(Tiểu luận) organizational behaviorgroup assignmentcase delta

NATIONAL ECONOMICS UNIVERSITY ADVANCED EDUCATIONAL PROGRAM ORGANIZATIONAL BEHAVIOR GROUP ASSIGNMENT CASE: DELTA Class: Advanced Finance 63C Lecturer: Dr Nguyen Duc Kien 11210303 Đặng Quỳnh Anh 11213213 Ngô Phương Linh 11211079 Ngô Quỳnh Chi 11215382 Lê Phương Thảo 11211938 Nguyễn Vân Hà 11215598 Vũ Anh Thư 11212653 Bạch Minh Huyền 11216199 Nguyễn Thị Cẩm Vân 11219513 Đinh Phương Linh 11216345 Vũ Thảo Vy Hanoi, 11/2023 TABLE OF CONTENTS TABLE OF CONTENTS INTRODUCTION .3 CASE ANALYSIS .4 I - CASE OVERVIEW Case summary Approaching method II - IDENTIFY THE PROBLEM Problem statements Fact Assumption III - DETERMINE THE ROOT Why did Delta's bankruptcy lead to employees’ demotivation? Theoretical reflection in identified roots - the expectancy theory .7 IV - EVALUATE DELTA’S SOLUTIONS Delta’s solutions evaluation Evaluate the relative effectiveness .10 V - DEVELOP NEW STRATEGIES 11 The essentials of developing new strategies 11 Alternative solutions .12 VI - WRAP-UP .12 Summary of case analysis questions 12 Learning points from Delta’s case .15 Conclusion of alternative solutions for Delta 15 CONCLUSION .17 REFERENCES 18 INTRODUCTION Motivation is the process that drives individuals and organizations toward success It is a complex phenomenon that is influenced by a variety of factors, including internal factors such as needs, wants, and values, as well as external factors such as the work environment and rewards Motivation serves as the engine that propels employees to perform their best, fostering a positive work environment and enhancing overall productivity Motivated employees are more likely to go the extra mile, take initiative, and be creative They are also more likely to stay with their company for the long term In the corporate world, effective motivation strategies can lead to remarkable turnarounds and significant achievements, as demonstrated by the case of Delta Air Lines This case study illuminates the transformative power of motivation, shedding light on how strategic leadership and innovative incentive structures can not only uplift a company from the depths of the financial crisis but also sustain and enhance the morale of its workforce By delving into the Delta Air Lines example, we gain valuable insights into the art and science of motivation, exploring the intricacies of aligning organizational goals with employee satisfaction and commitment Through this analysis, we uncover the key principles that drive motivation and learn how they can be applied in diverse contexts to inspire and empower individuals, fostering a culture of excellence and achievement within any organization CASE ANALYSIS I - CASE OVERVIEW Case summary Delta Airlines faced a major turnaround from bankruptcy to becoming the most profitable among the Big Three U.S airlines under CEO Ed Bastian's leadership Bastian prioritized employee motivation through competitive pay and a profit-sharing formula The challenge now is to balance monetary incentives, consider economic factors, and find new revenue strategies to sustain employee motivation 1.1 Delta’s solution Delta has implemented a multifaceted solution to address various aspects of its employee compensation and motivation strategies The first element of their approach involves the implementation of a profit-sharing formula, complemented by competitive pay structures This approach aims to not only reward employees for their contributions to the airline's success but also ensure that their compensation remains competitive within the industry 1.2 Outcomes of Delta’s solution One of the primary positive outcomes of this strategy is the achievement of high employee compensation levels By sharing profits and offering competitive pay, Delta ensures that its employees are financially rewarded for their hard work and dedication This not only enhances their overall job satisfaction but also contributes to their sense of accomplishment, knowing that their efforts directly impact their earnings Moreover, this approach provides a degree of job security, as it aligns employee interests with the airline's success However, there are negative outcomes associated with this strategy as well Delta's profit-sharing and competitive pay model can lead to dependency on external factors that affect the airline industry, such as fluctuations in fuel costs or economic downturns Additionally, there is a need to carefully balance monetary incentives with the sustainable economic growth of the airline Striking this balance is crucial to ensure that the company remains financially stable and can continue to invest in its employees' compensation and motivation while maintaining a healthy bottom line Approaching method Approaching this case, we mainly apply these three theories of motivation: “the expectation theory”, “goal-setting theory” and “equity theory" to analyze the related problems The goal is to understand how these theories are actually applied in organizational motivation efforts In this case, it refers specifically to Delta Airlines' solutions to motivating employees as well as how to maintain longterm motivation It also involves striking a balance between the risks associated with those solutions and other factors of the business's profitability Additionally, the six-step problem-solving model (first introduced by Edgar Schein) Serves as the foundation for our analysis points, which closely follow the basic stages in the problemsolving process to explain the key elements that have contributed to Delta Airline's solutions From there, we take the knowledge gained and put it to use to develop a few new alternative solutions to address the case's issue II - IDENTIFY THE PROBLEM Problem statements The primary problem that is being considered in this case revolves around how CEO Ed Bastian motivated his employees in two ways when his company is bankrupt, which is to create a profitsharing formula that supplements that base pay with additional cash, depending on the company’s performance As a result, Delta’s employees are the best paid in the industry—something Bastian has pledged to maintain Not only reward employees but also mental encouragement, he reinforces to Delta’s employees that they play a pivotal role in the strategy behind the airline’s rebound and gives a chance to communicate with his employees However, if Delta relies on monetary incentives to motivate employees, a culture of entitlement could develop among Document continues below Discover more from: Organizational Behavior Đại học Kinh tế Quốc… 301 documents Go to course Final exam of Organizational Behavior Organizational Behavior 100% (10) VĂN HÓA Vingroup Organizational Behavior 100% (6) 102003 44 OB A1 - OB 22 14 17 Assignment Organizational Behavior 100% (5) Organization Behavior Netflix Case Organizational Behavior 100% (4) Organisation Behaviour A1 Organizational Behavior 100% (3) Expectancy theory Organizational Behavior 100% (3) employees Employees may come to expect high levels of compensation, even if it is not sustainable in the long run That is why in this case of Delta, the primary problem now gives rise to several secondary problems Firstly, due to the current economic conditions, fuel cost, low carriers, it is important for Delta to balance between motivating employees and uphold company’s profit Consequently, it raises the second need: to find new strategies for growing revenue in order to maintain employee motivation in the long term To be more specific, keeping employees motivated enhances the organization commitment between companies and the workforce Nevertheless, if Delta’s lack of implementing new revenue growth strategy, the company's long-term sustainability could be threatened and Delta might face financial difficulties in near future Fact The fact that among numerous companies coming to the edge of bankruptcy, Delta’s CEO, Ed Bastian had succeeded in bringing Delta’s back by motivating his employees with specific recognized actions, which focused on bringing base pay back up to competitive levels and creating a profit-sharing formula depending on the company’s performance In other words, he reinforced to Delta’s employees that they play a pivotal role in the strategy behind the airline’s rebound These facts provide evidence via paperwork, official announcements and articles Along with the Delta case, there are numerous real-life cases have demonstrated the importance of employee motivation in solving a wide range of issues that may arise for a business, such as Toyota with “Respect for People” to maintain high morale and productivity during the crisis, and it ultimately contributed to the company's recovery after “the 2008 financial crisis” or General Motors launched its General Motors Recognition Program in order to reward employees for both social and points- based recognitions and so on Assumption The primary assumption about motivation in the Delta Airlines case is that employees are more motivated when they feel valued, appreciated, and fairly compensated for their contributions This assumption is based on the principles of equity theory and expectancy theory, which suggest that people are motivated to work harder when they perceive that their efforts are being rewarded fairly and that their contributions are valued III - DETERMINE THE ROOT Why did demotivation? Delta's bankruptcy lead to employees’ Firstly, the case underscores a stark contrast in compensation within Delta, with widespread wage cuts affecting the majority of employees while executives receive retention bonuses This discrepancy could breed a sense of undervaluation among the workforce, fostering resentment as they witness disproportionate rewards at the top tier Secondly, reduced perks and benefits during bankruptcy compound employees' dissatisfaction, akin to scenarios faced by employees in companies such as General Motors during its financial crisis Scaling back on health insurance, retirement benefits, and travel privileges diminishes the overall compensation package, leaving employees feeling undervalued and disengaged, as their once comprehensive benefits are curtailed Thirdly, the increased workload and heightened stress levels resulting from workforce reductions amplify the negative impact on motivation Employees faced with additional responsibilities and longer hours during a bankruptcy may find themselves stretched thin, leading to a decline in morale and job satisfaction Moreover, the erosion of trust in leadership emerges as a significant factor, reminiscent of the fallout from the Volkswagen emissions scandal If employees perceive poor management decisions as contributing to the financial woes leading to bankruptcy, trust is further compromised A lack of confidence in leadership can demotivate employees, fostering a sense of disillusionment with the company's direction Furthermore, the uncertainty surrounding Delta's future prospects during the bankruptcy adds another layer of demotivation Employees grappling with doubts about the airline's viability and their roles within it may shift their focus from long-term commitment to seeking stability elsewhere Concerns about the bankruptcy's lasting impact on their careers may push employees to consider alternatives, driven by the fear of working for a company with a tarnished financial history The multifaceted challenges arising from compensation disparities, reduced benefits, increased workload, diminished trust in leadership, and uncertainty about the company's future collectively contribute to a demotivated workforce at Delta during the bankruptcy period Theoretical reflection in identified roots - the expectancy theory Expectancy theory of motivation suggests that three factors influence employee motivation: performance, values, and expectations These factors interact with how motivated employees are during challenging times and how committed they are to the organization The following ideas provide an explanation of these theoretical aspects in the context of Delta Firstly, in the context of employee demotivation, expectancy plays a crucial role, representing the belief that an employee's efforts will lead to a specific outcome For instance, at Delta Airlines, if employees doubt that their hard work can prevent layoffs or salary cuts during financial difficulties, their expectancy for positive outcomes diminishes Secondly, performance is linked to the belief that achieving specific outcomes will result in desired rewards However, employees may perceive low instrumentality, fearing that meeting performance goals won't shield them from adverse consequences, as seen at Delta Airlines where financial struggles may still lead to layoffs or reduced benefits Furthermore, valence, the perceived value of outcomes, is crucial In financially distressed companies, like Delta Airlines, the value of job security, benefits, or pay may be perceived as lower, diminishing employees' motivation to invest time and energy into their work IV - EVALUATE DELTA’S SOLUTIONS Delta’s solutions evaluation Delta appears to employ “the expectation theory”, “goalsetting theory”, “equity theory" in its approach to motivation In the following parts , we point out the theoretical aspects demonstrated by Delta's specific solutions We also consider the impact of those solutions to see if they can motivate employees perfectly or if they still have some potential disadvantages 1.1 The expectancy theory Expectancy theory emphasizes the importance of a strong connection between individual effort and performance with rewards Employees were motivated by the expectation that their efforts Firstly, in Delta Airlines' approach to employee motivation, they successfully enhanced the Effort-Performance Link This was achieved through strategic initiatives designed to boost employee performance Notably, the CEO, Ed Bastian, spearheaded an effort to increase the base pay of employees This step created an environment where employees came to expect that their dedication and hard work would be recognized and rewarded with improved compensation Secondly, the company strengthened the Performance-Reward Link by introducing a profit-sharing formula This formula distributed a portion of the company's profits to its employees, further reinforcing the connection between individual employee performance and the subsequent rewards they received This innovation motivated employees to strive for higher performance, knowing that their efforts would directly impact the company's success and consequently, their own financial well-being Additionally, the Valence aspect of motivation played a significant role in Delta's strategy Employees highly valued the profit-sharing incentives and the increase in base pay, as these improvements directly contributed to their financial stability and well-being This created a positive valence, as employees saw the rewards as valuable and meaningful Moreover, Bastian's leadership played a crucial role in fostering a positive emotional valence He consistently emphasized the importance of each employee's 10 contributions to Delta's overall success, further motivating them to perform at their best.would lead to a share of the company's profits While the approach of emphasizing the link between effort, performance, and rewards can be effective, it is essential to be aware of potential drawbacks One potential drawback is the risk of overemphasizing rewards, as an excessive focus on rewards can lead employees to prioritize personal gain over the effort required to attain them, especially when the rewards are perceived as easily achievable Unrealistic expectations can also hinder motivation if employees anticipate rewards that are unattainable or if the company's goals and reward system are unclear Moreover, a lack of transparency in how performance is evaluated and rewards are distributed can result in employees perceiving the system as unfair, potentially leading to decreased motivation Therefore, while connecting effort to rewards is a valuable motivational strategy, it should be implemented carefully to mitigate these potential downsides and maintain a balanced and effective approach 1.2 The goal-setting theory Delta Airlines effectively employed the Goal-Setting Theory to enhance employee motivation Firstly, the company established specific and challenging goals under the leadership of CEO Ed Bastian Their objective was crystal clear: to transform into an upscale carrier that could command higher prices by delivering superior service and reliability This goal was not only ambitious but also demanding, requiring employees to perform at their best to achieve it Secondly, the company ensured goal acceptance through initiatives like the "Velvets" monthly events These events served as a platform for Bastian to directly communicate the company's vision and objectives to employees, fostering a shared understanding and acceptance of these goals Lastly, feedback mechanisms were integrated into Delta's approach to employee motivation The company provided regular performance feedback through methods like profit-sharing announcements This feedback served as a vital tool for employees to gauge their progress toward achieving the company's goals and adjust their efforts accordingly 11 However, while the goal-setting theory can be a powerful motivational tool, it is not without its potential drawbacks Setting unclear and unrealistic goals can hinder employee motivation If goals are vague or overly challenging, employees may become demotivated This may occur because employees might not perceive the goals as achievable, leading them to question whether the effort required is worth the outcome or if the goals are simply impossible to reach In addition the lack of feedback can pose a significant challenge If employees not receive regular feedback on their progress toward their goals, they may lack clarity on whether they are on the right track or if adjustments are needed in their approach This absence of feedback can lead to frustration and demotivation, as employees may feel left in the dark regarding their performance and the achievement of their objectives In conclusion, while the goal-setting theory offers a valuable approach to employee motivation, it is essential to address potential issues related to goal clarity and feedback to ensure its effectiveness Clear, realistic goals and consistent feedback mechanisms are crucial to maintaining a motivated and goal-driven workforce 1.3 The equity theory To address equity concerns, Delta offered employees an increase in base pay This created a perception of fairness by providing more stable and predictable income and addressing the imbalance between external factors (such as fuel costs) and employee rewards Equity theory maintains a sense of fairness and equity among employees Delta's commitment to being an industry leader extended to its approach to employee compensation, ensuring that its workforce was the best-paid in the airline industry This deliberate strategy not only bolstered the airline's reputation but also fostered a profound sense of equity among its employees By offering the best compensation packages, Delta created a feeling of fairness and equality compared to their peers at other airlines This not only ensured that employees were satisfied with their pay but also nurtured a sense of competitiveness and motivation among them When employees perceive their compensation as equitable in relation to their counterparts in the industry, they are more likely to 12 feel motivated and engaged This motivation is not solely rooted in financial gain but also in the intrinsic sense of being valued and treated fairly Delta's success in maintaining an engaged and motivated workforce was, in part, attributed to this emphasis on equity in compensation This approach contributed to the airline's outstanding employee engagement scores, lower turnover rates, and a more positive organizational culture, ultimately helping Delta maintain its position as a top player in the industry However, there are potential drawbacks to consider The first is the risk of misperceived fairness If employees believe that the distribution of rewards is unfair, they may experience demotivation This stems from their perception that they are not being adequately rewarded for their contributions or that their efforts are not sufficiently valued Additionally, unclear criteria for determining rewards can pose challenges When employees are uncertain about how to achieve rewards due to vague or ambiguous guidelines, frustration and demotivation may ensue Lastly, a lack of transparent communication regarding changes to the reward system can lead to feelings of unfair treatment among employees, potentially resulting in resentment and reduced motivation Hence, it is essential to be cautious in implementing to minimize these possible drawbacks and uphold an efficient method as it can help to create a fair and transparent compensation system, foster employee motivation and engagement Evaluate the relative effectiveness Overall, Delta's solution to increase employee motivation seems to be successful The company has seen significant improvements in employee morale, productivity, and customer satisfaction since implementing the profit-sharing formula and other initiatives Delta's employees are now the best paid in the industry, and they feel like they are a part of the company's success This has led to a more engaged and motivated workforce The long-term effectiveness of Delta's profit-sharing program is a complex question that depends on a number of factors In the short term, the program has undeniably yielded positive outcomes, boosting employee morale, productivity, and customer satisfaction 13 This success has propelled Delta to the position of the most profitable among the Big Three U.S airlines Nevertheless, Delta's profit-sharing approach, while not without merits, does come with inherent drawbacks The profitsharing formula, influenced by external factors such as fuel costs and economic conditions, places compensation somewhat beyond employees' control This unpredictability may create a perception of unfair compensation among employees, given the volatile nature of these external factors The program's viability could be jeopardized if it becomes financially burdensome for Delta during periods of declining profits Moreover, there is a risk of discord between employees and management if the profit-sharing distribution is perceived as inequitable The ultimate verdict on the program's long-term efficacy hinges on Delta's adept management of these risks Sustained profitability is key to the program's continued success Conversely, a downturn in Delta's profits could transform the profit-sharing initiative from an asset into a liability V - DEVELOP NEW STRATEGIES The essentials of developing new strategies While profit-sharing strategies can be effective in certain contexts, Delta may find that addressing employees' low motivation requires a more comprehensive approach Motivation is a multifaceted aspect influenced by factors beyond financial incentives Implementing new strategies allows Delta to explore and respond to the root causes of low motivation, such as lack of recognition, limited career growth opportunities, or insufficient worklife balance By focusing on a broader range of solutions, such as professional development programs, clear communication channels, and well-being initiatives, Delta can create a work environment that fosters employee engagement and satisfaction This holistic approach recognizes that motivation is not solely driven by financial rewards and aims to cultivate a workplace culture that values and supports its employees on various levels 14 Alternative solutions Firstly, fostering open communication channels allows employees to express their concerns and ideas, creating a more inclusive and responsive work environment Implementing recognition programs, including regular feedback and acknowledgment of achievements, goes a long way in boosting morale Secondly, offering professional development opportunities and clear career paths demonstrates a commitment to employees' growth, providing them with a sense of purpose and advancement Thirdly, flexible work arrangements, such as remote options or flexible hours, contribute to improved work-life balance Fourthly, well-being initiatives, like wellness programs and mental health support, underscore a company's commitment to the overall health and happiness of its workforce These tailored solutions address the diverse factors contributing to low motivation, creating a workplace that values and supports its employees on various levels In fact, by applying these methods, Delta consistently earns recognition on Forbes' prestigious lists, securing a spot on the Best Workplaces for Women in the U.S., Best Employers for Diversity, and America’s Best Employers for Veterans Remarkably, for seven consecutive years, Delta has achieved a perfect score of 100% on the Disability Equality Index, solidifying its position as one of the nation’s premier workplaces for disability inclusion VI - WRAP-UP Summary of case analysis questions Question 1: Which motivational theories does Delta appear to be leveraging in its approach to motivation? Delta appears to be leveraging the following motivational theories in its approach to motivation: Expectancy theory: Delta's profit-sharing program provides employees with a clear link between their efforts and performance 15 (expectancy) and the rewards they will receive (valence) This alignment of interests is a key motivator under expectancy theory Goal-setting theory: Delta's "Velvets" events help to communicate and reinforce the company's overall strategy and goals to employees This helps to create a sense of shared purpose and direction, which can be motivating Equity theory: Delta's relatively high compensation levels and its commitment to paying employees competitively help to ensure that employees feel treated fairly This sense of equity can also be motivating Question 2: Picture being an employee of Delta during the period when the company transitioned into—and out of— bankruptcy What motivational implications would that experience have, and how long would they last? Negative motivational implications: Uncertainty about the future: Employees may have felt uncertain about the future of the company and their job security, which could have led to decreased motivation and productivity Reduced pay and benefits: During bankruptcy, Delta was forced to reduce pay and benefits for employees This would have likely harmed employee motivation, as employees would have felt less valued and appreciated Increased workload: During bankruptcy, Delta also had to streamline operations and cut costs This may have resulted in increased workloads for employees, which could have led to burnout and decreased motivation Damage to morale: The bankruptcy process can be stressful and demoralizing for employees This could have led to a decline in morale and motivation among Delta employees Positive motivational implications: Sense of accomplishment: If Delta was able to successfully emerge from bankruptcy, employees may have felt a sense of 16 accomplishment and pride This could have led to increased motivation and productivity Job security: Once Delta emerged from bankruptcy, employees may have felt more secure in their jobs This could have led to increased motivation and productivity Improved compensation and benefits: As Delta's financial situation improved, the company may have been able to restore or even improve compensation and benefits for employees This could have led to increased motivation and productivity Increased morale: As Delta's financial situation improved and the company emerged from bankruptcy, morale may have improved among employees This could have led to increased motivation and productivity How long the motivational implications would last would depend on several factors, including: The severity of the bankruptcy: The more severe the bankruptcy, the more likely it is that the motivational implications would be long-lasting The company's culture: A strong company culture can help buffer the negative motivational implications of bankruptcy The leadership of the company: Effective leadership can help to motivate employees during difficult times Question 3: Which you think is most motivational for Delta's employees? Their high base pay, their generous profit sharing, or a CEO who is so accessible and communicative? Which of these three factors is most motivational for Delta's employees is difficult to say without conducting research the most motivational factor for Delta's employees will likely vary from individual to individual, based on: High base pay: Financial rewards can be a powerful motivator, especially for employees who are struggling to make ends meet 17 However, research has shown that the motivational effects of money tend to diminish over time Generous profit sharing: Profit sharing can be a motivator because it links employee rewards to the company's performance However, the amount of money that employees receive through profit sharing can vary depending on the company's profits, which can be unpredictable CEO who is accessible and communicative: A CEO who is accessible and communicative can help to create a positive work environment and make employees feel valued and appreciated This can lead to increased employee motivation and engagement In the context of Delta's success and the motivation of its employees, all the mentioned factors contribute to motivating the employees Different employees may be motivated by different aspects, and these factors collectively create a comprehensive motivational environment within the company It's not a matter of one being more motivational than the others, but rather the synergy of these elements working together to inspire and engage the workforce effectively Learning points from Delta’s case The case of Delta Airlines and its CEO, Ed Bastian, offers valuable lessons in motivation, illustrating the airline's remarkable journey from bankruptcy to profitability Tailored Motivational Strategies: The case highlights the importance of tailoring motivational strategies to the specific needs and circumstances of the organization Delta employs a combination of financial incentives (competitive base pay, profit-sharing) and non-financial strategies (leadership communication, shared purpose) to create a holistic approach to motivation This underscores the need for a customized approach to motivation that considers the unique attributes and challenges of the organization Leadership and Communication: The role of leadership in motivating employees is paramount CEO Ed Bastian's accessibility, communication skills, and regular engagement with employees demonstrate that effective leadership can inspire and motivate a workforce Learning how to lead by example, communicate a clear 18 vision, and engage with employees on a personal level can significantly impact motivation Financial Incentives and Performance-Linked Rewards: Offering competitive base pay and profit-sharing programs can be highly effective in motivating employees Delta's profit-sharing formula, which ties rewards to the company's performance, demonstrates the importance of aligning individual and team efforts with organizational success It emphasizes the value of clear links between performance and financial rewards in motivation Shared Purpose and Company Culture: Delta's emphasis on a shared vision and a strong company culture of togetherness reinforces the idea that a sense of belonging and purpose can be powerful motivators The importance of aligning employees with the company's mission and values, and fostering a positive and inclusive company culture, is a key learning point These four learning points encapsulate the core elements of motivation in the context of Delta Airlines, offering insights into leadership, financial incentives, and culture as essential factors for motivating employees effectively Conclusion of alternative solutions for Delta Delta acknowledges that addressing employees' low motivation goes beyond traditional profit-sharing strategies They recognize motivation as a complex aspect influenced by various factors and believe in implementing comprehensive solutions These include fostering open communication, recognition programs, professional development opportunities, flexible work arrangements, and well-being initiatives By adopting this holistic approach, Delta aims to tackle root causes such as lack of recognition and limited career growth, creating a workplace culture that values and supports employees Notably, Delta's commitment to employee satisfaction is reflected in its consistent recognition on Forbes' prestigious lists for workplace inclusivity and excellence 19