inferior work that is rejected by the customer, he/she will lose a day of work the following pay period. On the other end of the spectrum, those employees who are willing to work overtime with productive, salable work produced will be rewarded with being paid double time instead of time and a half. Salary employees who are willing to work overtime will be rewarded with an extra paid vacation day each quarter.

 

By lowering the benefit for working excessive overtime, the employees will be encouraged to work faster. If more time is needed for a specific project the option is still there and does not punish people that use overtime for the good of the company.  The employees now have positive valence reasons to work faster and negative valence outcomes to abusing overtime.

5. Those employees who do not wish to utilize any vacation days will be able to ‘’turn them in’’ at the end of the fiscal year, and will be given the pay equal to their vacation time. This option is contingent on their quarterly evaluations showing that they produced saleable material for our clients.

 

By letting employees who do not use vacation time to turn them in for extra money the valence for the employees will increase as they get to choose what they think is valuable. If they want time off, they can use it but if they don't they can receive money for those days.

Evaluations will be conducted for each department at the end of each quarter. Each employee will receive an evaluation whether he/she is salary or hourly. These evaluations will be critical in the bonuses that will be awarded, and critical for the employee to be able to move up the ladder in the company.

Effects from Policy Changes

Jessica: Previously Jessica had lacked motivation to bring new business to company and had trouble retaining clients due to complaints with the creative departments. By increasing the rewards for things in her control like bringing in new clients, Jessica has experienced an increase in her expectancy since her hard work is the primary factor to her success. With increased instrumentality for the creative department to produce quality work quickly Jessica has also had an easier time keeping current clients and closing accounts which have also helped increase her motivation.

Paula: By reducing the high quota Paula can now work at a pace that suits her and increases her expectancy as she now believes she is in a position to succeed. She also has experienced a jump in her level of instrumentality to produce quality with the bonus for good work. With her increased level of quality work she has had fewer returns and she is less backed up with her work.

Brad: With the quota gone Brad now feels less pressure to finish websites and customer complaints have dropped. With the new policy that gives him extra time for working longer each week and making quality websites, Brad now has a reason to stay and work longer to get the websites finished sooner.

Keith: With the changes to the overtime policies Keith works at a much faster pace. With his positive valence reason for working longer gone, he now does his best to finish on time. He now uses overtime only when there are multiple IT issues on big accounts so he does not lose days in the next pay period. Keith's increased pace has resulted in happier clients and employees who can now count on Keith.

 

 

 

References:

World Campus, PSU (2013). Lesson 4:Expectancy Theory. Retrieved from https://courses.worldcampus.psu.edu/su13/psych484/001/content/lesson04/printlesson.html

Vroom, V. H. (1964). Work and motivation. New York: Wiley.

Vroom, V. H. (1995). Work and motivation (2nd ed.). New York: Wiley.

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