Marketing Project Brand Loyalty Customer Behavior

How Does Brand Loyalty Influence Customer Behavior?

The rise in living standards, ease of accessibility to finance coupled with a wide variety to choose from has made consumer durable market to grow with a rapid rate. Many players are getting into the market. With the advances in communication and technology, new lifestyles and the quest to appear young and beautiful, the demand for quality beauty products has increased significantly. Consumer quality sector is characterized by the emergence of exchange offers, discounts and intensive competition. People nowadays want to imitate in regards to dressing, language, and politics among other lifestyle aspects. The increasing population is bombarded with information about maintaining a youthful look, making women seek for cosmetics that suit them.  With this knowledge in mind, beauty manufacturing product companies make every effort to brand them to capture the booming market. Companies are competing on the basis of firm grasp of the local and international market, their well acknowledged brands and hold over wide distribution network. The penetration level of consumer products remains high.

This research is scoped down to understand the relationship between consumer behavior and brand loyalty, factors affecting consumer decision making, the role of brand loyalty in consumer durables and the position of the individual consumer in the segment. The path forward will be to study the secondary data for industry overview, collect primary data for more insight and  derive conclusions based on primary and secondary data. The research findings will be addressed based on the theories of consumer buying behavior and brand loyalty.

Organizations must engage in making strategic decisions that are capable of improving the firms’ image so that they can have an advantage over competitors. To be specific, these image enhancing strategies ensure that the organization increase the loyalty of the current customers. In addition, the image enhancing strategies should help in the attraction of new customers to the organization. Strategic decisions that can bring enhanced image to the organization have included the selection of target markets, and modification of products to suit the demands of the customers. Other strategic decisions on prices, location of products and services, promotional efforts, and operating policies help in improving the organizations’ image.

The implementation of these strategies ensures that there is a solid background for effective image in the organization. An organization’s image ensures that if there is something about it that is not known, the knowledge the customers have on the organization fills the void. The main concern of this research is to determine whether the perception about the brand image affects customer behavior.

Research objectives

The interest of the research is to determine if brand loyalty influences consumer behavior. This study would be of value to those organizations concerned about the society and those concerned with the attaining off the highest possible profit. Further, the study aims to find if consumers have positive attitudes for those organizations that improve their brand loyalty and social responsibility.

Specific research objectives include:

  1. To find the relationship between consumer behavior and brand loyalty.
  2. To find out whether consumer behavior leads to change in the brand image quality, for instance, product quality or service quality.
  3. The influence of customer satisfaction on the brand’s image
  4. Does consumer behavior affect brand image?
  5. Does consumer behavior lead to change in the brand image quality?
  6. Does customer satisfaction affect brand image?

Research questions

Literature Review

The main focus of this study is to measure the attitudes of customers in relation to brand loyalty and to ascertain its influence of this attitude on brand loyalty. Study of attitudes enables organization managers to answer questions as to why a consumer purchased one product over another. The understanding of the consumer attitude towards particular products ensures that they come up with strategies and decisions on major products and market decisions.

The image associated with a particular product or service ensures that it has a competitive advantage over other products and services. A company’s brand is valuable strategic asset in achieving goals and objectives. Brand loyalty can be referred to as the consumer decision; whether conscious or unconscious concerning the use of a product or service. It may also refer to the intention to buy or use a particular product for a long duration of time. Brand loyalty is achieved due to the right features, and the quality of the brand. Quality of the product must be at the right price for the consumer to perceive the brand as being loyal to their needs. Organizations can change consumer behavior concerning a particular product or service through advertising. Advertising ensures that consumers acquire new habits, and instill those habits by telling the consumers how the product is of value to their money. Consumers should also be encouraged to continue using the products and services in the future (Hoyer and Maclnnis, 2008, p. 27).

According to Pride and Ferrel (2008, p.123), the main reason why organizations do not have strong brand loyalty is because they are not familiar with various ways of disseminating a strong and clear message that distinguishes their product with that of the competitor. In addition, the message should distinguish the product in a positive and memorable manner. The major challenge of organizations is to avoid the disadvantages of portraying a particular product or service as having negative image. An organization’s image should not be viewed in terms of the product and service attributes; the organization’s philosophies concerning environmental management, philanthropy, and ethical considerations are critical in influencing consumer behavior.

Societal Conscious Marketing

Most organizations have adopted marketing strategies that focus on societal needs. Each of these strategies is philosophical or operational concepts used by organizational leaders to enhance the objectives of their businesses. The following are some of the concepts widely used in organizations (Phillips, 2010, p. 45).

  1. Product concept: products should be produced in large volumes since all of it can be sold to the consumers
  2. Selling concept; products can only be consumed if they are heavily promoted
  3. Product concept; consumers will buy high quality products that are within their price range
  4. Marketing concept: specific customer demands can only be met if organization produces products that are equal or better than those of the competitor. In addition, the products should be priced lower than the competitor.
  5. Societal marketing concept: This term involves marketing in a manner that does not harm the society, people, and the environment. Societal marketing concept is motivated by the need to satisfy direct customers and other constituents in the market.

Brand loyalty can be exercised in several ways. The main activities that organizations can do to improve brand loyalty include environmental friendly activities, philanthropy, ethical activities with local, national, and international communities, customers, and employees. Environmentally friendly activities can include recycling, waste reduction, and other strategies aimed at minimizing the organization’s impact on the environment. Philanthropic activities include engaging donations of money, food, facilities, and time. These activities are classified under the title known as cause related marketing (Kahren, 2009, p.36).

According to Dutton (1997), organizations have been turning philanthropy activities inward towards their employees. This is done through paying them in order to volunteer for their favorite charities. She asserts that words like “ethics’, honesty, truth and trust are good sentiments. She, however, notes that they mean nothing if they are not adopted by organizations. Ethical activities include using different hiring practices and employee relations such as high moral values, fair pay, equal treatment, and equal opportunity for all workers. Organizations that do not treat workers fairly have the risk of lowering their brand image. Brand image should start with internal operations; there is no point of trying to show the external clients that business ethics are good while simultaneously engaging in unethical activities towards the employees. Employees play an important role in advertising the organization to outside clients more than any other marketing strategy.

Marketing Dissertations 300x225 Marketing Project Brand Loyalty Customer Behavior

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The question of how brand loyalty affects product evaluation was examined by Brown and Dacin (1997). Their study looked into the differences between the impact of organization brand loyalty which include the organization’s ability to produce and deliver quality products and services and the corporate social responsibility’s impacts on consumers. In their first research, students analyzed their hypothetical scenarios. The outcome was that brand loyalty had a significant effect on the way consumers evaluated the product attributes and the overall image of the organization. Further, the authors found out that social responsibility had no direct impact on the organization’s image. Their second study found out that social responsibility became significant predictor of product loyalty in the consumers and its evaluation.

According to Kim (1996) product demand is determined by non-product factors such as cleanliness, public relations, atmosphere, advertising and the convenience of the brands’ locations. In any organization, quality of products can be determined according to the consumer attitude towards the product with other products available to the consumer in the market.

“Perceived quality is different from objective or actual quality, a higher level abstraction rather than a specific attribute of a product, a global assessment that in some case resembles attitude, and a judgment usually made within a consumer’s evoked set” (Zeithaml, 1988, p.4).

Zeitmal further assert that few consumers are able to analyze and measure the objective properties of a product. This is because the objective assessment depends on the verifiable standards, the objective measurement can be questioned because it depends on who set the standards.

Theoretical framework

The A Priori Approach

According to Lunn (2011), the theory introduces theories and concepts from other disciplines including behavioral sciences. The value of behavioral sciences has been used in consumer knowing what the consumer wants. Well known examples are included in the manifestations of motivational research and such attitude theories as those of Festinger and Fishbein. The A Priori approach involves giving the consumer an all embracing label such as “economic man”, “problem solver”, “learner”, and “existentialist”. The strength of the a priori lies in the organization and the systematic basis of knowledge provided about certain aspects of the consumer.

Brand Loyalty Theory

According to Katz (1960), Brand loyalty theory has three distinct dimensions. The first dimension is referred to as emotive tendency towards products and services. The emotive tendency refers to the consumer likes and dislikes which is manifested on how they purchase a particular brand in the market. The second dimension is known as evaluative tendency towards products and services. Katz refers to this tendency as positively biased evaluation of a product or service. Organizations use positive characteristics to define brand utili6ty to the customers. The evaluative tendency of the product or service can also be determined from past experience in using the brand.

Behavioral tendency towards the brand is the next dimension. Katz (1960) refers to the behavior tendency as the biased responses consumers have towards a particular product or service regarding its procurement, purchase and consumption characteristics. Consumer characteristics such as shopping, paying for the product, as well as its consumption determine the behavior tendency. Behavior tendency is developed after using the product for a long period of time. In addition, behavior tendency can be developed from good or bad tendencies toward other brands.

Black Box Theory of Behaviorism

Sandhusen (2000) assert that the black box model is an interaction of several perspectives concerning a specific brand. The perspectives include the stimuli, consumer characteristics, choice patterns and consumer responses. The focus of the organization is not in the internal processes within the customer: the organization focuses on the relation between stimuli and response of the customer. Stimuli are related to the marketing characteristics developed by an organization in order to lure the customer in purchasing of the brand. The environmental stimuli are determined by social factors such as politics, economy and the culture in which the brand is to be used. The black box symbolizes the buyer characteristics and their choice patterns, which determine their response towards a particular brand.

Hypothesis

This research focuses on the various factors that influence consumers’ brand loyalty towards a given brand. From the various factors that influence brand loyalty, below are the hypothesis derived.

H1: There is a positive correlation between brand loyalty product and brand name

H2: There is a positive correlation between brand loyalty and product quality.

H3: There is a positive significant relationship between brand loyalty and product design

H4: There is a positive significant relationship between brand loyalty and product price.

H5: There is a positive correlation between brand loyalty and promotion.

H6: There is a significant correlation between service quality and brand loyalty.

H7: There is a positive significant relationship between store environment and brand loyalty.

Research Methodology

The main objective of this research was to establish how brand loyalty influences cosmetics buying behavior of UK female consumers. This section also highlights the various processes undertaken in obtaining and analyzing the information gathered for this research. This includes a description of the research design and methods used in collecting the data that were analyzed to arrive at a conclusion in the study.

Research philosophy

Based on the nature and the topic to be studied, this research will be conducted on positivist philosophy. It will be based on this philosophy because the research will involve testing of hypothesis developed from deductive theory, involving measurement of observable social realities.

Approach

This research will be conducted on deductive approach based on hypothesis testing from the data collected. Data will then be analyzed to either confirm or disapprove the hypothesis.

Data Collection Methods

Data collection will consist of surveys, filling in questionnaires and conducting interviews with cosmetic consumers and dealers in London, UK. Qualitative evaluation shall be employed in this research besides using subjective techniques such as interviews and observations to gather relevant and substantive data. Quantitative approach is preferred for this research due to the varying experiences of the consumers of these products. Upon collecting data using interviews and questionnaires, the data will then be carefully analyzed. This shall be carried out using both the One-way ANOVA and the Pearson’s guideline to establish how brand loyalty influences consumer behavior with respect to cosmetic consumption in UK.

Questionnaire Design

In this research, a questionnaire was developed, and pilot tested through personal interviews with seven senior-most managers at Superdrug, which is the second largest health and beauty retail shop in UK. The questionnaire used for collecting data was divided into two segments: the first section concerns the demographics of consumers and the second were about brand loyalty factors. This research involved sampling randomly 400 female cosmetic consumer of between 18 to 42 years of age. In order to obtain a reliable data, the survey was distributed in London City at five major cosmetic shops. The malls included L’Occitane, Jo Malone, Floris London, Boots and Screenface, in addition to Superdrug retail shop.  A total of 400 usable questionnaires were then returned and collected 60% response rate.

Table 1 reveals that age composition of those aged between 18-25 years were 25% of the respondents. Yet again, the table reveals that close to half of the respondents ages varied between 27-35 years. About 26% of the respondents were between the ages of 36-42. The sample survey was almost balanced at 51% for the married and 49% for the unmarried. With regard to education level, the surveyed respondent revealed that 72% of the respondent had at least a degree and 18% having completed high school. This implies that only 10% of the respondents had postgraduate degrees.

Data Analysis

This research used the One-way ANOVA to establish whether there is any significant correlation between independent variables (product quality, brand name, design, price, service quality, promotion, and store environment) and age and income the consumers interviewed. The main reason for adopting the One-way ANOVA as the most appropriate tool is that it was found to be the best for testing the hypothesis when at least two groups are measured on an interval scale. The purpose of the One-way ANOVA is to show the degree of variability of the sample values taken by considering to what extent the observation within each group differs and how much the group means differ.  Apart from the One –Way ANOVA, the researchers also found it appropriate to use the Pearson Correlation for purposes of analyzing the relationship between the two variables, which are both ratio and interval-scaled. This is based on the fact that the correlation coefficients determined using the Pearson’s guideline is used to establish the degree and direction of the correlation, which is suitable for hypothesis testing. In this regard, the research used Pearson correlation principle to test the independent variables (product quality, brand name, price, promotion, design, store environment and service quality) that influenced consumer brand loyalty and to establish if there is any correlation between the variables.

Results

Table 2 below shows the Cronbach’s Alpha (coefficient alpha) of each of the variables tested.  The findings reveal that all the variables have a high degree of reliability. Table 3, on the other hand, shows the seven autonomous variable factors of brand loyalty that were experimented during the research through questionnaires given out to the respondents. The results were also ranked using the Likert scale in the questionnaire: strongly disagree, disagree, neutral, agree and strongly agree. The result is then gotten from the uppermost average score of brand loyalty factors based on the answers provident by the respondents. In overall, the result reveals that product quality is the most vital factor. In UK environment, most respondents choose product quality as the core aspect that influences their brand loyalty.

The One-way ANOVA scrutiny of the factors of income level and brand loyalty was conducted. This was meant to establish if there could be any significant relationship between the two variables. Here, there are four variables that are most significant according to the study, which include brand name (0.000) promotion (0.004), product quality (0.009) and service quality (0.038). In overall, the result shows that, in UK, majority of the consumers prefer brand name, promotion, and product and service quality as factors of brand loyalty. According to table five below, only two variables that are significant. These are price (0.014) and the brand name (0.050). An analysis of this data reveals that, among the age groups surveyed, female consumers aged between 36-42 prefer brand names more compare to other age groups.

Test of Hypothesis

As revealed in Table 4 below, brand name was found to have considerable positive relationship with brand loyalty. The results of this research revealed that consumers preferred brand image only when they foresee positive functions or benefits from the product in question. It is then that they will recommend the brand, react positively to the price premium and accept brand extension to other categories of products within the same brand.

The quality of the products was shown to have a positive correlation with brand loyalty. This kind of correlation is demonstrated based on Cohen’s (1988) principle, in which a correlation of (r=0.0302) is considered moderate. Therefore, based on these statistics, the finding showed that product quality has a lot of significance with regard to consumer decision-making process. The findings of this research revealed that brand loyalty and price had a positive relationship. In this case, price was found to be more important for any average consumer in the market. Nevertheless, those consumers with high brand loyalty were not very much sensitive to prices. The research showed that as long as these consumers were satisfied with a given brand, they would continue buying the product with the same brand irrespective of the price increase.  On the other hand, the findings did not show any correlation between product design and brand loyalty. Out of all the seven variables tested, many consumers did not consider product design as an important factor for UK consumers to become loyal to a given cosmetic brand.

According to the findings, promotion and brand loyalty were found to have a positive relationship. Product promotion was considered as one of the most valuable factor in determining a consumer’s brand loyalty. This includes the use of sales promotions, commercial adverts, personal and public selling. In fact, the research revealed that many female consumers spent considerable time reading product labels before purchasing the product. The research also revealed that brand loyalty and service quality had a positive relationship. Findings showed that service quality encouraged many consumers to prioritize a store. The result indicated that salesperson consumer relationship results in long-term orientation of customers towards a given store. Similarly, trust developed in the salesperson seems to relate to the overall discernment of the store’s service quality, which leads to customer’s total satisfaction with the store.

The findings also showed that the environment of the store is also positively related to brand loyalty. The store environment is seen as major factors that influence consumer brand loyalty. This research revealed that many consumers were much sensitive to attributes of the store such as a variety of selection, merchandise displays, packing space, and ease of accessibility to vehicles and the overall goodwill of the store in buying products.

Table 1. Demographic Sample Description

 Age

Frequency

Percentage (%)

18-25

27-35

36-42

100

196

104

25

49

26

Marital status

Married

Unmarried

 

204

196

 

51

49

Education:

High School

Undergraduate

Postgraduate

 

72

288

40

 

18

72

10

Table 2. Reliability Analysis of Brand Loyalty factors

Variables

Alpha

Product Quality

Brand name

Price

Promotion

Design

Service Quality

Store Environment

Brand Loyalty

0.6572

0.7028

0.6618

0.6974

0.7482

0.8200

0.7139

0.6646

Table 3. Brand Loyalty factor Ranking

Factor of Brand Loyalty Ranking

Mean/Average

Product Quality 1 3.68
Q1. The brand is durable than others   3.69
Q2. The materials used by the brand are natural   4.11
Q3. The brand has sufficient color   3.65
Q4. The brand has good functional quality   3.77
    Mean Average     3.80
Design   2  
Q1. The brand provides wide variety of designs   3.72
Q2. Designs of the brand are suitable for me   3.79
Q3. Designs of the brand have distinctive features   3.73
Q4. Designs of the brand are trendy and fashionable   3.85
    Mean Average     3.77

 

Brand Name                                                          3  
Q1. The brand is trustworthy   3.70
Q2. Brand image and name attract me to buy   3.82
Q3. Brand Name is selected irrespective of price   3.41
Q4. Brand reveals my individual personality   3.96
    Mean Average     3.72
Promotion               4  
Q1 Ads of the brand is attractive   3.64
Q2. Ads of the brand attract me towards purchasing the product   3.44
Q3. Product displays are entrancing   3.62
    Mean Average      3.56

 

Store Environment                                                   5  
Q1. The brand has good store location   3.64
Q2. There are adequate outlets for the brand   3.76
Q3. The interior show is gorgeous   3.50
Q4. Music and color inside the store are beautiful   3.36
    Mean Average     3.57

 

Price       6  
Q1. Increases of price not hinder me to purchase   2.99
Q2. The brand provides goods value for money   3.52
    Average Mean 3.56
Service Quality 7  
Q1The salesmen in the store are knowledgeable   3.21
Q2. The salesmen in the store are willing to help   3.39
Q3. Vendor of the store is and courteous and friendly   3.18
Q4Vendors in the store have neat appearance   3.33
    Mean Average     3.28

 

Table 4. Significance of Brand Loyalty factors with brand loyalty

Variables Pearson Correlation Sig. (2-tailed)a
Product Quality

Brand name

Price

Promotion

Design

Service Quality

Store Environment

Brand Loyalty

 

0.304

0.561

0.466

0.411

0.140

0.333

0.369

0.002

0.002

0.005

0.006

0.162

0.001

0.010

Conclusions and Findings

Various studies have focused on understanding the concept of brand loyalty and the factors influencing it. Product attributes, after sale service, marketing capabilities, perceived quality or aesthetics, depth of product line as the key differencing factors influencing the behavior of purchasers. Brand commitment is also a necessary condition for true brand loyalty to occur.  Packaging, new product trial, price, store location corporate social responsibility and advertisements influence consumer behavior. While several factors influencing brand loyalty have been studied in the extant literature, this research has revealed that brand loyalty influences consumer behavior. Consumers may also compel entrepreneurs to change the brand image in terms of product or service quality. Similarly, the brand image has been proven to satisfy the consumer expectations.

The dimensions of brand loyalty theory clearly depict how consumer’s tastes and preferences influence their buying power. This is followed by an assessment of the product to decide if they will buy it or not. The assessment also referred to as evaluative tendency compels organizations to brand their products to attract customers, an aspect of competition. Product branding can be enhanced by advertising, changing the brand name and promoting it to improve recognition.  The behavioral tendency proposed by Katz is creations of a bandwagon effect among consumers to enable them continue buying the product. The initial products are branded in a way of attracting customers though subsequent ones show depreciation, a strategy used by marketers.  Branding through advertisement show some favor of the product while despising others, thus discouraging customers from using those other products whether related or not. The black box model looks into the customers willingness created by the company’s emphasis of the product. The characteristics of the buyer determine their choice of product.

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From this research, the brand name and image has a significant impact on customer choice with all factors kept constant. As part of consumer behavior, every brand has some features which consumers always associate the brand with. They consume a given brand on the basis of its features. Again, the consumers take into account the quality, and price while making buying decisions. The point of purchase is another factor that comes to a buyer’s mind. Being a highly demanded product by women, they want to buy cosmetics from a good reputed and trustworthy purchase point. Exhibition malls serves as favorite consumer purchase point.

Other factors like age, occupation and education of consumers will influence buying decisions following the way each group has been exposed about the product. Young people will have more taste of cosmetics because they want to look good while old ones are slightly less concerned with beauty. Exposure and knowledge of a product affects its demand. The raw materials making the brand also play a vital role of its choice. If a sample cosmetic is known to contain harmful chemicals, it loses its market. An organization will get to know what factors influence the purchase decision of a consumer before branding the product. Accordingly, it will direct its marketing effort so that it can get potential customers to purchase the products.

Subject Issues Learnt

Brand loyalty is the consumer’s conscious or unconscious choice that is expressed intentionally or a behavioral pattern to repurchase a brand again. This happens following the perception of the consumer that the brand provides the right image, characteristics or quality based on reasonable price. Hence, consumer behavior is habitual. Beginning from product design to creation of a mature brand, good marketing strategies, which depend on a clear understanding of the memory, motivation, learning and decision processes, influence the consumer’s choice. Launching of new products, market segmentation, timing market entry and brand management are all related to the theoretical framework employed in the research.  Branding is by far and large the most important factor influencing the product’s success or failure in the market place. It can also greatly impact the company’s perception by the buying public. Brand is not only a company’s product but also a representation of the individual company and that is where the core of brand loyalty falls.

Brand loyalty is simply more than the consumer’s commitment to repurchase a product. It incorporates the high attitude towards the product demonstrated by repeated buying.  This loyalty is a business investment because of the high prices being paid by the customers.  Depending upon the nature of the product versus basic necessities or luxuries, consumers a single or brand loyalty. This brand loyalty is affected by their brand choice as well as by their store loyalty behavior. The bondage of brand loyalty is strong especially through repeated advertising and promotional schemes. The main factors that influence brand loyalty are the quality of product, habit of use and regular availability of the product. Searching for a product means mental and physical information about products, prices and shops. Consumer information is thus a marketing tool that can be used to understand the interactions between a specific target segment and marketplace so as to meet the consumers’ needs and wants.

Brand image or the good reputation of a particular service ensures that it maintains a competitive advantage over other products and services. An organization’s brand is valuable strategic asset in achieving goals and objectives. Brand loyalty can be referred to as the consumer decision; whether conscious or unconscious concerning the use of a product or service. It may also refer to the intention to buy or use a particular product for a long duration of time. Brand loyalty is achieved due to the right features, and the quality of the brand. Quality of the product must be at the right price for the consumer to perceive the brand as being loyal to their needs. Organizations can change consumer behavior concerning a particular product or service through advertising.

The reasons why people become brand loyal are because the favored brand satisfies the consumer needs and wants than the competitors do. Again, there is a reduction of perceived risk, sticking with a favorite brand improves certainty. Brand loyalty helps maintain self image in reinforcing the customer’s self concept and confidence. It is also the path to least resistance. Marketers use strategies like in-store and o-location impulse triggers, notably point-of purchase displays.  Consumer innovativeness is the predisposition to buy new and different products rather than remain with the previous choices and consumption patterns.

Consumer behavior is influenced by social, cultural, Psychological and personal factors. Culture influences buying behavior depending on the country, geographical region, religion, nationality and racial groups. The societal classes such as wealth distribution, education and occupation impact the behavior of consumers towards a product. Social factors like family, reference groups, roles and statuses influence buyer behavior. Personal factors include lifestyle, economic situations, age, occupation, personality and self concept. Perception, motivation, learning, beliefs and attitudes are psychological factors affecting consumer behavior. Marketers should, therefore, look into these factors in branding particular products.

References

Brown, T. and Dacin, P., 1997. The Company And The Product: Corporate Associations And Consumer Product Responses. Journal Of Marketing, 61 (1), pp.68-84.

Dutton, G., 1997. Warming The Cold Heart Of Business, Management Review 86 (6), pp.17-20.

Hoyer, W. and Maclnnis, D., 2008. Consumer Behavior. New York: Cengage Learning.

Kahren, F., 2009. Brand Loyalty. Washington D. C: Whimsical Publications.

Katz, D.,1960. The Functional Approach To The Study Of Attitudes. New York; Public Opinion Quarterly.

Kim, H., 1996. Perceptual Mapping of Attributes and Preferences: An Empirical Examination of Hotel FandB Products in Korea. International Journal of Hospitality Management 15 (4), pp.373-391.

Lunn, J., 2011. Models Of Buyer Behavior: Consumer Decision Process Models. New York: Marketing Classics Press.

Phillips, C., 2010. Brand Loyalty. New York: Youwriteon.

Pride, W., and Ferrell, C., 2008. Marketing. New York: Cengage Learning.

Sandhusen, R., 2000. Marketing. London: Routledge.

Zeithmal, V.,  1988. Consumer Perceptions Of Price, Quality, And Value: A Means-End Model And Synthesis Of Evidence, Journal Of Marketing, July, pp2-22.

Did you find any useful knowledge relating to brand loyalty and customer behavior in this post? What are the key facts that grabbed your attention? Let us know in the comments. Thank you.

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Quantity Surveying Dissertation New Rules of Measurement NRM

The Deployment and Utilisation of New Rules of Measurement within Quantity Surveying

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The construction industry has always been viewed as being the last to adopt modern technology and methods compared with other industries. The need for major change in the industry is abundantly clear as many projects in recent years have been going over budget and clients have not been satisfied with the work. This has been down to new developments in construction technology and materials. Quantity surveyors have tried to use traditional methods to price and measure these new techniques but it has been proven that the current SMM were not adequate to do so. The creation of the New Rules of Measurement aims to change all of this and provide the client with great cost accuracy on modern projects from start to finish. This dissertation aims to analyse the impact the New Rules of Measurement have had in QS firms and whether they are being used effectively by firms that have currently adopted them. The opinions and experiences of current Quantity Surveyors have been gathered by reviewing literature on NRM and by conducting interviews with quantity surveyors from the contracting and consultancy side of the profession. The general feeling in the industry is that quantity surveyors are not utilising the NRM to its full potential and there is various reasons why this is.

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Many professionals in the construction industry are against change and tend to have the opinion of “if it’s not broke, don’t fix it” in regards to the current measurement rules they use (SMM7). Companies have a lack of spare capital to invest in new methods and training. As the full set of documents has not been released people are unwilling to integrate an uncompleted document into their work. A lack of guidance and information from the RICS has also been to blame. The aim of this dissertation is to analyse how NRM is being used in the UK industry by QS professionals and to evaluate whether it is being utilised to its full potential and if it is providing effective cost certainty on construction projects.

Dissertation objectives

  • Analyse the issues that quantity surveyors have encountered in the industry with measurement and costing.
  • Compare NRM with SMM7 and how NRM can address issues arising from the use of SMM7.
  • Evaluate whether NRM has had a noticeable impact on the UK QS profession since its release.
  • Evaluate the problems that quantity surveyors may incur when trying to implement NRM into their everyday work and why some are against using it in the UK industry.

I do hope you enjoyed reading this post on new rules of measurement and how it affects the UK construction industry. There are many other titles available in the construction dissertation collection that should be of interest to construction management students and building professionals. There are many dissertation titles that relate to other aspects of construction such as project management techniques, environmental management, building and construction methods to name a few. It took a lot of time to write this post and I would be grateful if you could share this post via Facebook and Twitter. Feel free to add your thoughts in the comments section. Thank you.

MBA Leadership Essay EFQM Model

MBA Leadership – EFQM Model

A lot has been written on the EFQM Excellence Model generally and its application to the field of total quality management. This chapter is founded on the information search and review of literature that was conducted in February and March 2013. It largely investigates the EFQM model with respect to the adjustments it has undergone over the years. Steered by the three research questions in this research, the literature review then explores the history of the EFQM Excellence Model, and the different adjustments the model has undergone as well. The chapter concludes with the current position the EFQM Excellence Model.

The EFQM Excellence Model

The EFQM- European Foundation for Quality Management was established in 1988 with the aim of assisting European firms to become competitive in the global market. The first choices of this establishment were to follow the example of the American MBNQA through forming the European quality prize (Conti, 2007). The mainstays of these prizes are extremely alike because all of them are founded on the philosophy of total quality management. On the other hand, there are a number of variations between nations. In accordance with Tan (2002), in developing nations these prizes provide little significance to factors like leadership and social responsibility. In Europe, the EFQM is more relevant to human resource management as well as social impact.

Successive forms of the EFQM Excellence Model have been created. The key reason for the adjustments is to be corresponding to the state of business. An evident illustration is the development of the MBNQA from a simple system of quality assurance to a system of quality management (Tan, 2002). The present type of the EFQM model dates from 2010. On the other hand, there is still not enough capability to evaluate this new type empirically. As a result of this, this paper will focus on the application of the EFQM model from 2003 -2012.

The EFQM model of 2003 varied in significant ways from the past one from the time it integrated a few concepts, like knowledge and information management, to draw up emphasis on process management and consumer orientation and to highlight the enhancement cycle (RADAR) and, in general, to make application easier in all sorts of businesses, private or public, multinationals or medium enterprises, or even in the non-profit organisations (EFQM 2003).

The EFQM Excellence Model supposes that, for a firm to be effective, whatever its industry, structure, size and so on, it ought to have a decent system of management. In light of this, the EFQM model is an instrument that may be applied to structure the system of management of a firm, through self-evaluation.

Self-assessment comprises a consistent assessment of activities and results of a firm with the excellence model (Calvo-Mora, Leal & Roldán, 2006) and it plays a part in identifying areas of improvement and strong points that as a result could facilitate to develop enhancement plans that ought to be incorporated in the strategic plans of an organisation (Jacobs & Suckling, 2007). In general, the scientific literature finds a positive correlation between company performance and self-assessment (Ahmed et al., 2003).

The EFQM Excellence Model is a flexible framework founded on nine principles. Out of the nine, five are Enablers whereas four are Results. The Enablers focus on what a firm, the Results focus on what a firm accomplishes. Enablers lead to Results (Mavroidis, Toliopoulou & Agoritsas, 2007). The EFQM model, realising there are a lot of strategies to attain maintainable excellence in all performance elements is founded on the principle that outstanding results with regard to customers, performance, and society are attained by means of resources, partnerships and processes. With reference to figure 1, the arrows highlight the dynamic attribute of the model. They indicate learning and innovation helping to better enablers that as a result cause advanced outcomes (Mohebi, 2002). This structure proposes the presence of correlations amid enablers and results and the actuality that being effective in a remote area is not satisfactory to attain excellence (Ehrlich, 2006).

efqm dissertation MBA Leadership Essay EFQM Model

EFQM_Dissertation

Brief Summary of the Criteria Under the ‘Enablers’ group of the EFQM Model

Leadership- It is anticipated from the higher managers of leading firms that they would create systems of management in their firms and would struggle for their appropriate implementation and additional advancement (Collier & Bienstock, 2006). They would take the workers of the firm in assurance and would directly intermingle with their clients, suppliers and general public. These heads ought to be instrumental in making organisational transformations as and when requisite. They must come out as role models for the workers of their firm.

Policy and Strategy- Leading firms should have a long-standing strategic idea bearing in mind the anticipations of its different stakeholders (Ciavolino & Dahlgaard, 2009). These proposals must be evaluated constantly for appropriate implementation and upgraded obligatory. These plans must be founded on tracking the outer environment and monitoring the strong points of the organisation regularly.

People- It is desirable that firm manage their human resource obligations effectually by recognizing the capabilities of their employees and further advancing these to develop full advantage (Collier & Bienstock, 2006). There ought to be appropriate mediums of communication between senior managers and the staff members to identify their problems and prospects. The worker’s outstanding performance ought to be acknowledged and rewarded.

Partnerships and Resources- External allies, like suppliers, ought to be included in developing the coordination needs for more fulfillment of the buyers. The firm should assist these associates in their issues and form a synergy among them (Dahlgaard-Park, 2008). Outstanding firms ought to have well demarcated systems for dealing with their buildings, finances, materials and equipment. Old fashioned technology ought to be recognized in their operation and substituted with modern technology whenever the need arises. Appropriate application of information technology ought to be made and it must be guaranteed implied knowledge of the firm is transformed into systems of knowledge management.

Processes- Different processes must be well drawn and documented. The process ought to be analyzed for additional improvement constantly (Dahlgaard-Park, 2008). The firm must design and create its services and products on the basis of the anticipations of the clients. Long-standing relationships ought to be established with the consumers.

Brief Summary of the Criteria Under the ‘Enablers’ group of the EFQM Model

Customer’s results- How does the client view the firm? The firm is anticipated to develop processes to have knowledge of the consumer’s views of the firm (Go´mez-Go´mez, Martı´nez-Costa & Martı´nez-Lorente, 2011). People’s results- What are the views of the staff members of the firm regarding the firm? Therefore, systems must be developed to understand, monitor, forecast, and better the views of the staff members. Society’s results- What has the firm accomplished for the general public? What does the society notice regarding the firm? Therefore, systems have to be developed to understand, monitor, forecast, and better the views of the general public (Rooghani, M., & M. Homayonfar, (2005)). Key performance results- Key outcomes of performance are the results as intended by the firm. The results may be financial or non-financial. What the firm is accomplishing with regard to its intended performance is to be analysed and monitored.

According to Adebanjo (2001), the EFQM model integrates the principles of quality management mainly leaving the issues of quality management to individual companies. This implies that the aspect of quality assurance, related largely to the control of the production process, are presumed and organisations will possibly rely on other systems like six sigma, or ISO 9000 to concentrate in those features.

The Evolution of the EFQM Excellence Model

The EFQM Excellence Model is run by the European Foundation for Quality Management (EFQM) (Iñaki, Landín & Fa, 2006). This is a nonprofitmaking body integrated in Brussels (McCarthy & Greatbanks, 2006). Its associates are firms from industry and service in addition to institutions of higher education, research organizations and other institutions from academia. Its key purpose is to pass on the concept of Excellence across Europe (Vernero et al., 2007). In this context, the EFQM offers a range of services from information material and training on self-assessment to measuring support. They are all enhancing the fundamental business of supporting and running the European Quality Award.

The basic EFQM Excellence Model was initially established co-operatively by specialists and researchers and printed in 1991 (Klefsjo¨, Bergquist and Garvare, 2008). Ever since, it has been constantly revised and upgraded. A key amendment occured in 1999. It was acknowledged that collaboration with external allies or networking in addition to invention and learning had occurred in the interim as vital encounters to organizational performance. The objective was to integrate both features in the novel model. In addition, model management, applicability, and usability must be enhanced. As an initial step, the EFQM distributed a draft for a novel model in April 1998 (EFQM 1999). Conversely, its graphic arrangement revealed the preferred learning sequence. However, two new components were incorporated: “Partnerships”, as an enabler, defined the firm’s astrategy to cope or work together with external partners; “Partners” denoted the relevant measures of performance. In addition, the subcriteria lost their previous objective of offering comprehensive requirements to every component. As an alternative, they now termed as the factors approach, positioning, valuation, and assessment. These had initially been part of the “Blue Card”, that is, the scopes for assessment. The subcriteria of the old model were shifted to the parts to tackle. The latter alterations triggered significant criticism. Firms already using the model for self-valuation objectives would have had to re-educate all their employees.

As (Jelodar, 2006)a result, they strongly supported an evolutionary strategy to model improvement as an alternative . Additional issues were witnessed in the actuality that all model matters were shifted from the degree of subcriteria to the parts to tackle. The latter are not obligatory however, potrayed as an classic guidance for firms to comprehend the model. As a result, scientists and practitioners were frightened the good judgment concerning the subjects of the model could become disoriented (Javidi, 2006). On the other hand, the novel model draft provided some substantial developments largely referring to the dimensions of assessment. These later created the RADAR-Chart. Following an intense talk with its associates across Europe, the EFQM chose to pull out the draft of the new model and presented a second suggestion which was a lot more in agreement with the earlier version (EFQM, 1999). However, it considered the aforementioned factors of invention and learning in addition to external associations which are nowadays both placed more to the front. Conversely, the original level structure with subcriteria, elements, and sections to tackle was maintained. This made it easier for firms to adjust and carry on their internal processes of self-valuation.

The Changes Incorporated in Version 2010

According to the 3 dimensional trait of the EFQM Model, this section elucidates the adjustments in each of these scopes, being: The Fundamental Concepts; The set of eight concepts was retained per se, however, all have a transformed and more vibrant title whereas the content for each was developed and is nowadays presented in a more organized manner (Tarí, 2006); The Model itself with the 9 boxes or criteria; Moreover, here the 5 enabler and 4 result benchmarks boxes were retained per se, however, have now  an improved naming, more uniformity inside, less similarity and were upgraded in content. Similarly, the weighting is now easier and more stable (Jacobs & Suckling, 2007). The RADAR factors for Results and Enablers. Here an enormous transformation was made for the ‘scope’ elements employed to evaluate the performance of the outcomes or ‘footprint’ of an firm. The set of aspects for evaluating strategies in the enabler criteria were polished with traits like effectiveness, creativity and suitability being incorporated into the popular trio of ‘approach’, ‘deployment’ and ‘assessment and review’(Shertan, 2008).

Above and beyond these key adjustments, also the weighting of the benchmarks was revised and streamlined, while retaining the ‘equal’ value amid the capability of a firm using the 5 enabler benchmarks and the performance it conveys for all stakeholders in the 4 result benchmarks. Each retains 50-percent of the total (Davies, Douglas & Douglas, 2007).

Changes in the Fundamental Concepts

The key principle of what these 8 models signify is established in this form of the Model, their function was strengthened as in former times the possible value of this aspect of the Model has frequently been undervalued (Homayonfar, 2008).  This is apparent from the process of design employed for this form of the Model – this method employed the Fundamental Concepts as the base and indite for the rest. It was now the first time that a entirely reliable and direct connection was created amid each of the eight notions and each of the 32 benchmark areas, whereas keeping these 2 outlooks on Excellence separately.

Although the amount of concepts stays at eight and the naming looks relatively identical, a comprehensive interpretation of the description for each concept demonstrates the content has been improved considerably and signifies extremely well the elements we can discover back in firms that are worthy our admiration (Delghavi, 2007).   What did not transform is that the fundamental concepts are a exceptional and influential way to ‘define’ the position of being outstanding in a broad way.  Furthermore, the 8 concepts stay numberless; they have no sequence order, weight or significance.  Which of these 8 are the most vital to follow relies on the present state and particular environment a firm exists in and what it aims to turn into in the future, its determination. What did transform however considerably is the manner these 8 concepts are nowadays  visually incorporated with the two other elements, the eight notions are now visibly placed as the electrons  circling around a core with RADAR and the 9 benchmarks (or if one prefer it more – Satellites circling around the Globe) (EFQM 2010).

Table 1 -Fundamental Concepts

2003 Version 2010 Version Key shift in content
Results orientation Achieving Balanced Results Concentration is presently on developing the key set of outcomes requisite to observe development against the  mission, vision,  and strategy, allowing leaders to formulate effectual and appropriate decisions.
Customer Focus Adding Value for Customers Concentration is presently on plainly defining and communicating the  value proposition and vigorously  involving clients in the service and product  design
Leadership & Constancyof Purpose Leading with Vision,Inspiration & Integrity The concept is at present more  dynamic, concentrating on the capability of leaders to adjust, react and  gain thededication of all stakeholders to guarantee the ongoing success of the firm.
Management by Processes and Facts Managing by Processes The concentration is at present on how the processes are intended to convey the strategy, with end to end running past the “classic”  limits of a company.
People Development andInvolvement Succeeding through People The Concentration is presently on forming a balance amid the tactical needs of the firm and the  personalprospects and objectives of the people to achieve their obligation and involvements.
Continuous Learning,Innovation and Improvement Nurturing Creativity &Innovation The concept presently identifies the need to improve and relate with networks and involving all stakeholders as possible  sources of originality and invention.
Partnership Development Building Partnerships The concept has been extended to include partnerships  beyond the supply chain and recognises that these should be based on sustainable mutual benefits to succeed.
Corporate SocialResponsibility Taking Responsibility for a Sustainable Future The concept presently cenres on  vigorously taking responsibility for the business’s behaviour and activities and handling its effect on the broader community.

The Current Version of the EFQM Excellence Model

What transformed in the way the Model functions with results?

In this section, let us evaluate what has transformed in the Model to promote a better evaluation of the performance of a company. In this segment we define first the modifications in the 4 generic benchmarks of results a firm realizes, and then how the RADAR aspects were upgraded to allow better Feedback, Analysis, Learning and Action (Andersen, Lawrie & Shulver, 2003).

What transformed in the results benchmarks?

For the 3 stakeholders being the people, customers,  and the public a firm is working with and for, the identifying and the ‘stereo’ norm of having on one hand insights and on the other hand indicators of performance stay the same (Bencsik & Nagy, 2007). On the other hand, the guidance and the the definition of which actualities and figures to concentrate on were put into precisely the same structure and were enhanced. A clear change was formed from a list of illustrations of processes to a more generic depiction of the form of or the areas of performance to apply in signifying outstanding or excellent levels of performance (Civcisa, 2007).

For the Result benchmarks 6, 7 and 8 a sharper dissimilarity between the observation (a) and pointer (b) elements of performance is now developed. This strengthens that outstanding performance can simply be established or attained of both the  efficiency and effectiveness are attained (Acur and Englyst, 2006). Each of the b) principle areas deals with the effectiveness side, with performance pointers that display how much is achieved, whereas each a) side deals with the efficiency part or performed all this action certainly ‘created a difference’.

As an illustration for consumer outcomes on the b) side a firm could indicate how fit and how much negative and positive response was managed, and how quick, whereas on the a) side the effect of this response on the definite insights by Clients is perceptible (Rusjan, 2005). Without taking part in an academic paper here on this subject, it is currently evident in the criteria that efficiency data is placed in 6a, 7a and 8a, whereas effectiveness data is under 6b, 7b and 8b (Pouyan &. Karimanpoor, 2007). As a last observation on this subject let’s remark both a) and b) can have slugish or leading pointers, this version of the Model does not employ this element to assign a result in a) or b).  On the other hand, for the  Key Results benchmark (9) a noteworthy transformation was made in the definition and identification of the outcomes the shareholders or proprietors of a firm anticipate to be attained. It now basically refers to ‘attaining what is intended for in the approach’ (Go´mez-Go´mez, Martı´nez-Costa & Martı´nez-Lorente, 2011). Certainly, also for this ‘bottom line’ principle the description and direction for appropriate facts and figures was improved like it was for principle 6, 7 and 8.

Another could be less noticeable transformation at first sight is the overview now of the notion of giving priority to key outcomes. In the description for every of the results principles a particular part is committed to establish the relative significance or weight for every of the sets of data employed to present and comprehend one of the aspects of the performance, which connects into the necessity to make contrasts and determine goals for these ‘Key Results’. The virtual weighting of principles, these transformed and gets both Consumer and Key outcomes at the same significance (150 pts each), and Individuals and The public both at 100 pts. For principle 9, and currently also principle 8 there is a 50/50-percent share between the principle parts a) and b), whereas for the people and customer principles 6 and 6 the 75/25 share stays.

Changes affecting the way we look at specific RESULTS of an organisation

Here amongst the vital transformations of the 2010 version of the  EFQM Model was created by transforming the order and improving the aspects of RADAR relevant to each of the results principles.  For the study (such as during an evaluation for instance) of the performance a attains achieves in a particular field still  two key elements are employed, however, these  transformed in order. By placing the ‘relevance and usability’ of the outcomes first, and the popular performance elements of ‘targets, ‘trends’, ‘causes’ and ‘comparisons’ add, a balance between the examination of set of information itself and what may be perceived as patterns in this information has been recognized clearly and resolutely now (Gomez-Gomez, Martınez-Costa & Martınez-Lorente, 2011).

Foremost the analysis in agreement with the approach of the ‘scope & relevance’, ‘integrity’ and ‘segmentation’ of the information employed to comprehend and show the outcomes for a specific principle (6, 7, 8 or 9) is performed. Just when a vivid picture of what we employed to call ‘scope’ is decided upon, the level of performance may be evaluated.  Together then these 2 aspects help in measuring how strong the performance is or where noteworthy prospective to advance can be realized.The adjustments to the results segment of the RADAR imply that those measuring need to form a judgement, based on the data they are given, with regard to: The percentage of the outcomes being applicable, segmented and integer  for ‘Relevance and Usability’; and if the performance is  probable to be maintained into the future, founded on  evaluating the tendencies and targets, contrasts with other firms, the understanding of the “reason & effect” connections, modifications in the operating setting, etc.

What transformed in the way the Model functions with enablers?

In general, the structuring into 5 enabler principles was kept as an easy way to divide into generally approved groups of tactics a firm can transform when targeting to advance its size and future performance.  Whereas on the well-known 9 boxed picture all main words were kept (with the exclusion of ‘Policy’), the invitation from ‘Processes’ into  ‘Procedures, Services’ and Commofity highlights the worldwide personality of the EFOM Model (Go´mez-Go´mez, Martı´nez-Costa & Martı´nez-Lorente, 2011).  It is relevant for any form of industry, size or development.  In addition, it stops some explanations of the principles that ‘forget’ the center of any firm  that lies into the plan and provision of their collection of services, or products , the contribution for Customers employed to fulfil their task.

Another could be less apparent transformation at first sight is the extension of the Response arrow underneath the 9 boxes with  ‘Creativity’. In addition, the ‘Learning’ and ‘Innovation’ as the preferred outcome of comprehending how enablers incorporate with outcomes and vice versa, this highlights inventiveness as an factor element influencing accomplishment, it illustrates the dynamic attribute of the EFQM Model.

What changed in the enabler criteria?

In agreement, 24 benchmark araes are still employed to structure an organized and comprehensive outlook on the dimensions and value of all the methodologies a fim has. There are 24 areas a firm may transform in the light of a continued and improved future performance.  Such as in the 2003 version, every benchmark has 5 criterion areas, apart from criterion 2 on Strategy which has 4 areas. Moreover the alterations shortened below per benchmark part, numerous attention was offered in this revision to bring the amount of management points to a standard amid 5 and 6. This way every point defines now more evidently  a particular subject that may produce valuable topics for discussion. Furthermore, a rationality analysis on these management points to define just realistic and modern practices of management was performed, giving rise to a general decrease (from >160 to 132) and a more concentrated content (Go´mez-Go´mez, Martı´nez-Costa & Martı´nez-Lorente, 2011). Even though the old expression ‘may include’ is currently methodically substituted by ‘Actually, Excellent firms:’, these management points must NOT be regarded as a worksheet or a list of compulsory practices or tactics, they act as a generic list of practices from actual life circumstances in a way to describe a particular criterion-part.  Perhaps the most influential incorporation was attained by re-cycling a number of or all of the shot points from the Fundamental Concepts into every benchmark field (Gomez-Gomez, Martınez-Costa & Martınez-Lorente, 2011).

Changes affecting the way we look at a specific enabler of an organisation

Even though the modifications here are less noticeable at first sight matched to the ones for the results aspects of RADAR, they as well demand cautious attention when adjusting to the 2010 version. Although for instance the term ‘review’ is substituted by the name ‘refine’, as well what is being ‘Assessed & Refined’ is currently defined more evidently in the novel picture. In general, one may view each of the RADAR letters have this form of development; this is mirrored as well in the novel picture for RADAR that well demonstrates now the ‘whole circle’ of the 4 areas of the RADAR rationality (Go´mez-Go´mez, Martı´nez-Costa & Martı´nez-Lorente, 2011). The 3 aspects and how these are made up of the 7 qualities remains mainly similar as a structure and the technique to come to an agreement of either a recording level or to enable an intensive exchange of insights for one of the 24 enabler benchmarks.  On the other hand, a number of trivial changes in wording may have a substantial adjustment in the examination of an enabler, such as the ‘timeliness’ (or speed) of positioning.In conclusion, the medium for scoring objective is now more constantly employing the standard of ‘evidence’ to arrive at an agreement for each of the aspects and/or the subsection of qualities.  As a good description in the appendix is not yet obtainable, this generates a need for more management for the applied meaning of ‘evidence’, this for instance during a actual external evaluation.

References

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Adebanjo, D. (2001), “TQM and business excellence: is there really a conflict?” Measuring Business Excellence, Vol. 5, pp. 37-40.

Ahmed, A.M., Yang, J.B. and Dale, B.G. (2003), “Self-assessment methodology: the route to business excellence”, Quality Management Journal, Vol. 10, pp. 43-57.

Andersen, H., Lawrie, G., & Shulver, M. (2003). The balanced scorecard vs. the EFQM business excellence model, 2GC Working Paper, 1-14.

Bencsik, A., & Nagy, Z. (2007). Practice-Related Problems and Solutions on the Field of Improving Worker Satisfaction. Problems & Perspectives in Management, (3), 58-68.

Calvo-Mora, A., Leal, A., & Roldán, J. L. (2006). Using enablers of the EFQM model to manage institutions of higher education. Quality Assurance in Education, 14(2), 99-122.

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Dahlgaard-Park, S.M. (2008). Reviewing the European excellence model from a management control view. The TQM Journal, 20(2), 98–119.

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Jacobs, B., & Suckling, S. (2007). Assessing customer focus using the EFQM Excellence Model: a local government case. The TQM Magazine, 19(4), 368-378.

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Did you find any useful knowledge relating to the EFQM model in this post? What are the key facts that grabbed your attention? Let us know in the comments. Thank you.

HRM Essay HR Performance Issues and Motivation

HR Performance Issues and Motivation

“Do not discipline employees who are unable to perform a task. Discipline those who are able to perform a task, but are unwilling or unmotivated to succeed” – SANS Leadership and Management Competencies course book (Bong, 2014)

Understanding the motivations of employees in order to identify and correct performance issues is fundamental to effective Human Resource management.

Because of this, there is a wealth of research related to understanding the underlying causes and effects of good and bad employee performance. The goal is to figure out where the problem originates and to develop ways to correct those problems.

Motivation theories are abundant but all originate from the experts considered to be fathers of motivation theory; Maslow and Herzberg. Early motivation theorists like Abraham Maslow and Frederick Hertzberg, laid the foundation upon which modern motivation theory is built. Their work has guided research in this area of study since the late 1950’s and early 60’s (Hendriks, 1999).

Yet as the workplace has evolved and diversified over the last several decades, so have the perspectives on motivation theory. The foundation has remained the same, but the perspectives are changing and elaborating what was original hypothesized by Maslow and Herzberg.

Take for instance Maslow’s need hierarchy theory. Maslow theorized that human motivation is driven by five needs: the need for shelter or safety, food and water, love and respect, recognition and fulfillment. These needs are organized in a hierarchy based on basic needs and “higher-order” needs; food and shelter are basic needs, recognition, love, fulfillment and respect are higher-order needs (Hendriks, 1999).

HRM Dissertation Topics HRM Essay HR Performance Issues and Motivation

HRM Dissertation Topics

Hertzberg, on the other hand, proposes just two categories in his motivational theory. Herzberg concludes that people are motivated by either extrinsic or intrinsic motives (Gagne & Deci, 2005). Mainly, this theory says that either a person is motivated because they like what they are doing, or, they are motivated based on the expectation that they will be rewarded in some way for the work they are doing.

Both theories suggest that employee satisfaction is important to motivation and that in order to keep employees motivated, their needs must continue to be satisfied. Maslow’s theory falls short of prescriptive answers to questions of employee motivation, whereas Hertzberg suggests that employers can maintain employee satisfaction by considering the intrinsic and extrinsic motives of their employees when adopting rewards incentives (Davoren, 2013).

While Maslow and Herzberg’s theories in their broader applications have become less applicable as the workforce and workplace has changed, the fundamental basis of these theories is still sound and relevant to current motivational theory.

Among some of the more recent expansions on motivation theory include the Commitment and Necessary Effort (CANE) motivation Model, Self-Determination Theory (SDT) and the Cognitive Evaluation Theory (CET). Motivation theory has been applied to understanding motivation in many different areas, including in sports, academic achievement and business. These theories applied in business can help solve HR performance issues and improve employee motivation.

The CANE motivation model tries to incorporate the many different aspects of motivation theory. It takes the best approaches of modern research, and combines them into one all-encompassing theory that can be used to understand the motivations of professionals with knowledge based jobs (Clark, 1998). These types of jobs, white collar jobs that require some expertise and professional knowledge, usually involve incentives for attracting highly educated professionals. Understanding the interaction of rewards systems and motivators that guide those professionals is very important for HR recruitment.

Clark argues that some strategies in the area of organizational development overestimate the effect that employee incentives like contests and performance recognition have on employee motivation (Clark, 1998). These strategies are widely used as a means to increase worker productivity. However, some research studies have suggested that studies that show that these strategies work to improve motivation are “fatally flawed” and that these strategies may not have as much power to influence employee behavior as previously thought (Clark, 1998).

The CANE Model says that motivation is two-pronged and intertwined. First, motivation is based on commitment to a goal. The second is the amount of effort that goes into achieving that goal (Clark, 1998). If an employee is motivated by a commitment to achieving their goal, he or she will remain focused on that goal even if they are tempted to focus on other less important goals. Once that level of commitment is achieved, the effort needed to achieve the goal, or the “Necessary Effort”, will sustain the motivation to complete the task. If the task is perceived as important, then the necessary effort to complete the task is tied to its importance.

Though Maslow and Herzberg’s theories are becoming outdated, the CANE Model falls short of unifying motivation theory into one model because of its limitations in broad application. It is too broad to explain the nuance effects that culture and diversity have on individual definitions of commitment, effectiveness and control (Clark, 1998). Not to mention that broad solutions to problems of motivation in the workplace can only be identified by this model; applying those solutions to specific job performances is more difficult and requires more specialized solutions.

Self-Determination Theory has evolved not only through theoretical analysis but has also held up in empirical studies. SDT relies heavily on needs based theory, but the needs are more psychological in nature. Satisfying these psychological needs, according to Self-Determination Theory, motivates behavior and also elucidates the processes that direct action (Gagne’ & Deci, 2005).

In this theory, by determining underlying psychological needs, employers can appeal to the intrinsic motivations of employees to correct performance issues and to increase motivation. Intrinsic motivation is driven by internal satisfaction. This involves the motivation that comes from being engaged in an activity that brings personal satisfaction. It is unrelated to any material reward. An employee is motivated by a psychological need to be challenged or to feel a sense of accomplishment (Ryan & Deci, 2000).

Since all behaviors are at their core driven psychologically, research in the area of Self-Determination Theory has tried to discern which of these psychological needs are being fulfilled by intrinsic motivation.   What has been concluded is that intrinsic motivation can be encouraged and facilitated by environment since intrinsic motivation is not caused but rather “catalyzed” into action when the conditions are right (Ryan & Deci, 2000).”

Lastly, Cognitive Evaluation Theory (CET) which is one aspect of Self-Determination Theory finds that intrinsic motivation can be produced by offering encouragement and feedback that satisfies a sense of accomplishment and competence in employees (Ryan & Deci, 2000). This can be done using rewards for achievement; a bonus for timely turnaround or for reaching a sales goal. But employees can also be intrinsically motivated by words of encouragement that satisfy the same psychological need for feeling competent; a pat on the back or a ‘good job’ goes a long way.

Work performance is directly affected by job satisfaction and motivation. The work performance is the outcome. When working from the intrinsic motivation model, appealing to the internal psychological needs of employees can increase job satisfaction, which in turn sparks motivation and finally produces an improved work performance. Understanding the means to increase job satisfaction is the crux of resolving performance issues and positively motivating employees.

Solutions to performance issues should be evaluated at all levels. Just because an employee is not performing satisfactorily doesn’t mean that the problem lies with the employee. Sometimes, the problem is in management style or a lack of resources to do the job right. These things can exacerbate poor performances when the employee feels that they are not being given the proper tools to complete their job or receiving the necessary feedback to do the job correctly (Lister, 2012). By simply rewarding exceptional behavior or providing constructive feedback for poor performance, an employer can improve job satisfaction and thereby resolve performance issues.

Therefore, assessing the needs of the group can allow employers to predict how those assessments will effect “job satisfaction and work outcome” (Gagne & Deci, 2005). Also, evaluating the types of needs that are being satisfied can affect job satisfaction and outcome. Herzberg presents two different factors in employee motivation. There are hygiene factors, the more superficial needs, and the motivation factors, which include more intrinsic motives.

Among hygiene factors that Herzberg identified are things like salary and work conditions. Motivation factors on the other hand, include things like personal achievement, opportunities for promotion, and a sense of responsibility (Hendriks, 1999). These factors have a direct and indirect effect on job satisfaction and performance. Hygiene factors according to Herzberg’s theory mostly affect motivation in a negative way; by the very absence of things like good working conditions and status, job satisfaction is decreased (Hendriks, 1999).

Consider a garbage man whose job performance has gone down. His work has slowed and he seems clearly dissatisfied with his job. Upon evaluation, HR has discovered that the employee is dissatisfied with his salary. He has been on the job for several years without promotion and without pay increases. According to both Maslow and Herzberg’s theories of motivation, his job dissatisfaction is rooted in one of his intrinsic and basic needs not being met; salary, food and shelter.

But further analysis supports Herzberg’s theory that there is a second prong to this employee’s dissatisfaction. He has not received a promotion, which is more than mere dissatisfaction with his salary; it implies that he is dissatisfied because he is not receiving the recognition that he feels that he deserves for the time and commitment he has given to his employer. By not relating to the psychological need for recognition, which has its own intrinsic reward for the employee, the employer is partly to blame for the performance issue and lack of motivation.

To resolve the problem, the employer must first identify the causes of the problem and then seek to improve job satisfaction through proper motivation. In this scenario, showing that management cares about his input and recognizes his many years of contribution by giving him a raise or a new promotion or job title, can help to resolve those performance issues by appealing to the intrinsic and extrinsic motivations of the employee.

Work Cited

Bong, K. (2014 ) Management Laboratory. Retrieved from Sans Technology Institute:

Clark, R. E. (1998). Motivating Performance: Part 1 – Diagnosing and Solving Motivation Problems. Performance Improvement. Los Angeles: University of Southern California.

Davoren, J. (2013) What Types of Rewards Would Motivate Workers in an Organization?

Gagne’, M., & Deci, E. L. (2005). Self-determination theory and work. Journal of Organizational Behavior, 331-362.

Hendriks, P. (1999). Why Share Knowledge? The Influence of ICT on the Motivation for Knowledge Sharing. Knowledge and Process Management , 91-100.

Lister, J. (2012). Examples of a Motivational Issue in an Organization.

Pintrich, P. R. (2000). An Achievement Goal Theory Perspective on Issues in Motivation Terminology, Theory, and Research. Contemporary Educational Psychology, 92-104.

Ryan, R. M., & Deci, E. L. (2000). Intrinsic and Extrinsic Motivations: Classic Definitions and New Directions. Contemporary Educational Psychology, 54-67.

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Economics Essay Asset Price Bubbles

Central Bank Response to Asset Price Bubbles

Recent research in the area of macroeconomics has been focused on trying to identify the causes of the 2007 – 2008 global financial crisis and determining best central bank monetary policies to prevent future crises. A debate that has for the last few decades been settled is now being revived; “lean” versus “clean” handling of asset Price bubbles.

The prevailing consensus of central bank monetary policy has followed the “Greenspan Doctrine” established in the 1970’s for dealing with asset price bubbles. Alan Greenspan, who was the chairman of the U.S. Federal Reserve from 1987 to 2006, believed that cleaning up after an asset bubble burst was less costly and damaging to the economy than allowing central banks to burst bubbles; attempting to “Lean Against The Wind (LATW) (Wadhwani, 2008)” on rising asset bubbles to prevent a bigger burst. This perspective was widely accepted by central banks around the world.

There are mainly four arguments against LATW monetary policy. First, bubbles are difficult to predict; the market would likely detect asset bubbles before regulators would and the market would be able to orderly deflate those bubbles through natural market processes. Secondly, there is evidence that raising interest rates (a central bank strategy for determent) doesn’t reduce the inflation of bubbles since investors are likely to take the risk on high interest rate assets in the midst of an asset bubble based on the expectation of high returns on those assets. Third, the Fed is incapable of isolating dangerous asset bubbles from normal rising asset prices; monetary policy could ham-handedly attempt to prevent asset bubbles but have the effect of harming normal asset prices. Lastly, proactively bursting asset bubbles could make the burst harsher than if the bubble were allowed to burst on its own.

Those cautions have kept the Greenspan Doctrine in place since the late 80’s, but in the aftermath of the 2007 – 2008 crisis, many economists are beginning to wonder if the “lean” strategy may actually be cleaner than the Greenspan Doctrine. Not to mention, the Greenspan Doctrine assumed that bubbles could not be as destructive as the most recent housing bubble. Could central banks develop monetary policy strategies that are more precise in detecting and deterring asset bubbles?

Combating Price Bubbles

Clearly, setting aside the lean versus clean debate, there are standard monetary principles that have not always been followed or enforced. Namely, regulators should demand more transparent disclosure, require more capital and liquidity, apply stricter monitoring of risk, stronger enforcement of compliance, and more accountability for regulators charged with overseeing the financial stability of markets. These policies need to be either reinstated and or reinforced to help stabilize the markets during asset bubbles or otherwise.

But for central banks to devise better strategies for combating bubble driven asset pricing, it is necessary to rethink the Greenspan Doctrine considering how ill-prepared the central banks were for dealing with the crisis in the financial markets. Or, perhaps both strategies have a time and place in setting monetary policy. Frederic Mishkin argues that there is a way to apply the LATW strategy to the financial markets if first central banks understand that there are two different types of bubble driven assets and each one requires a different monetary strategy.

Asset-pricing bubbles are divided into “credit bubbles” – like the housing bubble – and “irrational exuberance bubbles” – like the dot-com bubble (Mishkin, 2011).” He argues that because credit bubbles are so destructive to the economy and so hard to clean up that it would be appropriate for central banks to focus their monetary policies on predicting and deflating credit bubbles before they grow too large. Credit bubbles are linked to the financial markets so intricately that whenever there is a credit bubble like the one just experienced, its bursting usually leaves in its wake a deep recession, a financial crisis and a long period of slow growth and high unemployment.

Unlike normal recessions, there was no sharp recovery after the last three big asset bubbles. Because it is so hard to recover from credit bubbles, trying to head them off and prevent them is necessary. The LATW can be applied and should factor in to central bank policy because credit bubbles are much easier to identify. Each credit bubble shares certain symptoms that could alert regulators to the problem: lower lending standards, premiums on risk become abnormally low and credit is being extended at a much faster and higher rate (Mishkin, 2011).

Asset Price Bubble Dissertation 300x200 Economics Essay Asset Price Bubbles

Asset Price Bubble Dissertation

The central bank targets these credit bubbles by slowly raising interest rates to discourage excessive risk taking in the credit markets. By inflating the interest rates on these assets, central banks can tamp down exuberance as well as spark growth in a slowing economy (The Financial Times LTD, 2014). This requires central banks to turn their focus more sharply and aggressively towards monitoring and reacting to irregularities in asset pricing more than the traditional singular focus on controlling inflation (Wadhwani, 2008) (Gambacorta & Signoretti, 2013). Lastly, this type of proactive monetary policy could have the effect of reducing moral hazard through proactive responses to booms as opposed to the reactionary approach to booms after the bust; this could discourage the reckless risk taking that typifies credit bubbles (The Financial Times LTD, 2014).

While economists are still debating the merits of the LATW strategy of curtailing asset price bubbles, it is without question that the traditional standards of monetary oversight have been too lax over recent decades and reinforcing those policies will go a long way to restoring healthy checks and balances to the world market. However, it has also become very clear that these boom and bust cycles threaten financial stability in such a way that central banks can no longer ignore fluctuations in credit markets. While focusing on controlling inflation is still a target for central bank monetary policy, central banks must now focus efforts on developing Bubble Policies (Rudebusch, 2005) that can prevent or deflate asset price bubbles before they can do real damage to the economy

References

Brittan, S., Meltzer, A. H., Wolf, M., Smaghi, L. B., Schlesinger, H., Mayer, M. Frankel, J. (2009, Fall). Should, or Can, Central Banks Target Asset Prices? A Symposium of Views

Gambacorta, L., & Signoretti, F. M. (2013, July). Should monetary policy lean against the wind? – an analysis based on a DSGE model with banking.

Mishkin, F. S. (2011). How Should Central Banks Respond to Asset Price Bubbles? The ‘Lean’ versus ‘Clean’ Debate After the GFC. Reserve Bank of Australia June Bulletin, 59-67.

Rudebusch, G. D. (2005, August 5). Monetary Policy and Asset Price Bubbles.

The Financial Times LTD. (2014, April 16). Definition of leaning against the wind. Retrieved from Financial Times Lexicon: http://lexicon.ft.com/term?term=leaning-against-the-wind

Wadhwani, S. (2008). Should Monetary Policy Respond to Asset Price Bubbles? Revisiting the Debate. National Institute Economic Review, 25 – 34.

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