In a case study provided by NZIE, Dr. Lock, a
mechanical engineer who worked as the CEO and founder of a boatbuilding firm, noticed
a decline in employee productivity within their organization over a five-year
period. She reasoned that the decline was due to the employees’ need for more
money as she discovered that most of them had other jobs to compound their
income. This seem to explain why they were coming to work very tired and were
not achieving the expected results. She decided to increase their salaries
because she assumed that the low salary was the reason.
After reading and analysing the case study
provided by NZIE and other very relevant research articles and journals, it becomes
clear that the increasing the salaries in Dr. Lock’s company did not have the
desired effect because she did not consider other important variables. Before
making her decision, she believed that simply increasing the employees’ salary
by 20% would solve all her challenges and increase productivity. She did
not consider other factors mentioned in the research discussed below:
Dr. Lock also failed to consider
aspects related to intrinsic motivation. In reference to that, Stringer,
Didham, and Theivananthampillai (2011), argue that good performance and
productivity are more associated with intrinsic motivation. Likewise, these
authors also claim that pay is strongly associated with intrinsic motivation as
well. Furthermore, they suggest that pay fairness play a significant role in firms
that use the pay-for-performance goals.
Possibly, because she did
not have much knowledge about management since her training was in engineering,
Dr. Lock had difficulty understanding and applying a more effective solution to
prevent the decline of productivity. However, according to Rynes, Gerhart,
and Minette (2004), there are some contradictions between what people say about
pay and what they actually
think of it. The same authors
postulate that, in most cases, the employees’ answers are the ones that do not
really reflect their thoughts and that they respond to external pressures.
Dr. Lock did not take into
account the positive effects that the environment in the workplace can have on
productivity. Hence, referring to that, Leblebici (2012), states that one of
the most relevant factors for increasing and/or maintaining good productivity
is building good relationships among managers and employees and the team as a
al., (2004), also clarify that in the long run pay is not either the first nor
the only motivator for increasing productivity or job satisfaction, but it
really has a big impact on many employees’ performances as a motivator. Although this may be true, competitive salaries are predictors
neither of high productivity nor of self-actualization in the workplace or in
life itself. (Chamorro-Premuzic, 2013)
Based on what was discussed previously in this
paper, it is clear that, although pay is an important factor to be considered,
it is not the only one. Dr. Lock intuitively assumed that the problem was pay-related
without doing any further analysis or consulting managers and other supervisors
who could help her to better understand the facts and make a more effective
After conducting my own research, I have
concluded that the root cause that Dr. Lock should address is intrinsic
motivation. Accordingly, Janus and Browning (2014), assert that,
nowadays, many organizations use the pay-for-performance plan as a motivator for
their employees’ good production. Nevertheless, they are not taking into
account that it might come up with negative effects such a disengaged team by
fostering competition among the group to see who’s the best or most efficient.
My recommendation to Dr. Lock to improve
productivity and worker commitment is to have a better communication system
among CEO, managers and employees so they have a better understanding of what
the firm expects from them. Consequently, the company could also implement a
plan of clear goals and expected results that the organization is pursuing so
that the employees feel more engaged and knowledgeable about what they need to
do, when they need to do it and why they are supposed to accomplish the tasks.
Moreover, the company could offer the employees some personal benefits as
intrinsic motivators such as tuition assistance for a higher education,
promotion, an employee recognition program and prompt acknowledgement of accomplishments.
As an illustration, one the most effective and powerful
elements that can motivate employees is recognition. Its effects in the team
engagement and in the employees’ productivities are exceptional (Shetcliffe, 2007).
My recommendation for Dr. Lock as strategy for identification, selection
and development of staff is to use the talent management theory. According to
Julia and Rog (2008), the implementation of talent management in the workplace
is an essential tool for improving engagement in the workforce. Likewise, the authors affirm that it will be
very effective and beneficial to decrease turnover rates and improve
productivity. Therefore, Dr. Lock should keep an effective communication with
managers and make sure that the supervisors would be trained to be attentive to
identifying and recognising employees that show good skills and differentiated
talents. Consequently, some steps should be followed for an effective
implementation as proposed below by Carter, (2014):
Implementation and evaluation
It is a process that should be followed systematically and looking for
feedback constantly to keep the implementation running on the track.
The leaders should be talking to everyone in the organization what it is
expected from the implementation process and why the organisation need it and
receive feedback to make the diagnosis.
Technology software can be used to improve the quality of recruitment
and selection of candidates.
The company needs to select some leaders and form a group to lead the
implementation. They must be well trained and focused.
It is very important an effective communication using memos, webinars
and the company internet page frequently updated to keep everyone knowledgeable
of what is happening in the company so that everybody could be on the same
My recommendation in the case of a low cost boat manufacturer and a
highest possible quality yachts could be pretty much the same, but there would
a slight difference.