The need to motivate employees in small companies

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This assignment is based on a small company called OBC which is the abbreviations for its name. The name is not used since it's a actual situation and existing company and I have been asked by the employees who gave me interviews and information to maintain confidentiality and not to give the name of the company hence it will be simply called OBC. OBC has been in business for the last six years. OBC is in the business of supplying a wide range of beauty products, cosmetics, skin care products, hair care products and beauty care equipment used in beauty and barber saloons. OBC markets its products in Muscat, Sohar, Nizwa and other locations. They also imports sells and installs sauna and steam bath equipment for households. In the first three years the company was highly successful with excellent sales revenue and profitability and then the sales started declining apparently according to the sales manager due to increase in competition. In the first three years from 2004-2007 OBC average sales per month was about 14,000 Omani Rails with a sales staff of three consisting of one sales managers and two sales representatives who work outside in the field. Today they have a sales manager, a brand manager, two sales and executives and one counter assistant in their showroom in Al Khoud. The monthly sales have decline to 3- 4 thousand rials a month according to the Accountant of OBC and in the peak months of the two Eids the sales peaked to 7000 rails with 60% of this revenue coming from the Showroom sales.

In August 2010 the company was appointed as Agents for Philip Martin's cosmetics of Italy and it is yet to be seen how the company performs with this brand range. With this brand a brand manager has been appointed with the high pay sales of 800 Omani Rial, she is yet to prove herself in position OBC along with this product in Oman. The company doesn't advertise in the media nor does it undertake publicity and public relations activity. Though it has participated in two exhibitions. It doesn't carry out any promotional activities.

Terms of Reference

The reduction in sales has lead to a lot of pressure being exerted on the sales team by the owner, managing director of the company who's full time job is in the aviation industry visits the showroom and sales office in the evening to monitor and control the activities of the company.

In the last three years the managing director decided to rationalize the pay structure based on performance and made two pay reductions from the sales team substantially reducing the base pay. However included incentives on sales based on predetermined sales of sale revenue achieve starting from 3000 Rials. This created dissatisfaction among sales team. Although the incentives are attractive non of the sales personnel has performed since then.

Secondly constantly the sales team members are pressurized to improve their performance and threaten with termination. Thirdly the sales teams expenses are minutely scrutinized and payments are delayed.

2.1 Other Issues

It seems that the sales manager and his team may not have the right skills and expertise in sales management processes. The company doesn't carry out any promotions, advertising campaigns and other marketing activity. Hence it can be assumed that the personnel are either not skilled or due to internal reasons they cannot undertake these activities. This will be reviewed through the process of interviews later in the research.

2.2 CEO and Challenges

The managing director himself is not knowledgeable in sales and marketing management, financial systems & procedures and lacks knowledge in human resources functions. Further he neither provided the direction as a leader or knows how to motivate his team.

The lack of understanding in managing and leading the entire team working in OBC is one of the major concerns of the staff. The Accountant in OBC is a part of the senior management team reports directly to managing director he too is de-motivated simply because the CEO doesn't make decisions that encourage or direct the company. Further the accountant is of the view that the lack of systems in HRM, Financial management, strategic direction, marketing, leadership are the reason for the decline in the performance of the company. Further aggravated by indecision by the managing director. The accountant is also of the view that the managing director doesn't allow the accountant, sales manager and brand manager to use their initiative to achieve company goals and objective.

Exploration and Investigation of the Problem- The Implication and Effects of Behaviour.

What are the consequence of the problems of indecision. The consequences of indecision is that the company is not growing because the people in the organization are not allowed to make decisions to move in the right direction. The CEO himself is not making the decisions or delay them and don't allow employees to do the right things to enhance the profitability and growth of the company. As such the sales manager, the brand manager and accountant are feeling frustrated, de motivated and are don't have job satisfaction.

Assuming that these employee have the skills and ability to enhance the profitability and growth of the company and they are not given the responsibility and authority to act so it makes them feel unimportant and not wanted. An unknown author one said people don't leave companies they just leave other people (managers). This is causing considerable job dissatisfaction among the core team of employees in the company.

These unpin the fact that the company doesn't have proper systems and procedures for effective management of human resources. It doesn't even have proper systems and processes in other functional activities frustrating employee further for instance the inventory management system is primitive hence the inventory movement cannot be managed on the basis of fast moving stocks, redundant stocks, slow moving stocks. In fact the inflow and outflow of inventory is not properly managed hence the profitability cannot be measured effectively the efforts to develop in house a information management system has failed because the CEO insist on using a system that has no license hence the vendor is not supporting the company by way of training and installation of the system. The accountant is blamed for this, the finance department is understaffed and the accountant has to do the inventory management, sales invoicing, treasury function. general accounting. When the accountant doesn't do all of this he is blamed by the CEO his exact words are "you are the highest paid accountant in Oman and you are not doing your job. The accountant has been asked to resign if he cannot perform. This has made the accountant de motivated and stressed out he wants to quit his job. The accountants view on the contrary is that he needs some people to assist him on various financial activities and that he cannot work on software installation and data entry, inventory management, also perform the administration function in addition to the treasury function he performs. In addition these problems the main issue see to be lack of focus and direction of the CEO and his inability to effectively communicate with his people. Both of which de motivates the team of managers and other employee because the CEO actions impact the entire organization.

Underpinning Management Knowledge and Issues

Reviewing the whole process from the perspective of management is the art of getting work done by other people as discussed earlier in this paper. A manager should be skillful in this process of getting his staff to work for him (unknown author some also attribute this concept to Mary Parker Follet). Which means the manager needs to have several key abilities and skills. They include motivational skills, interpersonal communication skills, ability to plan effectively, leadership qualities, an understanding of basic management skills, employee involvement & empowerment, ability and understanding of how to motivate and retain people. (Daft, 2000) (Mullins, 2007) (Huczynski, and Buchanan, 2008) Hence effective management to lead people effectively needs a wide variety of skills and abilities this is what one aspires to gain through a programme of study in a MBA programme,

4.1 Intrinsic and Extrinsic Motivation

Employee are motivated fundamental at individual level in two ways that's intrinsic and extrinsic motivation academic and practicing managers are of the view that intrinsic motivation is the best since the person is motivated internally by herself hence such people are better performers and enjoy better job satisfaction because of their attitude (Armstrong, 2007) While other critics are of view that complex human behavioral factors cannot be easily categorized into two broad categories of motivation and Reiss is of the opinion that individuals differ on what makes them

happy therefore of the view that its not right to make value judgments as to what motivates people (Reiss, 2004) .

Extrinsic motivation on the other hand is external factors that motivate people such as rewards, incentives and these can be short lived or momentary therefore a person may not be motivated to do something which he doesn't wish to do. Here again it should be understood that money or incentives and status alone cannot motivate people as in Hygiene factors of the two factor theory of Herzberg (Daft, 2000) and (Mullin, 2007)

Hence what motivates people is difficult to understand factors that motivates an individual may not motivate another hence the manager's job becomes even more challenging remember the maximum you can take the horse to the water but you cannot make it drink" The manager in OBC should understand how different people working under him are motivated hence the benefit of the idea of intrinsic and extrinsic concepts is that some broad view of how individuals working for a manager will be motivated can be review from this framework perhaps one should review motivation of subordinates with the intrinsic / extrinsic frame work along with the idea of hygiene factors and motivators based on the two factor theory espoused by Frederick Herzberg. The view that Hygiene factors include status, salary, benefits and job security the existence of these factors doesn't lead to dissatisfaction or satisfaction.((Mullins, 2007) The senior employee in OBC have a status because of the job titles such as Sales manager, Accountant, Brand managers they are paid salaries and enjoy benefits such as company maintained cars, paid mobile bills, housing and medical benefits hence the hygiene factors are taken care of by the organization systems and processes in OBC but extrinsic elements such as incentives, benefits exist status too can be included here in

4.2 Organizational Vision and Motivation

Another view of developing compelling motivation among employees is based on organizational Vision and leadership. The leader has the most important driver of such motivation through seting Vision and goals that encourage employees to move towards the desired goals. What is important is to develop motivational programmes that will encourage and recongnise the desire behavior needed to achieve organizational vision say Robert Chapman the CEO of Barry Wehmiller Group. Chapman further goes on to say that success of motivation programmes will begin with strong leadership the CEO must have clear view of the vision Importantly able to identify critical success factors of the business that impact the vision and have a deep commitment and desire that CEO can and will be able to motivate the behavior of individuals to achieve such goals (Chapman, 2008)

Therefore it's the leaderships challenge to create a business with a strong vision and to drect the organizations vision through motivation. The CEO then is key to designing a viable business model that can succeed. The leaders should understand that people want to be part of a successful organization they are looking for real meaning; " to be engaged in a vision that they can be proud of" (Chapman, 2008)

Interesting Richter, (2010) a performance management consultant who has worked with fortune 500 companies suggest that leaders can use vision through intrinsic motivation to drive teams towards organizational goals. The concept of strategic leadership vision and goals to motivate people are thoughts espoused by numerous academic varying from strategic management discipline, management, leadership and psychology. In fact military leaders share similar thoughts on motivation of subordinates that subordinates can be motivated with clear purpose of Vision and Mission that leaders with clarity of thought and direction can motivate large number of people to act (Einstein & Humphreys, 2001)

4.3 Intrinsic Motivation -16 basic Desire Theory

Based on the research of 6000 people in the USA Prof Steven Reiss proposes a theory in which he suggest that human have 16 basic desires they are;

1. Acceptance, the need for approval

2. Curiosity, the need to learn

3. Eating, the need for food

4. Family, the need to raise children

5. Honor, the need to be loyal to the traditional values of one's clan/ethnic group

6.Idealism, the need for social justice

7.Independence, the need for individuality

8.Order, the need for organized, stable, predictable environments

9.Physical activity, the need for exercise

10. Power, the need for influence of will

11. Romance, the need for sex

12. Saving, the need to collect

13. Social contact, the need for friends (peer relationships)

14. Status, the need for social standing/importance

15.Tranquility, the need to be safe

16. Vengeance, the need to strike back/to win

(Adopted from Steven Reiss, (2004) Multifacted nature of …)

This model is based on the view that people desires vastly differ, the 16 esires represent intrinsic desires that motivates people's behavior directly and assumes they are not aimed at indirectly satisfying other desires. People are motivated by higher levels of desires. However Prof Reiss is of the view that they don't related to deep motivation but act as a manner to achieve the other basic desires (Reiss, 2004)

The concept thought can be critised on the basis that its somewhat akin to the ideas of basic needs espoused by Abraham Maslow and his school of though that followed and expanded on hierarchy of Needs to the ERG theory since the 16 desires reviews basic desires. Hence senior managers could probably use this model to review its rewards and awards in terms of salary allowance and benefits part of the hygiene factors although money is not considered the most important motivator (Daft, 2004) a person needs a living wage.

Underpinning management knowledge and issues

While all these skills are vital in effectively leading and managing people some skills can be considered more important and relavent for instance the ability to communicate effectively and motivate people if these two elements are in place much of the problems in OBC can be avoided and it can be solve through the natural processs of organizational development. However dealing with people requires ability to effectively communicate and motivate individuals and teams within the company.

Effective communication is not taking place in OBC hence there is conflicts, miss understanding, and objectives are not being met. This should be the first thing to be resolved to improve the performance of people and improve their motivation levels.

Analysis of Questionnaire and Findings

Using a question to interview the managerial staff of the company the researcher found the following detailed views on several issues pertaining to the company.

OBC employee interview Questionnaire internal use only for use with management staff

Are you satisfied with your salary scale?

Are satisfied with the Allowances and benefits ?

Is there good internal relationship between the employees?

Is the relationship with the management good? if not what are the causes?

Is there transparency in communication in the company?

Does the company have proper systems in HRM, Finance, Marketing and information system?

Senior Management

Does your manager communicate effectively with you?

Does your manager give proper instructions ?

Does your manager involve you in the planning and performance management processes?

Does he /She inspire and motive you?

What factors motivate you?

The analysis and findings from the interview questionnaires are compiled below six employee were interviewed of that one employee was a female in the group of Six. They were all managers and executives. A summary of the findings is given below. The responses were equally divided in that 50% were netural and 50% of the employees were negative of the company and its management

In the process of interviews the researcher was able to get very friendly with the accountant and his opinion was that all employees would leave the company at the first available opportunity including the sales, brand managers and others. Some are just hanging out they are totally unproductive and he also mention that the CEO is aware of this. The major cause for all the problems is the CEO inaction. He neither implements the recommendations or suggestions made nor makes his own decisions. This reinforces the earlier comments in this paper

5.1 Salaries

Of the six staff interviewed three people were of the view that the salaries that they were paid was in keeping with their jobs categories these include the Accountant the second highest paid employee, the Brand Manager the highest paid employee and the Sales manager the third person with a good salary. Other employees were paid very low salaries less that 200 Omani Rials

5.2 Allowances and Benefits

The three managers are happy with the allowance and benefits and one employee said he is getting company accommodation

However two factor theory of Herzberg clearly indicate that the concept of hygiene factors do not lead to satisfaction hence the salaries and benefits will not necessarily motivate the employees of the company (Daft, 2000). On the other hand it may only support the basic desires as espoused by the Reiss which may not again be sufficient for managerial staff of OBC, Instead they can only be motivated by Motivators.

5.3 Relationship among employee

All employees Agreed that the relationship among themselves are excellent and they enjoy working with their colleagues.

5.4 Relationship with Management

As research has indicated the relationship with the management is not good with the team due to several reasons such as poor communication, indecision, delays, poor planning, non recognition of employees, lack of systems in human resource management, lack of systems in finance, marketing. Further the managers are not allowed to make decisions and move forward. When the managers are not allowed to make decisions and they are not given the responsibility and authority they feel unimportant and demotivated,

Further the managers said that the CEO does not have focus doesn't plan and inspire them and doesn't have a vision for the company he is just interested in the cash inflow and profits only and doesn't look at long term growth and development.

The motivators of the two factor theory of Herzberg apparently doesn't exisit to these employee in OBC for instance responsibility, authority, challenging work, are motivators and these doesn't exist for these employees.

From the perspective of strategic leadership or transformational leadership these employees are not inspired by their leaders or CEO because of lack of vision, values and challenges hence they have lost interest or de motivated. It's the job of the CEO to inspire the employees through shared values, vision, critical success factors, direction (Chapman, 2008) and (Einstein & Humphreys, 2001)


It's the opinion of the researcher that the motivation of employee in OBC is a challenging task there seem to be several important considerations missing starting with leaderships success of modern organizations dependents on leadership (Huczynski and Buchanan, ) and (Chapman,2008). The importance of leadership cannot be overlooked to provide direction to a company and the role of the CEO is important to establish the direction through vision and motivation. This is a major concern for OBC and its managers the lack of the vision of their CEO is de motivating the entire team.

Excellent people management and human resources management systems is a fundamental prerequisite for organistional success (Armstrong, 2007) which is lacking in OBC. For instance the differences in pay scales, allowances, benefits between people of the same level is a clear indication that the company doesn't have proper human resource management systems. Communication is poor, relationship between the senior management and employees are lacking these are clear indication that human resources management systems should improve (Armstrong, 2007)

Marketing, Finance and Information systems not in place is an indication that the company is probably also week in planning, forecasting, which means the company is not proactive and is not directed with focus seems that the fundamental elements of value chain are missing fromn the perspective of operations management. This is also indicative that systems for performance management, measurement and control doesn't exist therefore in such situations the survival of a company is difficult from a long term perspective.

Lack of communication, is a very serious concern communication is fundamental to coordination, effective management of people and resources when communication fails everything else will fail in a group or team. Communication in a organization should be effective at every level managers should ensure communication works effectively since it's the life blood of organizational success. In short if communication fails everything fails. Half of the issues and challenges in OBC are communication related decisions are not communicated between management and staff. Ideas are not shared, Instructions are not given effectively. This is a major concern and one of the reasons that everyone is not working together perhaps also the reason for lack of motivation in OBC

The operational managers are of the view that the reason for reduction in sales is the increase in competition. Which means the company should be able to manage the changes taking place in the environment. Although a new agency was acquired the brand building and marketing of its products and visibility in the market is lacking. Hence managers should develop the culture of adopting to change increase awareness build corporate image and brand image communicate with the external markets these are not happening

Perhaps the organizational culture in OBC should change to a can do attitude, supportive of people and the importance of people management should be the major focus in the company to improve their operational effectiveness.


Unfortunately the best recommendation that though cannot be implemented is to change the CEO since the CEO is also the owner of this business its not recommendation that can be implemented

May be one of the managers should write a effective business plan for OBC in that discuss some areas for improvement such as improvements in communication and planning from along term perspective so that the CEO might take it into consideration.

Also discuss in the plan the need to be effective in HRM management practices including the need to improve leading and management of people from a perspective of motivation at a individuals and team perspective this may be the best option available.

Some of the employees too needs training in planning and decision making, marketing and communication to enhance the effectiveness of the company. Its important to make recommendations that can be effectively implemented and that would resolve the problems in the organization several other recommendations can be made but they will not add value to the company in any way hence they are not applicable.