If you believe that managers in a business firm are dependent upon the trust, commitment, and effort of others within the firm, then how do you build that trust, commitment, and effort? In particular, how do you guide the business firm toward a common goal? Can you buy those attitudes and efforts with financial incentives?

Discussion Board Forum 4:

Building Trust, Commitment and Effort

The building of trust can be quite challenging in our modern day. In fact, it takes very little to destroy trust between management and the employee in a business firm setting. In the day and hour when one social media video posted on Facebook with someone speaking off the cuff about a social topic can be incriminating evidence enough to get that person fired from their job even if what was said was not in the work setting, it’s hard to blame people for not willing to be overly trusting. When considering building trust, I believe the starting point is with the business firm and management putting social capital into their employees.  Galli (2012) states, “In contrast to human capital, describes social capital as “the quality created between people, whereas human capital is a quality of individuals”.  Galli (2012) further says, “As a result, if a firm’s leadership development practices stay exclusively human capital oriented, it might build the smartest and most competent managers but without the necessary social capital it risks that these resources and capabilities become stuck and cannot be deployed.” 

The point the that is article brings out is that when a firm starts investing in employees to become leaders or even managers, they stop thinking like individuals working for a company and become a person of that company. When social capital is poured into people, it makes it easier for that person to believe and trust in the management or firm because an investment has been made on their behalf. In return, the business firm can ask this person to take a challenging assignment somewhere on behalf of the company and this, now corporate person can deploy to this challenge because they believe that the entity has the best intentions for them.

Commitment is a very multidimensional subject and has different forms. Stinglhamber (2015) defines commitment as “a force that binds an individual to a course of action of relevance to one or more targets” whereas Stinglhamber (2015) again, “Affective commitment (AC) refers to “an emotional attachment to, identification with, and involvement in the organization” Stinglhamber (2015) also “Normative commitment is viewed as “a feeling of obligation to continue employment” and lastly Stinglhamber (2015) defines “ continuance commitment is defined as an “awareness of the costs associated with leaving the organization”. All employee’s undoubtedly are committed at some level, the real question is to what level are they committed to? Some are there because if they quit, they’ll have to find another job. While others stay on because they like their current paycheck and have no plans to go anywhere else, but the affective commitment is what I believe companies are looking for, when the employee actually identifies with the organization in a personal way, where there is even a strong emotional bond.

This is where commitment and effort cross paths because one will not be present without the other. The deeper level the commitment, no doubt the more effort will be put forth for a job well done. Galli (2012) again, “on building networked relationships among individuals that enhance cooperation and resource exchange in creating organizational value”. When the employee see’s that they are adding value to company, they are emotionally committed and wanting to effort forth to continue to bring value. Also, “Consequently, social capital oriented leadership development is multifaceted considering different environmental and social circumstances and means “helping people learn from their work rather than taking them away from their work to learn.” Galli (2012)

Guiding the Business Firm toward a Common Goal

A good business practice to getting everyone onboard to achieve a common goal starts from the top. A corporate leader, whether it be the CEO, CFO or a VP must clearly impart a vision through out the directorate level and have qualified managers carry this impartation of vision to the grass roots employee level. As our article reads, “his idea can be an invention of a new product, but it does not have to be an invention or a discovery. It can be an innovative method of marketing an existing product, capitalizing on a new market niche, motivating employees, creating an optimal capital structure, or utilizing new sources of capital.” (Goshen, 2016). Whatever the goal is, it should measurable and realistic or S.M.A.R.T which stands for specific, measurable, achievable, relevant and time bound.

Goals cannot be loose or ethereal. It has to be very specific for the employees to fully understand what the actual goal is. The way that the firm is guided toward this common goal is through its measurability. As each team and ultimately the company “keeps the score of progress” or measures the analysis, everyone can tell if appropriate progress is being made toward the goal or not. Often, employees will try to aim for the easiest and most simple goal because they know that it can be reached rather easily. Sometimes executives want the company challenged and will be unrealistic at times. Neither one of these are good as the goal must be achievable. It shouldn’t be to easy but none the less it should not be nearly impossible to achieve. This should be a relevant goal as people will not put forth effort in a token goal or something that does not have meaning or will not inspire the best out of the company. Lastly, the time bound component is that people need to have a firm deadline that is also realistic. Giving an appropriate time bound deadline will bring everyone into accountability as far as when the goal needs to be met.

Buying Attitudes and Efforts with Financial Incentives

When it comes to buying attitudes and efforts by way of a financial incentive, the incentive is fair part of business, however the means by the way that employees get that incentive must be monitored and the rules by which the employees are to attain the financial incentive should be very clearly laid out by the senior management. There is a certain amount of risk involved when financial incentives are at play within an organization. It is often said that high performers usually win the incentives every quarter and the low performers seldom even try. So instead of the intended effort of getting everyone to put forth their best effort, you can often have a scenario with the “go getter’s” reaping all of the incentives and more apathy is bred to the part of the under performer, in which defeats the purpose. 

Financial incentives can also be quite healthy, especially if a firm likes to promote from within. Employees that can perpetually reach financial incentives can be observed for potential management in the future. It can prove to be healthy for helping to achieve the bottom line and continue to please shareholders. To avoid the pitfalls of high performers versus low performers, employees can be broken up into teams, with work being shared out evenly and the financial reward given to the high performing team. Financial rewards have their place in the corporate cultured if they are monitored and put in place appropriately.

                                References

Galli, E. B., & Müller-Stewens, G. (2012). How to build social capital with leadership development: Lessons from an explorative case study of a multibusiness firm. The Leadership Quarterly,23(1), 176-201. doi:10.1016/j.leaqua.2011.11.014 

Stinglhamber, F., Marique, G., Caesens, G., Desmette, D., Hansez, I., Hanin, D., & Bertrand, F. (2015). Employees’ organizational identification and affective organizational commitment: An integrative approach. PLoS One, 10(4) doi:http://dx.doi.org.ezproxy.liberty.edu/10.1371/journal.pone.0123955

Goshen, Z., & Hamdani, A. (2016, January). Corporate control and idiosyncratic vision. Yale Law Journal, 125(3), 560+. Retrieved from http://link.galegroup.com.ezproxy.liberty.edu/apps/doc/A443458656/OVIC?u=vic_liberty&sid=OVIC&xid=bc2ee315

Presslee, A., Vance, T. W., & Webb, R. A. (2013). The Effects of Reward Type on Employee Goal Setting, Goal Commitment, and Performance. Accounting Review, 88(5), 1805–1831. https://doi-org.ezproxy.liberty.edu/10.2308/accr-50480

 

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