Finance for IT people

Soon I will add a few posts to describe three financial concepts that all IT people should know:

1. Time value of money: the value of a dollar changes with time. When analyzing projects you need to take this into account.
2. Net Present Value of a project: A way to compare projects to literally see which gives you the most bang for the buck.
3. Project Payback: How long will it take for a project to pay for itself.

Learning these concepts is important because they help bridge the gap between business and technical, which increases your value to the business. In a business setting, with some exceptions, there is no room to implement technology for technology’s sake alone. New technology has to create tangible value, intangible value, or both. The three methods above can quantify tangible value.

Will it Work?

The other day I mentioned that I thought the bailout was a good thing if it works. I will be the first to say that I am about as accurate at predicting the future as most people: I have very limited success! So I decided to research the “if it works” theory by tapping some bigger and better brains than my own!

I spoke with my current Finance Professor, Dr. Christofi, and he is skeptical. He agrees the government had to do something, but feels the real culprit of the mess was FASB 157 – Fair Valuation. For those that have not taken accounting, this rule basically forced companies holding mortgage-backed securities to take a loss and write down their value because the price they could sell their securities for dropped (even though the hold till maturity value was still mostly there). This removed company’s liquidity and made them a higher credit risk. No loan for you, bond holders want more assets, and security holders sell. Ouch!

My old economics professor, Dr. Pressman, feels that the bailout does not provide enough money to really fix the problem. Sure it will add a little liquidity juice, but it will not be enough. Look at what AIG said: “We need to more money.” Of course if you throw $400,000 parties, you would probably need more money too!

So should we throw more money at the financial institutions? Dr. Pressman says no. That does not treat the root cause of the problem: Mortgages. Now my take on that is we unfortunately have to bail out the people who made really poor decisions and bought houses they could not afford.

Sorry if you are one of them, and this may sound harsh, but what were you thinking? I could have gotten a loan for more than twice what my mortgage is. I could have gotten a really low adjustable rate with low payments too. Did I? No. I knew rates were low and they would most likely go up. I also knew my budgetary constraints and the fact that if something sounds too good to be true, it probably is. But hey, housing prices always rise so there is no risk, right? No, wrong. Anyway, I truly hope you get your mortgage issues resolved.

Enough on that tangent, back to Dr. Pressman. He said if the ARMs adjust upward, you would have many more people just walking away from their homes and devaluing the hold to maturity value of the mortgage-backed Securities. Why?

First, they won’t be able to afford the new payments. Second, they will owe more than the house is worth. While he thinks the market will probably stop its death spiral around 7,000 to 7,400, if the ARMs adjust up, the market will go even lower.

I still want to get another economist’s view on the subject: Dr. Scott. He will add the dimension of gaming theory and oil pricing to the overall analysis. He is a really fun guy to talk to and knows his stuff. More to come…

Why this blog has been innactive since December

I know I don't have many readers on this obscure blog, but the ones I do have are a dedicated bunch! Sorry, I was busy working on my MBA and writing VMware Infrastructure 3 for Dummies. That kept me pretty busy.

I am back now and will be updating this blog at the very least, monthly. Hopefully a lot more frequently.

If I decide to go through with a relaunch of this blog under a new domain and blog name, I will definitely update more frequently. I just need to make sure I have the time.

For Those Against the Bailout

How did we get here?

Companies held these mortgage-backed securities (Derivatives). The mortgages went down in value, so the securities went down in value. According to the matching principle in accounting, you need to adjust the value of your asset when this happens. This changed company’s current ratios. That made debt holders and equity holders nervous.

Meanwhile, some other companies used extreme leverage to buy these securities. If you have a million dollars and borrow another 19 million to buy securities, you are extremely leveraged. You know have 20 million in securities and only 1 million of your own principal was used. If the value of the securities drops 5%, you just lost your million and want to sell fast. The first time there were other leveraged buyers who thought it was a great deal. Then prices dropped 5% for them and they had to sell. This continued until no one wanted to buy. The securities were extremely devalued.

Now back to the original companies. They just lost a chunk of their asset value. The debt holders want them to raise cash to cover it (raise their current ratio), but don’t want to lend them money because they are now more risky. So how does the company get cash? Borrow from the banks? No, they are not lending due to increased risk and reserve requirements. Sell more stock? Well no, the company is now worth less and more risky. The shareholders are selling, not buying. This further devalues the company.

At this point, you either sell your company to another (more conservative) company that did not invest as heavily in mortgage-backed securities, or you go the way of Lehman Brothers.

Where are we going from here?

How does this affect our economy? Production is reduced because companies can’t borrow money. In conjunction, people are nervous so they aren’t buying anyway. Demand falls, the economy shrinks. Company’s lay people off. Demand shrinks more because less people have income to buy things. Companies need to produce less and lay more people off. This process continues until we are in a deep recession or worse.

Eventually this brings down prices and demand starts to tick up. Companies start hiring again so they can produce more. Oh wait; they can’t borrow money to ramp up production so they don’t hire people back. The deflationary cycle continues. There is mass unrest and extremely high unemployment. Cushy life as we know it comes to an end.

Should Wall Street be bailed out for making bad investments?

If you say no, ask yourself how long you can be unemployed. Did Wall Street make billions on bad investments? You bet. Do they deserve to be punished? Yes indeed. Should they be punished to the point where we all suffer severely? No.

This is why the bailout is a good thing if the plan works. Worst case, it stops the deflationary cycle. Best case, it kicks off a new growth cycle. Much as I hate the idea of it, we need it or life as we know (growing economy / increasing standard of living) will likely cease to exist. Also, if foreign governments lose faith in the dollar, they won’t lend us money. Although I have yet to take International Finance, my understanding is foreign governments finance our trade deficit. What happens if that line of credit dries up? Very bad things.

The good thing about all this turmoil is, in the long run, the securities will increase in value when the housing market turns around. And it will turn around. Economics is a self-sustaining pendulum. The bailout is just trying to accelerate the swing without years of pain.

The bailout could actually make money as long as the securities are bought below the current value of the hold to maturity annuities that back them. If you disagree with the bailout, read the Macro Economics section in the very well written book Economics for Dummies. I am not picking the title out of sarcasm. This book was extremely helpful in my MBA economics class.

The politicians know we need this, but many of their constituents are against it. Therefore, it got voted down today (9/29/08). After the constituents lose their jobs and the economy is in an even worse death spiral, it may be to late for the bailout plan to help. If you are against the plan, please do some research on macro economics and re-evaluate your position.

Organizational Culture

Abstract:

This paper focuses on the definition and analysis of corporate culture. The integration, differentiation, and fragmentation views of culture are discussed. An argument is presented that states understanding corporate culture is necessary for managers within an organization. An analytical framework is then introduced to aid in the analysis, reinforcement, or change of one's organizational culture.

Introduction:

"Organizational Culture (OC) is the set of shared, taken-for-granted implicit assumptions that a group holds and that determines how it perceives, thinks about, and reacts to various environments" (Kreitner and Kinicki, 2007, p. 76). At the surface level, OC is observable characteristics in an organization. However, OC also includes shared and deep-seated beliefs, differences that cause conflict, and individual goals and motivation. OC both creates and is modified by the power structures in an organization. Additionally, OC is influenced by the wider society as a whole.

The most easily recognized part of the picture is an OC's artifacts. Artifacts are observable physical traits in an organization and include published lists of values, dress code, stories and myths, rituals and ceremonies, status symbols like offices and parking spaces, etcetera (Kreitner and Kinicki, 2007). In fact, anything that you can observe which leads you to a conclusion about the beliefs and values of an organization can be considered an artifact.

Artifacts are created by the deeper values a company holds dear. Values can be espoused and enacted. Espoused values are touted publicly in an organization whereas enacted values are actually displayed through employee behavior (Kreitner and Kinicki, 2007). If the two are different, conflict exists. Closely related to the values are normative beliefs. Normative beliefs are "thoughts and beliefs about expected behavior and modes of conduct" (Kreitner and Kinicki, 2007, p. 84).

Other dimensions of OC include power and politics. Kreitner and Kinicki repeatedly mention printed value lists. Those lists come from upper management and reflect expected behavior. Similarly, promotions usually include status symbols like a parking space or a bigger office. Since behavior and symbols are two artifacts comprising OC, power and politics are part of OC and can change it over time. The other facet contributing to OC is culture external to the company.

From a global perspective, research shows that national culture significantly influences organizational culture. Anglo/Nordic regions are less sensitive to uncertainty and power. This leads to organizations that act like village markets. Latin regions have a high sensitivity to power and a low sensitivity to uncertainty. Companies in these regions follow more of a defined pyramid structure (Schneider and Barsoux, 1997).

Local cultures can similarly influence groups in an organization. The Brownfield and Greenfield groups were observed in a 2005 study (Sharpe, 2006). The Brownfield group was an urban and established union culture believing in an "us vs. them" relationship with management. The Greenfield group was rural and had not been introduced to union practices. As whole, the Greenfield group was more malleable and better accepted the culture management wanted to instill.

All in all, OC needs to be examined from a much deeper perspective than just artifacts. Beliefs and values as well as political and cultural issues need to be examined to obtain an accurate picture. The question becomes what perspective to use for examining OC.

Integration, Differentiation, and Fragmentation: A Multi-Lens Perspective

Organizations are cultures represented by patterns of meaning, values, and behaviors (Myerson and Martin, 1987). In their 1987 paper on culture change, Myerson and Martin make the following base assumptions:

1. OC is resistant to change.
2. OC is adaptive and always in a state of flux.
3. Organizations are cultures.
4. Cultures and cultural change need to be viewed from three distinct yet interrelated paradigms: Integration, Differentiation, and Fragmentation.

To get an accurate picture, cultures need to be analyzed through several lenses (Myerson and Martin, 1987).

Integration:

From the integration perspective, culture comes from the top down. The values of top management become the values of the culture to which everyone agrees. OC is viewed as a closed system with no external influences. Cultural change is viewed as an organization-wide and drastic phenomenon that should be implemented and controlled by top management (Myerson and Martin, 1987).

Integration focuses on similarities rather than differences. The manifestations of culture (rituals, story-telling, etcetera) are only observed if they are consistent with each other. Integrationists believe that all levels of the organization share a common view.
Inconsistencies and ambiguities are largely ignored or treated as anomalies.

However, there is always conflict in an organization, so integration perspective tends to produce a simplistic and shallow view of the corporate culture if used alone. This is because integrationists tend to only focus on the superficial manifestations of culture such as the espoused values of management, which are easy to control (Myerson and Martin, 1987) and ignore the very real issues of societal culture and conflict. Thus another perspective needs to be used in conjunction for a more accurate analysis.

Differentiation:

The differentiation perspective focuses on disagreement and contradictions instead of consensus. The focus is on the cultural contribution of groups and individuals instead of the leaders of an organization. "A culture is composed of a collection of values and manifestations, some of which may be contradictory" (Myerson and Martin, 1987, p. 630). Stories may be inconsistent with the publicly touted values. Likewise, espoused values may be different than enacted values. Differentiation also acknowledges that factors external to the organization can contribute to its culture. For example, societal groups contain class, racial, and ethnic identifications that people bring with them.
The cultural diversity tends to create conflict as well as overlapping and nested subcultures (Myerson and Martin, 1987). In fact, Myerson and Martin (1987) point out three distinct subcultures:

1. Counter-cultures: Express disagreement with the dominant culture.
2. Orthogonal subcultures: Indifferent to each other and dominant culture.
3. Enhancing subcultures: Reproduce top management's views in an
exaggerated form.


Cultural change is viewed as an incremental rather than a corporate-wide phenomenon. A group's culture is what gets changed instead of the overall OC. Changes can come from modifying the structure and members of the groups or from external cultural or environmental factors. Changes may also come from the relationships between subcultures as well as the dominant culture (Myerson and Martin, 1987).

Many researchers use a hybrid approach that combines integration and differentiation perspectives (Myerson and Martin, 1987). The hybrid approach accounts for the backdrop culture espoused by management as well as any differences between groups and individuals. This approach is interesting because it can be applied recursively. An integration perspective can be used at a corporate level. The differentiation perspective can be used to view the differences between large corporate subgroups. At that point each subgroup can then be analyzed from the integration perspective, which in turn analyzes the subgroup's subgroups. This process continues until one reaches the individual level.

Fragmentation:

Fragmentation tends to focus on individuals, flux, and ambiguity. This perspective feels that people are in agreement on some things, disagreement on others, and indifferent to other items at the same time (Myerson and Martin, 1987). Fragmentation accepts ambiguity as the norm, feels that subculture and organizational boundaries do not exist, that culture is always changing and cannot be controlled. The metaphor Myerson and Martin (1987) use is that of a web. People are nodes in the web connected by whatever concerns they have in common at the time. Cultural change takes on an individual focus. As individual concerns change, the web changes, and the culture has changed.

Implications for Managers:

OC influences a company's financial performance. An 11-year study of 207 companies in 22 industries showed that financial performance was higher in companies with adaptive and flexible cultures (Kreitner and Kinicki, 2007). Other studies show that incompatible cultures are the reason 7 out of 10 mergers and acquisitions fail to meet their financial promises (Kreitner and Kinicki, 2007). The author therefore argues that understanding OC is part of a manager's job. A manager needs to decide if OC or subcultures need to change, be reinforced, or left alone. The only way to fully understand the scope of OC is to actively analyze many dimensions from several viewpoints. While the underlying theories to manage culture, groups, and individuals are beyond the scope of this paper, Figure 1 presents a 3 by 4 grid framework for analyzing one's culture from the three perspectives and four dimensions. Theories relevant to each perspective and dimension intersection are listed.


Figure 1: 3 by 4 Analytical Framework




Integration:

From the integration perspective, the political view needs to focus on the corporate hierarchy since that is where culture comes from. The four dimensions of power are where the focus needs to be since these are often exercised at the managerial level in an organization. The dimensions are: decision-making, non decision-making, symbolic, and system power (Clegg and Hardy, 1996). Since the integration perspective is a closed model, societal influences will be overlooked (Myerson and Martin, 1987).

If the goal is maintaining the existing culture, one can do nothing or reinforce the existing norms and values. Human Resources (HR) can be told what to look for when hiring someone to make sure they fit the culture. Formal statements, making sure espoused values are enacted values, the design of physical space, slogans and sayings, explicit rewards, and promotions are all integrational maintenance tools since they are implemented at a managerial level. IKEA's reinforcement of the "IKEA Way" through printed material and HR practices is a good example of this concept (Grol and Schoch, 1997).

If changing the culture is desired, the process of unfreezing, changing, and refreezing the culture is necessary. Gordon Ramsey is a master of this technique. In his television show "Kitchen Nightmares," Ramsey goes into a failing restaurant and turns it around by changing the culture. He initially unfreezes the culture by frankly pointing out all of the flaws in the restaurant and verbally tearing people down. In the change stage, he then redesigns the menu, the interior, and verbally builds people back up. The culture is refrozen in a meeting after the first successful dinner service.

Differentiation:

The political focus from the differentiation perspective needs to be on the various subgroups in the culture and their interaction with each other as well as the backdrop culture found in the integration perspective. Additionally, values and beliefs that are injected from the surrounding social culture also need to be given some thought.

Reinforcing the culture revolves around conflict management, helping to speed group development, and group based rewards. When IKEA opened in France, they reinforced their informal culture. This led to employees not listening to managers because the French tend to culturally view informality as weakness (Grol and Schoch, 1997). If change is desired, it needs to take place at a group level by restructuring members, size, group focus and rewards. In the case of IKEA, they had to implement formal group training and communication patterns in France (Grol and Schoch, 1997). Additionally, people can be rotated to see things from other group's perspectives to effect change.

Fragmentation:

Fragmentation has more of an individual focus. Politically, people need to be assessed within the five bases of power: reward, coercive, legitimate, expert, and referent (Kreitner and Kinicki, 2007). A person's own network of people and groups both inside and outside of the company are what determine the societal dimension from the fragmentation perspective. A person's beliefs are influenced by their network and will likely be at odds with some part of the backdrop culture found in the integration perspective.

Since the fragmentation perspective views culture as always changing and unmanageable (Myerson and Martin, 1987), the best a manager can do is to try to align the espoused values with individuals through rewards and individual motivation. Strategically, the more powerful individuals will likely have more influence so managers should concentrate their efforts on the more powerful.

IKEA's informal, relatively unstructured culture can easily be viewed from this perspective. Employees are encouraged to informally learn by doing and the only way to advance is to learn as many lateral jobs as possible. Additionally, one needs to know how to work within the culture to advance (Grol and Schoch, 1997). This will cause changes to employees' cultural webs as they learn different jobs and thus change the corporate culture on a micro-level.

Conclusion:

Managers need to understand their OC and decide if it has the best impact on the company from a financial perspective. In order to understand the culture, a great deal of thought and analysis must take place. To get an accurate picture of the culture, a manager must apply the Integration, Differentiation, and Fragmentation perspectives to several different dimensions of the corporation. Only then will a manager be able to determine if changes or reinforcement are necessary. If either is needed, a plan can be enacted to meet the goals. Again, the only chance of change or reinforcement plans succeeding is if the culture is well understood.


REFERENCES

Clegg, S.R., & Hardy, C. (1996). Chapter 13. Handbook of organizational studies. (pp. 220-237). London: Blackwell.

Grol, C., Schoch, and CPA. (1997). Chapter 7. IKEA: Managing cultural diversity. (pp. 88-112). Paris: Centre de Perfectionnement aux Affaires.

Kreitner, R. & Kinicki, A. (2007). Chapters 3, 8, 10, 11, 15. Organizational behavior. (pp. 74-106, 234-268, 302-370, 474-506). 7 edition, New York: McGraw Hill.

Meyerson, D., & Martin, J. (1987). Cultural change: an integration of three different views. Journal of Management Studies, 24, 623-647.

Schneider, S., & Barsoux, J. L. (1997). Chapter 4. Managing across cultures. (pp. 77-105). London: Prentice Hall.

Sharpe, D. R. (2006). Shop floor practices under changing forms of managerial control: A comparative ethnographic study of micro-politics, control and resistance within a Japanese multinational. Journal of International Management, 12, 318-339.

Motivation Theories

ABSTRACT: Goal setting and MBOs are proven motivators that are commonly used. However, they should not be the only motivators in an organization. This paper examines Herzberg’s Motivation Hygiene Theory (MHT), Job Design, and Equity Theory. Each theory will be described, and analyzed. A hybrid model is proposed to better analyze any workplace.


HERZBERG’S MOTIVATOR HYGIENE THEORY


Description

“Frederick Herzberg’s theory is based on a landmark study in which he interviewed 203 accountants and engineers” (Kreitner and Kinicki 2007, p. 240). Motivator Hygiene Theory (MHT) states that job satisfaction and job dissatisfaction are not opposites. The opposite of job satisfaction is no job satisfaction. The opposite of job dissatisfaction is no job dissatisfaction. Motivation can be achieved through job satisfaction.

MHT uses motivators and hygiene factors. Motivators are intrinsic entities and influence job satisfaction, while hygiene factors are extrinsic and at best produce no job dissatisfaction. Both factors can be seen in Figure 1. A base assumption of MHT is

Figure 1: Motivator and Hygiene Factors (Herzberg, 1987, p. 112)




managers can motivate individuals by building motivators into their jobs. Additionally, managers can reduce costs associated with turnover and job absenteeism by managing the hygiene factors to minimize job dissatisfaction.

Analysis


While MHT provides an extremely useful framework, it is not without criticism. One frequent criticism is the original study was based on US engineers and accountants. This limits the test to two job categories and one culture. However, since 1968, the test has been repeated over twenty times with different populations and cultures. The results were notably similar (Herzberg, 1987).

The theories’ double groupings are also criticized. While the motivators seem to correctly provide intrinsic motivation and job satisfaction, other surveys have found hygiene factors also provide job satisfaction (Kreitner and Kinicki, 2007). However, Figure 1 shows both hygiene and motivators overlap to an extent. A modification of MHT can better account for the criticisms. One can view MHT as a four-part grid with all factors contributing to motivation and satisfaction. See Figure 2.



Figure 2: MHT Four-Part Grid

Herzberg criticizes himself for leaning too far to the industrial engineering viewpoint and not giving the behaviorist viewpoint enough weight. He feels that positive reinforcements are necessary in the workplace if only to create a pleasant working environment (Herzberg, 1987). The author feels this is a valid point and that reinforcement, both negative and positive, as well as MHT have an important role in organizations.

The last criticism is Herzberg’s theory seems to have an underlying assumption that all people are intrinsically motivated and self-starters. If this were the case, everyone would be in Maslow’s self-actualization stage. From the author’s experience, this is not the case. Many people have priorities lying outside the workplace and just want a 9 to 5 job. One can argue that motivators will have little effect and hygiene factors will be what the person cares about.

Although there are several criticisms, MHT does provide a solid foundation for analyzing motivation and job satisfaction. In fact, one can argue that the other theories examined can be described in terms of motivator and hygiene factors.



JOB DESIGN


Description

Creating motivation through Job Design (JD) involves changing the nature of an employee’s job to increase performance and job satisfaction. JD has four different approaches: biological, perceptual-motor, mechanistic, and motivational (Kreitner and Kinicki, 2007). This article examines three motivational JD theories which are an application of MHT.

The first is Horizontal Job Loading (HJL). This is the ineffective practice of adding more of the same tasks to a person’s job. “(Horizontal) job loading merely enlarges the meaninglessness of the job” (Herzberg, 1987, p. 114).
The second approach is Vertical Job Loading (VJL). With this approach, employees are giving more responsibility and often take many of their manager’s tasks. This offers the opportunity for personal growth, achievement, recognition, and other HMT motivators. Herzberg performed a VJL study whose results are shown in Figure 3.


Figure 3: Vertical Job Loading Results (Herzberg, 1987)



The final motivational JD model is the Job Characteristics Model (JCM). This model, developed by Richard Hackman and Greg Oldham, focuses on restructuring a job by focusing on intrinsic motivation. The model focuses on three critical psychological states:

1. The perceived meaningfulness of the work itself.
2. The perceived responsibility for outcomes.
3. Knowledge of the actual perceived results of the work.

The psychological states are in turn influenced by five core job characteristics.

1. Skill Variety - Using varied skill sets. Affects work meaningfulness.
2. Task Identity - Ability to perform a whole piece of work. Affects work meaningfulness.
3. Task Significance – Affect the job has on other people. Affects work meaningfulness.
4. Autonomy – Affects perceived responsibility for outcomes.
5. Job Feedback – Provides knowledge of work results.

The core job characteristics influence the core psychological states, which determine the outcomes shown in Figure 4. To account for differences in effectiveness by individual, JCM adds three moderators that vary from person to person.

Analysis

While HJL does not produce long-term motivation, VJL and the JCM do. They have a lot in common. Both focus on intrinsic factors for motivation. VJL focuses on motivators while JCM focuses on the three core psychological states and what influences them. Both share a common weakness by ignoring extrinsic factors. The two theories are very different in two significant ways. First, VJL often focuses on taking over some of a superior’s work. JCM focuses on the work itself and does not have that underlying assumption. Second, VJL does not take differences in individuals into account for how effective it will be whereas JCM does.

Figure 4: Job Characteristic Model (Kreitner and Kinicki, 2007)



While it is generally agreed VJL and JCM increase long-term motivation, each theory has its critics. The criticisms of VJL are usually pointed at the binary approach of HMT. Watson wonders if the Herzberg survey questions themselves falsely increase the appearance that the two factor approach is accurate (Watson, 1986).

JCM critics point to research that states it can reduce performance as easily as it can increase it (Kreitner and Kinicki, 2007). This represents a high risk since redesigning a job can be time intensive and costly to implement.

A criticism of JD in general is that it concentrates on a limited set of motivational work features such as skill variety and autonomy at the expense of other important factors like social environment and work context (Humphrey, Nahrgang, and Morgeson, 2007).




EQUITY THEORY


Description

Equity theory (ET) states that motivation and behavior are a function of perceived fairness in the organization. Employees subjectively compare themselves to a similar person. The comparison person can exist in the organization, or have a similar title in a different organization. The comparisons are based on the concept of inputs and outcomes. Inputs consist of an employee’s human capital, hierarchical position in the company, and the amount of work they do. Outputs are what the company provides and include pay and bonuses, inclusion in decision making, fringe benefits, promotions, and job security (Kreitner and Kinicki, 2007). There are three equity outcomes:

1. Equitable Situation: Comparison person has an equal input to output ratio.
2. Negative Inequity: Comparison person has a higher input to output ratio.
3. Positive Inequity: Comparison person has a lower input to output ratio.

ET assumes that a person will try to resolve inequities. The resolution can be cognitive (justifying the inequity mentally) or behavioral (increasing or reducing inputs). Different people have different equity sensitivities. There are three groups:

1. Benevolent: Insensitive to inequity.
2. Sensitive: Quickly resolves negative and positive inequity.
3. Entitled: Has no tolerance for negative equity. Expects positive equity.

ET was expanded into the concept of Organizational Justice. This examines how fairly people feel they are treated at work and consists of three parts:

1. Distributive Justice: Perceived fairness with respect to reward distribution.
2. Procedural Justice: Perceived fairness in allocation decisions.
3. Interactional Justice: Perceived fairness in how decisions are implemented.


Analysis

Equity is a subjective concept. How an employee perceives the situation has far more bearing than the situation itself. Forethought, democratic decision-making, and good communication seem to be the keys to maintaining Organizational Justice. A manager should think about perceived equity before giving a reward. “Research shows that positive perceptions of Distributive and Procedural Justice are enhanced by giving an employee a ‘voice’ in decisions that affect them” (Kreitner and Kinicki, 2007, page 244). Interactional Justice requires communicating the “why” of a decisions and treating people with respect and dignity.

Equity sensitivity reliably predicts lower motivation when pay is low and has begun to examine the wide ranges of behaviors that inequity may invoke (Ambrose and Kulik, 1999). It can also predict Organizational Citizenship Behaviors (OCBs) by sensitivity group. Equity Sensitive people perform far more OCBs than Benevolents or Entitleds when perceived organizational justice is high (Blakely, Andrews, and Moorman, 2005).

Ambrose and Kulik criticize equity sensitivity research in a few ways. There is a lack of referent standards to analyze research results, studies are not long term, and experiment measures are often based on subjective measures by those interviewed. This may have caused mixed study results.


CONCLUSION

Individual motivation is such a complex topic that no single model seems able to adequately cover it. It then seems logical to develop a multidimensional analytical framework that combines several models. A proposed hybrid model can be seen in Figure 5. It allows for the analysis of problems, actions (positive and negative reinforcement) and proposed changes from the following six perspectives:

1. Intrinsic Factors
2. Extrinsic Factors
3. Equity Factors
4. Goal Factors
5. Social Factors
6. Individual Factors

Using this model ensures a broader perspective when analyzing the workplace.

Figure 5
The Multidimensional Analysis Model forces a manager to analyze a situation across several theories instead of one or two.





REFERENCES

Ambrose, M. L. & Kulik, C. T. (1999). Old friends, new faces: Motivation research in the 1990s. Journal of Management, 25, 231-292.

Blakely, G. L., Andrews, M. C., & Moorman, R. H. (2005). The moderating effects of equity sensitivity on the relationship between organizational justice and organizational citizenship behaviors. Journal of Business and Psychology, 20, 59-273.

Herzberg, F. (1987). One more time: How do you motivate employees? Harvard Business Review, 65, 109-120.

Humphrey, S. E., Nahrgang, J. D., & Morgeson, F. P. (2007). Integrating motivational, social, and contextual work design features: A meta-analytic summary and theoretical extension of the work design literature. Journal of Applied Psychology, 92, 332-356.

Kreitner, R. & Kinicki, A. (2007). Foundations of motivation. In J. E. Biernat (Ed.),
Organizational behavior (pp. 240-259). 7 edition, New York: McGraw Hill.

Watson, T. J. (1986). Chapter 4. Management, organization and employment
strategy: New directions in theory and practice. (pp. 87-132). London and New York: Routledge & Kengan Paul.

Mass Dissemination

Mass dissemination of information can occur on a macro or micro level. Both are important and have specific uses. Let’s explore macro mass dissemination first. It is the art and science of mass dissemination of information to the general public.

As Seth Godin pointed out in ‘No One Expected a Tornado,’ “Bottom line: the first thing to rehearse is your communication strategy. You can't predict weird events, but you can get really good at alerting people when they happen.” Macro mass dissemination contributes to your company’s public face. In Seth’s example, the emergency response system was far too slow in letting people know about problems that were going to affect them. This leaves a negative connotation for the system. Seth’s point is: manage your communications better to create a positive impact.

The same holds true for micro mass dissemination, which is private group communications. Micro mass dissemination is critical for project management and daily operations. Take a company wide email system roll out project as an example. When something goes wrong, the primary stakeholders need to know so they can arrive at a course of action. This proper course of action rarely occurs in a vacuum. Additionally, any users affected by the problem need to be alerted as well to maintain a proactive, customer friendly stance. Again, Seth’s point holds true: manage your communications better to create a positive impact.

The communications concept is easy to grasp but often hard to master. If you do not have a communications strategy, macro or micro, for whatever you are working on, create one. A little thought about who needs to know what when can go a long way.