Management Analysis Paper March 13, 2014 1 out of 12

Management in Peril: The Need for

Employee Investment

Nina Lin Chen (1125184)
Management Analysis Paper
BA 390 Winter 2014

Management Analysis Paper March 13, 2014 2 out of 12
Table of Contents

Executive Summary 1
Management Problems 2
Problem #1 2
Problem #2 3
Problem #3 4
Management Solution 5
Solution #1 5
Solution #2 6
Solution #3 7
Conclusion 7
Citation 9
Annotated Bibliography 10
Appendix 12

Management Analysis Paper March 13, 2014 1 out of 12
Executive Summary
Management recognizes that in a primarily technology-dominated marketplace today,
one crucial advantage it needs over its competitors is innovation. A method of driving
innovation is focusing on employee investment programs; however, critics claim these
programs carry exorbitant price tags, and are almost always ineffective. What they fail to
understand though is that this reason mainly stems from managements tradition, old-school
style approach of business. This results in impeding, rather than fostering programs that drive
innovation in the workplace. If management recognizes that 1) compensation does not drive
innovation, 2) employee investment is a long-run, bottom-line expense, and 3) businesses
should encourage a fun work environment, then employee programs will be effective. One
particular kind of employee investment focuses on providing the time and resources for
employees to take non-career related classes. Consequently, this will boost the necessary
employee motivation that will increase in innovation that management so desperately desires
from its company.

Management Analysis Paper March 13, 2014 2 out of 12
Introduction
A companys success relies on advantages over its competitors. This includes
intellectual property, liquid assets, and vast networks and long-term relationships; however a
recent shift to a predominantly technology-focused market leads to one particular advantage
more valuable than the others: innovation. Defined as a new idea, device or method by the
Merriam-Webster dictionary, innovation is the driver that differentiates a company from the
rest of its competitors. How does innovation occur? Simple: people drive innovation. Therefore,
fostering innovation within a company involves focusing on providing employees with the
necessary resources to innovate (Mehregany).
Management Problems
Management long knew this trade secret. Not surprisingly, it has attempted to
capitalize on this opportunity by implementing systems that promote innovation within the
company; yet, time has proven that more failures follow than successes after rolling these
programs out (Mehregany). This is partially attributed to the sheer difficulty in trying to roll out
processes that are practical in nature for a relatively abstract concept. However, management
needs to take ownership as well. Its conservative, outdated approach to business hinders the
success rate of these programs, which ultimately fails to drive innovation. The following
highlights three ways of thinking that management has yet to escape from.
Problem #1: Money Solves Everything
From managements perspective, innovation positively correlates with motivation. To a
certain extent, this holds true. A more motivated employee will put forth more effort to
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innovate, whereas a less motivated employee will not put forth as much effort. However, the
problem lies in managements misinterpretation of how to motivate people.
Management seems to live in an entirely separate universe marked by savory executive
titles, beefy base salaries, succulent stock options, and all-you-can-eat fringe benefits. Placing
the descriptive language aside, these items all demonstrate motivators that drive executives to
ensure the financial success of the company. Simply put, money feeds executive-level
motivation. This rule also extends to everyone else in the company. The amount of money
motivates highly-skilled candidates to join and valuable employees to stay at a company.
When the concept of innovation is thrown into the equation, this complicates the matter
(Kohn). Unfortunately, management continues to impose a system that does not work.
Under Maslows hierarchy of needs (see Figure 1), the bottom tier is composed of
physiological and safety needs together called the basic needs. Basic needs are both
directly and indirectly fulfilled by compensation. This is the phenomena, in which more money
results in more motivation, and thus productivity (Jerome). On the flip side when basic needs
are satisfied, more compensation does not equal more motivation; in fact, productivity
decreases. The important concept to note is that innovation happens at higher levels, beyond
basic needs. Management chucking more money at employees simply leads to nothing, or
more often decreased productivity (Kohn).
Problem #2: Employee Investment is a Benefit
When company profits take a dive, expenses in employee investment are almost always
the first to go. This is because management perceives employee investment as a benefit rather
than a necessity of the company. Compared to sales or marketing expenses, employee
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investment does not directly affect the bottom line (Mehregany). There is nothing wrong with
axing off employee investments to protect a companys immediate future per say, but there is
something to be said about the perception of employee investments as a good to have, but
not necessary on the expense budget.
The current corporate culture rewards short-term gains and financial successes over
long-term goals and vital factors that ensure company success. Therefore employee
investments, whose effects are felt in the long-run, do not align with this culture and are
ultimately listed as benefits. Management grossly overlooks the fact that innovation and
employee investment requires looking at the long-term success of a business. Unfortunately,
the act of examining innovation and employee investment through a short-run lens is an all too
common mistake of management. As a result, management regards employee investment as
a line item that can be just as easily added as removed from business operations like hanging
a picture frame on a wall (Mehregany).
Problem #3: Business is no childs play.
Business is serious. There exists some wiggle room for minor mistakes and occasional
mishaps, but anything substantial may cost a lot of jobs or worse, an entire company.
Therefore, business decision-making must involve a focused, serious attitude. This fosters an
employee perception that work cannot be fun, because fun equates to lack of seriousness,
which would drive up the potential for errors. Furthermore the more management pushes
seriousness in the workplace culture, the more stress appears. This derives from the
expectation that employees must make decisions with limited or no errors; this perfectionist
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attitude coupled with tight deadlines and pressures from higher-ups ultimately results in
employee stress.
When management introduces the expectation of innovation into the workplace, this
forms a contradiction. On one hand, management expects employees to innovate. On the
other hand, management expects employees to maintain this perfectionist-like attitude.
Innovation works the best in environments that encourage creativity, some risk-taking, and
out-of-the-box thinking. The process is messy and often unorganized, so when introduced to
the workplace environment that expects employees to act on only the most calculated and
organized ideas, this leads to terrible innovation and a baffled, frustrated management.
A Management Solution
The management problems, described above, contribute to the failure of employee
investment in companies, which ultimately results in the lack of innovation. In order to move
even consider encouraging innovation within a company, management must let go of these
preconceptions. Once this happens, management will feel the positive effects on innovation
after implementing employee investment programs.
One specific kind of employee investment programs is Expanding Knowledge, which
focuses on companies providing the time and financial resources for employees to take non-
career specific classes. This program promotes an environment for innovation because it
combats the three management problems listed above. The following explains how Expanding
Knowledge attacks these, which consequently drives the innovation management desire.
Solution #1: Money Doesnt Solves Everything Intrinsic Motivation Does
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To gain access beyond the basic needs, in which is when employees start to think
innovatively, management needs more than compensation. The psychological and self-
fulfillment needs require something other than extrinsic motivation; it calls for intrinsic
motivation. Based on Dan Pinks theory of motivation, accessing these higher levels require
three kinds of fulfillment: autonomy, purpose, and mastery. Autonomy relates to giving
employees choices over their work, purpose means giving employees a reason to exist, and
mastery describes when an employee achieves competency in a skill (Pink). Once these three
needs are met, this accesses the higher levels of Maslows hierarchy causing an increase in
productivity in innovation.
The Expanding Knowledge program achieves these three motivations. First off, the
employee chooses the class he or she wants to take. This empowers an employee to control
what he or she wants to do. Second, giving an employee the opportunity to learn something
means instilling a sense of purpose in life other than financially supporting his or her family.
Finally, by attending these classes and learning, an employee will work towards mastering a
skill. Overall, this leads to employees with higher productivity with better potentials for
innovation.
Solution #2: Employee Investment is a Benefit Imbedded in the Corporate Culture
While other employee investment programs simply benefit the employees, Expanding
Knowledge extends beyond this by building a community. At first, the implementation may
not immediate churn out substantial results. Nevertheless, as long as the company continues
to push the purpose of Expanding Knowledge, to promote innovation within the company, the
results will take effect. One crucial component is that the company must set up ways that
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employees can exchange or show off these skills to each other, whether that means hosting
weekly talent shows or innovation meetings by departments. What this slowly builds is a
community.
With careful implementation and time, Expanding Knowledge can become part of the
company culture. This program creates a sense of community within the company, in which all
employees engage in activities that they can share with each other. Consequently, an identity
forms within the company. One in which differentiates from other companies, who do not
offer this benefit. In the long run, this decreases the perception that Expanding Knowledge is
a benefit because once people associate the program as a part of the company culture, people
are less likely to cut something that makes up part of the companys identity.
Solution #3: Business is no childs play but can be adult play.
Introducing Expanding Knowledge contradicts the very concept of business as a serious
profession. Businesspeople perceive fun as wasteful loafing that decreases productivity and
increases risks. That is not the case with Expanding Knowledge, however. Expanding
Knowledge accomplishes several things: 1) increases fun in the workplace, which 2)
decreases stress, and 3) encourages an environment of employees innovating. Ultimately, this
means increased productivity overall. By no means does this program run as though it is not
chaotic, risky, or perfect. Expanding Knowledge, though, does eliminate the stress that
dampens innovation in the workplace by introducing a fun part of work, and creates an
environment conducive to innovating (Pink). The results may take a while to generate, but will
eventually come through. The idea that business can incorporate fun, and expect the results
management wants can be the case.
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Conclusion
In the corporate world today, innovation is the key to a companys survival.
Unfortunately, a large gap has formed between how management thinks and how
management should think; it is the latter that ultimately determines a companys success in
innovation. One crucial aspect is employee investment, and in particular, giving employees the
time and resources to take classes outside work. This method addresses several difficulties
management faced with previous method that attempt to drive innovation, and is one worth
implementing if management truly and whole-heartedly supports innovation within their
companies.

Management Analysis Paper March 13, 2014 9 out of 12
Citations
Jerome, Nyameh. "Application of the Maslows Hierarchy of Need Theory; Impacts and
Implications on Organizational Culture, Human Resource and Employees
Performance." International Journal of Business and Management Invention 2.3 (2013):
39-45.
Kohn, Alfie. "Why Incentive Plans Cannot Work." Web log post. Harvard Business Review, Sept.
1993. Web. 12 Mar. 2014.
Mehregany, Mehran. "If You Want Innovation, You Have to Invest in People." Web log post.
Harvard Business Review, 3 Oct. 2013. Web. 13 Mar. 2014.
Pink, Daniel H. Drive: The Surprising Truth about What Motivates Us. New York, NY: Riverhead,
2009. Print.



Management Analysis Paper March 13, 2014 10 out of 12
Annotated Bibliography

Jerome, Nyameh. "Application of the Maslows Hierarchy of Need Theory; Impacts and
Implications on Organizational Culture, Human Resource and Employees
Performance." International Journal of Business and Management Invention 2.3 (2013):
39-45.
This is an article written by Dr. Nyameh Jerome from the Department of Economics of Taraba
State University in Nigeria. Dr. Jerome analyzes the relevance of Maslow's Hierarchy of Needs
with respects to employee performance and organizational culture.

Kohn, Alfie. "Why Incentive Plans Cannot Work." Web log post. Harvard Business Review, Sept.
1993. Web. 12 Mar. 2014.
This is a blog piece by Alfie Kohn for the Harvard Business Review. The topic focuses on why
incentive plans fail to increase productivity of employees, and why these only temporarily
boost compliance.

Mehregany, Mehran. "If You Want Innovation, You Have to Invest in People." Web log post.
Harvard Business Review, 3 Oct. 2013. Web. 13 Mar. 2014.
This is a blog in the Harvard Business Review written by Mehran Mehregany, chair position at
Case Western University and founder of several companies including NineSigma. Mehran
discusses how people drive innovation, and how teaching innovation is possible, if not
necessary for this process to occur in the workplace.
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Pink, Daniel H. Drive: The Surprising Truth about What Motivates Us. New York, NY: Riverhead,
2009. Print.
Written by Dan Pink, an author specializing in work, business, and management, Drive looks at
what motivates people. People often associate motivation with compensation, but this is not
the case for higher cognitive functions. Pink discusses these three intrinsic motivators of
autonomy, purpose, and mastery.


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Appendix
Figure 1: Maslows Hierarchy of Needs