Employee Motivation Assignment Help

Assignment: Employee Motivation

Problem-Solving Application Case (PSAC)

A Fickle Cat

Long-time employees complain that Caterpillar has changed. John Arnold, a 35-year-old parts auditor at Caterpillar's distribution facility in Morton, Illinois, says some of his coworkers are on food stamps. Arnold has worked for Caterpillar since 1999. More than 10 years later, he's making $15.66 an hour.

To succeed today, does an employer have to worry about motivation? In recent years, Caterpillar, a Wall Street darling and mainstay of American manufacturing, has rolled back traditional extrinsic motivators.

• Item: Caterpillar laid off 30,000 workers in 2009.

• Item: By the second quarter of 2012, Cat's profit had jumped 67 percent from the previous year. (Net profits in 2011 2Q of $1.01 billion, or $1.52 per share, rose to net profits of $1.69 billion or $2.54 per share in 2012 2Q.)

• Item: About the same time, Cat was freezing wages and reducing benefits. New contracts created a two-tier system so that new hires were brought in on an even lower wage scale.

• Item: Further layoffs followed the newer, concessionary contracts.

Disparities

In May 2013 a feature in Bloomberg Businessweek noted that while workers were losing jobs, pay, and benefits, CEO Oberhelman prospered. In 2011 his pay rose 60 percent to over $16 million, and in 2012 to more than $22 million.

So what serves as employee motivation in this environment? Maybe survival. The article quoted Emily Young, a welder at Caterpillar's Decatur plant: "You're basically expendable. For every one person who doesn't work, there's five waiting in line." The same article quoted CEO Oberhelman affirming, "We can never make enough profit."

Weakened Unions. As Businessweek reported, Caterpillar toughed out a strike at its Illinois plant in 2012 for over three months. Eventually union workers agreed to virtually the same offer that caused the strike. Existing workers accepted a six-year wage freeze and reduced benefits. New workers would be brought in at a lower wage scale.

In Wisconsin in 2013, union workers didn't even try to strike. When their contract expired, workers simply stayed on the job. After a few months of on-again, off-again talks, the workers agreed to conditions similar to the Illinois contract.

Worsening Results. Recently Cat's march to higher peaks of profit have stalled. With greater use of natural gas and dropping coal prices, sales of big mining trucks (used in surface coal mining) also declined. This forced the company to scale back production and lay off even more workers. This on top of an overall drop in spending in the Asian mining sector contributed to Cat's decline in earnings.

A Money Problem

Some industry watchers see Caterpillar's worries as a money problem. As in too much of it. Fortune senior editor Matt Vella, in a Fortune Brainstorm podcast with magazine staff, sees it this way: "The criticism from labor is the company is doing better than ever; why aren't we seeing some of the rewards of that? The company will say, ‘Well, we can't afford to give too much away because we don't know what's going to come down the road.'"

The Businessweek article brought such questions to a head:

Caterpillar has become a symbol of the growing divergence in corporate America between profits and wages. As a percentage of gross domestic product, corporate earnings recently hit their highest level in more than 60 years, and wages fell to new lows, according to Moody's Analytics.

"What's interesting," says Fortune writer Nin-Hai Tseng, " ... is that Caterpillar makes itself out to be this poster child of everything that went right with manufacturing in America. With that reputation carries a lot of responsibility.... [P]eople can ask ... does it have a responsibility to pay its workers more?"

What Employees Say

While Glassdoor.com doesn't provide objective analysis, this job research site provides ready access to employee voices. The site includes posts by current and former company employees so people looking for work can research a potential employer. Most reviews include a simple yes or no on whether the reviewer would recommend the company as an employer. While there's no guarantee that all posts are legitimate, Glassdoor.com remains one of the best places to get a quick read on the way current and former employees likely feel.
Reviews for Caterpillar vary. Some workers say good things about their future with Caterpillar and the corporate culture. But more critique the company. Critics of the company's policies include both current and former employees. Tellingly, many current employees who would recommend the company as an employer have misgivings. Major themes include:

• Lack of chances to advance, stand out, prove one's worth, or improve one's compensation.

• Rueful acceptance of problems in the workplace because of the need to have a job.

• Over-management in face of shrinking pay.

• Overemphasis on cost-cutting programs by middle managers who frequently lack product or process knowledge.

• Lack of progressive vision for future growth, with single focus on reducing costs.

You get a sense of the tone of many comments in this post from a former employee, let go after eight years: "They will preach values, morality, safety, people, and quality, but in the end they only care about profit. Never been so disappointed in what a company has become as this one."

The Executive View

When Businessweek asked Oberhelman about increasing wages, he sounded wistful. He can raise wages "when we start to see economic growth through GDP," he says. "Part of the reason we're seeing no inflation is because there's no growth. Inflation was driven by higher labor costs, not higher goods costs. Frankly, I'd love to see a little bit of that. Because I'd love to pay people more. I'd love to see rising wages for everybody."

Real GDP has grown slightly during the period in which Oberhelman has reduced and frozen wages, from a negative 3.1% in 2009 up 2.4% in 2010, 1.8% in 2011, and 2.2% in 2012, according to the US Dept. of Commerce.

In the meantime, Oberhelman justifies the growing disparity by invoking competitiveness. For Cat to be competitive, his executive salary needs to increase dramatically. For Cat to be competitive, workers' wages need to be reduced or frozen.

Then and Now

In contrast to its current frosty relations with labor, once Caterpillar was seen as an exemplar of an enlightened management that could justify spending to increase employee engagement by its return on investment.

As recently as 2006, a human resources guide on employee engagement cited Caterpillar as a success story. The guide noted Caterpillar's gains as follows:

• Annual savings of $8.8 million from decreased attrition, absenteeism, and overtime (Europe).

• Increase in output by 70% in less than 4 months (Asia Pacific).

• Decrease in break-even point by almost 50% in units/day, and of grievances by 80% (unionized plant).

• Increase of $2 million in profit and 34% in highly satisfied customers (start-up plant).

Now Caterpillar has decided to increase profitability almost solely by going leaner. The staff at Fortune doubt that today's Caterpillar will ever restore the kinds of manufacturing jobs of the past-jobs that brought US workers into the middle class. Instead, Cat hews to a global view of managing labor costs.

The company continues to increase its overseas operations in places like Korea, Russia, and Brazil. Over half of its labor force and its profits are overseas. Domestically Caterpillar continues to reduce and reshape labor, moving to lower pay scales and benefits, and with a greater reliance on guest workers. (Oberhelman has lobbied to make it easier for corporations to bring in lower-cost, highly trained foreign PhDs.) As modern manufacturing continues to do more for less, organic demand for labor will continue to decrease.89
Time will tell if the company can remain competitive with a primary focus on managing costs only, or if it will find reason to elevate employee engagement as a company priority.

Apply the 3-Stop Problem-Solving Approach to OB

• Step 1: What is the problem?

o Use the Integrative Framework for Understanding and Applying OB (Figure 5.9) to help identify the outcomes that are important in this case.

o Which of these outcomes are not being achieved in the case?

o Based on considering the above two questions, what is the most important problem in this case?

• Step 2: Use the Integrative Framework to identify the OB concepts or theories that help you to understand the problem in this case.

o What person factors are most relevant?

o What environmental characteristics are most important to consider?

o Do you need to consider any processes? Which ones?

o What concepts or theories discussed in this chapter are most relevant for solving the key problem in this case?

• Step 3: What are your recommendations for solving the problem?

o Review the material in the chapter that most pertains to your proposed solution and look for practical recommendations.

o Use any past OB knowledge or experience to generate recommendations.

o Outline your plan for solving the problem in this case.

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Introduction

Motivation (Kanfer and Chen, 2016) is one of the key force that can drastically impact the way an employee behaves at on an off the workplace. Motivation can bring out a positive change in the employee and can enable him to work better, improve performance, productivity, efficiency and creativity etc can be improved at work.  There are several theories that support motivation as a catalyst for improving the performance of employees. Need based theories and the process based theories are two important theories that support employee actions and the underlying motivation that do impact them in their day to day activities. The following part of the discussion will focus on the role of motivation in Caterpillar and the organizational behavior that is suppressing motivation in employees. The report is presented in 3-stop approach to provide a comprehensive overview of the current problem scenario.

Step: 1 The problem

The problem

The key problem in the current case is the changing organizational behavior of the organization. Caterpillar has changed a lot in the recent years. The company has changed from its previous worker oriented strategies to the current profit orientation. Apart from the vision towards increasing profits, cost reduction, there is nothing more the company is concerned of. Inspite of the fact that the revenues of the company have grown as well the sales of the company have increased, there is no any attempt by the management to improve the worker conditions. The opportunistic ideology of the CEO and top management, who wish to associate their salary hikes with the competitiveness and wage freeze of the workers is more likely to create severe problems to the organization in future. The worker morale is going to get highly impacted. Demotivation and long term disadvantages to the company are likely to occur in the organization. The rift between the workers and the management will create major operational problems to the company in future. Further there is need to keep up ethical and responsibility perspectives as part of social responsibility requirements. Complete materialistic vision is not good from any perspective; these are some of the key problems at present.

Integrative framework for understanding and applying OB(Lazaroiu,2015) to identify the outcomes in this case:

Hence from the above integrative OB evaluation, the most important outcomes required to achieve in the current case are to enforce morale and motivation in the employees. Secondly there is need to keep up the long-term interests of keeping the corporate responsible company image, remaining as employer of choice as well to retain the image of ethical company where workers can become part of the stakeholders to take up their legitimate rights in the fruits of the company.

The most important problem in the current case is biased wage structure in the organization. Workers are not being paid rightly when management (CEO) is being paid heavily. Though this is hidden as a need for competitiveness and better positioning of the company, the immediate problem is the loss of morale and motivation in workers. This can build up rift and can cause serious complications to the organization on long-term.

Step: 2

Variety of motivational theories can be applied in the current case to understand the organizational behavior prevailing at present and better course of actions can be proposed as well. As per Vroom Expectancy theory, Motivation to do something will obviously will impact the performance and productivity of employees in general, There are three factors that define the motivation level of employees, valence, Instrumentality and Expectancy.

The force of motivation is equal to the product of each of these parameters.

Force = Valence X Instrumentality X Expectancy (Barba-Sanchez & Atienza- Sahuquillo, 2017).

Valence defines how much the worker will be bothered of the outcome, if there is no relevance of the sales or revenues to the worker, if there are no positive implications to the workers, his valence level will be low. Also if the outcome of the process is not going to affect anything of the worker (either positively or negatively) the motivation will not be impacted. Same is the case with expectancy also, the outcome cannot be good, how hard you try means the expectancy of the worker will be low. Hence to summate all these issues, it can be said that the motivational force of the employee will be low when valence, instrumentality and expectancy are less. In the current case of Caterpillar episode, it is exactly the same, irrespective of the work level and efficiency, irrespective of the revenues and sales, there is no benefit to the workers as their wages are free zed and benefits are curbed, so the force of motivation is literally poor for the workers.
So the immediate problem is the fact that he worker performance will fall down drastically if the same situation continues in the organization.

Personal factors

Important personal factors are motivation level of workers, satisfaction (Keramati et al., 1997), feeling of ownership Etc. All of them are important personal factors to be considered in this case.

Important Environmental characteristics

There are several environmental characteristics need to be considered in the current case for healthy operational environment.

The current managerial approach is apathetic towards workers - there is no consideration and responsibility shown towardsemployees.There are frequent layoffs of the workers; there is no consideration to wage growth inspite of good sales and revenues.

Workers do not have opportunities to excel and show their merit.(Adkins & Nauman,2016)

Forced to accept the workplace conditions due to necessity.

Emphasis is more on cost cutting rather than constructive progression with product improvement etc from middle management of the organization

Lacking vision towards future from organizational top management.

There is need to consider the processes of employee benefits and emoluments in the organization. There is need to focus on the key aspects of each of these processes and should work on to rectify the same for ensuring healthy atmosphere.

Principles of organizational behavior, underlying theories that will impact the organizational behavior are some of the considerations that need to be considered in this case for solving the current problems.

Step:3 -Recommendations:

There are numerous recommendations needed to solve the current problem. Broadly speaking the very first of the recommendations is to change the attitude of the management. Management attitude need to be changed and they should consider workers also as stakeholders of growth of the organization. The rewards and benefits need to reach them too. Though there can be immediate benefits in making lean control and cut-shorting the costs by wage freeze, long term benefits cannot be obtained without consideration to the emotional, motivational and material needs of the workers. Organization need to develop a competent strategy to encourage workers who are really beneficial to the organization. Further there is need to avert over management in the context of shrinking pay. This can have positive implications to Caterpillar on long term.

The outline of the strategic plan contains,

Evaluating the current strategies of employee benefits and wage schemes

Proposing alternative plans and justifying the cause of the same

Proposing changes to the environmental operating conditions in terms of developing opportunities for growth and proving individual merit of employees.

Seeking approval from the board and implementing the strategies for betterment of the conditions of the employees.

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