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Overview/Introduction

Reinforcement theory is the process of shaping behavior by controlling the consequences of the behavior (Helms, 2006).  It is one of the older approaches to motivation; derived from B.F. Skinner's (1969) work (Redmond, 2010).  With the use of rewards and punishments, desired behaviors can be reinforced, while unwanted behaviors can be extinguished.  Reinforcement can be implemented into many different situations where individuals are trying to motivate others, as well as meet a variety of different needs. These different reinforcement systems deal with responses to stimuli, and their consequences.  Behavior is punished or reinforced in positive or negative ways.   After Skinner published his findings on the reinforcement theory in 1969, application of theory concepts in an industrial setting have been extensively studied.  These studies have proven that reinforcement theory and behavior modification can help management significantly with employee motivation. 

"Reinforcement theory suggests to managers that they can improve employees' performance by a process of behavior modification in which they reinforce desired behaviors and punish undesired behaviors (Barnet, 2011)." 

Application of this theory in the workplace is evidenced in a case study regarding a Sears Department Store in Altoona, Pennsylvania.  In 2006, a manager at this store was having trouble getting his employees to encourage customers to apply for a Sears credit card.  Employees were not promoting credit card applications because customers often said no, and the credit card applications did not benefit the employees in any way.  The manager developed a plan to use reinforcement to raise the number of credit card applications.  This case study examines how the use of reinforcement increased credit card applications in the Altoona store.

Details of Case

Initially, an Altoona, PA branch manager of Sears, Roebuck and Co., held a meeting for all employees of his branch to explain the importance of opening new credit card accounts. He focused only on how the company benefits from store credit, and he expressed that he wanted to be the number one store for credit card applications. Credit card applications went up slightly after the meeting, but soon went down to the normal low.  The manager held another meeting for all employees to once again discuss this issue. This time he directed his attention away from the company benefits and focused on the employees. The boss announced a revised job description at this meeting. He developed a new set of questions employees had to ask every customer:  “Do you have a Sears credit card with us... Would you like to open a Sears credit card today to save ten dollars off of your purchase?”

By offering customers ten dollars off on their current purchase, he thought credit card applications would go up.  He began offering all employees an extra two dollars on their pay check for each credit card application. The employees still received two dollars even if the customer was declined credit.  In order to receive two dollars per application, the employees had to have five applications per month. Without at least five, the employees would get paid nothing. Every ninety days, the applications would be counted, and the person with the highest amount would be recognized by having his/her picture hung on the bulletin board in the staff lounge; his/her name was announced at the morning meetings, and he/she received a twenty five dollar Sears gift card. 
 
On the other hand, if an employee did not receive five applications each month for ninety days, the employee was required to complete training to help raise his/her credit card applications. Employee’s credit card applications were evaluated every ninety days. If in the next ninety days no improvement was made, the employee was suspended for three days. If an employee's credit card applications were below standard for another ninety days, he/she was terminated. Employees were given adequate time and training to improve their credit card applications.  The manager was successful at raising the rate of credit card applications once he used reinforcement. Credit card application rates soared, and the store became the number one store for credit card applications in the state of Pennsylvania. The outcomes from using reinforcement were great. The manager was happier with all of his employees, and the employees were happy because they were making extra money. 

Resolving the Issue through Reinforcement Theory

The main issue in this case is that credit card applications were low and the managerial issue was that there was low employee motivation to promote the credit card applications. 

Store credit cards are important to retailers like Sears.  There are over one hundred million active store credit cards in the U.S. (Spurgin 1998, Lee & Kwon 2002).  This Sears’ manager wanted his piece of that pie because store credit card programs increase sales (Chakravorti 2000, Lee & Kwon 2002).  The manager presented the need for more credit card applications to his employees.  The employees first increased the amount of new store credit cards but the increase soon became extinct and new motivations were needed. The manager's issue was how to motivate his employees to bring in more credit card applications. To resolve this issue several aspects of reinforcement theory were used.

Stimuli are the variables that elicit a behavioral response or conditions leading up to the behavior. Responses are the behaviors or activities that are performed. The consequences are the results of behavior.” (Redmond, 2010)  In this case, the manager needed to create some external stimuli to encourage the desired response from the employees and customers: more credit card applications being offered and completed.  The consequences of this stimulus would hopefully be an increase in credit card applications and satisfied employees.

The Law of Effect is an important concept related to the reinforcement theory.  “A fundamental principle of reinforcement theory is called the law of effect, which simply states that people engage in behavior that have pleasant outcomes and avoid behavior that has unpleasant outcomes”. (Thorndike, 1913)  In this case, customers were offered the ability to save $10 on their purchase which is a positive outcome.  Employees were given a monetary reward for every credit application they turned in which is also a positive outcome. 

The following two methods of delivery from the reinforcement theory were used in this case:

1. Positive Reinforcement

Positive Reinforcement is any consequence of behavior that strengthens the probability of the future occurrence of that behavior, given that the reinforcer is available upon demonstration of the desired behavior (Whyte, 113).  Management chooses to employ both money and praise as reinforcement.  According to Whyte, although money is a very common tangible reinforcer of work behavior, much has been said about other tangible and intangible reinforcers, such as verbal praise and social reinforcement from peers (Whyte, 113).  At the second employee meeting, the manager offered customers ten dollars off of their purchase for applying to open a Sear’s credit card.  In addition, employees were offered $2 additional pay to be added to their paycheck for each application that was filled out.  A stipulation was set, that they must have at least 5 applications in per month to qualify for the monetary bonus.  To introduce other tangible and intangible forms of praise, the person with the highest amount of credit card applications had his/her picture hung from the bulletin board in the staff lounge, and their name announced at meetings.  An additional monetary reward was also given out in the form of a $25 Sears gift card. 

The positive reinforcement here also was a way to motivate the employees. The manager giving the extra money as a reward, allowed the employees to become eager in wanting to benefit from asking a question, "would you like to sign up for a Sears card today?". Although not every employee was motivated by the reward, the manager then had to implement a punishment to motivate the others that were not trying to get customers signed up for a Sears card. The motivation here was tied to the Need Theory by Maslow "Safety" which allowed for security of their employment with the Altoona, Sears store if they processed the required amount of credit card applications.

2. Positive Punishment

Punishment is the second class of consequences which operates to control behavior. Unlike positive reinforcement, punishment is a change in the environment which weakens the probability of future occurrence of the behavior. Disciplinary action associated with the occurrence of certain work behaviors is punishment, since the behavior will often decrease in frequency when followed by it (Schneier, 1974).  The manager of Altoona Sears choose to implement positive punishment along with positive reinforcement.  Positive punishment applies unpleasant stimulus with the end result of decreasing the frequency of undesirable behavior (Redmond, 2010).  If an employee did not receive five applications each month during a ninety-day interval, he/she had to undergo additional sales training.  If no improvement was shown during the consecutive ninety-day interval, the employee was suspended.  In another ninety-days time, if the employee's credit card sales were below standard, then his/her job was terminated. 

Another vital component of the operant model on which research pertinent to work organizations has been conducted is the schedule of reinforcement. Reinforcement can be dispensed on a continuous or variable schedule.  In the work setting the fixed interval is typically used, where every appropriate behavior is followed by reinforcement (Schneier, 1974).  An important part of the effectiveness of the system was the set interval of time the employees were evaluated in.  At the Altoona Sears, applications were counted and evaluations were conducted every ninety-days.  Employees had ample time and notice to adjust their behavior accordingly.  They could expect an assessment of the number of individual credit card applications they completed, and then anticipate either reward or punishment along a set, fixed interval schedule.

Analysis

Application of the Reinforcement Theory concepts and the steps of the Behavior Modification Model for Reinforcement (2006), worked to successfully increase credit card applications and employee motivation in this case study. 

By using Behavior Modification Model concepts, the Altoona Sears was able to become number one in credit card applications.  Step 1 of the model says to specify the desired behavior as objectively as possible.  Application of step one is evidenced by the two meetings that management held to address the issue of low credit card applications.  Initially, he stated how important credit card applications were to the company.  He then stated his desire to be the store with the most credit card applications.  After the meeting, credit card applications went up slightly, but soon after were back down to the normal low.  This shows a flawed reward system was in place which resulted in low employee motivation to solicit credit card applications, so he started over.  This flawed system can be directly related to extinction, as the manager failed to recognize the employee's desirable behavior (raising credit card applications) with any tangible reward system that the employees would find motivating.  This example of extinction can be tied into the law of effect, as their initial raising of credit card applications did nothing to elicit a pleasant outcome for the employees; therefore their extra efforts were abandoned. 

 Steve Kerr, former chief learning officer believes, defining performance and making your definition operational is the starting point.  Anything you would like your staff to do can be done and rewarded, as well as measured, if there is an operational definition to make goals and priorities actionable (Schacter, 2009). 

During the next meeting, the manager showed the goal orientation of the company by clearly stating the importance and benefit of opening new credit card accounts. This time he directed his attention away from the company benefits and focused on the employees. The goal was to ask each customer to open a Sears credit card account; an employee would receive a $2 bonus per application provided they achieved at least 5 applications a month.

Step 2 of the model, measured the incidence of desired behavior by fixed interval schedule.   By setting the fixed interval schedule of ninety days to count the applications for compliance with the new system, the manager was able to observe the employees, and gather evidence in order to accurately apply reward or punishment. 

Step 3 of the model, behavioral consequences are then provided that reinforce desired behavior.   Here we see how implementing the reinforcement theory resolved the issues.  Positive reinforcement increased the frequency of desired behavior by presenting the employees with a monetary bonus, recognition, and gift card rewards.  Positive punishment was used for those employees that were unable to meet the requirements of the new system. The undesired behavior was addressed and reduced by introducing new stimuli in the form of extra training, suspension, or termination.  Only a few employees fell below the five applications per month minimum, and they successfully completed the extra training.  After completing training, employee’s credit card applications rose to above the minimum. Suspension and termination never had to be used since training was always an effective way to correct employee’s poor credit card applications.  In this case, the fixed interval schedule successfully gave the staff a timeline to be consistent with. 

Step 4 of the model, determining the effectiveness of the program by systematically assessing behavioral change, is shown in the increase of credit card applications at the Altoona Sears.  End results show techniques were effective. 

The Altoona store was successful at achieving their goal and became number one in credit card applications in the State of Pennsylvania, after employing methods of the Reinforcement Theory.

References

Barnet, Tim Encyclopedia of Business, 2nd ed. » Mar-Nov 2011. http://www.referenceforbusiness.com/management/Mar-No/Motivation-and-Motivation-Theory.html

Chakravorti, Sujit, Why Has Stored Value Not Caught On? (May 2000). FRB of Chicago Policy Studies Series No. S&R-2000-6. Available at SSRN: http://ssrn.com/abstract=294516 or doi:10.2139/ssrn.294516

Helms, Marilyn M. (2006) Reinforcement Theory.  Encyclopedia of Management. (ed.) Retrieved January 26, 2011, from http://www.enotes.com/management-encyclopedia/reinforcement-theory

Lee, J., & Kwon, K. N. (2002). Consumers' use of credit cards: Store credit card usage as an alternative payment and financing medium. The Journal of Consumer Affairs, 36(2), 239. Retrieved from http://search.proquest.com/docview/195906238?accountid=13158

Redmond, Brain F. & Richardson, Marissa A. (2010) Reinforcement Theory. WikiSpaces- PSYCH 484: Work Attitudes and Job Motivation. Retrieved January 27, 2011.https://cms.psu.edu/section/content/Default.asp?WCI=pgDisplay&WCU=CRSCNT&ENTRY_ID=9ABABEF55CDB46078BFD0F4B9632CE88

Schacter, H. (2009, March 25). Staff lack drive? Reward system may be to blame. The Globe and Mail, C2.

Schneier, Craig E. 1974. Academy of Management Journal, Sep74, Vol. 17 Issue 3, p528-548, 21p

Skinner, B. F. (1969). Contingencies of reinforcement. New York: Appleton-Century-Crofts.

Spurgin, Ralph E. 1998. The dinosaur lives. Credit Card Management, 11(2): 60-61.

Whyte, W. F. "Skinnerian Theory in Organizations," Psychology Today, Vol. 5, No.11 (1972),66, 68-f.

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