Traditional Management Practices And The Link With Staff Fluctuation


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Traditional Management Practices And The Link With Staff Fluctuation

  2. 2. IntroductionThe main issue that the author is dealing with in this dissertation is Staff Fluctuation. Thereare two main issues that arise for a company that suffers with high staff fluctuation. 1. Financial and Economic IssuesThe financial impact is illustrated in the following chart: STAFF TURNOVER ADM SALES PER CUSTOMER CUSTOMER FLUCTUATION SALES PER SALES REP TOTAL DIRECT COST PER SALES REP OPERATING RESULTSource: Monthly Circular of the Wurth Group November 2005The hypothesis is: If the fluctuation rate goes up the sales volume per customer will godown, customer fluctuation will increase, the sales volume per Rep will fall, and total costper Rep will increase whereas the operating result will drop. 2. Psychological IssuesAt the company in-house Fluctuation seminar in Germany, October 21st, 2005, JoachimStephan stated: “An analysis yielded that out of 10 customers, 8 will generate lower salesonce the sales representative so far servicing them decides to leave the company”.This not only has an effect on the finances of the company, but has an effect on therelationship between the company and the customer. In short, it looks bad to havecontinuous changes in the faces calling on the customers. It has a negative impact on ourreputation. This is summed up the quotation from Professor Wurth’s paper on StaffFluctuation from 1991, “For Heaven’s sake, another new face at Wurth, there must besomething wrong at that company”. As Professor Wurth stated at the same conference, staffleaving leads to “negative rumours” about the company and this negativity has the effect of“poisoning the work climate”. To sum up the emotional effect we can say that stafffluctuation leads to dissatisfaction, poor spirit and a lack of trust.There are a normal range of responses to this problem. The first point is to get an insightinto the state of the market and the conditions that the company works under. The WurthGroup recommends doing the following: 2
  3. 3. - Examination of the labour market in order to check the supply of labour and the unemployment rate. In a country like Ireland, the fact that we currently have a low rate of unemployment, 5.9% July Seasonally Adjusted figure (, 8th August) and almost full employment is usually offered as a reason for having difficulties in holding onto staff.- Checking the development of salary levels. For example in Ireland where salary levels have increased in the past ten years it is accepted that competition for jobs is a factor that leads to high staff turnover rates.The FAS – ESRI (Economy Wide Vacancy Report, April 2008) reported that all retail andconstruction sector firms currently have difficulty filling vacancies whilst eighty four percent of service sector and fifty three per cent of industrial sector firms have difficulty fillingvacancies. This has certainly been the case at Wurth Ireland. Our own internal statistics tellus that out of every ten job applicants only six on average are considered suitable for thefirst stage of the interview process. From the six that are chosen, only four shows up for theinterview at all, having scheduled and agreed the meeting on the telephone.Having gained this insight into the market the company is then faced with having to makedecisions regarding its response. The considered response to this situation has been to takethe following measures as recommended by Sven Kristensen from Wurth Denmark onbehalf of the group management: 1. Hiring Procedure: the procedure for hiring staff has been refined with a standard six step process in place for all sales employees. 2. Payment system: the salary levels have been increased by 20% in the past two years in order to make the salary level competitive. 3. Competency: there is a programme of product and sales training in place in order to aid staff development. 4. Area Optimisation: ensuring that each sale is has sufficient potential for sales growth and therefore good salary levels in turn. 5. Management: the sales managers have a range of training programmes in place that are designed to improve their skills and therefore make them better leaders.As Sven Kristensen explains in his report, these measures are not a “cure-all” for reducingstaff turnover. They are in fact a series of practical steps taken by the management ofWurth to try and combat the high rate of fluctuation amongst our sales reps. The desiredresult of these measures is to stay close to the sales reps and hopefully in turn have apositive effect on the rate of attrition.The result of these actions is illustrated in the following charts: 3
  4. 4. Staff Turnover ADM in % - IE-Würth Ireland - TOTALActual - EUR 29.7 27.2 27.6 26.9 26.7 26.9 26.5 25.6 25.3 25.7 25.3 24.8 24.6 TOTAL Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan 2007 2007 2007 2007 2007 2007 2007 2007 2007 2007 2007 2007 2008Source: WISThis chart illustrates the development of staff fluctuation for the year 2007 into January2008. The fluctuation figure reached its lowest level (twenty four per cent) in August 2007.The worst result occurred in October 2007 when the figure peaked at almost thirty per cent.In 2007 the company had one hundred and two Sales Reps, meaning that twenty five SalesReps left the company during the year. 4
  5. 5. Staff Turnover ADM in % - IE-Würth Ireland - TOTALActual - Jan - EUR 37.6 36.0 35.0 27.9 26.7 26.5 24.4 24.8 22.8 19.0 TOTAL 14.7 13.3 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008Source: WISSource: Wurth Information SystemAs the charts illustrate the company has had a consistently high level of sales stafffluctuation since 2000, and has settled at 26% for the past year. This is in spite of theactions taken to reduce the fluctuation level. It can be said that the actions recommended byMr. Kristensen have had a positive effect in many countries and especially in WurthDenmark. It should also be said that these measures are the minimum requirement for thehandling of staff recruitment and retention. However their implementation has not yetyielded the desired result for Wurth Ireland. This has led to the idea behind this thesis.The objective of this research is to search for a new alternative by examining the theory asto whether or not the sales managers require a new approach. This statement by PeterDrucker sums up the shift that has occurred in human history:“In a few hundred years, when the history of our time is written from a long-termperspective, it is likely that the most important event those historians will see is nottechnology, not the Internet, not e-commerce. It is an unprecedented change in the human 5
  6. 6. condition. For the first time-literally-substantial and rapidly growing numbers of peoplehave choices. For the first time, they will have to manage themselves.”Covey, Stephen. (2004) The 8th Habit From Effectiveness to Greatness. Simon & Schuster.We are now living in what is called the “Knowledge Age” having moved from theIndustrial Age. Dr. Covey explains Peter Druckers comparison of the Industrial-ManualWorker Age with today’s Knowledge Worker Age this way:“The most important, and indeed truly unique, contribution of management in the 20thcentury was the fifty fold increase in the productivity of the manual worker. The mostimportant contribution management needs to make in the 21st century is similarly toincrease the productivity of the knowledge worker.The most valuable assets of a 20th century company were its production equipment. Themost valuable asset of a 21st century institution will be its knowledge workers and theirproductivity.”So what causes people to leave an organisation? Still, Cundiff and Govoni (SalesManagement, 1988) suggest the following causes of turnover of sales personnel: 1. Poor recruiting 2. Improper selection and assignment 3. Training deficiencies 4. Inadequate supervision and motivation 5. Breakdown in communications 6. Unsatisfactory performance 7. Disciplinary issues 8. Cutbacks in personnel 9. Transfer 10. PromotionIt follows that this change in workers should require a change in management. The first fivereasons on the list above are relevant to management. The question for this thesis iswhether this change has occurred in management thinking and literature. Following that thequestion is what management skills and techniques are used by the management of WurthIreland when dealing with their sales staff? Is there a gap between the development ofmanagement thinking and the techniques used by the managers?The methodology that this author has used for this examination is: 1. Review of the available literature. This author has reviewed the literature from the following points of view: - The development of management theory - Management into Leadership - Motivation and the manager’s role in motivation - Modern Management Theory – Is there a new paradigm? 6
  7. 7. 2. Survey of the sales staff in Wurth Ireland. This survey was conducted amongst 112 Sales Representatives. 3. Focus Group discussion with sales staff in Wurth Ireland. This was an in depth discussion with Sales Representatives based on the questions contained in the survey. The idea was to gain more rich information from the participants.The review of this literature, the primary and secondary research and this author’sconclusions and recommendations are contained in the following thesis. 7
  8. 8. Chapter 1: Literature Review1.1 Historical Development of Management Theory1.2 From Management to Leadership1.3 Motivation and Management1.4 Shifting Paradigms – A new era of Management Thinking1.5 Conclusions 8
  9. 9. 1.1 Historical Development of Management TheoryWhen tracing the evolution of management it is normal to start with the scientific studiesconducted by F.W. Taylor. However there is literature predating the scientific study ofmanagement by thousands of years, literature that illustrates that the concept ofmanagement and the organisation of people has been thought about throughout the ages.Some of the oldest writings come from Sun Tzu, who lived in China 2500 years ago. In TheArt of War for Executives (1989) based on the writings of Sun Tzu; Donald Krausestates, “Sun Tzu tells us that leadership alone determines success”. There were according toSun Tzu, seven characteristics that come from effective leadership: - Self-discipline; meaning there is no need for external motivation. - Purpose; working in order to achieve objectives. - Accomplishment; defined results are achieved. - Responsibility; a leader takes ownership. - Knowledge; constantly trying to improve understanding and ability. - Laddership; meaning that the leader works cooperatively with his workers. - Example; showing the way.Richard Scott of Stanford University has provided a useful grid that explains thedevelopment of Management Theory.FIGURE 1.1 Four Stages of Theory and Leading Theorists1. 3.1900 – 1930 1960 – 1970Weber ChandlerTaylor Lawrence Lorsch2. 4.1930 – 1960 1970-?Mayo et al. WeickMc Gregor MarchBarnardSelznickSource: Peters, Thomas J. Waterman Robert H. (1995) In Search of Excellence, Lessonsfrom Americas Best-Run Companies. London, HarperCollins Business.These writers along with Abraham Maslow and Frederick Herzberg developed managementthinking up to the modern era. In order to give an outline of this development I am going tosummarise the works of Taylor, Maslow, Mc Gregor and Herzberg. Karl Marx was the first 9
  10. 10. to offer the notion of the manual worker. F.W. Taylor was the first to study the manualworker.F.W. Taylor – Scientific ManagementTowards the end of the nineteenth century as trade and competition were increasing, therewas a need for a more scientific approach to management. The main focus was on usingworkers time more effectively and minimising wasted time. Taylor based his studies on theprinciple that if a person is rewarded for what they do they will repeat the action. Thiscould be called a ‘carrot and stick policy’. Conversely if the action receives no recognitionthere is less chance that it will be repeated. Already at this early stage Taylor was putting anemphasis on effective staff selection, training, monitoring performance and providingincentives and rewards.This theory was backed up by Edward C. Tolman who’s “Expectancy Theory” in the1930’s stated that human behaviour was motivated by conscious expectations (Adair, John1996) The theory is limited in that it concentrates on basic needs and not the higher needssuch as esteem needs or a desire for self-fulfilment. Also it does not account for the factthat some element of human behaviour is reflexive and comes from an inner motivation thatis more difficult to quantify.Maslow’s – Hierarchy of NeedsAbraham Maslow’s hierarchy of needs grew out of the famous Hawthorne Studies of 1924-1932. Whereas expectancy theory was based on the‘Rational Man’, these studies took into account the importance of social factors and theinfluence of social groups on motivation. They developed theories proposing that theindividual’s interest could be replaced by group intent.Maslow stated that a person is motivated by inner needs. Once one set of needs have beensatisfied a person is motivated by a higher set of needs that have yet to be satisfied. AsStephen Covey (2004) put it, “Satisfied needs do not motivate. It is only the unsatisfiedneed that motivates”. John Adair (1996) called this process the ‘Alexander Principle’ – “wehave new worlds to conquer”.Maslow grouped these needs starting with basic survival moving through to the highest setof needs which he called, Self-Actualisation. 10
  11. 11. FIGURE 1.2 Maslow’s Hierarchy of Needs: Self-Actualisation Esteem Growth Self-respect Social Accomplishment Achievement Safety Belonging Personal – Status DevelopmentPhysiological Security Acceptance Recognition Hunger Protection Social Life From Thirst Danger Friendship And Sleep LoveDouglas Mc Gregor – Theory X and Theory YIn his book The Human Side of Enterprise in 1960, Mc Gregor put forward the theory that“behind every managerial decision or action are assumptions about human nature andhuman behaviour”. Mc Gregor split these into two groups of assumptions that he called,Theory X and Theory Y.Theory X states that: 1. The average human being has an inherent dislike of work and will avoid it if he can. 2. Because of this dislike of work, most people have to be coerced, controlled, directed, and threatened with punishment to get them to put an effort into the achievement of company objectives. 3. The average human being prefers to be directed, wishes to avoid responsibility, has relatively little ambition and wants security above all else.Theory Y states that: 1. The expenditure of physical and mental effort in work is as natural as play or rest. 2. External control and the threat of punishment are not the only means for bringing about effort towards organisational objectives. Man will exercise self-direction and self-control in the service of objectives to which he is committed. 3. Commitment to objectives is a function of the rewards associated with their achievement. 4. The average human being learns, under proper conditions, not only to accept but to seek responsibility. 11
  12. 12. 5. The capacity to exercise a relatively high degree of imagination, ingenuity and creativity in the solution of organisational problems is widely, not narrowly, distributed in the population. 6. Under the conditions of modern industrial life, the intellectual potentialities of the average human being are only partially utilised.Lidstone, J. (1978) Motivating Your Sales Force. England, Gower Press.Mc Gregor’s Theory Y draws on Maslow’s hierarchy theory. The basic premise of it is thateveryone is a potential success at something. As far as management is concerned, if McGregor is right there is tremendous potential within people and in the right conditions theirmotivation can drive them to achieve great things.Frederick Herzberg – satisfiers and dissatisfiersHerzberg further stimulated management thinking with his book, ‘Work and the Nature ofMan’ in 1968. This work contributed in particular to the area of sales management.Herzberg looked deeper into the factors listed in management thinking and divided theminto two groups. One group he found did not provide motivation but rather, if these factorswhere not right they would lead to de-motivation or dissatisfaction. These factors weregenerally found to relate to the work environment and are called ‘Hygiene Factors’ becausethey need to be cleaned up regularly. The other factors that lead to motivation are centredon the job itself. These are the factors that can lead to longer lasting motivation and have agreater impact than the Hygiene factors. These factors are called ‘satisfiers’ or motivators.If we put this into the context of Maslow, the Physiological, Safety and Social needs are thehygiene factors and the Esteem and Self-Actualisation needs are the motivational factors.FIGURE 1.3 Herzberg’s Satisfiers and Dis-Satisfiers HYGIENE FACTORSCompany policy Availability of clearlyAnd Administration defined policies and proceduresSupervision Competence and fairness of supervisorInterpersonal relations Quality of social life at workSalary Total compensation package 12
  13. 13. Status Position or rank in relation to othersJob Security Freedom from insecurityPersonal Life The effect of work on a person’s Family life, stress, unsocial hoursWorking Conditions Facilities, heating, tools, space, noise, canteen MOTIVATORSAchievement Specific successes, completing jobs Solutions to problems, seeing the results of your workRecognition Notice or praise, concrete rewards and recognitionPossibility of Growth Opportunities for learning and practising new skills, gaining new professional knowledge. Opportunities for promotion.Advancement Enhanced position/status at workResponsibility Responsibility matched with the authority to carry it outThe work itself The actual doing of the jobLidstone, J. (1978) Motivating Your Sales Force. England, Gower Press 13
  14. 14. These writers sum up the development of management thinking. The next stage of researchis to investigate the evolution of management thinking. Has management theory shifted to anew wave of thinking that stimulates motivation? 14
  15. 15. 1.2 From Management to LeadershipManagement has many definitions most of which centre around the four main functions ofmanagement, Planning, Organising, Coordinating and Controlling. As Henry Mintzbergstated, “If you ask managers what they do, they will most likely tell you that they plan,organise, coordinate and control.” However it is not quite as simple as that. When talkingabout the job of the manager we are, as Peter Drucker stated in The Practice ofManagement,” talking about a complex subject”(Drucker, 1995). The question then arisesas to the job or the work of the manager. However, according to Mintzberg, these words tellus little about what managers really do. They, at most, tell us something about vagueobjectives that managers have. Henry Mintzberg outlines what he calls some “Folklore andFacts about Managerial Work” (Mintzberg on Management Inside our Strange World ofOrganisations, 1989)There are, according to Mintzberg, four myths about the manager’s job that do not bear upto scrutiny. 1. Folklore: “The manager is a reflective, systematic planner”. Whilst there is a lot of evidence on this subject, none of it, according to the writer, supports the statement. Fact: Study has shown that: “managers work at an unrelenting pace” and that they in fact are strongly oriented to action. The writer bases this on a study of Managers that showed that they dealt with a “steady steam of callers and mail from the moment they arrived in the morning until they left in the evening”. He also observed that of all verbal contacts, “93% were arranged on an ad hoc basis”. He also noted that managers “jump from issue to issue, continually responding to the needs of the moment”. 2. Folklore: “The effective manager has no regular duties to perform.” They are constantly delegating tasks and spending time planning and controlling. Fact: “Managerial work involves performing a number of regular duties”. According to this study, it is normal for field sales managers to regularly see customers, for example. 3. Folklore: “The senior manager needs aggregated information, which a formal management information system provides.” Managers have a number of media at their hands including documents, phone calls and meetings. Fact: “Managers strongly favour telephone calls and meetings”. Managers like to use gossip, speculation and hearsay. This soft information is in fact where managers get most of their information from. 4. Folklore: Management is a “science and a profession”. Fact: Science is systematic, analytical and predetermined. Manager’s usejudgement and intuition. This is not a scientific process according to Mintzberg.Mintzberg reaches the conclusion (Mintzberg on Management Inside Our Strange World ofOrganisations, 1989) that the manager’s job is “enormously complicated and difficult”. 15
  16. 16. Brevity, fragmentation and oral communication characterise the work of a manager. PeterDrucker, one of the most prominent commentators on this subject wrote about the need for“clearly spelled out objectives” (The Practice of Management 1989). The setting of theseobjectives must be in accordance with the contribution the employee is expected to make.Using the example of the District Sales Manager, Drucker states, “The objective of thesales manager’s job must be defined by the contribution he and his district sales force haveto make to the sales department.Sales Management is one type of management, the one that is particular to this thesis. Areview of the literature on sales management reveals a number of issues. Firstly it may beworth having knowledge of the characteristics of a successful sales person. Peter Chambers(21st Century Sales Management, 2004) identified the following characteristics: • Sensitivity • Self-Discipline • Positive work-rate • Analytical Ability • Active Listening • Persuasiveness • Problem solving skills • Creativity • Seeking closure • Tenacity • Integrity • Team working • Technical skillsWhilst this is a long list, the sales person’s job is, as Chambers says “a complex one.”Being a complex job may mean that the management of these employees is also complex?Considering its complexity, Chambers further suggests the use of tools for controlling theefforts of the sales people. He suggests measuring such activities as: • Calls per day per person • Days worked • Active Selling TimeStrafford and Grant (Effective Sales Management, 1986) put emphasis on controlling theoperation by using the following system:- Set standards- Collect Information- Analyse Variances- Take Corrective Action. 16
  17. 17. They follow this up by stating that the manager should concentrate on the following criteriafor their sales people:- How many people they call on- How often the customer requires a visit- What kind of customers are they?- What does the sales person need to do during the visit?Simon Cooper proposes the importance of weekly performance meetings where the salesperson’s role can be broken down to some key questions (Selling Principles, Practices andManagement, 1997). • Prospects – How many people have you called to this week? • Contacts – How many people have you contacted? • First Appointments – How many people agreed to meet with you? • Second Appointments – How many people agreed to see you again? • Closed Sales – How many people have you sold to this week? • Sales Value – What are the sales worth in term of order value and profitability?The models suggested by these authors have at their core a focus on controlling the effortsof the sales people. As Professor Dr. Reinhold Wurth puts it (2005), “some of these models,gave me the impression that they were totalitarian. They seemed to me to be more likely torestrict management than to increase its creativity, flexibility, and its courage to takecalculated risks.” Regarding the issue of Staff Fluctuation, the main focus of managementis on their dealings with the people who work for them.Dalrymple et al. (2004) identify the two most important tasks for Sales Managers to be rolemodelling and trust building. The writers suggest role modelling means; leading byexample, sharing best practice and having a professional attitude and behaviour. Trustbuilding entails maintaining good rapport with the sales team, fostering opencommunication and helping sales people to ‘look good’.According to Peter Drucker (The Frontiers of Management, 1986) there are some basicprinciples in making people decisions. 1. If a person is put into a job and that person does not perform, it is the manager’s mistake. As Drucker says, “I have no business invoking the ‘Peter Principle’”. 2. Julius Caesar’s maxim, “The soldier has a right to competent command”, is relevant. The manager must make sure that the people in his command perform. 3. Of all decisions a manager makes, the ones regarding people have the greatest impact on a company’s performance.Dr. John Adair (Effective Motivation, 1996) takes this issue for managers of dealing withpeople further when he makes the point that it is more important to be a “leader” than a“manager”. Dr. Adair suggests that there are three overlapping areas of need forconsideration when a manager or leader is dealing with employees. 17
  18. 18. FIGURE 1.4 Core Responsibilities of Leadership ACHIEVING THE TASK BUILDING AND DEVELOPING MAINTAINING THE THE INDIVIDUAL TEAMIn order to achieve this, the author suggests certain behaviours are needed. Theachievement of these behaviours leads to the accomplishment of the three coreresponsibilities which in turn lead to effective management / leadership and in turnmotivation.Dr. Adair (Not Bosses but Leaders, 1990) draws a clear distinction between Managementand Leadership using the following key points: • Leadership and Management are not the same. In industry and commerce they should go together. • Leadership is about giving direction, building teams and inspiring others by word and deed. • You can be appointed a manager but you are not a leader until your personality and character, your knowledge and your skill in doing the functions of leadership are recognised and accepted by the others involved. This is a very fundamental difference. • Leadership and change go together. Managing in the form of running an organisation is more appropriate when there is not much change going on. • Managing entails the proper and efficient use of resources – good administration. Good leaders care about administration; the less good ones don’t. • Management is uninspired leadership.In Leadership that gets Results (2000) Daniel Goleman suggests six leadership “styles”. 1. Coercive 2. Authoritative 3. Affiliative 4. Democratic 5. Pacesetting 6. CoachingGoleman suggests that while Coercive and Pacesetting leadership have their uses, they ingeneral harm the “working atmosphere”. The other four styles have a “positive impact”.Warren Bennis further suggests that there are four ingredients leaders have that “generateand sustain trust” (On Becoming a Leader, 1989). 18
  19. 19. 1. Constancy 2. Congruity 3. Reliability 4. IntegrityProfessor Dr. Reinhold Wurth takes on the theory of leadership in his model ofmanagement that is summarised by the following five sentences: 1. Every success has multiple causes. Management only needs to create the conditions that put the right people in the right place at the right time. 2. More leadership, less management, following Tom Peter’s recognition that most companies are ‘overmanaged’ and ‘underled’. 3. Fuse a bunch of soloists into a loyal team, i.e., inform, motivate and integrate staff so as to create a team spirit that can move mountains. 4. No top-heavy bureaucracy, no organisation charts and job descriptions; instead, shallow hierarchies, short paths, clear structures that leave the individual lots of free space to take his or her own initiative. 5. Create fast, flexible, small units that can apply their resources where the markets fast-changing needs guarantee the best return on investment.Wurth, Reinhold. (1995) Management Culture the Secret of Success. Frankfurt, CampusVerlag.Perhaps the best summation of the effect of management when done well is that byAbraham Maslow (Maslow on Management, 1998) when he states:“Proper management of the work lives of human beings, of the way in which they earntheir living, can improve them”, to the point where “work actually becomes part of the selfpart of the individuals definition of himself.” 19
  20. 20. 1.3 Management and MotivationMaier and Lawler (Effective Motivation, 1996) summarised the determinants ofperformance as follows: Performance = Ability * Motivation (Effort) Ability = Aptitude * Training * Resources Motivation = Desire * CommitmentWhat do we mean by motivation? Lidstone (1978) suggests:“That which moves or induces a person to act in a certain way, that which tends to moves aperson to a course of action”The terms relating to motivation are listed in the table below.FIGURE 1.5 Terms Associated with MotivationASSOCIATED TERMS ASSOCIATED QUALITIESApproach to work EnergyOrientation to work DriveApplication TenacityWillingness DeterminationDedication Strength of purposeAlignment of person / organisation PurposefulCommitmentWork appetiteSource: Adair, J. (1996) Effective Motivation. England, Pan Macmillan Ltd.Job satisfaction is important relevant to motivation levels. There are five factors that standout as determiners of job satisfaction; achievements, recognition, work itself, responsibilityand advancement (Herzberg, 1966).George and Jones (2006) have defined motivation as, “Psychological forces that determinethe direction of a person’s behaviour in an organisation, a person’s level of effort, and aperson’s persistence in the face of obstacles.” The writers describe how motivation cancome from intrinsic or extrinsic sources. Intrinsically motivated behaviour can be describedas behaviour that is performed for its own sake; the motivation comes from doing the workitself. Extrinsically motivated behaviour is that which is performed to acquire material orsocial rewards. In this case the source of motivation is the consequences of the behaviourrather than the behaviour itself.How do managers achieve motivation in their employees? As stated by George and Jones:“They ensure the members of an organisation obtain the outcomes they desire when theymake valuable contributions to the company”. Managers use outcomes to motivate peopleto make inputs to the organisation.” 20
  21. 21. These authors have also written about Expectancy Theory, a theory put forward by VictorH. Vroom in the 1960’s. Vroom explains that:“Motivation is high when workers believe that high levels of effort lead to highperformance and high performance leads to the attainment of desired outcomes.”FIGURE 1.6 Expectancy, Instrumentality and Valence Model – Victor H. Vroom Effort Performance Outcomes(An important input) Expectancy Instrumentality ValenceExpectancy theory identifies three main factors that determine a person’s motivation:Expectancy, Instrumentality and ValenceGeorge, Jennifer. Jones, Gareth. (2006) Contemporary Management. Fourth EditionNew York, McGraw Hill.Vroom also implied the existence of a law of diminishing returns in relation to motivation.This means that increasing increments in motivation result in smaller increments inperformance until the point is reached where performance no longer increases (Vroom,1964). This raises questions as to the nature of motivation.David Mc Clelland believed that all needs were learned by the kind of events that peopleexperienced. These needs, depending on what they were led to motivation to acquire thatparticular need. Mc Clelland termed these needs “nAch,” “nAff,” and “nPow.” RichardSteers and Lyman Porter summarised these needs (Motivation and Work Behaviour, 1991) Need for Achievement - nAch = “behaviour toward competition with a standard forexcellence”. This applies to people with a “strong desire to assume personal responsibilityfor performing a task”. High need achievers are always highly motivated and do not needincentives for motivation.Need for Affiliation – nAff = “a desire to establish and maintain friendly and warmrelationships”. In many ways this is similar to Maslow’s social needs. People with this needare motivated to seek work opportunities that satisfy this need.Need for Power – nPow = the need to “control others, to influence their behaviour and tobe responsible for them.” 21
  22. 22. The Irish Management Institute, (Handbook of Management, 2004) suggests workers arenaturally motivated when starting a new job, feeling, “proud, elated, energised, excited,renewed in vigour, enthusiastic to begin and grateful for the opportunity.” The retention ofthis motivation is dependent on the employee being able to “use their knowledge, improvetheir skills and have the freedom and responsibility to make decisions.” This leads on to therole of management in motivation. The authors propose that there is a “PsychologicalContract” in force that “provides a mutual clarity of expectations of what an individualoffers an organisation and vice versa, over and above what is contained in the formalcontract.” They offer the following model of motivation as a checklist.FIGURE 1.7 The Psychological Contract Employees know what is expected of them and have Role clarity clear standards or competences by which they are measured. Employees are given authority and decisions arePsychological Role Support supported by their boss. They have the right resources,Safety materials, etc to do the job. Employees are given praise for what they do and effort Recognition is noted regularly. Employees receive regular feedback on their Feedback performance and guidance and development on areas that need to improve. Employees are encouraged to offer their ideas andMeaningfulness Contribution initiatives and to know that their individual effortof Work makes a difference. Employees are encouraged to use “stretch” goals to Achievement increase their sense of achievement and maximise potential. Employees are enabled to express their own personality Diversity at work and that this is safe to do so. This in turn allows potentially greater creativity, initiatives and the employee to be more committed to their work and organisation. Management Supportive or non-supportive. StyleOrganisational Competitive individualistic or group culture, blameStyle Culture culture or learn from mistakes and collaborative culture. Relationship Accessible colleagues or competitive. 22
  23. 23. This handbook also proposes Ten Principles of Motivating Others: 1. Clarity of goals 2. Recognition 3. Feedback 4. Value Individuals 5. D is for Delegate, not Dump 6. Tools and Resources 7. Contribution 8. Positive Attitude 9. Allow Mistakes 10. Raise ExpectationsIn summary the authors say that good motivators encourage people to “retain the vitalityand enthusiasm they first brought to the job”. They “give direction, support and enablestaff, so they can meet their objectives.”Tom Peters and Robert Waterman put forward the view that the problem with the rationalview of motivation is that, “people are not very rational” (In Search of Excellence, 1995).The authors state the opinion that “man is the ultimate study in conflict and paradox.”Taking this into account the authors propose that excellent companies are effective inengendering commitment from staff due to the way they deal with the contradictions inhuman nature. They summarise this using the following points: • People are self centred and like praise. But, none of us are as good as we would like to think. However, “rubbing our noses in that reality doesn’t do us much good.” • Our imaginative instinct and gut feeling is at least as important as our rational side. “Does it feel right? Counts for more than “Can I prove it?” • People are strongly driven from within and are self-motivated. • Action speaks louder than words. People watch for “patterns in actions and will mistrust words that in any way mismatch deeds”. • “We desperately need meaning in our lives and will sacrifice a great deal to institutions that will provide meaning for us. We simultaneously need independence, to feel as though we are in charge of our destinies, and have the ability to stick out.”The authors state that rather than embracing this reality, organisations instead, “set reallyhigh targets for people”. This while perfectly rational is, according to Peters and Waterman,“ultimately self-defeating”.By contrast they give the example of IBM who insists that salespeople set their own quotasin order to ensure that all their people meet them. IBM manages to ensure that 80% of itssalespeople meet their quotas. The writers quote the example of a major competitor of IBMthat sets quotas to ensure that only 40% make their targets. This means that 60% of thesales staff sees themselves as failures. The authors pose the question as to why IBM adopts 23
  24. 24. the approach they do. They answer according to a recent psychological study amongst arandom sample of male adults that asked the men to rank themselves on:- “the ability to get along with others” – Result: 100% put themselves in the top 60% of the population; 25% put themselves in the top 1%.- Leadership – Result: 70% put themselves in the top quartile, only 2% rated themselves below average.- Athletic Ability – Result: 60% put themselves in the top quartile and only 6% said they were below average.This according to the authors means that, “We all think we’re tops”. “We’re exuberantly,wildly irrational about ourselves”. However, the writers state that most companies take anegative view of their staff and “verbally berate participants for poor performance”.According to Peters and Waterman companies “call for risk taking but punish failure” and“want innovation but kill the spirit of a champion.” On the other hand, the authors state thataccording to their studies, people “like to think of ourselves as winners” and excellentcompanies design systems “were most of their people are made to feel like winners.”As an illustration of this point, the authors quote one GM manager, who told them,“Our control systems are designed under the apparent assumption that 90 per cent of thepeople are lazy ne’er do-wells, just waiting to lie, cheat, steal, or otherwise screw us.” Onthe contrary, the authors state that, “The systems in excellent companies are not onlydesigned to product lots of winners, they are constructed to celebrate the winning once itoccurs.” The writers call this “positive reinforcement” and they put forward the theory thatthis is the most important factor for Motivation. Peters, Thomas J. Waterman, Robert H. (1995) In Search of Excellence, Lessons fromAmericas Best-Run Companies. London, HarperCollins Business.Drucker reinforced this IBM philosophy (The Practice of Management, 1995) byexplaining that IBM considers that they are employing a “human resource – the wholeman”. As Drucker states, “one cannot hire a hand; its owner always comes with it.”Jack Welch, the former CEO of General Electric seems to endorse that view when he saysthat so much about management is “about training, positive feedback and thoughtful goalsetting.” (Winning, 2000) According to Welch in order to motivate and retain good peoplea company must “create effective mechanisms” meaning “money, recognition andtraining”.Paul Mooney offers the opinion that in order to achieve high levels of motivation; Irishbusinesses need to develop “an attitude around failure”. He states that managers should see“poor performance or competitive threats as useful”. This will result in, what he calls,“resilient leaders”. A “resilient leader” will learn how to “help their team, remain hopefuland confident and inspire their staff”. This type of leader will “demonstrate kindness andcompassion and they facilitate self determination and self-respect.” This in turn leads tohigh levels of motivation. 24
  25. 25. Mooney, Paul. (2008) Transforming Failure into Leadership. Irish Entrepreneur Businessand Life. Volume 7 Issue 1.This theory of motivation is important for organisations because as stated by Herbert A.Simon (Management and Motivation 1970) “Individuals are willing to accept organisationmembership when their activity in the organisation contributes, directly or indirectly, totheir own personal goals.”John Lidstone of Marketing Improvements Ltd. a U.K. based consultancy offers theopinion that the big challenge for companies regarding motivation centres on the fact that“the behaviour of your salesmen and women and their motivations are intensely personaland unique”. According to Lidstone the mistake that most companies make is that they“apply blanket policies to motivate their sales people”. This is, Lidstone states because“they have carried out no research to discover the real profile of the needs to be satisfied.”Testimony to this is the statement of one managing director to Lidstone that, “it isadministratively more convenient and less costly to treat everyone the same. We are not inbusiness to cater for human oddities.”Lidstone, J. (1978) Motivating Your Sales Force. England, Gower PressFrederick Herzberg offered the following insight into what he termed, “Myths aboutMotivation”. A reading of this list from (Manage People, Not Personnel) in the HarvardBusiness Review signals the complexity of the issue, when you consider that Herzberg callsthese “Myths”. 1. Reducing time spent at work 2. Spiralling Wages 3. Fringe Benefits 4. Human relations training 5. Sensitivity training 6. Communications 7. Two-way communication 8. Job participation 9. Employee counsellingThese points go against the opinions of a number of other writers who endorse these typesof incentives in order to enhance motivation. Perhaps Professor Reinhold Wurth sums upbest how it is that management are mainly responsible for the motivation of theiremployees with the following simple statement:“If we in Management think 75% of our employees are people who steal and who are lazy,badly qualified, and dumb then these are exactly the employees we will have. On the otherhand, if we are sure that 98% of our staff have achieved superb results, and that they arecommitted, willing and have a positive attitude to the company, then our house is in order –because what we have then is a team that’s well motivated, has a positive mood, and whichwill achieve great things.”Source: Wurth, R. (1995) Management Culture: The Secret of Success. Frankfurt, CampusVerlag. 25
  26. 26. The area of motivation is vital to managers who want to attract and especially retain goodstaff. The creation of motivation whether by the influence of a manager or self-actualisationas proposed by Maslow leads to an unlimited outlook on life, vital for the job of a salesrepresentative? Joseph O’ Connor wrote: “A salesman has to have his hopes. It is not a wayof life for a pessimist.” (The Salesman, 1998) A limited outlook on life only creates alimited world. Abraham Maslow proposed (Motivation and Personality, 1970), “For acarpenter who is only a carpenter, the world is made of wood”. 26
  27. 27. 1.4 Shifting Paradigms – New Management TheoryThomas Kuhn wrote that, “A new scientific truth does not triumph by convincing itsopponents and making them see the light, but rather because its opponents eventually die,and a new generation grows up that is familiar with it.” Kuhn proposes the term“Paradigm” to describe this process. Kuhn’s point is that, “Successive transition from oneparadigm to another via revolution is the usual developmental pattern of mature science”.Source: Kuhn, Thomas. (1962) The Structure of Scientific Revolutions. Third EditionUnited States of America, The University of Chicago Press.Dr. Stephen Covey brings the theory about paradigms into the field of management andleadership, (The Seven Habits of Highly Effective People, 1989). Covey explains that theword paradigm is used to mean a, “model, theory, perception, assumption, or frame ofreference. In the more general sense, it’s the way we ‘see’ the world, in terms of perceiving,understanding, and interpreting”. Kuhn shows how every major scientific break-through isfirst a break with tradition, with the old way of thinking. This leads to a new interpretation,a new paradigm. The purpose of this review is to explore the most modern managementtheory to determine the existence or otherwise of new paradigms regarding managementand leadership.Warren Bennis supports this theory of Paradigm Shift, (Leaders Strategies for TakingCharge, 1997). He writes that after a period of “mediocrities, travesties, trespasses,destructions and dislocations” that we have reached a “major turning point” in managementhistory. “A new paradigm is being born”.This shift is part illustrated in (The Principles of Management, 1990) by Peter Druckersstatement the following about the use of reports and procedures,“Most common misuse is as an instrument of report and control from above. Only superiormanagement competence and continuously improving management performance can keepus progressing”. According to Drucker it is the spirit that motivates. Good spirit requiresfull scope for individual excellence. The focus should be on strengths, not on weaknesses.The first requirement on spirit is a high demand on performance. Poor or mediocreperformance cannot be condoned. A manager that sets his sights low or consistently failsmust not be allowed to remain on the job. Every manager should be specifically assignedresponsibility for helping all who work with him to focus, direct and apply selfdevelopment efforts. Regarding rules for Human Organisation for Peak PerformanceDrucker suggests the following: 1. Analysis and organisation of the work 2. Improvement in performance comes from improving performance of individual parts of the job. 3. Must be a logical and systematic flow to the work. 27
  28. 28. As William E. Halal explained “Prevailing management concepts were conceived for anindustrial past, so they are not useful for a vastly different economy based on knowledge”.(New Management Democracy and Enterprise are Transforming Organisations, 1996)There is a conflict described by Halal, between Old versus New Management. On the newside are notions such as, empowerment, fluid structures, and human needs. These are oftenfelt to be naïve to managers. One response is: “Just because an idea is old does not meanthat it is bad. Another is: “There will never be a substitute for the discipline andaccountability of the old system”. Halal believes that this conflict cannot only be resolvedbut that, “New management absorbs the old management into a broader, more powerfulframework.”In his chapter on Knowledge Entrepreneurs Halal writes about how work was previouslyabout doing a job and getting paid a salary. However changes have brought about what hecalls, “enlightened work practices”, with employees being encouraged to participate indecision making. He calls the old system a “paternalistic system”. In 1994, Fortunemagazine announced “The End of the Job”. Today companies need the, “intellect,involvement and creative ideas of everyone that works for them”.Halal points out those knowledge workers must be regarded as “self-employedprofessionals”. Work nowadays requires a deep personal involvement and therefore cannotbe supervised.Drucker wrote (Management Challenges for the 21st Century, 1999) about the history ofmanagement. During the 1930’s there were two sets of assumptions: 1. Discipline of Management - Management is business management. - There is one right organisational structure. - There is one right way to manage people. 2. Practice of Management - Technologies, markets and end users are given. - Management’s scope is legally defined. - Management is internally focused.According to Drucker, up to the 1980’s this theory was close enough to the reality. Now,however it has outlived its usefulness. There are, Drucker says, a number of obstacles to thepractice of management. That in fact the reality has become the opposite of the originalassumptions. Drucker maintains now that what is needed is new assumptions, newparadigms.“Managements concern and managements responsibility are everything that affects theperformance of the institution and its results – whether inside or outside, whether under theinstitutions control or totally beyond it.” 28
  29. 29. As stated in my introduction, Druckers opinion is that the most important contribution ofmanagement in the 20th century is the 50 fold increase in the productivity of the manualworker. The most important contribution needed in the 21st century is to increaseproductivity of the knowledge worker. The most valuable assets of the 20th century wereProduction Equipment. The most valuable assets of the 21st are Knowledge Workers.Drucker lists a number of factors that are essential for Knowledge Worker Productivity: • Management must ask: “What is the task?” • Knowledge workers must manage themselves. They have to have autonomy. • Continuing innovation has to be part of the work, tasks and responsibilities of knowledge workers. • Knowledge work requires continuous requires continuous learning for the worker. • Productivity does not only depend on quantity, quality is as important. • Knowledge workers must be seen as assets, not costs.These factors are, according to Drucker, the opposite of what is required from the manualworker. The model of managers controlling workers no longer applies; Managers must nowbe coaches and facilitators.Contradicting the earlier work by Douglas Mc Gregor stating that there were only two waysof managing people; Abraham Maslow showed in his book, (Maslow on Management) thatdifferent people have to be managed differently. Peter Drucker says that Maslow’sevidence is overwhelming but that in the period up to the publication ofManagement Challenges for the 21st Century (1999) few people had paid attention.Rather than being subordinates, Drucker now says that increasingly, workers are“knowledge workers”. This means in effect, according to Drucker, that the workers knowmore about their jobs than their bosses do. Drucker further adds that today’s managers haveusually not held the position that their employees hold. He goes on to put forward thetheory that what motivates knowledge workers is what motivates volunteers. They need,above all else a challenge. The main things a knowledge worker needs are:- A Challenge- To believe in the organisations mission- Continuous training- ResultsThis means managing people as “partners”. The definition of partners is that all sides areequal. This is very different to the traditional notion of manager and employee. Partners arenot ordered to do things, they are persuaded. Drucker says that the management job is infact a “marketing job”. The key questions to ask therefore are: 1. What does the other party want? 2. What are its values? 3. What are its goals? 4. What does it consider results? 29
  30. 30. This means that the starting point is: “Managing for performance”. This leads on to anotherset of questions proposed by the writer. 1. What is your task? 2. What should it be? 3. What should you be expected to contribute? 4. What hampers you in doing your task and should be eliminated?Following the answering of these questions and the definition of the task of the employee,the next requirements can be tackled. They are: 1. Knowledge workers responsibility for their own contribution. 2. Continuous innovation being built into the job. 3. Continuous learning and continuous teaching.Management thinking of this type has developed into the role of the manager as a coach.This theory is developed by Peter Bolt (The Whole Manager, 1999). According to Bolt,“All managers are coaches and as organisational structures become flatter this skill willgrow in importance.” Bolt suggests a couple of different approaches to take when acting asa coach. The first he calls, the “Questioning Approach”. This involves the following: • “What did you think went well and what was tricky?” • “If you were to do it again what would you do differently?” • “How did you go about preparing for the meeting?”Bolt suggests that the responses to these questions provide an opportunity for the employeeto identify the areas in which they need to improve. This is, in Bolts opinion, more effectivethan telling the person what they are doing wrong.The second approach suggested by Bolt he calls the “Impression Approach”. Commentsattributed to this approach are: • “My feeling is that you can do better than that. Let’s talk through your approach”. • “You appear to have had an off day. What changes would you make in the future?”In this case, the writer highlights that the manager is leading the discussion but stillencouraging the employee to identify for themselves areas for improvement.The model of coaching as opposed to management in the traditional sense goes from oneend of the scale where the employee is simply told what to do to the other end where theemployee is coached. The effect of being coached is illustrated in the following modelsuggested by John Whitmore (Coaching for Performance, 2002). 30
  31. 31. FIGURE 1.8 Coaching for Performance Told Told and Told, Shown and Shown Experienced Recall after 70% 72% 85% 3 weeks Recall after 10% 32% 65% 3 monthsWhitmore backs up Peter Bolt’s theory that coaching is largely a “questioning role”. Byresponding to the manager’s coaching questions the employee becomes aware of everyaspect of the task and the actions that are necessary. This clarity encourages the employeeto take responsibility. Whitmore further proposes the following model of coaching.FIGURE 1.9 Coaching COACHING Boss Knows what is Performer Chooses to going on take responsibilityRobert Waterman expands on this theory of the manager as coach in (The Frontiers ofExcellence, 1995). By drawing the distinction between coaching in sports and businessWaterman demonstrates that sport concentrates on win-lose situations whereas coachingor “mentoring” is about helping individuals develop. This is win-win as opposed to win-lose. Waterman proposes a number of attributes that are specific to the coach or mentor ashe sometimes calls the role: 31
  32. 32. • The gift of time – spending time with people, making them fell important. • High Expectations – mentors see and demand more of their staffs’ potential than the workers would ever see for themselves. • Approachability – although there may be a great difference in status, coaches are easy to get close to. • Informality – the process of coaching takes place outside of any formal functions. • Competence – often the coach is an expert in their field. • Protection – mentors act as a buffer for their people from bureaucracy. • A sense of fun and humour – good coaches take their jobs seriously, but don’t take themselves too seriously.Waterman also makes the point about “visibility”. This means accessibility, being seenaround the organisation, letting people know that you are there and are available to talk.The result of this role is, according to the author, that coaches bring out the best in peopleoften achieving results beyond what people would have had in mind for themselves.Richard L. Daft (Management, 2000) writes about the importance of creating an excitingand demanding work environment. For this he maintains human skills are becomingincreasingly important. Daft considers the main task of middle managers to be the ability tomotivate workers. In order to do this, they must be able to do the following:“Build relationships; empower others; promote cooperation; manage conflict”.Employees also must have the freedom to make decisions and solve problems. Tom Peters,(Thriving on Chaos, 1989) calls this “Reconcieve the Middle Managers Role”. Peterssuggests the manager’s role is to “solve problems – now, on the spot – rather than passingthem up.”The idea of the manager as a coach has been brought further by some authors who havemoved into other, sometimes more personal realms of management. Peter M. Senge does so(The Fifth Discipline, 1993) when he states that the manager should take a broader andmore challenging set of steps in taking care of his/her employees. Senge suggests that themanager: • Support personal mastery as a part of the organisation’s philosophy and strategy. • Make it acceptable for people to acknowledge family issues as well as business issues and to make allowance for family commitments. • Help people obtain counselling and guidance for how to make effective use of family time.Senge’s theory is that in order for the employee to be successful there must not be a“conflict between work and home” and that management should play a supportive role tothat end.Terence Deal and Allen Kennedy invented the term “Symbolic Managers” to describe whatthe see as the role of managers today – “their primary job as managing value conflicts thatarise in the ebb and flow of daily events” (Corporate Cultures, 1982). These SymbolicManagers are “sensitive to culture and its importance to long term success”. They also 32
  33. 33. “place a high level of trust in their fellow employees” as well as seeing themselves as“players in the daily drama of company affairs”. This is in contrast to “Rational” managerswho see their jobs as “Managing” and “Hiring/firing” people.Clegg et al. (1999) do question this new form of leadership. The authors suggest that thetendency to promote this new leadership to the exclusion of all that went before “riskscreating a return to universalistic thinking”. In order to balance the varying views thefollowing case study looks at some examples of current management practice in this area.The question therefore is: Has the shift in management thinking lead to practical action interms of a company’s ability to retain its staff? In this Case Study, “Why Are We LosingAll Our Good People?” published in the Harvard Business Review, Edward E. Lawlerstudies the situation with the company, Sambian Inc. This company has lost a number ofkey people in quick succession and the management have heard rumours that another keyemployee is considering leaving. Lawler studies the situation from the point of view of,“How can Sambian discover what’s really driving people out the door?”A number of commentators in this case recommend a series of actions and procedures thatorganisations should have in place in order to discover the reasons why people leave andalso to keep talent in the first place.Anna Pringle, the head of international people and organisation capability for Microsoftoffers the following opinions: - The HR manager is the custodian of talent. He or she should know whether key members of staff are happy and are thinking of leaving the organisation. Pringle says that an “Early Warning System” is important for this. - The most effective leaders devote 40% of their time to people. This means coaching and mentoring, recruiting and re-recruiting top talent. - Pringle also recommends holding “small, open discussions with key employees. This can be done in the form of breakfast or coffee meetings and should be held weekly. - Pringle makes the point that at Microsoft, “we try to tailor our proposition to individuals needs”. This may mean having flexible hours for staff with families. She gives the example of giving people access to fitness clubs in order to improve the work / life balance.In his comments on the case, F. Leigh Branham, a human resources consultant states thatthere are a number of “trigger events” that can cause employees to leave. 1. Misalignment between the employee’s expectations of the work and the actual work or even the workplace. 2. Insufficient feedback or coaching. 3. An imbalance between work and life.Branham states that in general most employees are reluctant to talk to management aboutthese “push factors”. Because of this the company must have some form of feedbacksessions and encourage an environment where employees can speak freely about what bugsthem. Without this, according to Branham, organisations become a revolving door. 33
  34. 34. Jim Cornelius, he CEO and Chairman of Bristol-Myers Squibb writes about how he toofaced a “talent draining situation” at his company when he first took over. He alsorecommends some actions that will aid the staff retention. 1. Simplify the management structure so that they can gain a direct understanding of the issues facing the firm. 2. Make sure that the mission is crystal clear so that everyone in the firms understands it. 3. Ensure that people are being compensated correctly.Cornelius also stresses the importance of meeting regularly with employees to discuss whatthey are doing. He emphasises “face to face meetings with senior managers”. This isimportant for Cornelius as he says, “Phone calls, email and teleconference won’t cut it”.The final contributor to this case study is Jean Martin, the executive director of theCorporate Leadership Council in Washington, DC. Martin explains the importance of“anonymous audits” and surveys in order answer questions about what she terms, “culturaldisconnects”. Questions such as:- “What are the unwritten assumptions about the way work gets done here?”- “Do you believe hard work will be rewarded?”- “Do you feel that other employees are committed to your success and the organisations success?”Through their study of more than 100,000 employees around the world, the CorporateLeadership Council found that although employees join companies for rational motives,they stay and work hard for emotional ones. It is also relevant that in their studies they havediscovered that on average only 25% of departing employees “express dissatisfaction”before leaving. Also important is the fact that nearly one third of high performers reportedthat what they want for their careers is not what the company wants for them. Along withaudits and surveys, Martin recommends that Sambian hold “monthly employee-run‘mission review sessions,’ in which workers discuss Sambian’s mission and its relevance totheir work.”These actions can, according to Martin, reduce attrition rates by “as much as 87%.”Lawler, E. (2008) Why are we losing all our good people? Harvard Business Review.Reprint R0806A, June 2008.The process of development is traced from along the line of Manager developing intoLeaders and on to becoming Coaches. Stephen Covey has further proposed the idea of“Manager as 1st servant to his employees”, representing a further paradigm shift. Coveyuses the model “Good to Great” formulated by Jim Collins (The 8th Habit, 2004) toillustrate the transformation of management. 34
  35. 35. FIGURE 1.10 The Level 5 Hierarchy The Level 5 Hierarchy Level 5 ExecutiveLevel Builds enduring greatness through a paradoxical combination of personal humility 5 plus professional will. Effective LeaderLevel Catalyzes commitment to and vigorous pursuit of a clear and compelling vision; 4 stimulates the group to high performance standards. Competent managerLevel Organises people and resources toward effective and efficient pursuit of 3 predetermined objectives. Contributing Team MemberLevel Contributes to the achievement of group objectives; works effectively with others 2 in a group setting.Level Highly Capable Individual1 Makes productive contributions through talent, knowledge, skills and good work habits.Covey states that “the very top people of truly great organisations are servant leaders.” Thistype of leader is described as “humble, the most reverent, the most open, the mostteachable, the most respectful, and the most caring”. Jim Collins following a five year studyquoted in The 8th Habit states that what catapults a good organisation to being truly great is“Level 5” or “Servant” Leadership.This is perhaps the leadership required to retain the talent that we have in the company. 35
  36. 36. 1.5 ConclusionsPost review of the literature this author concludes that there has been a shift in managementthinking from the point of view of industrial thinking, shifting from the concentration onmanagement control to the attitude of manager as the first servant to the employee. This isin line with the shift from the industrial age to knowledge age economy. Peter Vailldescribed this knowledge age as, “permanent white water” (Learning as a Way of Being,1996). This description depicts the “complex, turbulent, changing environment in which weare all trying to operate.”This ‘Paradigm Shift’ has reached the point where there is a requirement for the manager toact as “first servant” to his employees. This represents a particular challenge for managersand businesses that are scripted in industrial style management thinking. Peters andWaterman describe the situation as thus: “Many otherwise smart and business-savvy peopleare operating from a theoretical base that is simply out of date” (In Search of Excellence,1995) Daniel Goleman (Emotional Intelligence, 1996) proposes that the most importantcompetences required for dealing with people now are, “Self-awareness, self-control andempathy.”This shift in management thinking presents many challenges. A review of the literature onSales Management in particular still shows an emphasis on controlling and monitoringstaff. This is in direct contrast to the management styles the literature shows has developedin the past decade. The challenge is to study the situation the individual company findsitself in by conducting primary research and taking a practical view towards improvement.As Bruno Tietz said, “Sound common sense is and will always be the fundamental basis forsuccessful management, whatever that is”. Common sense in this case will result in furtherstudy in order to determine the current position. 36
  37. 37. Chapter 2: Research Methodology2.1 Methodological Framework2.2 Questionnaire Design and Data Analysis2.3 Presentation of Results2.4 Justification of the Chosen Methodology2.5 Conclusions 37
  38. 38. 2.1 Methodological FrameworkIntroductionAs I referred to “paradigms” earlier in this thesis, I have attempted to take into account myown paradigms regarding this subject prior to deciding on my methodology. During thecourse of my MBA studies and my management work with Wurth Ireland I had in advanceformed the opinion that management theory had advanced in line with this development tothe knowledge age. Taking this bias into account, I was conscious of the importance ofhaving a sound methodology. This also meant behaving in an ethical manner regarding theresearch. Collis and Hussey (2003) have suggested an awareness of these main problems asbeing important. • Confidentiality / Anonymity: I stressed the point with the sales staff that all answers were confidential. The survey responses were sealed and mixed so that the author had no knowledge of where the answers came from. The focus group discussion was held in a general way discussing general issues with no names attached to comments made in the minutes. • Informed consent: The participants and survey sample were informed as to the reason for the research. They understood that the responses were not for use in work and were only a contribution to research for a master’s project. • Dignity: The anonymous nature of the research ensured that no participants were ridiculed or embarrassed. It was also stressed that participation was entirely optional. 12% of the sample did not return questionnaires. • Publications: I was aware of my paradigm on this subject in advance of my research and so endeavoured to read widely and broadly on the subject in order to achieve balance in the research.In order to maintain credibility of this research I kept in mind this summary by Rogers(1961), “scientific methodology needs to be seen for what it truly is, a way of preventingme from deceiving myself in regard to my creatively formed subjective hunches”.My methodology for gathering primary information took the following form: • Questionnaire – Survey of the Sales Representatives in Wurth Ireland Ltd. • Focus Group – Discussion with Sales Representatives on the subject of challenges and issues they face in doing their jobs.Research ObjectiveThe key questions I wanted to answer in this research were: 1. The opinions of the sales representatives on the key criteria related to successful management in the modern age. 2. Whether a gap exists between modern management theory and management practice in Wurth Ireland Ltd. 3. Are there specific areas where an execution gap exists and if so what are they? 38
  39. 39. The Study DesignThe population for the survey was the Sales Representatives of Wurth Ireland Ltd. Apopulation is a set of people that can be defined as “all workers of a certain grade in aparticular company” (Collis and Hussey, 2003). Wurth Ireland has one hundred and twelveSales Representatives. Each one of these was surveyed using a delivery and collectionmethod. Angela Hammouda, (MBA Lecture, March 2007) recommended piloting thequestionnaire in advance to ensure that: • Each Question is understandable • The overall questionnaire is not too long and arduous • Implementation method works.This author conducted a pilot with four Area Sales Managers in order to test these criteria.The result of this was to change the order and wording of some of the questions. Therewere 15 questions in total in the questionnaire. After analysing the data it was clear thatonly 8 of the questions were fully relevant. For future research I would do a more extensivepilot study.The response rate was eighty eight per cent. Ninety nine of the one hundred and twelvesurveys were returned. Saunders et al. (2007) suggest expecting between thirty and fifty percent response rate for delivery and collection questionnaires, therefore an eighty eight percent response was satisfying.The Focus Group discussion was used to gather data regarding the opinions of the groupson the issues involved. The participants were made up of twelve Sales Representatives. Theadvantage of using Focus Groups is summed up with the quotation, “The explicit use of thegroup interaction to produce data and insights that would be less accessible without theinteraction found in a group” (Morgan, 1988). This should provide the researcher with richdata. My role in the Focus Group was that of facilitator. Saunders et al (2007) suggest thatthat role allows the facilitator to; “Keep the group within the boundaries discussed andallows the generation of interest in the topic in order to encourage discussion.” Collis andHussey (2003) suggest that the facilitator should “enlist the help of others to observe andrecord what is said.” For this reason my work colleagues, Lorraine Riddler (note / minutetaking) and Jason Murphy (observation) also attended the discussion.The discussion took place around the subject of problems / challenges faced by the SalesRepresentatives in doing their jobs effectively. The topic of the management was notspecifically introduced so not to bias the discussion. Rather it was left as a generaldiscussion. At various times I introduced the topics; Targets / Strategies, Coaching / Helpwith achieving targets, Trust and Motivation. This was in order to ensure that the subjectmatter was covered. The analysis of both the questionnaire and focus group are containedin chapters 2.3 and 2.4. 39
  40. 40. 2.2 Questionnaire Design and Data AnalysisI believe that the research has established a link between the quality and type of leadershipprovided and whether or not sales people decide to stay with an organisation. The literaturehas established a move towards coaching and the “manager as first servant to hisemployees”. FranklinCovey, the management consultancy conducted an “ExecutionQuotient” (xQ) Survey through Harris Interactive (the Harris Poll Online),, (20/05/2008) This survey was designed “from an employee andworkgroup perspective” in order to establish the organisations ability to focus and executeit’s priorities. The priority in this case is staff retention.The data from the xQ Survey confirms that most organisations suffer from “executiongaps” that undermine there most important priorities. One of Wurth Irelands mostimportant priorities is the retention of its sales staff. Therefore, what are the execution gapsthat are causing staff fluctuation? These gaps are the result of a number of factorsincluding, lack of focus on key goals, lack of accountability and little help from theorganisation in achieving individual goals. The xQ survey was conducted betweenSeptember 26th and October 17th, 2002 amongst 11,045 adults, employed across a range ofsectors ( 20/05/2008). The execution gap that is being investigatedthrough this thesis is whether there is a link between outdated management practices andstaff fluctuation.This author’s strategy when deciding on the survey questions was to match the KeyFindings from the xQ Survey with questions related to these key findings that are relevantto the issue of management and staff fluctuation in Wurth Ireland. The analysis of theseresults centres on the fact that sales staff fluctuation is twenty six per cent. This author’stheory is that an answer of twenty per cent or more in the negative is an indication that thisattrition rate of twenty per cent plus will continue. This is on the basis that the criterion laidout by FranklinCovey is an indication of an execution gap, in this case being the highfluctuation rate. The questions are designed in order to test the company management’sperformance in these key areas. In aligning the gap in performance with the fluctuation rate,we can test whether Wurth Irelands sales management team are operating in line withmodern, knowledge age management practice or whether there is a gap in the managementpractice which in turn is leading to staff fluctuation.As this survey is a method of collecting opinion data this author has used Rating Questions.This took the form of a series of statements, keeping the same order of response categoriesso as to avoid confusion amongst the respondents as recommended by Dillman, (2000). Inconsidering the layout of the questionnaire this author took note that the best way ofobtaining valid responses was to keep the visual appearance and wording simple (Dillman,2000). 40
  41. 41. 2.3 Presentation of ResultsSurvey / QuestionnaireThe results of the survey are presented in Pie Chart form. The survey questions asked forthe respondent to either ‘Agree’ or ‘Dis-Agree’ with the statement given. The colour codingfor the chart is as follows:Agree – represented by light blue shading.Dis-Agree – represented by plum shading.The xQ Survey findings clearly indicate that in order to improve organisations effectivenessmanagement must improve on key business priorities. In order to do this, FranklinCoveyrecommend the following: 1. Clarify the top goals of the organisation.According to FranklinCovey, there is no more important task for management than to“establish clear, key goals and then communicate those goals”. In order to establish theclarity of the targets and strategies of Wurth Ireland, I included the statement:Figure 2.1 “I understand the company’s targets and strategies.”As illustrated in Figure 2.1, 76% of the respondents agreed with the statement. 24%however, disagreed stating that they do not understand the company’s targets and strategies. I understand the companys targets and strategies 24% 76% 2. Translate top organisational goals into action. 41
  42. 42. In order to be successful, the organisation must ensure that employees have detailed targetsthat are in line with strategy. My examination of this was done using the statementillustrated in figure 2.2:Figure 2.2 “I have clear measurable targets that I understand.”This chart shows that 73% answered that they agree that they have clear measurable targetsthat they understand whereas 27% of respondents feel that they not understand their targets I have clear measurable targets that I understand 27% 73% 1 2 3. Ensure buy-in and commitment to the top goals.In order to achieve commitment to company targets FranklinCovey recommend involvingpeople and having them contribute ideas to the formulation of these goals. In order to testthe level of involvement and the sales reps feeling of self worth in the company I includedthe following statement:Figure 2.3 “I am encouraged to come up with ideas and my contribution is valued.”The results for this question were that 69% agreed that they were encouraged to contributeand felt that their contribution was valued. However, as illustrated in the chart, 31%answered that the opposite. This indicates a high level of people, in relation to thefluctuation rate that do not feel involved in idea generation nor that their contribution isvalued by the management. 42
  43. 43. I am encouraged to come up with ideas and my contribution is valued 31% 69% 1 2 4. Follow-through with discipline.FranklinCovey recommend that people should “think through their priorities, determinewhere they contribute and build a plan” around this. This planning should be done inconjunction with their superior who works with the staff member in order to help themachieve their objectives. This criterion leads to the statement illustrated in Figure 2.5:Figure 2.4 “My supervisor works with me helping me to achieve my targets.”The result of this, 82% answering that their supervisor’s do work with them in this wayindicates a positive development in relation to the fluctuation rate of 26%. 43
  44. 44. My supervisor works with me helping me to achieve my targets 18% 82% 1 2 5. Encourage workers to execute on top goals together.The xQ Survey Report makes the statement that too much time in spent on unproductiveissues such as, “infighting, politicking and covering up.” The report proposes that this isdue to a “lack of trust”. In order to determine the level of trust as felt by the sales people,this author looked for a response to the statement illustrated below:Figure 2.5 “The Company provides an open, trusting workplace.”This chart illustrates that 66% of respondents agreed with the statement whilst 34%disagreed. This level of disagreement is a concern, being higher than the current percentageof leavers. 44
  45. 45. The company provides an open trusting workplace 34% 66% 1 2In addition to the questions based on the criteria suggested by FranklinCovey and the xQSurvey, this author based two questions on the literature review that strongly suggests ashift in management thinking from the industrial style management to the knowledge age,“manager as first servant”. These questions are based on the importance of themanager/leader as a source or aid to motivation and to the perception of the manager as acoach who guides and trains his staff towards achieving their goals. The results of thesequestions are illustrated in Figure 2.6 and 2.7:Figure 2.6 “My relationship with my supervisor motivates me to do well.” My relationship with my supervisor motivates me to do well 22% 78% 1 2 45
  46. 46. Figure 2.7 “My supervisor is my coach” My supervisor is my coach 38% 62% 1 2Negative responses of 22% and 38% respectively indicate a gap between the advances inmanagement theory and the practices experiences by the sales representatives of WurthIreland Ltd. These levels indicate an area of concern in terms of the target of reducing stafffluctuation from the current rate of 26%.Focus GroupThe focus group discussion took place in Enniskillen, County Fermanagh with 12 SalesRepresentatives from various locations. The issue that stimulated most discussion was thatof coaching and training. The following points were the main issues and suggestions: • Product Training – require more regular product training not only on the top selling articles but on full product range. • As well as the Area Manager, could we look at a system where the Sales Rep. has a buddy or mentor. • Sales Reps feel hindered in their lack of knowledge on pricing. More empowerment is required here. • Management should help more with customers that are slow to pay. Coaching and training in the area of dealing with problem customers would be helpful. • Target setting is difficult to understand. Can target setting be explained in more detail in order to understand the company’s targets? 46
  47. 47. 2.4 Justification of the Chosen MethodologyWhilst questionnaires are not good for exploratory research, they are as stated by Robson(2002) good for standardised questions that can be interpreted the same by all respondents.Also questionnaires normally require less skill and sensitivity to administer than interviews(Jankowicz, 2005). In order to ensure a high response I used a delivery and collectionmethod, using scheduled staff meetings to conduct the survey. Delivering the questionnairethis way ensured a high response rate, 88%. Saunders, Lewis and Thornhill (2007)recommend, “Closed questions, but not too complex”. Also important is that the subjectmust be of interest to the respondent.This author decided on the use of a Focus Group in order to obtain “rich information”. Thisallowed an exploration of some of the issues by allowing the participants to “discuss andshare their views without any pressure on reaching a consensus (Krueger and Casey, 2000).This author felt the use of a focus group was more useful than interviews for the reason thatthe process of conducting interviews can be very time consuming. There is also the issue ofconfidentiality and the fact that the interviewer has an effect on the process (Collis andHussey, 2003). As I am a senior manager in the company I felt that the sales representativemay have felt uncomfortable answering questions related to his or her direct line manager.Instead it is better to encourage a relaxed atmosphere where, as proposed by Collis andHussey, listening to other group members express their views would encourage others tovoice theirs.This author also considered the use of Observation as a method for collecting primary dataas suggested by Brian Boyd, (Research Methodology Notes, 2005). The suggestion herewas to observe the interaction between an Area Sales Manager and a Sales Representativeon a normal working day. In order to gather effective data using this method a number ofdays would be required. Due to time constraints this method was not used. 47
  48. 48. 2.5 ConclusionsIn concluding this section I am conscious of my existing paradigm in relation to the subjectmatter. I attempted to get around this bias by conducting both Quantitative research in theform of a questionnaire and Qualitative research in the form of a focus group discussion.Saunders et al. suggest that an advantage of using mixed methods is that it enablestriangulation to take place. Denzin, (1970) argues that the use of different methods leads togreater validity and reliability than using a single approach. Collis and Hussey (2003)recommend methodological triangulation where both quantitative and qualitative methodsare used.I recommend some improvements in the form of further research in the next chapter. 48
  49. 49. Chapter 3: Conclusions and Recommendations3.1 Literature Review3.2 Survey / Questionnaire3.3 Focus Group3.4 Recommendations for Further Research 49
  50. 50. 3.1 Literature ReviewHaving conducted a review of management literature, this author concludes that there hasbeen a significant shift in management theory and in recorded practice over the pastcentury. This shift is most pronounced in the past twenty years in line with the transitionfrom the Industrial Age to the current, what is termed the Knowledge Age. The questionwas then to test whether this shift in management theory was being operated in practice inWurth Ireland Ltd.3.2 Survey / QuestionnaireThe structure of the questionnaire used was on the issues recommended by FranklinCovey,a leading management consultancy. The questions were designed to test whether theemployees feel that the key management criteria necessary for the knowledge age workerare in practice in Wurth Ireland Ltd.This authors rationale in reaching conclusions on this survey is the following:- The current staff fluctuation rate is 26%, which means that 26% of the Sales Representatives have left the company in the past year.- If management practice is a cause of fluctuation, a negative result equal to 26% approximately indicates that the fluctuation rate will continue. This is on the basis that the management of the sales reps and a failure to meet the selected criteria are relevant to the reason why people leave.- A negative result that is significantly less than the 26% fluctuation rate would indicate that, as far as the staff are concerned, management practice is in line with modern theory and is therefore not a reason for people leaving the company.FIGURE 3.1 Summary of the Survey Results:QUESTION AGREE DISAGREE POSITIVE / NEGATIVEI understand the company’s targets and strategies 76% 24% NegativeI have clear measurable targets that I understand 73% 27% NegativeI am encouraged to come up with ideas and my 69% 31% Negativecontribution is valuedI am treated as an asset to the company 65% 35% Negative 50