Masters Power Point

Organizational Behavior and Leadership

Courtney Keel, Jordan Minjarez, Marli Sanchez,

Angelo State University

MGMT 6311

Dr. Satvir Singh

December 3, 2018

Introduction

Payroll Associates’ sales department has been experiencing a high turnover rate in the last few years. Sales managers were made aware of the reasons why employees were leaving the company. The ex-employees’ exit interviews have reflected many issues within the sales department that require immediate attention. The main problems addressed were employees being overworked, unrealistic goals, and lack of product knowledge. The primary purpose of this report is to discuss the issues that arose over the last few years because of the high turnover rate. These problems include a lack of employee commitment, high turnover cost, and a struggle to maintain key employees.

We will then recommend alternatives that could help reduce turnover. These will include investing in training and development, increasing pay, and establishing goals. Finally, we will present the recommendation and supporting data that we see fit for the business. Our goal is to see Payroll Associates strive in all aspects of its business, including the retention of their employees and best customer care provision. We hope these recommendations can contribute to the growth and development within this company.

Problem: Work-Life Balance & Overworked

The exit interviews reflected that 70% of Payroll Associates’ past employees felt overworked. The sales representatives were working 65 hours per week. Their main complaint was a lack of a true work-life balance. They spent 75% of their week at work. Working late became a chronic routine and a serious problem. Employees started experiencing negative impacts on their health, home life, happiness, and life itself. Working overtime seemed to be the norm within the sales department — failure to prioritize a healthy work-life balance unfortunately affected employees’ well-being. Establishing a healthy balance isn’t just good for employees; it also benefits employers as well. The reason why the employees were having to spend so much time working and being away from home were unrealistic goals implemented by top management; therefore, the lack of work-life balance and employees being overworked is due to unrealistic goals.

Problem: Unrealistic Goals

Another complaint is the setting of unrealistic goals. Realistic goals ought to be in place for many reasons. One main reason is that executives or upper management set goals. The absence of input from lower level management will more than likely lead to unrealistic goals. Lower sales management personnel are more understanding of the marketplace and knows which goals are challenging and achievable at the same.

Unrealistic goals play a significant part in sales employee turnover. When sales employees fail to meet unrealistic goals, they lose confidence and motivation. Employees will then begin to feel frustrated and discouraged. Thus, they leave the organization because they jump to the conclusion that sales not a good fit for them. Unrealistic goals can also lead to unethical behavior. Sales employees may experience this type of behavior to reach unrealistic goals. Ultimately, the organization pays the most substantial price with the setting of unrealistic goals. Its profits decline due to lack of sales and sales force. This downturn will mean less profit which will lead to a lack of training and product knowledge.

Problem: Lack of Product Knowledge and Training

The lack of training and product knowledge was another primary concern expressed in employee exit interviews. This unfortunate result was due to the failure of supervisors to provide minimal training and a scarcity of resources to their employees when selling products and services. This undertaking, in turn, led Payroll Associates to leave a poor impression when dealing with potential clients and loss of sales. Employees not only felt unsuccessful when trying to sell these products, but they also received pressure from upper management to meet quotas that were not attainable due to lack of training. Recent research has shown that in a firm there is a strong relationship between the availability of comprehensive training to employees and the quality of customer services (Dhar, 2015).

Why Should We Resolve the Problem?

It's important to address these problems immediately. Organizational commitment from sales employees is low. Organizational commitment is, “the emotional attachment people have toward the company they work for.” (Dixit and Bhati, 2012) Employees are no longer taking their job seriously because they’re not committed to the organization. Employees need to be a priority of the organization. Research shows that “only 13% of employees are engaged worldwide.” (Robins, 2017) This number is unbelievably low, and the main reason for this consequence is that employees are not a priority. Employees at the central focus of a company are essential. “Employees are the pulse of every business, and a means in themselves, not as a means to an end.” (Dixit and Bhati, 2012) Addressing this problem will help reduce the turnover rate and will lead to better profits for the company.

In this case, it seems like employees feel no genuine connections to the company. The attachment they once felt for the company has diminished. The best way to resolve is issue create a culture of recognition, appreciation, and understanding. Instilling a culture of affective commitment is essential for employee retention. Employees who demonstrate an active commitment to “continue service with the organization because they want to do so.” (Dixit and Bhati, 2012) The goal is to strengthen the individual’s connection and involvement with the company.

High Turnover Cost

High employee turnover has adverse economic effects on a firm. A study conducted on the high level of turnover of teachers in the United States public schools showed the high instructional, financial, and organizational costs that are incurred by turnovers (Simon, & Johnson, 2015). Firing and hiring new employees leads to wasted time and consumes a lot of resources including training new workers. These sessions cost a lot of money, especially when repeated too many times.

An organization in a highly competitive industry suffers a high risk of employee turnover since their most qualified workers may choose to be employed by rival companies. Therefore, companies should ensure that their workforce has a positive attitude and that it is fully committed to attaining the objectives of the firm. Although motivating employees is a challenging duty, managers of every organization should possess high capabilities of portraying this skill (Hitka, Závadská, Jelačić, & Balážová, 2015). Managers should monitor their workers closely to ensure that they maximize their potential and achieve the required performance index.

A high turnover rate can also be the cause of a domino effect in a firm. The human resource department should ensure that it resolves the causes of employee turnover since the workers can incite each other. When many employees quit working at a particular company, the remaining workers lose the motivation to perform their duties (Tampu, 2015). Some of them follow their colleagues who quit while others demand increased wages. When employers fail to increase salaries, employees will file a lawsuit and stop working.

Struggling to Retain Key Employees

There are many benefits of retaining key employees in the sales industry. A good sales representative has loyal customers and an excellent reputation to continue to bring sales to the business. He will continue to retain his customers and will even attract new customers by word of mouth. The value of a good sales representative can bring a substantial amount of business. Preserving sales representatives such as these is a challenge, but it is vital to an organization. If the company struggles to retain the good sales representatives, the organization will incur lost profits. It will miss out on those loyal and new customers because the sales representative is no longer representing that company.

Who Is Affected?

The high cost of replacing an employee affects the company’s bottom line. The effects of turnover are adverse. The company Payroll Associates and the department heads have to deal with the ugly side of turnover. Sales managers are getting irritated by the ongoing trend of employees coming and going. New employees require time and training, which places a burden on the sales manager; it takes away from their managerial responsibilities.

Who is affected by the high turnover rate within the company? The current sales employees are experiencing low morale and fatigue from having to work extra harder since people are quitting the company. Also, customers are affected because basic sales level knowledge across the sales department is low. Incoming employees don’t know the product sold to the customers (business to business). AZ Central explains that, “Employees with less knowledge and less experience in your business and with their jobs won't produce as well as those who know more about what they are doing.” (Kokemuller, No Date) In the sales industry, sales and customer satisfaction are affected drastically. A significant downside is that it creates a domino effect that affects the rest of the employees still employed. Also, the customer has started expressing concern about the service provided and lack product knowledge. The adverse effect of poor performance is unprosperous business results.

Overall, turnover is something that needs focus and attention. The investment of time, money, and human resources will help reverse the turnover effects since employee retention will increase customer satisfaction.

Alternative: Investment of Training and Development

The first alternative that could reverse the side effects of the high turnover is investing in training and development of the current sales representatives. Employee training and development is a step forward in the ongoing development of employees. The primary goal is to develop highly skilled and knowledgeable sales representatives. The sales representatives are the business’ first point of contact due to customer interaction. Therefore, it is necessary to invest in the improvement of these employees. Employee training and development will save the company money as a result of the high turnover cost. Benjamin Franklin expressed the following, “An investment in knowledge always pays the best interest.” (Benjamin Franklin, 1700) It’s a necessary action, but training and development approaches have pros and cons.

Employee training and professional development increase company profits. The company will be able to reduce turnover while enjoying a higher profit margin. A corporate training article states that “According to the Association for Talent Development (ATD), companies that offer comprehensive training programs have 218% higher income per employee than companies without formalized training.” (Gutierrez, 2017)

The only downside that is interactive with training and development of employees is high cost and time. According to the ATD, in a 2014 state of the industry report, “organizations spend an average of $1,208 per employee on training and development. But time is money. According to that same study, companies are spending an average of 31.5 hours per year training employees.” (Linn, 2015)

Alternative: Increase Pay

Another alternative to reduce turnover in the sales department is an increase in pay. Increasing pay will lead to more organizational commitment and higher employee morale.

There are two options when increasing a sales employee’s pay. One option is to increase the commission percentage of the purchase. If a manager decides to expand sales commission that the sales representative will receive, it can increase his motivation. When sales representatives know that they can benefit more from a sale, then they will be more intrigued to make and close deals. Thus, leading to increased sales made by the sales team and more money earned profits for the company. The other option that sales managers can do to increase pay is a base salary. According to Magloff (2018), a base salary is implemented to “help sales representatives manage their cash flow and should cover basic living expenses.” It will allow a sales representative to relieve some stress off of their finances. It can lead to a higher focus on their sales and more significant commitment to the organization.

Alternative: Establishing Goals/ Mentoring Program/ Reward System

It is our recommendation to the human resources department that they design an informative class for managers to effectively mentor and establish goals for their direct report employees. Managers are then required to meet one on one with their employees quarterly to create goals, mentor, and listen to employee concerns. Mentorship programs are helpful in enabling employees to achieve their career goals. Managers should serve as excellent mentors and role models to their workers by helping them to solve problems encountered while carrying out their duties. Reliable and useful advice should be available to all employees during mentoring sessions. It is also crucial to organize brainstorming sessions that will enhance the innovation capability of the workers. Allowing workers to share their ideas regularly with their colleagues makes them confident, and they are motivated to pursue their career goals (Smith, Joubert, & Karodia, 2015).

Managers also have to motivate their workers by establishing reward programs. Employees who perform outstandingly should receive annual bonuses. Money is a great motivator in all the activities that employees perform. The cost of living has increased over the past years. Therefore, it is essential for every company to ensure that it revises its salaries based on the current economic times. This strategy provides that the high costs of living do not strain the workers. Employee salaries should be adequate for them to eat well, live in an average house, and also seek medical care without the workers being forced to find alternative means of income to afford these basic needs (Guan, Zhou, Ye, Jiang, & Zhou, 2015). When employees are well paid, they feel financially secured and can focus on working toward the organization's Recommendation

The recommendation that best fits the turnover problem is the establishment of goals, rewards systems and mentoring. The Goal-Setting Theory is, “one of the most influential and practical theories of motivation.” (Bauer & Erdogan, 2018) As noted, goal setting will motivate the sales team because objectives will provide direction. Secondly, goals energize people and drive them towards the achievement of their purposes. Thirdly, challenging intentions allow employees to feel like they have mastered and achieved something meaningful to them and the company. Finally, goals allow employees to think outside of the box. Goal Setting will improve the sales associates focus. The company will be able to measure productivity and manage business sales. The company should utilize the SMART goals strategy. SMART goals are effective. The team will have a sense have direction and focus. Goal setting is more effective when managers provide constructive feedback, and the employees can accomplish their aims. Employees need to be committed to the accomplishment of their aspirations.

Certainly, goal setting has its downsides because it reduces learning ability, adaptability declines, linear thinking may develop, and ethical problems might increase. However, the positive outcomes will certainly override the downsides listed above. Goal setting will also build self-confidence, and it will increase productivity. The sales team will be more confident selling the product while increasing sales. They will be more willing to embrace organizational commitment and citizenship. Goals mobilize good actionable behavior, which leads to a positive working environment. With time, goal setting will become a habit because employees will become addicted to seeing the progress they have made. Finally, goals will build a strong culture and individual character.

References

Asfaw, A. M., Argaw, M. D., & Bayissa, L. (2015). The impact of training and development on employee performance and effectiveness: A case study of District Five Administration Office, Bole Sub-City, Addis Ababa, Ethiopia. Journal of Human Resource and Sustainability Studies, 3(04), 188.

Bauer, T. & Erdogan, B. (2018). Organizational Behavior Version 2.0 Boston, MA: FlatWorld

Dhar, R. L. (2015). Service quality and the training of employees: The mediating role of organizational commitment. Tourism Management, 46, 419-430.

Dixit, V. & Bhati, M. (2012). A Study about Employee Commitment and its impact on Sustain \