(Tiểu luận) organizational behaviorgroup assignmentcase delta

Motivation serves as the engine thatpropels employees to perform their best, fostering a positive workenvironment and enhancing overall productivity.. By delving intothe Delta Air Lines

NATIONAL ECONOMICS UNIVERSITY

ADVANCED EDUCATIONAL PROGRAM

-ORGANIZATIONAL BEHAVIOR

GROUP ASSIGNMENT

CASE: DELTA

Class: Advanced Finance 63C

Lecturer: Dr Nguyen Duc Kien

Hanoi, 11/2023

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TABLE OF CONTENTS

TABLE OF CONTENTS 2

INTRODUCTION 3

CASE ANALYSIS 4

I - CASE OVERVIEW 4

1 Case summary 4

2 Approaching method 4

II - IDENTIFY THE PROBLEM 5

1 Problem statements 5

2 Fact 5

3 Assumption 6

III - DETERMINE THE ROOT 6

1 Why did Delta's bankruptcy lead to employees’ demotivation? 6

2 Theoretical reflection in identified roots - the expectancy theory 7

IV - EVALUATE DELTA’S SOLUTIONS 8

1 Delta’s solutions evaluation 8

2 Evaluate the relative effectiveness 10

V - DEVELOP NEW STRATEGIES 11

1 The essentials of developing new strategies 11

2 Alternative solutions 12

VI - WRAP-UP 12

1 Summary of case analysis questions 12

2 Learning points from Delta’s case 15

3 Conclusion of alternative solutions for Delta 15

CONCLUSION 17

REFERENCES 18

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Motivation is the process that drives individuals andorganizations toward success It is a complex phenomenon that isinfluenced by a variety of factors, including internal factors such asneeds, wants, and values, as well as external factors such as thework environment and rewards Motivation serves as the engine thatpropels employees to perform their best, fostering a positive workenvironment and enhancing overall productivity Motivatedemployees are more likely to go the extra mile, take initiative, and

be creative They are also more likely to stay with their company forthe long term In the corporate world, effective motivation strategiescan lead to remarkable turnarounds and significant achievements,

as demonstrated by the case of Delta Air Lines This case studyilluminates the transformative power of motivation, shedding light

on how strategic leadership and innovative incentive structures cannot only uplift a company from the depths of the financial crisis butalso sustain and enhance the morale of its workforce By delving intothe Delta Air Lines example, we gain valuable insights into the artand science of motivation, exploring the intricacies of aligningorganizational goals with employee satisfaction and commitment.Through this analysis, we uncover the key principles that drivemotivation and learn how they can be applied in diverse contexts toinspire and empower individuals, fostering a culture of excellenceand achievement within any organization

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1.1 Delta’s solution

Delta has implemented a multifaceted solution to addressvarious aspects of its employee compensation and motivationstrategies The first element of their approach involves theimplementation of a profit-sharing formula, complemented bycompetitive pay structures This approach aims to not only rewardemployees for their contributions to the airline's success but alsoensure that their compensation remains competitive within theindustry

1.2 Outcomes of Delta’s solution

One of the primary positive outcomes of this strategy is theachievement of high employee compensation levels By sharingprofits and offering competitive pay, Delta ensures that itsemployees are financially rewarded for their hard work anddedication This not only enhances their overall job satisfaction butalso contributes to their sense of accomplishment, knowing thattheir efforts directly impact their earnings Moreover, this approachprovides a degree of job security, as it aligns employee interestswith the airline's success

However, there are negative outcomes associated with thisstrategy as well Delta's profit-sharing and competitive pay modelcan lead to dependency on external factors that affect the airlineindustry, such as fluctuations in fuel costs or economic downturns.Additionally, there is a need to carefully balance monetaryincentives with the sustainable economic growth of the airline

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Striking this balance is crucial to ensure that the company remainsfinancially stable and can continue to invest in its employees'compensation and motivation while maintaining a healthy bottomline.

II - IDENTIFY THE PROBLEM

1 Problem statements

The primary problem that is being considered in this caserevolves around how CEO Ed Bastian motivated his employees intwo ways when his company is bankrupt, which is to create a profit-sharing formula that supplements that base pay with additionalcash, depending on the company’s performance As a result, Delta’semployees are the best paid in the industry—something Bastian haspledged to maintain Not only reward employees but also mentalencouragement, he reinforces to Delta’s employees that they play apivotal role in the strategy behind the airline’s rebound and gives achance to communicate with his employees

However, if Delta relies on monetary incentives to motivateemployees, a culture of entitlement could develop among

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Organization Behavior Net ix Case

-Organizational

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Organisation Behaviour A1

Organizational

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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

2 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

3 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 rewardedfairly and that their contributions are valued

III - DETERMINE THE ROOT

1 Why did Delta's bankruptcy lead to employees’ demotivation?

Firstly, the case underscores a stark contrast in compensationwithin Delta, with widespread wage cuts affecting the majority ofemployees while executives receive retention bonuses Thisdiscrepancy could breed a sense of undervaluation among theworkforce, fostering resentment as they witness disproportionaterewards at the top tier

Secondly, reduced perks and benefits during bankruptcycompound employees' dissatisfaction, akin to scenarios faced byemployees in companies such as General Motors during its financialcrisis Scaling back on health insurance, retirement benefits, andtravel privileges diminishes the overall compensation package,leaving employees feeling undervalued and disengaged, as theironce comprehensive benefits are curtailed

Thirdly, the increased workload and heightened stress levelsresulting from workforce reductions amplify the negative impact onmotivation Employees faced with additional responsibilities andlonger hours during a bankruptcy may find themselves stretchedthin, leading to a decline in morale and job satisfaction

Moreover, the erosion of trust in leadership emerges as asignificant factor, reminiscent of the fallout from the Volkswagenemissions scandal If employees perceive poor managementdecisions as contributing to the financial woes leading tobankruptcy, trust is further compromised A lack of confidence inleadership can demotivate employees, fostering a sense ofdisillusionment with the company's direction

Furthermore, the uncertainty surrounding Delta's futureprospects during the bankruptcy adds another layer of demotivation.Employees grappling with doubts about the airline's viability andtheir roles within it may shift their focus from long-term commitment

to seeking stability elsewhere Concerns about the bankruptcy's

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lasting impact on their careers may push employees to consideralternatives, driven by the fear of working for a company with atarnished financial history

The multifaceted challenges arising from compensationdisparities, reduced benefits, increased workload, diminished trust inleadership, and uncertainty about the company's future collectivelycontribute to a demotivated workforce at Delta during thebankruptcy period

2 Theoretical reflection in identified roots - the expectancy theory

Expectancy theory of motivation suggests that three factorsinfluence employee motivation: performance, values, andexpectations These factors interact with how motivated employeesare during challenging times and how committed they are to theorganization The following ideas provide an explanation of thesetheoretical aspects in the context of Delta

Firstly, in the context of employee demotivation, expectancyplays a crucial role, representing the belief that an employee'sefforts will lead to a specific outcome For instance, at Delta Airlines,

if employees doubt that their hard work can prevent layoffs or salarycuts during financial difficulties, their expectancy for positiveoutcomes diminishes

Secondly, performance is linked to the belief that achievingspecific outcomes will result in desired rewards However,employees may perceive low instrumentality, fearing that meetingperformance goals won't shield them from adverse consequences,

as seen at Delta Airlines where financial struggles may still lead tolayoffs or reduced benefits

Furthermore, valence, the perceived value of outcomes, iscrucial In financially distressed companies, like Delta Airlines, thevalue of job security, benefits, or pay may be perceived as lower,diminishing employees' motivation to invest time and energy intotheir work

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IV - EVALUATE DELTA’S SOLUTIONS

1 Delta’s solutions evaluation

Delta appears to employ “the expectation theory”, setting theory”, “equity theory" in its approach to motivation In thefollowing parts , we point out the theoretical aspects demonstrated

“goal-by Delta's specific solutions We also consider the impact of thosesolutions to see if they can motivate employees perfectly or if theystill have some potential disadvantages

1.1 The expectancy theory

Expectancy theory emphasizes the importance of a strongconnection between individual effort and performance with rewards.Employees were motivated by the expectation that their efforts Firstly, in Delta Airlines' approach to employee motivation, theysuccessfully enhanced the Effort-Performance Link This wasachieved through strategic initiatives designed to boost employeeperformance Notably, the CEO, Ed Bastian, spearheaded an effort toincrease the base pay of employees This step created anenvironment where employees came to expect that their dedicationand hard work would be recognized and rewarded with improvedcompensation

Secondly, the company strengthened the Performance-RewardLink by introducing a profit-sharing formula This formula distributed

a portion of the company's profits to its employees, furtherreinforcing the connection between individual employeeperformance and the subsequent rewards they received Thisinnovation motivated employees to strive for higher performance,knowing that their efforts would directly impact the company'ssuccess and consequently, their own financial well-being

Additionally, the Valence aspect of motivation played asignificant role in Delta's strategy Employees highly valued theprofit-sharing incentives and the increase in base pay, as theseimprovements directly contributed to their financial stability andwell-being This created a positive valence, as employees saw therewards as valuable and meaningful Moreover, Bastian's leadershipplayed a crucial role in fostering a positive emotional valence Heconsistently emphasized the importance of each employee's

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contributions to Delta's overall success, further motivating them toperform 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 beaware of potential drawbacks One potential drawback is the risk ofoveremphasizing rewards, as an excessive focus on rewards canlead employees to prioritize personal gain over the effort required toattain them, especially when the rewards are perceived as easilyachievable Unrealistic expectations can also hinder motivation ifemployees anticipate rewards that are unattainable or if thecompany's goals and reward system are unclear Moreover, a lack oftransparency in how performance is evaluated and rewards aredistributed can result in employees perceiving the system as unfair,potentially leading to decreased motivation

Therefore, while connecting effort to rewards is a valuablemotivational strategy, it should be implemented carefully to mitigatethese potential downsides and maintain a balanced and effectiveapproach

1.2 The goal-setting theory

Delta Airlines effectively employed the Goal-Setting Theory toenhance employee motivation Firstly, the company establishedspecific and challenging goals under the leadership of CEO EdBastian Their objective was crystal clear: to transform into anupscale carrier that could command higher prices by deliveringsuperior service and reliability This goal was not only ambitious butalso demanding, requiring employees to perform at their best toachieve it

Secondly, the company ensured goal acceptance throughinitiatives like the "Velvets" monthly events These events served as

a platform for Bastian to directly communicate the company's visionand objectives to employees, fostering a shared understanding andacceptance of these goals

Lastly, feedback mechanisms were integrated into Delta'sapproach to employee motivation The company provided regularperformance feedback through methods like profit-sharingannouncements This feedback served as a vital tool for employees

to gauge their progress toward achieving the company's goals andadjust their efforts accordingly

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