Introduction to change to an S-Corporation (which has



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The purpose of this report is to understand, what motivates & keeps employees committed to their work.? Why do employees feel they are being unfairly treated, with respect to the company’s incentive program.? How to ensure, quality of transparency in the job requirements.?


Tampani Inc. began as a small start-up company consisting of 6 people: David, Bev, Doug, Karen, Dora ; Dana. All 6 employees had previously worked for Plathe; they were all equally motivated to work ; put in their best efforts to make the company a success.

Tampani specializes in creating unique solutions for problems in human performance that takes place in complex sociotechnical systems.

A magnitude of Tampani’s projects come from a portfolio of government contracts. The company keeps growing, leading to an increase in the stock of its projects. This resulted in the company to change to an S-Corporation (which has its limitation to having only 100 stockholders).

Tampani’s incentive program is very basic consisting of competitive wages, yearly bonuses ; stock options. The allotment of bonuses and stock options is decided by the higher management, they are namely David, Bev ; Karen. Also included in the incentive program is increased responsibility, promotions ; title changes.

The company has developed a career-path line for the staff members, where they can establish a career as, a management/leader role or as a scientist/researcher role; although the basis of attaining such growth in the career paths is often unclear and sometimes seems irrational.

A recent motivation survey conducted in the company shows that majority of the employees are eminently motivated on certain factors (that are not fairly provided to satisfy their needs) ; to an extent, they are not motivated by few other elements (which are provided in abundance by the company). The rise in dis-satisfied ; unhappy employees has led to a growing concern in the organization.The Survey was conducted by Susan, the company’s Quality of Life Coordinator. The survey was voluntary & kept nameless. The sample results were obtained from sixteen employees that finished the survey.

Method of Investigation
References are made to scholarly journals & articles.

This report looks into employee motivation & includes motivational theories that would help to measure why employees are unhappy with reference to the organization’s reward and incentive plan. The motivation theories examined in this paper are namely: Two-Factor Theory, Goal-Setting Theory ; Equity Theory/Organizational Justice.

Problem Statement

The executive management did not fully understand what motivates employees to engage in their job tasks, leading to the creation of random ; an ambiguous incentive program.

As per the survey results, the employees are immensely motivated when they are involved in the early stage of a project, given adequate time for project completion, personal time ; distribution of team bonuses, however these elements have not been provided by the company.

Employee growth ; the advancement up the career-path trajectory is oftentimes confusing, un-certain and frequently seems irrational. For eg: staff members would be given the responsibility to manage a new project not as a reward or a promotion but only because the worker was free from other projects or job tasks ; now he/she has the adequate time to focus on a new project.

The employees do not have clarity ; transparency in their job requirements ; still, are not clear on how bonuses are determined! (ambiguity in the reward system).

Tom was overlooked at attaining employee stock options on account of a sudden change in the decision of the executive management. The company’s policies & administrative procedures were not well defined, causing confusion and animosity amongst the staff members.


The following includes some of the most relevant theories that can provide probable solutions to the case.
3.1 Motivation-hygiene theory( also known as two-factor theory )

The American psychologist, Fredric Herzberg coined the Two-factor Theory, (motivation-hygiene theory), which states that intrinsic factors are linked to job satisfaction & extrinsic factors to job dissatisfaction. According to this study, intrinsic factors include: achievement, recognition, responsibility, career advancement, growth and the work itself. Through his research he discovered that these elements were found to be linked to the work conditions of those employees that enjoyed the work they did, which led to job satisfaction; while extrinsic factors like, supervision, relationship with the supervisor, salary, working conditions, relationship with co-workers & company policy and administration were referred to by employees that did not enjoy performing their job tasks, leading to job dissatisfaction. Intrinsic factors are also known as motivator factors as they come from within the individual & the satisfaction that comes from these factors are not influenced through any external elements. for e.g.: the feeling of competence in achieving a task is part of an intrinsic reward. Whereas, extrinsic elements are termed as hygiene factors. Workers that have a significant amount of hygiene factors in their job, result in making them not dissatisfied, this doesn’t mean they would be motivated or satisfied either.!

The concept of eliminating hygiene factors in order to make the job satisfying for the employees is misguided as this would not result in employee motivation. If job satisfaction is reversed it will not lead to job dissatisfaction but no satisfaction. Executive management that seeks to motivate their employees cannot only rely on hygiene factors (extrinsic rewards) as this will only pacify the workers for a short while, as time passes by you will find that workers find their job tasks to be monotonous ; boring, making them feel frustrated ; dissatisfied. Hence, to motivate employees in the longer run management has to assign goals/job tasks that would intrinsically benefit the employee or provide them with intrinsic rewards like, employee recognition by their superiors or executives from higher management, providing autonomy in one’s work, increased responsibility, promotional opportunities like new project management and the benefits obtained from the work itself.
(Guha 2010, p. 122-123)

3.1.1 Limitations:

Although this theory has undergone an in-depth study by innumerable scholars and psychologists, there are yet limitations to applying this theory.
(Guha 2010, p. 129) The theory has shown contrary results when applied by management in the past. Research shows that there was a lack of guidance with regards to the implementation of Herzberg’s technique in the current business world. The theory is quite outdated. In order to motivate the employees in today’s day, researchers will have to examine the factors that satisfy the needs of employees in organizations, this however, is not easy as the needs and wants of people keep changing.

3.2 Two-factor Theory in relation to the case study:

In Herzberg’s motivation-hygiene theory, one of the hygiene factors that identifies events on the job that lead to an immense measure of dissatisfaction is when the company’s policies and administrative procedure is not clear.

Tampani’s policies and administrative procedure was not clearly defined and known to the staff members. The policies were also inflexible and did not seem fair to a few of the workers like Tom, who were left out from the allotment of stock options. This led to confusion and frustration among the staff members, as they expected to be rewarded with this incentive for their hard work. Tom being one of the most effective employees in the company was overlooked repeatedly ; seen to have not been given the reward he was working for.

Finally, once the decision was made by the executive management to change the policies for the stock-option allocation ; to not provide stock options to the employees as added benefits. This created dissatisfaction amongst the working members. This also shows the un-fair allotment of stock options in the organization. The management had used stock options as general incentives and did not realize that this is what employees desired to receive as their reward.

3.3 Goal Setting theory:

Goal setting theory is one of the most implemented motivational theory. This theory states that goals act as a driving force for employee motivation .The organization use goal setting theory to measure the performance of an individual. This helps to get the clear understanding of to the employee on the tasks that he needs to perform . The goals can either be set by the employee himself or it can be set by the manager .”Locke suggested two main concepts in this context: goal difficulty and goal specificity. Later studies have suggested that difficult goals, if well accepted by organizational members, may lead to greater individual effort and persistence”(Gadot ; Angert 2007,p 4).Even though implementing goal setting theory alone can help increase the employee motivation but if we provide feedback on the work accomplished by the employee it will further enhance the employee performance(Kilduff ; Baker 1984,p 9).The employees usually have the tendency to get the feedback related to the work they have accomplished . In other words feedback has a more positive effect when it comes to motivation than any kind of intrinsic or extrinsic rewards . Another aspect to the goal setting theory was the time allocated for completing the goals ,introducing the concept of self regulation . With definite goals to work on an employee will have a better understanding of the task and the specific responsibilities they have to carry out. Setting appropriate goals is the key to goal setting theory. Most of the time by setting specific and high goals can lead to increase in job efficiency rather than setting vague or easy goals(Latham Brcic ; Steinhauer 2017,p7).So, goals helps to increase the performance of an employee .This high performance will result in rewards , which eventually leads to job satisfaction Also, there is a direct relationship between the goal-setting theory, job feedback, and OCB(organizational citizenship behavior) explained in figure 1.

3.4 Equity Theory:

This theory states that humans have the tendency to always compare themselves with others. This comparison will directly or indirectly decide an employees performance and job satisfaction .In other words employees compares his job inputs and outputs to those of others and then will react to the inequality if there exists any . So the employee can find himself in three situations: overreward inequity, underreward inequity, and equity. The overreward condition occurs when an employee finds himself to be receiving more benefits for the job inputs as compared to others .such kind of situation can lead to guilt and demotivate the employee. Underreward, on the other hand, is a contrast to the overreward situation. In this case, the employee finds himself to be receiving fewer rewards for the job inputs when compared to others leading to dissatisfaction. Equity is an ideal condition where the employee feels he has been rewarded fairly for the work he has been performing. Another important concept we deal with when we are talking about equity is organizational justice. The overall fairness in the workplace is called the organizational justice. The three main components being: distributive justice, procedural justice interactional justice. The fair distribution of rewards or other incentives within organization is known as distributional justice. Distributional justices highlight the facts the rights and responsibilities and rewards are distributed fairly on the basis of performance and skill. How far the process carried out to provide the reward is fair i.e. perceived fairness of the process of distribution is called the procedural justice. Then how far an individual perceives that he or she is treated with dignity and respect is called the international justice(Mhlolo 2014, p2). So in short equity as a whole is whether the employees are treated with respect and dignity.

Fig2 Conceptualization of organizational justice

3.4.1 Alternative Solutions:

In Tampani, the Employees were facing the issue of increased responsibility. The employees were overloaded with work as there is no concept of task characterization as a result of which employees are not able to find personal time i.e. their work life balance was getting affected. By introducing the goal setting theory this issue can be solved. Also, the ambiguity in the reward system which was persisting in the organization can be addressed. As employees prefer to be rewarded to the task they perform. By setting up specific goals for each employee there will be a complete transparency in the intrinsic and the extrinsic reward the company provides.
But some of the drawbacks of the theory is that when implemented in the early stages in the organization can lead to interruption.

2) The persisting issue within the organization was the division of the bonuses and incentives. This ambiguity existed from the beginning within the organization as mentioned in the case Susan when she joined the company at its early stage received a bonus of 2000$ which was less than the amount her husband received which was 10,00$. This was causing a lot of unrest within the employees. Also, the gap in the communicating the company policies to the employees was further adding to the problem.
So by properly implementing the equity theory, these issues can be solved. It should be made sure that the employees are rewarded only if they really deserve it as overreward can lead to dissatisfaction within the employee as well as others. Distributive justice is an essential factor that has to be considered when it comes to this case. The fair distribution f incentives and reward and the clear transparency of why the reward is being given have to be understood by the employee. Equity should be achieved within the organization in all aspects to reduce any kind of unrest within the employees.

3.4.2 Recommendation and Implementation Plan:

• The organization should implement a clear system to award bonuses and rewards.This can be done by keeping a check on the work the employee does and by providing continuous feedback to the employees on the output of the work they have completed.

Challenge: If given a negative feedback about the work the employee may get demotivated and can reduce his work efficiency.

• The organization should set different KPI’s for each employee and when the KPIs are met only then they should be rewarded with either intrinsic or extrinsic benefits. This will motivate the employee to achieve the goals and provide further transparency in case of the reward distribution system.
Challenge: The most important difficulty in implementing this plan will be what kind of goals should be allocated to each individual.
• On analyzing the case survey one of the factors which were evident was the employees were given more responsibility as a result of which they were not able to lead a balanced life. Each employee should be assigned a specific task so that they are not overloaded with work.
Challenge : few employees might not have any work for a long period of time.


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