B321 Tma 02

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Question 1

(a)

Simons (1999, pg 768) describes intrinsic motivation as “desire to engage in behaviours or actions in anticipation of internally- generated rewards such as personal feelings of accomplishment” and extrinsic motivation Simons describes as (1999, pg 766) “desire to engage in behaviours or actions in anticipation of tangible rewards, such as money or promotion”. Extrinsic motivation is created by financial incentives. An incentive as Simons (1999, 767) describes as being “a reward or payment that is used to motivate performance.

The two types of motivation mentioned above can be used to design a rewards package for the product centre managers. First I will discuss intrinsic motivation; this type of motivation is “from within” (as Simon states (1999, pg 245)) rather than external. Managers can improve intrinsic motivation, Simon’s (1999, pg 245) states “they can make people proud of where they work” and also “they can involve subordinates in the goal setting process to increase the likelihood that subordinates will see the goals as legitimate. If subordinates are included in the process of setting goals-asked to provide input and information –they are more likely to feel that the goals are legitimate and work more diligently to achieve them”. The motivation is aligned to Air Tex Aviation’s performance goals, which are, the granting of credit but managers have performance goals set by Ted, monthly charges against their departmental profits, managers are more likely to stick to the rules set by Ted because they are in control of credit. Also, the purchasing of capital equipment and operating supplies but having predetermined limits this gives the managers a sense of control and able to make decisions without having to ask permission whenever a purchase was to be made. Moreover product managers are allowed to set policies such as pricing for products or services. They also have the power to hire, fire and administer the salary.

Product centre managers can rewarded because they have the responsibility to do the above and are free to make choices within set boundaries. Other rewards can be meaningfulness managers may feel they are doing something important. Also another reward is having the competence, managers can feel satisfied. Lastly, another reward is having the sense of progress, product centre managers will feel they have gained something.

I will now discuss the extrinsic incentives, Simons (1999 pg 245-246) states “financial performance awards-typically in the form of bonuses-can be linked explicitly to the achievement of goals and targets. Since incentives are to motivate performance Ted has allocated 10% bonus to managers.

(b)

Simon’s four levers of control can be used in the implementation of strategy for Air Tex Aviation. Simon’s states “Strategic control is not achieved through new and unique performance measurement and control system, but through belief systems, boundary systems, diagnostic control systems and interactive control systems working together to control both the implementation of intended strategies and the formation of emergent strategies”.

Simon’s (1999, pg 763) describes belief systems as “explicit set of organisational definitions that senior managers communicate formally and reinforce systematically to provide basic values, purpose, and direction for the organisation”. Figure 14-2 Levers of control (Simon’s pg, 305) shows belief systems as “strategy as Perspective” and “Obtaining Commitment to the Grand Purpose, this in the context of Airtex Aviation are firstly Ted and Frank have taken control of the business, Ted is President and chief operating officer and Frank is chairmanship. They also have a vision to grow at a rate of 20% per year for the first five years. To implement strategy Ted and Frank decentralised authority and made each operating activity a profit centre and grouped them by departments. Departments were given authority over his...
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