Kimbel’s Department Store CASE STUDY Kimbel’s Department Store Individual Assignment By PQHRM/64/12 Course: PQHRM – STAGE II Module 10 – Industrial Psychology Instructor – Mr. Samantha Rathnayake Institute of Personnel Management Colombo/November 2012 CONTENTS 1. 0 Acknowledgment 2. 0 Introduction 3. 0 What theories abut motivation underlie the switch from salary to commission pay? What needs are met under the commission system? Are they the same needs in the shoes and handbags department as they are in lingerie? Explain. 4. If you were Frances Patterson, would you go back to the previous compensation system, implement the straight commission plan in all Kimbel’s stores r devise and test some other compensation method? If you decide to test another system, what would it look like? 1. 0
ACKNOWLEDGEMENT This case study consists of knowledge, support, encouragement, insight and convictions given by colleagues of the organization that I’m currently working for. I also thank my parents for the continuous support throughout the course. I was privileged to have our lectures at IPM, for all their dvices, support and assistance and all staff at IPM 1. 0 Introduction 3. 0 a)What theories about motivation underlie the switch from salary to commission pay? The main theories that could be applied to this case are Maslow’s hierarchy of needs, expectancy theory and equity theory. Let’s look at how each theory is underlying the switch from salary to commission pay. Maslow’s Hierarchy of Needs Theory In 1943 Abraham Maslow, one of the founding fathers of humanist approaches to management, wrote an influential paper that set out five fundamental human needs and their hierarchical nature.
A key aspect of the model is the hierarchical nature of the needs. The lower the needs in the hierarchy, the more fundamental they are and the more a person will tend to abandon the higher needs in order to pay attention to sufficiently meeting the lower needs. The theory of motivation to stimulate sales performance assumes money is a primary motivator. Therefore this form of motivation is based on content theories of motivation. With increased sales commissions, money can satisfy psychological needs, social needs, and self-esteem according to Maslow’s hierarchy of needs.
Expectancy Theory The Expectancy Theory of Motivation (Porter & Lawler, 1968; Vroom, 1964) is one of the process theories. An individual will act in a certain way based on the expectation that the act will be followed by a given outcome and on the attractiveness of that outcome to the individual. I see this theory as a model of behavioral choice, that is, as an explanation of why individuals choose one behavioral option over others. It does not attempt to explain what motivates individuals, but rather how they make decisions to achieve the end they value.
As per Expectancy theory, the employee is attracted to the reward being offered and believes he or she can put forth the effort necessary to achieve a level of performance that will lead to that reward. Commission pay is an extrinsic reward that will often increase performance by sales people. Equity Theory The theory is built-on the belief that employees become de-motivated, both in relation to their job and their employer, if they feel as though their inputs are greater than the outputs.
Employees can be expected to respond to this is different ways, including de-motivation & reduced effort. Equity theory relates to sales people being compensated for their level of effort, compared to other sales people and the compensation they receive for their level of work Equity theory relates to sales people being compensated for their level of effort, compared to other sales people and the compensation they receive for their level of work. ) What needs are met under the commission system? Are they the same needs in the shoes and handbags department as they are in lingerie? Explain. Higher level needs can be achieved through a commission payment system. Increased commissions and sales effort by the staff can lead to increased recognition of individuals and some will be able to realize their fullest potential. The higher-level needs of self-esteem and self-actualization can be achieved.
There are motivating factors such as increased growth or promotion opportunities, recognition, and increased responsibility can be forthcoming. Although the needs are the same in both departments, a straight commission system in the lingerie department does not offer the same level of reward as it does in a shoes and handbags department. The per-item commission on lingerie is much lower than for shoes and handbags, resulting in reduced motivation because the lingerie salespeople must sell more products to make the same.
To recognize individual differences, as we know already people are different from one another, contemporary motivation theory recognizes that employees aren’t identical, they have different needs, attitude, personality, and other important individual; variables. To motivate the salespeople of Kimbel’s Department store by using goals to achieve results, The literature in goal setting theory suggest that managers should ensure that employees have hard, specific goals and feedback on how well they’re doing these goals.
To ensure that goals are perceived as attainable, management must ensure that employees feel confident that increased efforts can lead to achieving higher performance, goals. 4. 0 If you were Frances Patterson, would you go back to the previous compensation system, implement the straight commission plan in all Kimbel’s stores, or devise and test some other compensation method? If you decide to test another system, what would it look like? References * www. wikipedia. org * PQHRM notes * www. hbr. org