Question

John Davis, the human resource manager for a chain of hotels, is trying to motivate the company's employees with an updated compensation plan. There are two groups of operating employees. Line employees are responsible for dealing directly with customers and their performance objectives are related to providing high-quality customer service. To do this, line personnel must undergo regular training to update their customer service skills. Operating managers are responsible for monitoring the activities of the line personnel and providing instructional/developmental support when needed. Currently, the line personnel are paid on an hourly basis while the operating managers are paid salaries on a monthly basis. If employees receive adequate performance appraisals, they can receive generous bonuses and pay raises. However, when performance evaluations are inadequate, employees do not receive any rewards. This method of appraisal is creating conflicts between the employees and the top management of the organization. John believes that his new plan to give employees shares of profit and stock on the basis of the results of performance evaluations will further motivate employees and managers.

Refer to Scenario 13.1. The proposal of profit and stock awards for employees can make everyone in the organization work toward the common organizational goals. In this scenario, which of the following provides a useful framework to deal with the conflict of interests between employees and owners?

Goal theory

Agency theory

VIE theory

Needs theory

Equity theory

Answer 1

Needs Theory

In this case the needs of the owners and employees may coincide and this may work towards the betterment of the organization as the objective is to make maximum possible profit for the organization itself and this will ensure that the organizational goals and objectives are served. In case of conflicts, the need theory can be used which will segregate the requirements of the employees and owners based on a micro level and help them maintain their zeal to succeed.