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(Cherrington, 1973) These types of rewards are referred to as contingent rewards. The theory is that employees are willing to put forth extra effort if they know they will be rewarded accordingly.
Cherrington and his colleagues surmised that no inherent link between satisfaction and performance exists. Instead, satisfaction and performance are dependent upon performance-contingent awards. (Cherrington, 1971) Three types of rewards can be found in an organization. They are random, positively contingent, and negatively contingent. Random awards are given regardless of performance. High and low performers are rewarded equally under this system. Next, positively contingent awards are given only to high performers. Low performers are given nothing. Finally, negatively contingent awards are given to low performers while the higher performers receive nothing. (Cherrington, 1971) Cherrington's findings place power on the reward itself. In another study on performance-contingent rewards, Jacobs and Solomon confirmed the finding of Cherrington. The connection between job performance and job satisfaction was higher when performance was rewarded. (Spector, 1997)
Calveta Dining Services does not appear to use a performance-contingent reward system. Their policy is more centered on expecting every employee to be a high performer. The interview process is designed to weed out applicants who are not driven to succeed. The company culture assumes that all employees will succeed.
Theory Six and Review
Another theory explores the idea that no link exists between performance and satisfaction. Edwin Locke and Gary Latham explored the possibility that performance is contingent upon goal-setting. Locke and Latham found that goals determine self-satisfaction with performance. (Locke, 2006) Harder goals are more motivating because they require more effort to achieve than easier goals. Feelings of success in the workplace stem from the achievement of difficult goals. (Locke, 2006) Being able to grow and meet job challenges creates feelings of success. Locke and Latham's goal theory states that goals encompass both abilities and motivation. Goals can be grouped into four levels: high, moderately difficult, easy, and vague. High goals take greater effort and persistence.
The keys to goal setting are feedback, commitment, and task complexity. (Locke, 2006) Feedback is needed to track progress. Commitment to the goal is enhanced by self-efficacy and leads to the feeling that the goal is important. Task complexity can serve as a catalyst for problem solving. Situation constraints such as not have the necessary resources to accomplish the goal can affect performance. (Locke, 2006)
The atmosphere at Calveta Dining could support goal setting. Employees are given access to many educational aids as well as opportunities to cross train and advance. If an employee wishes to learn another job function and switch, the company does their best to facilitate that request. The company's core values, referred to as Antonio's Way, outline five basic goals for the company. These goals are broad and encompass the organization as a whole. They are not specific at the employee level and would not be considered high goals under Locke and Latham's theory.
Based on the different motivational theories, Calveta has room for improvement. A company's strategy is an action plan for running the business operations. (Thompson, 2010) The company's main motivational strategies are pay-for-performance and employee development based. While these are effective strategies, they overemphasize the need to develop and advance. The main problem cited by the customers is the turnover rate of the account managers. Customer relationship management is extremely important to the overall profitability of the organization. (Schultz, 2009) The customers want to build a relationship with their account manager and become frustrated when they keep losing them. Improving customer service will improve customer loyalty. (Schultz, 2009) The loss of the account managers can be directly attributed to the company's advancement policies. The account managers are not leaving the company, they are simply being promoted to other positions. While this is good for the employee, it is bad from the stand point of the customer.
Calveta should change their reward system. The company is in the growth stage. This often requires major changes in the business' strategy. (Timmons, 2006) One goal in "Antonio's Way" is to develop each employee to their full potential. Advancement is not the only way to accomplish this task. A satisfied worker is a productive worker. (Ginnett, 2008) The Calveta's have not considered the possibility of keeping an employee in one position over the long-term. The culture seems to regard this as underachieving. Many other factors motivate employees besides advancement.
Calveta should write up clear job descriptions for each position. Job descriptions can help management with the design of a new reward system, staffing, training, and performance control. (Grant, 1989) The company should allow each employee to develop a personal goal-setting plan. This gives the employees an opportunity to set and achieve high level goals. Adding a performance-contingent reward will increase overall satisfaction. This approach will not detract from the company's culture. Account managers will be given an opportunity to grow within their position and still be rewarded. This also solves the customer retention issues. Based on the theories of Cherrington, rewarding employees in a noncontingent reward system does not impact performance. The employees are currently being rewarded without having to achieve. This approach does not ensure the best performance from the employee. Adopting a goal-setting plan with feedback and a contingent-based reward system will better serve the company.
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