Inequity
Comparison often gives rise to inequity perception or feeling within employees. This is quite similar to the case at Plantir, where the management observed dissatisfaction and lack of motivation in the employees which eventually resulted in the retirement of Colin (production manager). Although, the company was able to gain its desired objectives (i.e. increase in the level of sales and the generation of cash) but the obsession to increase sales and profit to reduce cash pressures led to the dissatisfaction of several employees, even including the production manager. The sales team was awarded with lucrative bonuses and rewards, whereas the sheer dedication and commitment of other employees was ignored. Even Colin felt that he was being neglected at Plantir. The immediate replacement of Trevor significantly enhanced the communication gap within Plantir. With the replacement of Trevor, Plantir observed that departments were working towards their profit at the expense of other departments, while the CEO; Steve Downs, continually took sides with newly hired employees rather than employees that served the company with their heart and soul. As a result, Plantir witnessed the retirement of irreplaceable production manager Colin.
Reasons of Inequity
Some of the prominent reasons due to which inequality at Plantir raised to a significant level are as follows;
- Lack of Motivational Activities/No Activities
The obsession to increase the level of sales, while generating a significant amount of cash impacted the performance of the company to great extent. Plantir witnessed significant reduction in the level of motivation and engagement from the employees including both Colin (Production Manager) and Shirley (Cellar Door Manager). The main reason for such dissatisfaction was the inability of Steve Downs to play his leadership role to arouse the employee’s interest and dedication towards the work, while reducing the tension between the managers at Plantir. Furthermore, conflicts at Plantir were left unresolved by Steve Downs which eventually resulted in making Colin question his future at the firm along with the firm’s future.
The lack of leadership at Plantir significantly impacted the motivation of employees to work towards the achievement of organizational goals and objectives. The obsession with the sales and bonuses negatively impacted the performance of Plantir as the production capacity was continually ignored by the sales team led by Tom. By taking into account all the factors, Colin started to question his future at the firm along with the firm’s future. This reflects that the Colin became highly frustrated with the CEO’s attitude which eventually resulted in the retirement of Colin, in late 2009 (Case).
- Reward System
Reward systems are important in motivating the employees (Newman and Sheikh, 2012). Appropriate reward system helps increasing the motivation level of employees and they put in extra effort to achieve these rewards (Scott and McMullen, 2010). The results driven reward package of Tom was almost two to three times greater than other employees in the management level (Case). The continually increasing bonuses received by Tom, after the new distribution contracts for North American and Asian markets, were eventually equivalent to that of Steve’s reward package. This clearly reflects that Plantir’s reward system was sales-based as employees were rewarded on the basis of sales rather than performance creating an atmosphere of inequality within the organization.
As a result, Plantir witnessed significant decline in the motivation level among the employees other than the sales team. Only a handful of employees (i.e. Tom and his sales team) were satisfied with the rewarding system at Plantir as they were continually provided with bonuses and rewards.
- People Taking Sides
The strong relationship between Colin, Shirley and Trevor came to an end after the employment of Steve Downs as the CEO at Plantir. To cope with the challenging situation, Steve hired Tom to replace Trevor as the Sales Manager on the basis of friendship. Strong objections were made by Colin and Shirley regarding Trevor’s replacement but Steve neglected the objections made by the Production Manager and Cellar Door Manager. As a result, an atmosphere of resentment was created and tension among Colin and Shirley began to grow.
The rising tension among the managers was taken as a mere jealousy by Steve. Frequent complaints against Tom were constantly ignored by Steve. The dominant reason behind the neglecting complaints was the lucrative sales and profits by Tom and his sales team. Before the recruitment of Tom, Plantir experienced a shortage of cash due to lack of sales, but the recruitment of Tom significantly resolved the cash flow problems. In addition, the reluctance of Tom to help Colin with the growing supply side problems was also ignored by Steve. The ignorance of Colin’s complaints against Tom was taken negatively by Colin. As a result, the production team was highly de-motivated as the CEO was not taking any action against the sales team. This resulted in the dissatisfaction and de-motivation of the production team at Plantir.
Communication Barriers
Management’s obsession with sales and bonuses created significant gaps between the departments within the organization. For instance, the production department’s capability was constantly neglected by the sales department while the management consistently took a side with sales department as the company was able to shrink its piled inventories to a significant level.
The lack of communication significantly reduced the collaboration and cooperation among the departments that once existed (Treviño, Weaver, and Reynolds, 2006). Furthermore, the sales team was continually ignoring the production capacity which eventually resulted in the creation of communication gap. As a result, Colin believed that Plantir was losing sight of its direction in the wine industry due the CEO’s obsession with sales. On the other hand, Tom was hired as a Sales Manager due to which he was quite reluctant to help Colin to deal with the growing supply chain problems. This reluctance between the managers eventually resulted in significant increase in the communication gap among departments.
Lack of leadership skills was the dominant reason due to which the organization witnessed severe gap in the communication among department. The lack of communication created several difficulties within Plantir. One of those difficulties included the ignorance of production capacity and quality management.
Equity Theory of Motivation
Equity theory of motivation can be applied effectively to overcome the situation at Plantir. It is quite clear that Plantir has biased reward system. Therefore, the employees that work day and night without any flaws are rewarded lower than those employees that tend spend their time selling the products offered by the organization (Grant, 2007). This has eventually resulted in the change of work performance as the employees at Plantir were unable to meet the significantly rising demand of product, whereas the employees that were heavily paid significantly increased their performance along with productivity (Case).
In order to overcome the inequality situation at Plantir, CEO must ensure that the employees are treated equally and fairly (Shin, 2013). In order to do so, the input level of the employee should be compared with the output level, while comparing the result of one employee with that of another employee (Cropanzana, Bowen, and Gilliland, 2007). Steve Downs should focus on treating the employees equally and fairly, while considering the objections and feedback from the production team timely. This will eventually help Steve Downs to understand the problems that employees at the production department are facing to significantly reduce the problems so that Plantir can protect its image of being super premium brand.
The application of Equity Theory of Motivation will surely help in increasing the level of motivation among the employee, while reducing the turnover rate of key position holders along with other employees at Plantir.
Recommendations
Some of the recommendations that could help the organization arouse motivation level along with job satisfaction are as follows;
- Rather than becoming obsessed with sales and generation of cash, the organization should tend to forecast the demand of wine within the industry which will eventually help in increasing the level of sales. Burdening the production department due to such obsession can result in the failure of the business along with the inability to meet the supply contracts.
- Plantir does not have any rewarding system that could motivate and stimulate the job satisfaction level within the employees. Due to the biased reward system at Plantir, employees reduced their performance and productivity to a significant level as they were not being paid equally. To overcome the fears of employees within the organization, employees should be provided with unbiased rewarding system (Steers, Richard, and Shapiro, 2004). As a result of proper rewarding system, Plantir would have motivated workforce.
- Communication plays an integral part in the success of an organization (Cooren, Kuhn, Cornelissen, and Clark, 2011). The lack of collaboration and cooperation among the departments has constantly impacted the performance of other departments. It has been observed that sales department was only concerned with its profit maximization at the expense of other departments (i.e. production and quality). This can be significantly reduced by bringing the departments together to work on common platform. This means that the sales department should collaborate with the production department to evaluate the production level, while aligning the sales according to the level of production to help the organization accomplish its desired results (i.e. generating cash flow and increasing sales).
- The organization should hire fairly while providing equal chance of being hired (Wright, 2009). The hiring of Tom as Sales Manager and Ted as Production Manager clearly indicates that Steve was only interested in hiring friends for the key management positions at Plantir. To motivate the employees, Steve should focus on internal hiring rather than external hiring as the existing employees are highly aware of Plantir’s processes and operations.
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