SUBMITTED TO COURSE CODE COURSE NAME TOPIC TITLE SECTION PREPARED BY

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DR. DOLHADI ZAINUDIN MGT 2010 PRINCIPLES AND PRACTISE OF MANAGEMENT MOTIVATIONAL TO RENEGE OR NOT TO RENEGE? 8 AHMAD MARZUKI BIN ABDUL JALIL(012-4209671) AHMAD MADANI BIN MOHAMED HANIFA MUHAMED SHARIZAL BIN MOHD RASOL SYED ABDURRAHMAN BUKHARI BIN AHMAD JAMIL (1215601) (1212829) (1212565) (1214399)

DATE OF PRESENTATION:

19TH DECEMBER 2012

TABLE OF CONTENTS

NO 1 2 3 4 5 6 7

CONTENT Background Summary Question 1 Question 2 Question 3 Conclusion Reference

PAGE 2 3 4-5 6 7-8 9 10

BACKGROUND Puget Sound Building Material is the well-established that providing building material as well as manufacturing and installation service to the residential builders in the Washington and Oregon markets. Puget looked at the record new housing starts and decided it was time to move into the California and Arizona markets, especially concentrating on San Diego and Pheonix, two of the hottest housing markets, in the country.

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SUMMARY Federico Garcia, vice president of sales for Tacoma, Washington-based Puget Sound Building Materials, wasnt all that surprised by what company president Michael Otto and CFO James Wilson had to say during their meeting that morning. Federico hired promising new sales representatives and offered them hefty bonuses if they reached the goals set for the new territory over the next 12 months which can be refer to the company background. All of the representatives had performed well, and three of them had exceeded Pugets goal-and then some. The incentive system hed put in place had worked well. The sales reps were expecting handsome bonuses for their hardwork. Early on, however, it became all too clear that Puget had seriously underestimated the time it took to build new business relationships and the costs associated with the expansion, a mistake that was already eating into profit margins. Even more distressing were the most recent figures for the new housing starts, which were heading in the wrong direction. As Michael said, Granted, its too early to tell if this is just a pause or the start of a real long-term downturn. But Im worried. If things get worse, Puget could be in real trouble. James looked at Federico and said, Our lawyers built enough contingency clauses into the sales reps contracts that were not really obligated to pay those bonuses you promised. What would you think about not paying them? Federico turned to the president, who said, Why dont you think about it, and get back to us with a recommendation? Federico felt torn. On the one hand, he knew the CFO was correct. Puget wasnt, strictly speaking, under any legal obligation to pay out the bonuses, and the eroding profit margins were a genuine cause for concern. The president clearly wanted to not pay the bonuses. But Federico had created a first-rate sales force that had done exactly what hed asked them to do. He prided himself on being a man of his word, someone others could trust. Could he be back on his promises?.

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1. Recommend to the president that a meeting be arranged with the sales representatives entitled to a bonus and tell them that their checks were going to be delayed until the Pugets financial picture clarified. The sales reps would be told that the company had a legal right to delay payment and that it may not be able to pay the bonuses if its financial situation continues to deteriorate. Pugets company looked at the record new housing starts and decide it was a time to move into California and Arizona market which the vice president set this goal for the new sales reps. In this situation, the president, Michael Otto understand that the vice president, Federico Garcia set goals for the new sales representatives and promise to offered them hefty bonuses if they achieved the goal set for the new territory over the next 12 months. Some of the sales reps had performed well and exceed the Pugets goal. From this situation we can say the company use the goal-setting theory to motivate their sales reps. Goal-setting theory states that employees are motivated when they are given a specific goal which they can bring the company to the next level and better performance.

When the sale reps had done their work as been told by vice president, they should gain their rewards which we can refer to extrinsic rewards state that is something are given by another person, typically a manager, and include promotions, pay increases, and bonuses. Extrinsic rewards are important, good managers strive to help people achieve intrinsic reward as well. The most talented and innovative employees are rarely motivated exclusively by rewards such as money and benefits, or even praise and recognition. Instead, they seek satisfaction from the work itself. In this situation, vice president had promised sales reps to offer bonuses if they achieved the Pugets goal.

As a president, recognizing the needs of the sales reps which is lower level physiological needs is a must. Physiological needs is the most basic human physical needs include food, water, and oxygen. In the organizational setting they are reflected in the needs for adequate heat, air, and base salary to ensure survival. In this situation, the sales reps are offered bonuses which the physiological needs for them. (4)

Unfortunately, when comes to a meeting the president and CFO didnt meet the requirement of vice president because the Pugets company had problem that they had underestimating the time to took to build new businesses relationships and the costs associated with the expansion, a mistake that was already eating into profit margins. Even more distressing were the most recent figures for new housing starts, which were heading in the wrong direction. In this case, the company had a legal right to delay payment and that it may not be able to pay the bonuses if its financial situation continues to deteriorate.

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2. Recommend a meeting with the sales representatives entitled to a bonus and tell them the company`s deteriorating financial situation triggers one of the contingency clauses in their contracts so that the company wont be issuing their bonus checks. Puget will just have to deal with the negative impact on sales rep motivation.

As we know, the Pugets company had problem that they had underestimating the time to took to build new businesses relationships and the costs associated with the expansion, a mistake that was already eating into profit margins. Even more distressing were the most recent figures for new housing starts, which were heading in the wrong direction. Because of these problems, James Wilson(CFO) mentioned that lawyers already built enough contingency clauses into the sales representatives contracts that Pugets company not really obligated to pay the bonuses as Federico promised Therefore, this situation will make dissatisfaction of sales reps motivation towards company. This statement can be conclude as hygiene factors. Hygiene factors involves the presence or absence of job dissatisfiers, such as working condition, pay, company policies, and interpersonal relationships. When hygiene factors are poor, work is dissatisfying. However, good hygiene factors simply remove the dissatisfaction; they do not in themselves cause people to become highly satisfied and motivated in their work. Unsafe working condition will cause sales reps dissatisfied. In contradict, the president should take responsible to provide hygiene factors sufficient to meet basic needs of sales reps. Because the president dont take responsibilities, the company should be ready to take negative impact on handling the sales reps motivation towards company. Example, the sales reps will do strike in front of company. Moreover, they also can issued this matter to the government and this will cause the company to take more damage and consequences.

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3. Recommend strongly to the president that Puget pay the bonuses as promised. The legal contracts and financial situations don't matter. Be prepared to resign if the bonuses are not paid as you promised. Your word and a motivated sales team mean everything to you.

As the vice president of the company Federico hired a promising new sale representatives and offered them hefty bonuses if they reached the goals set for the new territory. All of the representatives had performed well; The incentive system Federico put in place had worked well. But however, it became all to clear that the company had seriously underestimated the time it took to build new business relationship and the cost associated with the new expansion, a mistake that was already eating into profit margins. Chief financial officer of the company advised me that the company's lawyer built enough contingency clauses into the sales reps contract that Federico are not obligated to pay those bonuses he promised. Ethically,as the company's lawyer said that Federico under no obligation to pay the bonus. But the sales representatives signed up for the job knowing what they were expected to do. In that sense, they share the responsibility for missing the fact that the goals were too high. As a matter of practicality, it would probably be a good thing to recommend payment. Doing so is likely to make for a more motivated workforce that would end up helping the firm economically in the long run. It's great for the profit margin that the President chose to legally find loopholes that can negate the promises Federico made to his employees, who probably bought his smiling rhetoric in good faith. But this boss dishonestly misleaded the people he hired as so many administrators do and the employees will have to decide whether to stick around which most will do because of the present economy and await another shafting, or to look elsewhere for a better opportunity with a boss who can be trusted. As we can see it is a win-win situation here if the president decide to pay the bonuses.

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As we can see in the Equity theory which focus on individuals' perceptions of how fairly they are treated compared to others. Equity theory proposes that people are motivated to seek social equity in the rewards they receive for performance. According to equity theory if people perceive their conpensation as equal to what others receive for similar contributions, they will believe that their treatment is fair and equitable. People who feel inequitably treated may decide to leave their jobs rather than suffer the inequity of being under or overpaid.

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CONCLUSION Motivation is nothing but an effort by the managers to help people focus their minds and capabilities on doing their work as effectively and efficiently as possible. Trust is another key to motivate people to perform at their best. Effective interpersonal communication also helps to develop an environment that motivates employees. If the employees are aware what the expectations of the managers are they can perform their jobs more effectively. A truly motivating environment is one where employees feel that their opinions are valued and where they can experience a sense of belongingness.

In today's complex business climate employees not only want appreciation for their work but also want to be recognized as people and not just workers. In companies today are adopting a variety of programmers to achieve goals together with their employee's satisfaction. These employee incentive programmers are not just limited to sales people but involve all employees to help meet corporate objectives. These employees include everyone in the chain from line workers to office personnel etc. These programmers are framed to employee morale and empower them so that they take more personal responsibility and achieve their self actualization goals. These employee incentive programmers are often conducted as employee training programmers and new employ management systems etc. Maslow's hierarchy of needs concept assumes that lower level needs must be satisfied or at least relatively satisfied before higher level needs become motivator

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REFERENCES

Daft, R. L. (2012). The New Era of Management (10th ed). (pp. 466489). International Edition. Mason, Ohio: Thomson/South-Western. World Wide Website(www).

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