Introduction to Problem Decision
When organizations experience issues in performance, the lack of engagement, and high turnover, managers are tasked with the challenge of boosting achievement and improving organizational effectiveness. In the organization in question, Open Access Inc. (fictional name), the company decision that was made concerned the introduction of an incentive system, which was necessary to establish for many reasons. The decision problem emerged steadily and over a prolonged period of time as the productivity of workers was declining. Employees became less productive because they lacked adequate supervision from the management, experienced poor communication, inconsistency, and the lack of acknowledgement. When it comes to poor supervision, managers were often inconsistent in their treatment of workers, they had the tendency of micromanaging and did not give employees enough time to finish their tasks, and often played favorites among employees.
Poor communication was among the issues hindering performance at Open Access Inc, both in terms of manager-worker and worker-worker interactions. Managers were often found not listening to workers’ concerns, which did not allow to create a safe workplace in which workers could feel secure and supported. When there were any changes to be made, such as the introduction of new technologies or schedule restructuring, workers were put on the spot and were never informed about them not were they trained to get prepared. When it comes to inconsistency, there was a problem of teams having to continuously change direction, which did not allow for facilitating consistency. The rules were always changing, which meant that workers got too distracted to get their assignments done. The lack of acknowledgement is also important to note as a limiting factor to performance. When workers and team members accomplished something and brought positive outcomes for organizations, their managers did not note or reward such accomplishments (Gibson et al., 2020). Therefore, it was necessary for managers to take into account their faults and create a new system of incentives for employees to bring them to the desired level of performance.
The reason for selecting incentives to increase productivity related to the need to align rewards with hitting targets. The incentives were expected to encourage staff to educate themselves about new services and products with which they work, build longstanding relationships with customers, demonstrate company values, or create new skills for making it easier to fulfill their roles. As a consequence, this can result in a positive impact on increasing sales while also boosting performance in a more holistic way (Gibson et al., 2020). By incentivizing performance and accomplishments, managers also wanted to retain the best talent in the organization because the desired assets are often intangible, including experience, knowledge, and talent. Because of this, it was necessary to offer employees incentives for showing each worker that they are highly valued and have a part in ensuring that they can provide success for the organization. By doing so, managers wanted to provide a sense of purpose to allow workers to use their knowledge and competencies for reaching the expected levels of performance to maintain competitiveness and profits.
Due to the lack of support from managers and no transparency, the organization has experienced low morale. Therefore, incentives were expected to positively influence behaviors and communication while also help build successful cultures and boost morale. Incentives can be important for directing people toward a goal and impact their behaviors while working on it. Depending on the results that the organization wants to accomplish, incentive schemes can be defined in accordance to them, such as the development of product knowledge, the promotion of collaboration and knowledge, and communication of brand values. Incentive programs were intended to improve morale in several ways; for instance, a well-designed incentive can provide workers with the reason to believe that their workplace is a part of something big and important. Incentive models also help create successful company cultures that will help nurture varying personalities.
The CEO of the organization played the defining role in suggesting that an incentive program was needed to facilitate the improvement of performance. While the CEO was not closely involved in working with employees and visited the office rarely, they were informed about poor performance regularly. As the organization’s leader, it was their job to understand the roots of the problem and find a solution that will fit workers’ needs the best. Therefore, the CEO took on the role of the initiator and did not delegate much responsibilities and began closely engaging with employees and look for moments that had to be improved. The CEO listened to what workers had to say and understand the challenges that they encounter on a regular basis. Speaking with employees, the leader found that the management was often ineffective in rewarding performance, lacked adequate communication, and was inconsistent in their assignments. They also found that workers were ill-informed about any upcoming changes at the organization, which led to poor performance and dissatisfaction. As the CEO of the organization, it was important for them to develop a strategy that will fit the culture.
CEO took initiative to motivate their workers by creating an initiative that will add to the overall happiness within the organization and contribute positively to the work culture. Beyond incentivizing workers, the CEO also introduced a system of rewards and punishments for managers to ensure that they remain interested in the high performance of their subordinates. The general managers of the organization were also offered performance-based bonuses as a practice for making sure that they meet the set goals. While high-performing managers were highly receptive of the new model of payment while lower-performing managers had the opportunity to improve their performance and prove that they are effective in guiding their subordinates toward accomplishing organizational goals. Therefore, the performance incentives served as the basis for recognizing positive contributions of workers into the organization while also considering the role that senior managers play.
Analysis of Problem Decision
The problem of poor performance at the organization was defined as the inability of employees to reach the standards set by the management. Previously, there was no system of rewards that could have helped workers get inspired to reach the set goals, and the absence of such support created an unfavorable environment with lacking transparency and poor communication. As the rates of performance and accomplishments worsened over the prolonged period of time, it became clear that the way in which the work was structured as well as the way in which workers were led by their managers. There ineffective and insufficient communication meant that the overall environment was inconducive to productive behaviors and actions. The constant micromanagement and undermining of workers’ roles and contributions steadily created strained relationships between employees and office leadership. As a result of this, the unfavorable environment created low morale of employees and increased turnover, which are indicators of lowering performance.
Because the goals and methods related to the decision are clearly defined, it is possible to see rational decision-making. The rational approach to decision-making entails finding all available alternatives, evaluating them based on possible consequences, and choosing the alternatives that best fit the goal and use the least amount of resources (Choo, 2007). It was surprising to see such an approach implemented at the organization because the optimization strategy is rarely seen at companies as information collection and processing requirements usually extend beyond the capacity of most individuals. Instead, decision makers implement the satisficing strategy, which is carried out when possible alternatives are examined without ensuring that those are alternatives (Choo, 2007). The alternatives available to the organization entailed the improvement of the workplace environment, avoiding micro-management, or training and retraining workers. However, among the alternatives, incentives were chosen as the suitable decision because they encompass an array of positive changes at the organization that could benefit not only regular employees and higher-standing managers.
It was necessary to act quick with the decision problem to avoid uncertainty at the organization, control the environment, and prevent performance from deteriorating further. In this case, the management of organization uses decision rules that emphasize the use of short-run reactions instead of anticipating long-run events characterized by uncertainty (Choo, 2007). The leadership of the organization arranged for a negotiated environment through the imposition of the plan to implement a system of incentives and the standardization of performance measurement procedures as aligned with industry traditions. In this context, organizational goals act as independent limitations imposed by the members of the organization tasked with addressing the issue of underperformance. As a result, the company takes the form of social concourse of interconnected interests in which several strategies are implemented to resolve the challenge (Choo, 2007). The interconnected interests in the particular case include the need of the CEO to take control over the issue of lowering performance, the need for managers to assume more responsibility over the guidance and support of their subordinates, as well as the improved dedication of employees to accomplishing set objectives. While all the methods implemented may not be completely beneficial for achieving consensus among all stakeholders, they are necessary for enabling the company continue operating despite unresolved divergencies.
The decision problem was understood as the need to restructure the work at the organization and show that good performance leads to good outcomes for employees. As long as employees are satisfied, they are more likely to perform in accordance with company standards, but what was occurring in the workplace did not allow them to do that. It is also important to mention that it was necessary to make a distinction between misconduct and underperformance because it could often be confused. Specifically, misconduct refers to intentionally unprofessional and dangerous behaviors while underperformance encompasses a range of limitations, such as not fulfilling work obligations, displaying disruptive or negative behaviors, as well as failing to comply with workplace policies.
When negotiating the common understanding of the problem, it was necessary to introduce a performance system for establishing a goal setting framework that enables constructive feedback on performance, ongoing skills development, as well as regular discussions about performance. However, this system was introduced after the fact of decreased performance and effectiveness as managers started noticing lower indicators. As poor performance began being more noticeable and concerning to the leadership of the company, they began implementing reviews and discussions with employees. There were meetings with workers to set clear expectations of performance while also reviews that entailed the tracking the performance of workers against the previously-agreed and set goals. However, implementing the performance appraisal system was too late and ineffective because there was an unfavorable environment at the organization.
Taking into consideration the fact that the CEO of the organization took the leading role in restructuring the performance at the company with the help of an incentivizing system, this leadership role was imperative for facilitating the process. The main leader of the organization also played a defining role in formulating the incentive philosophy, which is important for setting clear expectations and understanding limitations when going through the process of developing incentive programs. With the help of the incentive philosophy, it became possible to identify the amount of bonuses that the organization could pay as well as the type of compensation structure that would best fit the organization. It was important for the CEO to answer the question as to the most suitable organizational culture to be embedded in the company with the help of incentivizing policies.
The establishment of the incentive philosophy allowed the relevant stakeholders get ‘on the same’ page when it comes to aligning incentives with the business priorities of the organization. It was decided to take the top-down approach in the formulation of the strategy because of the lack of structure at the organization. The approach is concerned with identifying the ‘big picture’ first and breaking down its components. Therefore, the main goal or the ‘big picture’ that the stakeholders wanted to achieve was to improve workers’ performance at the organization (Dhingra et al., 2021). The key strategies aimed at achieving the goal included the development of the incentives system for workers, fostering a positive organizational environment, holding managers accountable for the delegation of tasks and fair assignment of responsibilities, as well as encouraging transparent communication and teamwork.
After the identification of the goal and the strategies for achieving it, the stakeholders were tasked with accurately determining the target pay incentive for each role. Two important factors that help determine the target industry pay benchmarks and the company budget. It was necessary to assess the target pay and the pay mix for similar roles within the context of competitive companies. The expected level of performance for each role should have accounted for performance thresholds (Peek, 2021). As a result, this would allow to provide the definition of high performance for the company and making sure that the highly-skilled and talented employees of the organization retain in their positions while potentially valuable candidates are attracted to vacancies. The CEO and senior managers researched the pay mix in competitive organizations and set similar benchmarks for incentivizing performance at the company.
When it comes to the power dynamics relevant to Open Access Inc. and solving the problem of poor performance, it must be mentioned that the CEO of the company took the authority to facilitate the implementation of the decision. The managerial power theory is especially relevant to apply in this case because it argues that the compensation of executives is often excessive when comparing to hypothetical and economically efficient compensation contracts. It also argues that the pay of executives does not often correlate to performance, which means that high earners in an organization are not necessarily high performers (Peek, 2021). The problem that the theory aims to highlight is the fact that highly-ranked organizational leaders are paid a lot but this does not mean that their performance matches the high pay. The introduction of the incentive system at the organization was intended to solve the problem and ensure the level of performance aligns with the level of payment. It was also important to eliminate the conflict of interest that creates poor decision-making on the part of managers who may seek short-term gain despite the long-term risks for the organization.
To avoid the misuse of power by higher-ranked managers and team leaders, the CEO suggested to link greater power to better opportunities. In the outcome if the performance of employees improves with the help of the performance-related-incentives, the meaning of better opportunities for leaders cannot lead to worse outcomes for those who are exposed to them (Winter & Michels, 2019). Therefore, when exercising their power to initiate a program for incentivizing good performance at the organization, the CEO ensured that the decision was based on logic and there would be no negative association between power and compensation. Even though some of the responsibilities, such as interviewing employees, were delegated to higher-ranked managers, the decisions made by the CEO prevailed because of the dedication to solve the issue of poor performance as soon as possible.
It should be noted that the opinions of employees were taken into consideration in the development of the performance-related-incentives because of the low levels of engagement and satisfaction in the workplace. Based on workers’ feedback, the CEO of Open Access Inc. formulated the system according to which the employees would get incentivized. Specifically, workers were supported with the help of retention bonuses, team and individual project bonuses, and annual incentives. Therefore, workers suggested that both long- and short-term accomplishments should be rewarded to ensure dedication to the tasks that they complete on a regular basis while the combination of accomplishments could serve as basis for rewarding employees every year.
Conclusion
There are many reasons for poor employee performance, ranging from the lack of guidance and support from managers to unfavorable work conditions. At Open Access Inc., the performance of workers was deteriorating over time, which was caused the increased dissatisfaction of employees, high rates of turnover, as well as the lack of managers’ accountability and support of workers in the accomplishment of their goals. While the CEO of the organization has been distant for some time and did not get involved in the internal corporate affairs, leaving this responsibility to high-rank managers, the falling rates of performance became alarming. The CEO had to take the lead and delve deeper into what was going on at the company and engaged closely with employees to understand the reasons behind their lack of motivation, apathy, and the inability to complete tasks successfully.
It should be noted that the decision made from an authoritarian standpoint even though employees were surveyed and interviewed. It appeared that the CEO was dissatisfied with the work of managers and excluded them from the decision-making, which could lead to future resentment on their part. Resentment may present further challenges for organizational success because when subordinates have negative feelings toward their leaders, they tend to be less receptive of changes or newly-assigned tasks and responsibilities. Leaders who express their open dissatisfaction with employees are at risk of damaging their reputation, which can also stress the workforce who get dissatisfied and are more likely to leave their positions. Therefore, by excluding most managers from making decisions about the incentives system, the CEO could run into the same issue with employees in terms of the lack of motivation and dissatisfaction.
The managers should have been included more in the decision-making process because they were the ones to engage with workers on a daily basis and could have provide insights into why performance had been declining. Instead, the Open Access Inc.’s CEO consulted few of his trusted managers and department heads and interviewed employees. Workers who were resentful of their managers probably did not give positive feedback on their supervisors, which gave the CEO the impression that managers were also performing poorly and did not meet the expectations of leadership. Thus, it would have been more productive to survey all workers and not only those in non-managerial positions to get the full picture of the performance at the organization. Besides, employee surveys and interview questions were not prepared by experts in the field, which had some limitations. If the surveys were to be redone, they had to be developed by an external provider specializing in employee surveys. The professionally-done and administered surveys would allow to create a post-survey action plan based on the opportunities for the company. Since the survey would include managers also, they could provide more in-depth information and capture the needs of both workers and their supervisors.
Despite the limitations of the decision-making and the exclusion of managers, the introduction of the performance incentive system was the ‘much needed’ boost of performance and engagement. As the first bonuses for individual and team projects and assignments were rolled out, workers saw that good performance was immediately rewarded, which caused a boost in their performance. Moreover, workers were speaking to HRs to postpone bonuses until substantial amounts accumulate, which meant that they showed dedication to the company and were happy to receive praise also. As a result of that, the company began experiencing improved morale and the development of a culture that nurtures accomplishments and supports workers along the way.
When it comes to the follow-up to the decision outcomes, Open Access Inc. started paying more attention to the measurement of performance and the consistent rewarding of performance. Besides bonuses, supervisors were encouraged to give positive feedback to employees and encourage them to ask for support and guidance if needed. In such an environment, teamwork strengthened while employees felt more valued and supported. There were still some conflicts between managers and workers but they were resolved more quickly than previously through negotiation and open communication to avoid resentment and misunderstandings among the staff involved.
The case study revealed much about the issues related to power, authority, and decision-making as it illustrated the defining role that the CEO of Open Access Inc. played in facilitating transformation of the organization and the move toward the direction of improved satisfaction and increased performance. The CEO demonstrated their power and took charge in the formulation of the strategy that could help workers become more productive and satisfied with their work at the organization. The decision occurred in a rather authoritative fashion because many managers and supervisors were excluded from most of the decision-making because the CEO was dissatisfied with managers’ leadership qualities. However, it is not uncommon for drastic decisions to be made at organizations where radical action is needed. When performance suffers significantly, there is a risk of companies witnessing a decrease in profits and lower competitiveness. If the employees at Open Access Inc. continued lowering their performance, the company would inevitably lose customers ad struggle finding new ones as workers will be ineffective in meeting their needs.
The loss productivity in the workplace is a complex and multi-dimensional challenge that cannot be resolve instantaneously and using limited resources. When there is a lack of consistent leadership and guidance at the organization, it is unlikely that performance will always be on the desired level consistently. Thus, it was crucial for the head of an organization, who often delegates responsibilities to high-rank managers, to take on the leadership role that is directly correlated to their position, and propose a solution based on key findings and logical decision-making. The compensation system developed to suit employee needs was necessary to bring workers back to the desired level of performance to avoid the potential loss of profits due to unsatisfied clients.
References
Choo, C. W. (2005). The knowing organization: How organizations use information to construct meaning, create knowledge, and make decisions. Oxford Scholarship.
Dhingra, N., Samo, A., Schaninger, B., & Schrimper, M. (2021). Help your employees find purpose – or watch them leave.
Gibson, K. R. O’Leary, K., & Weintraub, J. (2020). The little things that make employees feel appreciated. Harvard Business Review.
Peek, S. (2021). Performance-based pay won’t motivate employees as much as you think.
Winter, S., & Michels, P. (2019). The managerial power approach: Is it testable? Journal of Management and Governance, 23, 637-668.