Reference no: EM132869422

In terms of expectancy theory, what are the underlying causes of the problems faced by ACME and its employees?

ACME Hardware Stores

Fred Carston was the president of ACME hardware stores, one of the oldest hardware stores in a major southern city. While the firm had been very successful for several decades, the data Carston had before him revealed that both absolute sales volume and profit margins had declined for the past three years.

Carston felt the problem was very serious, so he called a meeting of the executive committee to deal with it. In attendance were the vice-presidents of marketing, finance, personnel, and merchandising. After a lengthy meeting with considerable input from the personnel vice president, it was decided that the real problem was low motivation levels on the part of the salesclerks. These low motivation levels apparently had resulted in indifferent attitudes toward customers. For the past twenty years the store had surveyed its customers about their feelings toward the store. The last three surveys had shown a disturbing trend - customers felt that the salesclerks in the store were unfriendly and not very helpful. Customers specifically commented that sales clerks often did not have answers to their questions, and seemed unwilling to try to get the answers.

The vice-president of personnel pointed out that ACME conducted attitude surveys of employees from time to time, and these revealed that (1) salesclerks did not find their jobs very interesting; (2) they received little feedback on how well they were doing; and (3) they felt that there were inequities across departments in terms of workload. Several executives at the meeting also commented that rumors had filtered up to them that clerks on the floor were not happy because they felt that management was ignoring them.

A discussion then ensued about how these problems could be resolved. The vice-president of personnel pointed out that since the salesclerks were on straight salary, they were all paid the same amount of money regardless of their sales. She suggested that the clerks be put on commission. If this were done, she argued, salesclerks would show much more interest in customers and therefore sell more. She cited evidence from a number of organizations showing that the introduction of an incentive system had resulted in increased output by employees and increased profit for the organization.

Some of the members of the executive committee thought that this was a rather drastic step to take and that employee turnover would surely increase if the system were implemented. They cited evidence from other companies where this had happened. Others felt that an incentive scheme really wouldn't solve the problem of poorly motivated employees because money wasn't a good motivator of people.

In view of these disagreements, Carston scheduled another meeting of the executive committee for one week later, to allow the members time to mull over the problem and to come up with a workable solution.