Inducement and Productivity

Submitted to: Dr. Edwin B. R. Gbargaye Organizational Behavior (Management 622).

August 28, 2013

By: Sophia W. Ajavon

Ambrose F. Bonney

Arthur K. Norris

Inducements and

Inducement and productivity are key components of a modern organization, and they must be taken seriously as a way of life for all managers in the workplace. Workers must be induced (influenced) in order to get the best out of them for the entity’s success. Getting people to do what you want them to do is not an easy task. They may have other things on mind that seem important to them, so making these people do as you want is always challenging. This is also an issue in the workplace, where there are people from different backgrounds, exhibiting different behaviors on and off the job and having their personal goals conflicting with the organizational goals. The behaviors of these people may impact productivity of the entity in positive and/or negative way.

Introduction

At the heart of theoretical and empirical work on helping behavior in organizations is the notion that organizations often depend on such behaviors to deal with non-routine aspects of work. Helping behavior is a robust predictor of group and organizational performance (Podsakoff, MacKenzie, Paine, & Bachrach, 2000), and has become more important in light of movement toward greater employee involvement (e.g., Boxall & Macky, 2009), interactive work structures (e.g., Frenkel & Sanders, 2007), and human resource flexibility within organizations (e.g., Beltrán-Martín, Roca-Puig, Escrig-Tena, & Bou-Llusar, 2008) 1.

Elton Mayo and Mary Parker Follet who are champions of this movement, spoke on these issues as a means of providing managements worldwide with positive advice on how to be productive.

Furthermore, the issue of the firm was also analyzed by the great American Management Consultant Edward W. Deeming (TQM-1980s -1990s) when he advised the firms in Japan to compete on the basis of product quality.

“Organization performance is enhanced by designing products and services to meet or exceed customers’ expectations and by empowering workers to find and eliminate all factors that undermine product /service quality”. 2 The Human side of Enterprise written by Douglas McGregor is another important philosophical base for the modern view of people in the workplace.

His optimistic view stated in his Theory Y

provided a way forward concerning the issues

of how to treat workers in an organization. He

stated that “managers can achieve much if they

view workers as self-energizing, committed,

responsible, and creative” 3.

Not forgetting Chester Barnard-Natural Systems Theory (1930s-1940s)- who called for management to maintain a cooperative system by offering inducements and exercising moral leadership. 4

HR Programs Can Be Divided into Two Major Groups:

1. Inducements and investments include training, pay level, benefits level, job security and procedural justice. 2. Employer expectations include individual pay for performance systems, employee monitoring and formal performance appraisals, with the goals of raising overall performance levels. 5

Inducement from a denotative point means an incentive, a bribe. 6 They are extra benefits or an increase in present benefit such as pay rise that will probably lead to increase in output. In the workplace, employers always want to have a high level of productivity increasing at an increasing rate until its point of diminishing return, thereby leading to a successful entity and a happy CEO. But these CEOs who want to be happy know that there are obstacles to such projected increase in productivity, whether internal or external.

Concepts of Inducement

But a candid look by the writers took a picture of productivity with respect to the internal factors which may harm or help productivity. And the main issue keen to hamper the process of productivity is the individual and collective goal of the employees. But researches along the way have proven that there are ways to bring individual motives in line with the motives of the firm.

Concepts of Productivity

Whether the entity is for profit making or not for

profit making, everyone wants to have a positive

result. Put simply, every institution is setup with the

sole intent of been successful in whatever they do.

This is an important goal not stated in the general

goals of the organization documents.

Simply put, productivity is efficiency in production: how much output is obtained from a given set of inputs. As such, it is typically expressed as an output–input ratio. Single-factor productivity measures reflect units of output produced per unit of a particular input. Labor productivity is the most common measure of this type, though occasionally capital or even materials productivity measures are used. Of course, single factor productivity levels are affected by the intensity of use of the excluded inputs. Two producers may have quite different labor productivity levels even though they have the same production technology if one happens to use capital much more intensively, say because they face different factor prices. 7

Managers are conductors of an input orchestra. They coordinate the application of labor, capital, and intermediate inputs. Just as a poor conductor can lead to a cacophony rather than a symphony, one might expect poor management to lead to discordant production operations

Bloom and Van Reenen document that higher-quality management practices (and higher scores) are correlated with several measures of productivity and firm performance, including labor productivity, TFP, return on capital, Tobin’s Q, sales growth, and the probability of survival. 8 The correlation between a firm’s management practice score and its total factor productivity is statistically strong and economically nontrivial.

Correlation Between Management

and Productivity

Inducement VS. Productivity: Are they Correlated?

Even though inducements are spoken of in

many different ways, there is a special way firms

look at the issue with respect to its impact on

productivity. By giving employees what is

required for them to work, that is to say just

benefits and extra incentives, managers may

assume that the employees will do even better in

getting the job done, which will lead to the firm

been productive.

Inducement VS. Productivity: Are they Correlated?

For many years behavioral theorists, or theorists of organizational behavior have been calling for employers to take a keen look at the unavoidable impact that employees have on the production of the firm. This is evident by the fact that theorists of the Human Relation Movement of the 1920s call for “managers to treat employees with respect, replacing close supervision with a more relaxed and sympathetic form of supervision, encouraging employees to express themselves freely, developing a cohesive team work & cooperative behavior”.9

Results suggest that perceptions of supportive human resources practices (participation in decision making, fairness of rewards, and growth opportunities) contribute to the development of Perceived Organizational Support (POS), and POS mediates their relationships with organizational commitment and job satisfaction. 10

If a management is practicing inducement,

employees expect their management to provide

them incentives such as benefits, vacation,

salary, career progression, etc. And make these

things common to all employees.

The issue of inducement increasing

productivity is a serious consideration in the

Agency Theory – a theory that tries to explain

and find solution to conflict of interest that

may arise when the goal of an individual is in

conflict with (differ from) the goals of the

organization.

Some researchers have stated that

organizations that have a high focus on

inducement and are very clear and even

handed in how they award inducements

will have a lower overall employee exists.

A Human Resource Website, HRVoice.Org

states that “people will stay as they feel

well rewarded, and an increase in turnover

will come about from the voluntary exists

of low performing staff”. 11

This is an indication that inducements and productivity are positively related; meaning an entity is most likely to have high output (ceteris Paribus), given the fact that they are induced by better incentives as compare to another situation where the level of inducement is low.

one answer for how productivity improvements

come in line with inducements provided to

employees, comes from Sandra Robinson of the

University of British Columbia and Sarbina Deutsch-

Salamon of York University. In a recent research they

identified that “when employees feel they are trusted

by management, sales and customers service go up.

This simply means that when employees feel trusted by

their managers/supervisors they will perform at a higher

level, thus increasing the contributions of employees to the

overall performance of the organization.

Life is a journey and we are all travelers. Life is a short trip and those who realize that harness their true potential

Life is a journey with problems to solve, lessons to learn, but most of all,

experiences to enjoy

Footnotes

1. Human Resources and helping in Organization

aom.org/uploaded Files/Publications/AMR/2ARevision1AMR. 2 Gbargaye E.B.R. (2013), Lecture notes on Organizational Theory (2013)

University of Liberia

3 Gbargaye E.B.R. (2013), Lecture notes on Organizational Theory (2013)

University of Liberia

4 Barnard C. I. (1938) The functions of the executive. Cambridge, MA: Harvard

University Press.

5. How to Increase the Retention of Good Performers While Encouraging Poor

Performers to Leave the Organization http://www.bchrma.org/wp-

content/uploads/2012/07/rb-performers.pdf

6 www.HRVoice.rog (Article: Clearer Expectations, Increased Productivity).

Accessed on July10, 2013 at 7:25am

7 Syverson,Chad (2011) What determines productivity? Journal of Economic Literature 2011, 49:2, 326–365 http:www.aeaweb.org/

articles.php?doi=10.1257/jel.49.2.326 accessed 9.7.2013

8 Syverson,Chad (2011) What determines productivity? Journal of Economic Literature 2011, 49:2, 326–365 http:www.aeaweb.org/

articles.php?doi=10.1257/jel.49.2.326 accessed 9.7.2013

Footnotes

9 Allen, Shore, Griffeth (2003) The Role of Perceived Organizational Support and

Supportive Human Resource Practices in the Turnover Process

Journal of Management http://jom/sagepub.com accessed Sept. 7, 2013

10 How to Increase the Retention of Good Performers While

Encouraging Poor Performers to Leave the Organization

http://www.bchrma.org/wp-content/uploads/2012/07/rb-performers.pdf

11 Cook I.J, One Key To Productivity(www.HRVoice.org) Accessed on July 10,2013

at 7:30am