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Chapter 4

Liberty Construction Company

Discuss this case in terms of the social system, equilibrium, the psychological contract, role, status and
status symbols.

• Liberty Construction Company, a small company in Colorado, can be considered as a social

system. Social system, as we all know, is a complex set of human relationships interacting in
many ways. Each small group (like the two camps formed in the incident) is a subsystem
within larger group (which is the Liberty Construction Company) that are subsystems of even
larger groups (the construction industry). One point that stands out in the complex interactions
among people in the social system is that the behaviour of any one member can have an impact,
directly or indirectly, on the behaviour of any other. Like in the incident, the job conflict that
arose between Federico and Alvarez affected other employees’ perception about the company
and it also created work problems.
• The company is said to be in social disequilibrium because the employees are divided and are
working against one another instead of in harmony. They seemed to be enjoying in giving each
group work problems. This disequilibrium is caused by the change implemented by the owner
which highly affected the present operator of the backhoe. The dissatisfaction he felt led to his
resignation from work. This disequilibrium will reduce the company’s progress but it will
eventually regain its equilibrium.
• Aside from the economic contract employees make when they join an organization they also
make an unwritten psychological contract. It defines the conditions of each employee’s
psychological involvement with the social system. In the case of Michael Federico, his
expectations are properly met by the management. They gave him the new backhoe to operate
which means they trust him and his skills and it also means that he is respected by them. On the
other hand, Pedro Alvarez felt dissatisfied and not properly recognized, his self-esteem and
self-respect is seriously affected. He felt like he is insulted because he should have retained the
newer machine instead of giving it to a temporary employee.
• Role reflects a person’s position in the social system, with its accompanying rights and
obligations, power and responsibility. Taking the side of Alvarez, we can say that he is
experiencing role ambiguity wherein people are not sure how they should act in situations. Like
what happened to him, he doesn’t know how he should act about the situation.
• Status is the social rank of a person in a group while status symbols are visible things that serve
as evidence of social rank. When it comes to seniority, Federico’s status level is higher having
nine months of work experience while Alvarez only has seven months. While when it comes to
job level Alvarez is superior because he is a regular employee. Status symbols are also
important in order to determine your social rank. The quality and newness of equipment used is
one of the typical symbols of status. Alvarez being reassigned to an older machine means that
his status level declines. Status and status symbols are often source of employee problems and
conflicts, like what happened in the incident. Sometimes they are also the cause of employee
separation because they don’t want low-status job. But they also have good effects; they
definitely serve to motivate employees to do their best in order to acquire higher status.

Chapter 5
The Piano Builder

1. Discuss the nature of Bird’s motivation in building pianos. What are his drives and needs? Would a
behaviour modification program affect his motivation? Why or why not? What would be the effect
of setting a goal of 2 pianos per year for him?

Motivation is the strength of the drive toward an action. It originates within an individual. One
factor that makes Bird remain in the career of making piano is that it is his hobby and that he likes
challenges which he get when he is making one. Potential pianos are a product of ability and
When a person have goals to achieve it is easy for him to be motivated. Bird’s drive is to
accomplish his goal and that is to build a grand piano. That is why he is still constructing pianos
though it takes nearly a year; it serves as his practice stage so that when he build s his dream grand
piano, it will be perfect. He also sells his pianos at the modest price because accomplishment is seemed
as important primarily for its own sake, not just for the money that accompanies it. His needs focus in
Maslow’s Higher-order needs which are the self-actualization. It means becoming all that one is
capable of becoming, using one’s skill to the fullest, and stretching talents to the maximum. His
ultimate dream is to build a grand piano which he haven’t done yet but want tot do.
Bird’s motivation will be affected by behaviour modification program. Positive reinforcement
may be used wherein it provides a favourable consequence that encourages repetition of behaviour. In
the case of Bird, when he is constructing a high-quality piano he experienced satisfaction and he feel s
that he overcomes the challenge so as a result he tends to do high-quality pianos again.
Challenge will push a person to work harder to accomplish his goals. These goals must,
however still be attainable, given the experience of the individual and the resources available. We can
say that Bird likes challenges, has the experience, and likes his work but the goal of two pianos a year
will only result into failure because it is not achievable. Failure to attain his goals will lead to feeling of
tension, lower self-esteem, and will no longer stimulate his personal growth needs. According to
Maslow, people are more enthusiastically motivated by what they are currently seeking than by
receiving more of what they already have. It means that Bird will not be that motivated by doing two
pianos per year because this need is already satisfied. What will really motivate him is what he is
currently seeking and that is to build a grand piano.

2. How could a manufacturer of pianos build the motivation Bird has now into its employees?

In order to motivate his employees, he must first identify, discover and understand their needs
and drives. Reinforcements can also motivate them. Goal setting is also important because employees
will be more motivated if they have clear goals to achieve. An element of goal setting, which is the
challenge, motivates most employees to work harder when they have difficult goals to accomplish
rather than easy ones. Reward and incentives also play a big role in motivating employees.

Chapter 6
Plaza Grocery

1. Which of the major economic incentive systems discussed in this chapter has the best chance of
working for Brad?

The best economic incentive system is the skill-based pay wherein individuals are rewarded for
what they know how to do. The system motivates employees to develop their work related skills
through attending trainings and seminars, it reinforces an employee’s sense of self-esteem, and it
provides the grocery stores with a highly flexible workforce that can fill in when someone is absent.
Since some of the employees seemed bored of their monotonous work, rotation among jobs to learn
them might reduce boredom.
We all know that money is very important not just for its economic value but also for its social
value. It is also an effective motivator. The employees usual wage rate is one of the reasons why they
seemed to lack motivation. When it comes to their request of higher wage rate, this system’s pay
satisfaction is relatively high because their pay increases for each new job learned. It will also benefit
the organization because the employees will constantly use their skills.

2. Can two or more incentive systems be combined, with an even greater likelihood of success? What
might be gained through a combination, and what would be the costs (for both Plaza Grocery and
the employees)?

Economic incentive systems like skill based pay and profit sharing can be combined because they
have the same attributes which are alike. Employees will have higher wage rate and incentives; they
will also develop personal growth and self-esteem because they may acquire new skills which are work
related. The Plaza Grocery will also benefit from the combination. Boredom in the work place will be
reduced and employees will be strongly motivated. The organization will earn more profit because of
employees will use their highest skills because they know that their share in profit will be affected.
The combination will cost the business to pay wage rate which is higher than the rate at would
be paid for the task being performed. Another is profits are not directly related to an employee’s effort
on the job. Delays and unpredictability of profits are other difficulties. The combination will also cost
something to the employees like not all employees like it because it places pressure on them to move
up the skill ladder, the subsequent dissatisfaction may lead to a variety of consequences like employee
Based on the incident I would recommend the behaviour modification because there is a direct
connection between performance and reward which are the primary focus of the problem.
Republic of the Philippines
Tarlac State University
City of Tarlac
College of Business and Accountancy
2nd Semester, S.Y. 2007-2008

(Chapters 4, 5, 6)

Submitted by:
Nerisssa M. Estacio

Submitted to:
Prof. Elvira Mercado
February 14, 2008