Solved: In attempting to address performance issues, a small start-up implemented a new compensation

In attempting to address performance issues, a small start-up implemented a new compensation structure and redesigned the office space with an open floor plan. After the changes were implemented, the leadership team was discouraged to discover that the performance issues persisted. What may be at play at this company, and which theory might assist this company in effectively addressing its performance issues?

Expert Answer

The company which is a small start-up has designed and implemented a new compensation structure and also redesigned the office space with an open floor plan to ensure that there are no barriers of communication among the employees depeding on the positions in hierarchy. But, none of these resulted in addressing the performance issues in the company which might be due to lack of motivation among the employees.

Performance = Motivation * Ability * Environment.

As Environment change has not resulted in an increase in performance and ability of the employees is not questioned, it is the motivation which is the main reason for the performance issues.

Below might be few reasons which result in lack of motivation –

a) The employees are unable to find a direct value addition based on their work

b) The leadership’s attitude is not very encouraging with respect to the vision, mission, objectives and the goals

c) Lack of interesting projects

d) Lack of regular meetings and effective communication

e) Management is not communicating with employees regularly regarding any issues or feedback

Hertzberg’s two factor theory might assist the company in effectively addressing the performance issues. The company has concentrated on Hygiene factors by making the working conditions better and increasing the compensation structure.

But it didn’t concentrate on the motivational factors i.e. achievements, rewards and recognition for the employees, increasing the responsibilities, providing challenging and interesting work which results in job satisfaction depending on the qualification and experience of the employees etc.

Hence, the above motivational factors along with the hygiene factors need to be addressed for the company to achieve the required performance.

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