Category: Uncategorized

Definition of the Problem

Introduction

Risk management (RM) has been defined as the process of scheduling, classifying, directing, and managing organizational conduct in order to curtail the detrimental effects of fortuitous losses at reasonable costs on the organization.

Risk avoidance involves eliminating all losses associated with a particular activity, loss prevention involves reducing the chance of a mishap occurring, and loss reduction emphasize reducing the severity and impact of losses once they occur. Loss prevention techniques focus on reducing the frequency of occurrences likely to result in claims and/or lawsuits.

In health care, risk management has become an important issue during the 1980s and 1990s. The complexity of the legal environment has challenged institutions to strengthen the practice of health care to protect staff and hospitals from loss. Risk management is defined as the science for identification, evaluation, and treatment against the risk of financial loss. Risk management also envisages the evaluation and scrutiny of medical treatment to identify and circumvent injuries to patients. It is envisaged that in most cases of medical malpractices, In medical malpractice cases, the duty owed by the defendant physician arises from the physician-patient relationship (Shandell & Smith, 1990, p.1-4).

What risk management is about?

RM is concerned with utilizing key functional activities of the organization to reduce the detrimental effects of accidental losses on that organization at pre-judged and predetermined costs. Further, the scope of risk management can also be extended to include aspects of recognizing, assessing, and protecting against the risks of financial losses that may arise due to risk materialization.

Further, there have been paradigm shifts in the underlying causes of fundamental issues governing risks in patient management. While at one time, the safeguards against losses or damages to the financial strengths of health care institutions and the prevalence of a reliable treatment environment were considered paramount, this has now shifted in terms of greater need for preventing harm and injury to patients by offering them a greater degree of health care protection and adequate safeguards against injuries caused by neglect by concerned health care professionals.

Thus, it can be seen that over time, the onus has shifted from the health care organizations need to protect its health care environment from outside malpractice attacks to a more focused and perhaps narrower need to keep the best health care interests of the patient uppermost and to improve the quality of service and discharge all responsibilities vested upon the health care workers, which, it is believed would significantly reduce the occurrences of medical malpractice and issues connected therewith.

The industrys risk manager of today faces many new and exciting challenges. By conventional practices, the job focuses on safeguarding the pecuniary trust of the organization and preserving a secure milieu. Today, the focus has broadened to include preventing patient injury and improving the quality of service. The administrator and physician must now respond and increase the emphasis on a system that can monitor, promote and guarantee the quality of service. Their objective is to alleviate malpractice judgments, cut defense expenses, and manage the insurance premium.

Background of the problem

The rising number of malpractice cases was not being reduced through prompt and speedy disposal of those cases by concerned officials. The fundamental causes for these issues to surface included issues arising out of technology advancement in medicine, which carried with it higher risks of injuries; issues arising out of worsening relationships between physicians and patients; and, problems arising out of unrealistic demands made by patients about modes of treatment and their results.

The probability of medical errors increased with the larger number of people involved in inpatient care. Risk management is used to secure the financial assets of an enterprise against the risks of calamities by assuring adequate economic protection and security against perceived and imminent occurrences of liability through appropriate risk cover strategies, including insurance of property and thus alleviating the possibility of financial losses that may accrue.

The word liability is used in various ways, but the general definition would be the state of being exposed to damage, danger, expenses, etc. The professional liability of the hospital is an area of great risk and all hospitals must decide on the amount of coverage they will carry. Comprehensive loss and exposure information must be collected and the data analyzed before purchasing insurance coverage. To ease the malpractice crisis, state legislators enacted a variety of laws designed to establish limits on the number of awards, set up arbitration screening panels, revised the contingency fee systems, and modified the collateral source rules.

Problem statement

Medical malpractice received a great deal of attention in the early 1970s when a crisis emerged due to the lack of availability of liability insurance. Most insurance carriers increased premiums at alarming rates, and others stopped writing malpractice coverage altogether, thereby shrinking market capacity. The increased frequency and severity of malpractice claims were the primary factors precipitating these actions. Insurers found themselves unable to adequately predict the frequency of claims or to adequately price this line of insurance. Patients will have to bear the cost and detriment caused by the lack of proper care in the health care setting due to faults caused by medical malpractice in health care.

Purpose of the study

Purpose of study

The purpose of this study is to consider the aspects of medical malpractices in a closed environment of Wayne State University Physician Group affiliated with the Detroit Medical Center Hospitals in Detroit, Michigan.

Research Questions

• Whether trusted methods are available that could identify specific medical outcomes of medical malpractices or liability incurring thereon?
• What is the extent to which a risk management program and risk managers could make difference?
• Could gaps in physician-patient relations impact medical malpractice?
• Could a collapse in communication in a physician-patient relationship result in a malpractice case?
• How could physicians avoid diagnostic errors and lawsuits?

To prevent lawsuits against hospitals and to prevent further injuries to the patient, ensure compliance with state insurance departments. Risk managers must develop a close working relationship with the persons who provide hands-on patient care. These professionals are often the first to realize that an untoward event has occurred. Risk managers must establish an open line of communication so that he or she is advised of events as soon as possible. Risk managers must develop an occurrence reporting system that these professionals understand and are willing to utilize.

Assumptions/Limitations

The study subject will be limited to Wayne State University Physician Group (WSUPG) affiliated with the Detroit Medical Center Hospitals in Detroit, Michigan.

Definitions

Summary

Risk Management has become a growing concern of all hospital administrators since the 1970s. Whether the institution is profit-motivated or not, it must be fully protected from loss to remain competitive in the health care industry. A program must be established, personnel must be educated, legal strategies must be planned, and insurance protection must be ensured. The goal is to provide quality service to the patient and to avoid negligence. The hospital should be a safe place for treatment and improving health, not a hazardous environment that creates further harm or injury to the patient.

Literature Review

The industrys risk manager of today faces many new and exciting challenges. According to custom, the work entails maintenance of the financial stability of the institution and upholding secure surroundings. Today, the focus has broadened to include preventing patient injury and improving the quality of service. The administrator and physician must now respond and increase the emphasis on a system that can monitor, promote and guarantee the quality of service. Their goal is to reduce malpractice verdicts, cut defense costs, and control the insurance premium.

Some of the findings showed normal circumstances within the study, but not all injuries were due to negligence, and not all injuries were preventable. Due to deficiencies in prevailing systems, nearly 30% to 40% of mortality among stressed patients could be due to avoidable issues in medical attention, taking into account a wrong diagnosis and delay in providing treatment (Acute care, disability, and rehabilitation, 2006, para.1).

These findings were based on the results of studies concerning the incidence of injuries. More findings prove that the severity of the injury was more apt to be the determining factor in deciding whether a claim would arise. In conducted studies, it is seen that early research is suggestive of the fact that disabled people may not have the longevity and inferior wellbeing as they become older than people who have not been diagnosed with any kind of physical or mental inabilities (Acute care, disability, and rehabilitation, 2006, Priorities, para. 32).

The American Hospital Association (AHA) gave guidance and it helped promote the acceptance of risk management. Across the country, hospitals are quietly improving the way they provide health care services and medical attention (Umbdenstock, 2009, para.1).

Risk management entails the identification, assessment, and taking of corrective measures against threats and challenges caused by fiscal indiscipline and, inter alia, has issued directives to hospitals to enforce risk management practices as a viable solution for the impaired provision of health services.

All medical activities that can lead to injury or death of any person, or damage to or loss of property, material, or reputation must be systematically managed regarding risk (Grose, 2005, para.1). This could be seen as being within the scope of risk management.

Risk management also outlines the basic elements of the program and directs that the manager be someone whose training or background was in hospital administration, insurance, or safety engineering. This guideline also stipulated essential components necessary for an effective program. This description listed mandatory requirements but left space for modification that would be dependent upon the unique characteristics of the individual hospital.

The steps of risk management are simple and straightforward:

• Identify the risk
• Analyze and evaluate the risk
• Control or eliminate the risk
• Protect the agency and the consumers of its services
• Manage any failures (Risk management: The steps of risk management, 2002, para. 1).

In its simplest form, risk management in health care has historically focused on providing a safe environment for hospital patients. With the formation of health care systems in recent years, the scope of risk management now expands beyond the inpatient setting. Organizations have affiliated components that provide not only acute care hospitals but also the outpatient, home care, and long-term care that patients require.

The new structure of health care delivery systems brings with it the obligation to increase the scope of risk management. Thus, establishing expectations is a first step in defining and delivering quality care and services and minimizing risk in the environment of long-term care (Peterson, 2005, para. 1). Broadening the focus of patient care is also a risk management initiative. Research has emphasized the need for recognizing that risk management now means, the comprehension of the entire gamut of care and devising ways and means by which these could be improved. Normally, patients may receive a range of care in multiple settings from multiple providers of care.

The continuum of care needs to be the central theme of patient care, as paradigm shifts occur, new policies are enforced or the standards of care are upgraded and refurbished to meet varying needs and demands of patient care.

An effective risk management program covers all aspects of hospital operations. To achieve this goal, managers must establish early warning systems, target clinical areas or practices that present the greatest exposure to liability, and implement preventive action to minimize the risk associated with these activities. Several professional regulatory agencies and other industry associations have worked hard to improve the quality of care provided in nursing homes (now called nursing facilities), the administration and governance of those facilities, and in turn the reputation of the overall field (Pratt, 2009, p.73).

Risk management is primarily designed to protect the financial assets of an organization by assuring adequate financial protection against potential liability through appropriate insurance coverage, reducing liability when untoward events occur, and preventing those events that are most likely to lead to liability.

The term Liability may be defined in various ways, but a general definition would be the state of being exposed to damage, danger, expenses, etc. The hospitals professional liability is an area of great risk and all hospitals must decide on the amount of coverage they will carry. Comprehensive loss and exposure information must be collected and the data analyzed before purchasing insurance coverage.

First of all, it is necessary to analyze the gross patient service volume, with relation to inpatient and outpatient visits, and also determine the number of employees on staff, including full/part-time employees. It is also necessary to review any case history of previous losses and identify the number of legal expenses paid therein. Evaluating loss projections: this can be accomplished in three steps.

1. Determine the frequency and magnitude of the loss, the nature of the injury sustained is the best predictor of the value of a loss;
2. Adjust frequency averages to reflect significant future changes in hospitals risk climate; and
3. Review the accuracy of loss payout estimates.

This is to include the settlement amount and the cost of the investigation, and defense for both paid and reversed cases. A skilled attorney should be retained for a second opinion as to the estimates of case values.

No one can estimate the amount of coverage an institution should carry, because each case differs in each area of care. Larger amounts of fund payouts are needed for meeting lawsuits awarded in court settlements. After the data has been analyzed, a risk manager would prepare for the future loss by purchasing insurance. Most hospitals overkill the expected loss projection and settle for the purchase of a premium that protects against catastrophic settlements and payoffs which are in the millions. Insurance coverage is paid for protection; the risk manager can further protect the institution by ensuring all health care providers work towards preventing loss within the institution.

Risk managers are responsible for developing systems to prevent injuries and other losses within the organization. Performance improvement actions are often initiated in response to suggestions offered by the risk manager. Education is also an invaluable tool in risk management and sometimes is the only activity required to prevent potential safety problems. Patient care and accessibility to mental health services rest not only on clinical skills, but on a place to practice them and an organized system supported by staff, physical facilities and funding (Reid, D J., & Reid, W H., 2009, Abstract, para. 1). Risk managers in many healthcare organizations are responsible for developing policies and procedures aimed at preventing accidents and injuries and reducing the organizations risk exposure (Johns, 2002).

The specific policies and procedures that constitute a risk management program in a hospital are developed in collaboration with the hospitals legal counsel. Judicial interpretation of statutory law in the court system is a continually evolving process and hospital leadership and governance are well-advised to seek the advice of counsel to ensure that risk management practices adequately protect the organization. Generally speaking, the infrastructure of a risk management program is designed to circumvent, or alleviate monetary setbacks, allocate funds for compensation and/or damages, and also clear the corporate image impediments caused by legal claims and lawsuits.

Prevention is a critical aspect of any effective risk-management program. Staff members need to be provided with the right kind of training and exposure to deal with emergencies, which may not be the result of their actions.

In summary, risk management has become a growing concern of all hospital administrators since the 1970s. Whether the institution is profit-motivated or not, it must be protected from loss to remain competitive in the health care industry. A program must be established, personnel must be educated, legal strategies must be planned, and insurance protection must be ensured. The goal is to provide quality service to the patient and to avoid negligent acts. The hospital should be a safe place, not a hazardous environment that creates further negligence.

Sentinel Event Statistics

This part of the study shall examine events that have a high capacity for attracting liability or cause for damages that result in lawsuits. It shall also consider ways and means by which these incidents could be prevented. According to the cases reviewed by the Joint Commission of Sentinel Event National Statistics as of June 30, 2009, there could be many kinds of surgical errors or delays that could harm, or cause death to patients, and thus give rise to criminal or civil proceedings for medical wrongdoing. High on their lists are wrong-site surgeries (13.4%), suicides (12%), operative and post-operative complications (11.1%), and delay in treatment (8%). (Appendix 1 and 2)

It would be presumptuous to blame for all kinds of errors on health care providers. However, errors caused while transfusing fluids, errors while administering injections and anesthesia, deaths caused by ventilator malfunctions, etc., do come within the purview of due services to be rendered by health care providers. Thus, they would be liable for potential legal action, at the choice of the aggrieved patient or their families.

The authors took up an empirical study on the aspects of care of patients undergoing treatment in three sections of a large urban teaching hospital. Of the total 1,047 patients being considered, 185, representing 18% had, at least one serious unfavorable consequence. The rate of such unfavorable consequences increased with the patients length of stay. There is a 6% probability of adverse effects increasing with every day the patients stay in the hospital. The highest incidence of mistakes (28%) occurred during the surgical intervention and daily care. During surgery, it was 10%, and intensive care patients were most likely to have critical impediments caused by medical errors (Annotated resources: Sentinel events, 2009, para. 3).

It is anticipated that there will be an increase in the findings of medical negligence against physicians as a result of the change in standards for the evaluation of medical negligence (Medical professional liability insurance trends in Asia; Malaysia, n.d., p.3).

The increase in such cases is a cause for major concern since these incidents could trigger off suits of medical malpractices, especially if large-scale death or injury is involved.

Omissions and delays

In a typical medical malpractice case, the onus would be on whether the mistake(s) made by the nurse amounted to deviation from standard care and caused harm and detriment to the patient, or direct cause of death to the patient (White & Traux, 2007, p.63). In the event, the nurse was employed by doctors as an agent, or member of the group, these doctors or groups would also be legally held responsible for the injuries caused to the patient.

Utilization Management and Risk Management

Utilization Management (UM) may need to be integrated with Risk Management (RM) so that coverage of aspects such as, insurance reimbursement billing and hospital stays (typically UM functions) work in harmony with patient omissions and delays in treatment, medical malpractices, and its aftermath (typically RM functions). It is believed that in most scenarios, importance to RM may not be possible, mainly due to staff shortages, and also due to the non-critical character of its activities; thus, RM and UM must work together, to enhance the quality of treatment, eliminate or significantly reduce aspects of medical malpractice and so on.

Medical Malpractices Jury Trial Verdicts

However, it was also seen that of the medical malpractice verdicts by jury considered during the calendar year 2008, of the total of nine verdicts, eight have gone in favor of the defendants, and only one has gone in favor of the plaintiff, or the aggrieved party. This was a case involving misdiagnosis, which was settled for an amount of $2,200,000 (Medical malpractice jury trial verdicts (January 1, 2008- December 31, 2008, n.d.).

Next, it is necessary to consider the benchmarks that need to be achieved under the Operational Risk Management & Safety Assessment (ORM&SA), laid down by Wells Fargo Healthcare Group. The modus operandi for conducting such assessment would be in terms of assessing present compliances and how deficiencies in the present system to make it congruent with desired levels could be achieved. The assessment would also include compliance audits and in-depth questionnaire-aided assessments in major functional areas of health care.

Enterprise Risk Management

Again, Enterprise Risk Management (ERM) forms a major area of public and governmental accountability, including in its scope, management of emergency room, infection control, laboratory, blood bank, and transfusion controls. Again, critical areas where risks of medical malpractices could be high are obstetrics, radiology, anesthesiology, and oncology, and pain management. This is more sharply accentuated in geriatrics and post and pre-natal interventions.

According to the Wells Fargo Healthcare group, a detailed and comprehensive view of all medical and patient-related aspects of patient care must be made. According to them, The purpose of this Operational Risk Management & Safety Assessment (ORM & SA) is to assist an organization in determining how prepared it is to retain risk as well as determine if the care that is provided to the patient meets established standards of care and other recognized benchmarks (Wells Fargo Healthcare, n.d.).

Aspects that influence quantum of coverage

Many aspects need to be considered while taking up the question of medical malpractice in the hospital setting. For one thing, hospital administration needs to decide upon the amount of coverage that it needs to carry and this has to be laid out on a scientific and deterministic basis. For another, the coverage would depend upon several variables, which may depend upon controllable and uncontrollable factors. The major aspects that need to be covered would be gross patients and their service volume, including a breakdown of inpatient and outpatient statistics. It is also necessary to find out the number of employees, including health care professionals whose conduct could have an impact and make it subject to risks of medical malpractices.

Legal history could dictate future trends

It is evident that before a risk management program is set into place, the history of medical risks and their settlement in the context of the institution needs to be identified and assessed. It is necessary to know cases of previous litigation regarding medical malpractices that have been instituted either against the institution or against any of its constituent practitioners. If so, it is also important to know how these issues were dealt with and the extent, or amount of damages that were made by the institution, or its represented insurance agencies, or firms. This aspect is important since this would bring out the public image that is associated with this particular health care center.

Importance of public image in health care settings

It is common knowledge that, to a very large extent, the survival and growth of public health care institutions depend largely upon the public image and goodwill that it has earned over years of providing health care services to patients. However, even a few instances of medical malpractices by its constituted agents, or health care providers would be enough to earn disrepute, which could significantly impact its image and potential prospects, since few patients would be willing to visit health institutions where the medical services are compromised or neglected, inviting legal complaints and actions.

Thus, many factors impinge upon the aspect of medical malpractices, which cannot be seen in isolation but has to be seen in the context of the individual case studies. The importance of a proper methodology for seeking out how best these issues could be addressed would form the next part of this paper.

According to the practicing physicians at Wayne State University Physician Group (WSUPG), the responsibility for controlling medical malpractices vests with the profession itself (Prognosis E-New: Fieger, Howard debate merit of health courts, 2005). According to the physicians, there are reasons to believe that health courts could be the best place where medical malpractice issues could be sorted out.

The judges have well acquainted with Medical Malpractice (MM) laws and with the help of unbiased observers, the judgments for such cases would be reasonable and in the best industry practices. Besides, the fact that WSUPG sets high professional standards of medical practices could lower the rates of such malpractices and move toward a more transparent and patient-oriented system of care provision.

Data Analysis

Introduction

Since January 1989, the Joint Commission on Accreditation of Health care Organizations (JCAHO), an autonomous agency that assesses and evaluates the performance of Health Care institutions and programs in the length and breadth of the USA, has enunciated benchmarks for patient safety. Although JCAHO benchmarks are not key drivers in risk management, nevertheless, there is evidence to prove that these ethical and commercial elements are critical to any strategic planning models concerning risk management. Through this, JCAHO provides an excellent vehicle for creating a culture of patient safety and welfare.

The goal of risk management is to reduce an entitys accidental loss of corporate assets, personnel, revenue, and reputation. Each organizations risk management plan should include the following components: the plans objectives, key elements, responsibilities, methods, and areas of focus for the current year.

Risk Management Plan

• Objectives: The main aim of the internal regional medical monitoring unit is to supervise risks to reduce losses, protect resources and assets and also ensure security, safety, and stability of condition of staff members, care providers, patients, and visitors. This could be in terms of a separate unit that has been given the responsibility of taking care of the above-mentioned aspects, thus allowing other care-providing units and departments to carry out their normal routine functions.
• Key Elements: Risk management involves several key elements. The methods for implementing these elements are described later in this document. The key elements are identifications of risk issues, evaluation of areas of risk, communication of risk information, education of organizational personnel and others, and reduction of risk.
• Responsibilities: The risk manager will be responsible for managing risk management activities.

These activities include:

1. 1. Coordinating insurance coverage.
2. Managing claims against the facility.
3. Interfacing with legal counsel.
4. Identifying and analyzing areas of risk exposure.
5. Considering and proposing suitable peril management practices.
6. Mounting and upholding an information supervision scheme.
7. Executing and observing security, teaching, and quality assertion agenda.
8. Inspecting, detailing, and observing risk management data and information.

Although the risk manager has the responsibility for this plan, risk cannot be reduced without education and participation by all team members. All team members are expected to report events, follow standards of practice, identify risk events, guide the organizational mission, implement systems to reduce risks, and budget monies to solve problems. Risk managers will be available to consult with any department or manager to assist in a risk assessment of the environment or system. Risk managers will also research issues and gather additional data to assist decision-makers in the search for solutions. This research may include local, state, or national data.

Methods for Carrying Out Key Elements

Identification

The methods of identification include, and are limited to, incident reports, medical device reports, customer comment tracking forms, attorneys health records requests, security reports, performance improvement referrals, medical staff/peer review reports. Safety hazard reports, supervisor reports, documentation by staff and/or phone conversations with individuals who feel a need to speak about issues, and visual inspection of all areas of the organization to identify potential risk situations.

Committee membership and participation are essential for risk identification. Risk managers will assist i

Introduction of Case Study Analysis: Organizational Issues

Original Milestone One Analysis

The Engstrom Auto Mirror Plant in Richmond, Indiana faced multiple organizational issues.

The organizational issues faced by the plant are a failing incentive plan (the Scanlon Plan), low employee morale, poor productivity, lack of trust between employees and management, communication problems between employees and management, lack of employee engagement, and product-quality issues (Newstrom, 2015).

Why do some people perform better at work than others? Inspiring people to become better workers and improve their own work performance makes one figure out their work strengths and weaknesses. Once you understand your individual style you can focus on strategies to become more productive at work. Reducing burn out, improving performance, and job satisfaction are what reengineers our work lives (Hansen, 2019).

New Final Project Content

Engstrom Auto Mirror Plant, a privately held corporation based in Richmond, Indiana, had been dealing with various issues within the organization for several years. The primary source of contention was a lack of productivity and poor quality, but a closer examination revealed a more complex issue: communication breakdowns (Newstrom, 2015). In addition, employees low morale and a growing lack of trust between them and their superiors were causing a larger storm than previously anticipated. The organizations employees developed mistrust towards the management due to unclear information about the incentives to be offered. Based on this, the employees morale is reduced, adversely affecting their performance in the workplace.

One of the things that caused strife at the plant was the Scanlon Plan, a motivational program that gave bonuses to workers for increased performance. In addition to encouraging cooperation and teamwork, the Scanlon Plan was a good idea because it was a good reason for employees to work smarter. Unfortunately, as soon as management could no longer pay bonuses, things started to go wrong (Newstrom, 2015). Employees were angry and suspicious of the management, so they were not happy. When these kinds of problems happen, employees are not as excited about their jobs, which leads to less work and lower-quality products. Therefore, the Scanlon Plan did not work out, which had a big impact on Engstrom.

The other issue identified in the organization is a decline in employee feedback. The rate of employee suggestions at Engstrom has fallen to a tune of 50 per year, a record considered low for the company. This indicates that the employees did not value providing feedback to their employer, particularly if it will be disregarded by management (Newstrom, 2015). If employees do not feel appreciated, they will not help the company be successful in the long run, which is very bad. In addition, the fact that Engstrom does not take employee ideas into account shows a psychological distance between management and employees, even if it is not on purpose. This counter-productive barrier, such as employees non-participative nature, contributes significantly to the issue.

The model of organizational behavior that dominated the managers thoughts and actions comes from the realization that the Engstrom Auto Mirror Plant incentive plan the Scanlon Plan would solve its productivity issue, low morale, etc. however, the plan had obviously not worked out according to the plant owners.

The Engstrom Auto Mirror Plant implemented an incentive plan years prior, which was designed to pay out bonuses to employees for the increase in productivity. Whenever the plant hit its target ratio, the company would pay out bonus checks to all it is employees. The aim of this was to cure the plants productivity issue (Newstrom, 2015).

Business owners Ron Bent, and Joe Haley were discussing in a meeting held on May 14, 2007, Haley stated, Theyve (the workers) have had it with the Scanlon Plan. You hear the griping everywhere: Whats the point of having a bonus plan if no bonus is paid for months? (Beer & Collins, 2008). Bent was talking animatedly to Haley: This is the third productivity problem in, what, two weeks? We cant climb out of this downturn with performance like that. Haley retorted, And its not just the people whove always been active in UAW (United Auto Workers), although the union could start taking a more belligerent position at their next meeting. Bent held up the expedite authorization, Its a vicious cycle. Were paying a stiff price for slips in productivity-and thats money I would far rather be paying to workers as a reward for high performance (Beer & Collins, 2008).

Showing gratitude isnt just about being nice, its about being smart-really smart-and its a skill that everyone can easily learn. The central characteristic undertaking of the most successful managers are that they provide their employees with frequent and effective recognition. This way they are motivating employees to excel. These managers achieve higher productivity, engagement, and retention. It doesnt take budget-busting amounts of money to recognize good employees (Gostick & Elton, 2009).

New Final Project Content

The first model of organization behavior that dominates the thoughts of Ron Bent and his assistant Joe Haley is the custodial model. This is based on offering employees with economic security such as wages and other benefits to foster employee loyalty and motivation (Beer & Collins, 2008). The custodial model focuses primarily on the financial aspects of working for the organization. The management introduced the Scanlon plan bonuses and the employee incentive program to increase the organizations production. These initiatives were used to encourage the employees to achieve organizational goals. Therefore, the management intended to increase employees performance.

The collegial model is the second model of an organizations behavior that dominates managers thoughts. The model is based on the idea that organizations set policies and make decisions by talking about them and agreeing. Power is shared among some or all of the people in an organization who are thought to understand the organizations goals as a whole (Beer & Collins, 2008). For example, bent organized and held monthly communication meetings for all staff members, during which he actively listened and took action based on employee feedback. The goal of management in this model is teamwork, and employees feel a sense of responsibility to maintain performance standards and production, which is similar to the Scanlon Plan.

Introduction of Case Study Analysis: Human Behavior Theory

The relevant human behavior theory related to the case study is the Equity Theory. This theory is based on the principle that peoples actions and motivations are guided by fairness and that discrepancies in this fairness in the workplace will spur them to try and redress it. It is the physiological state of weighing out the outputs versus the compensation or benefits. Individuals within a company will compare contributions and what compensation they have received for that work compared to those around them (Hoffman-Miller, 2013).

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There are several human behavior theories that can be incorporated in the case study root. However, the most appropriate theory for the case study is Adams equity theory of motivation. According to this theory, for an employee to be motivated, they must think that the rewards they get for their work are fair and similar to what their peers get. Adams Equity Theory delves deeper into how an organization should be managed and may be useful in developing solutions to Engstroms problems (Hoffman-Miller, 2013). This theory emphasizes the importance of balancing what an employee puts into his job versus what he receives from it. Employees feel fulfilled and successful when they believe they are getting a genuine reward. If the opposite happens, the employee will reduce their performance.

Original Milestone Two Analysis

The organizational issues in Engstrom can be characterized based on the cognitive approach. It proceeds by recognizing the primacy of human mental activity (Luthans et al., 2021). This approach has found the most significant application in developing motivation theory. Expectation, attribution (attribute, affiliation), focus (direction) of control, and goal setting characterize the purposefulness of organizational behavior (Luthans et al., 2021). This approach uses the connections between the process of cognition and organizational behavior.

The fact is that the company has made attempts to create a motivation system based on the activity of employees regarding their suggestions for improving the company. However, in this case, the problem is that the Scanlon method used by the company does not allow to motivate employees at unstable times competently. In this case, the main problems are that the company has no opportunity to pay the bonus after the decline in economic indicators (Luthans et al., 2021). From employees point of view, only what concerns them directly is important to them. Therefore, they lose the opportunity to receive bonuses, and their productivity and initiative respectively decrease. This is due to the fact that they no longer have the opportunities to realize their potential as before.

New Final Project Content

The failure of the Scanlon Bonus Plan was the main reason why Engstrom had problems with how it ran its business. In the beginning, this incentive system was meant to encourage employees to go above and beyond their job duties. It worked well for a while. However, after a while, the system broke down, making both employees and employers very suspicious of each other (Luthans et al., 2012). In addition, the failure of the Scanlon Bonus Plan hurt a lot of things that were important for a healthy work environment, such as employee motivation, trust between people, and the overall workplace culture. Employees at Engstrom were no longer pushed to do their daily jobs because they did not have the motivation or incentive to meet the minimum standards expected of them. Because of this, the plant could not make as much as it could have.

The Scanlon Bonus Program was originally established as an incentive for employees to do better at work. It was meant to be a reward system for exemplary performance. However, the problem started when employees thought they should get paid for doing the bare minimum of work. As a result, the reward system became the norm at work, and it was included in everyones paychecks. Using the concept of behavior modification, the employees became used to the reward for work performance, which significantly influenced their productivity (Luthans et al., 2012). This indicates that their achievement in the workplace depended on the reward. According to the law of effects, employees will keep behaving the way they do if they get good things. Thus, employees would be less likely to do well at work if the reward in question was removed, such as a percentage of their pay.

The incentive plan eroded organizational culture and caused a dysfunctional effect on employee production. An efficient and productive organization is built on its organizational culture. These are the assertions, belief systems, values, and social rules that comprise a companys culture. In the absence of these aspects, the organization is likely to lose focus. The incentive system did not work, and managements reaction was ineffective (Luthans et al., 2012). Engstrom no longer had a work culture because managers failed to provide an appropriate solution to address the problem. The failure of Engstroms Scanlon Bonus Plan is to blame for a lot of the plants problems. There are a lot of risks for a company when its employees are not motivated. Therefore, withdrawal of the incentive plan reduced the employees trust in management, which adversely impacted their performance.

Case Study: Solutions

In addition to the systematic perception of the workforce, the situational approach requires considering the managerial situation and the influence of situational factors on the behavior of people in the organization. This approach to management proclaimed that due to the uncertainty existing in the organization and its environment. The multiplicity of possible solutions to management tasks are generated by a variety of situations, there is not and cannot be a single universal approach to management in general (Thompson & Glasø, 2018). To predict peoples behavior, it is necessary to consider the situation and its perception by the system, that is, by the team, the organization.

Engstrom needs to change and modify the current employee incentive system and focus on increasing trust. The reward system should be transparent and understandable, based on quantitative assessments. It is necessary to use clear evaluation criteria common to most employees. It is essential to ensure the information availability of the incentive system, information about them should be distributed promptly at all levels (Thompson & Glasø, 2018). Employees should receive incentives immediately after positive results. The size of salaries and bonuses should not be tied to the positions held  if an employee consistently shows good results, their remuneration should be significant.

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The first solution is to replace the current Scanlon Plan with a system that majors on employees internal motivation. The new system should not use a financial reward system to motivate the staff. Instead, it should follow theory Y, which asserts that managers should be nice to their workers and use a decentralized, collaborative approach to management. This makes it easier for managers and employees to work together and trust each other (Thompson, G., & Glasø, 2018). Managers encourage employees to improve their skills and suggest improvements as they take on more responsibility. Instead of controlling employees, appraisals are used to encourage open communication. Therefore, adopting a non-financial employee motivation system is the most appropriate strategy for the organization.

Everyone should be encouraged to do their best because they want to be proud of their work instead of because they could get a bonus if they did their best. People at Engstrom Auto Mirror Plant did and said things that led to the plants downfall after the bonuses stopped. Remove the Scanlon Plan, and the management will eventually get rid of the rest of the problems because employees would feel they had to meet the highest standards because it would reflect on them (Thompson, G., & Glasø, 2018). Adams Equity Theory might be an excellent way to make sure that the inputs and outputs of an organization are in balance. This would also help build a stronger relationship between employees and leadership.

The second solution is to incorporate adequate communication within the workplace. Using the concept of theory Y, effective communication between employees at all levels builds relationships and keeps everyone on the same page. This fosters a positive work environment and boosts employee motivation and productivity. To be efficient in developing and fostering partnerships, communication needs to be open and clear. Normally, clarity is an important aspect because ambiguous communication can result in aspirations not being met, relationships being ruined, and trust is broken. Therefore, due to distrust, ineffective communication can lead to dissatisfied and demotivated employees.

The third solution is that the organizations management needs to create an organizational culture and ensure that the employees understand it. A place of work with an organizational culture has clear goals and expectations (Thompson, G., & Glasø, 2018). As a result of this, employees are more interested in their jobs and interactions with others. It also leads to employees who are very interested in their jobs, making them more productive. Having a strong relationship with an organization and its people makes for a good environment that is hard to ignore. Also, businesses with a strong organizational culture are more likely to do well than those with less structure. This is because they have systems that help employees be more productive, be more productive, and be more engaged.

Case Study: Strategic Actions

It should be noted that Engstrom is entirely dependent on the motivation of its employees, so it is necessary to develop strategies that will allow the company to change its approach to management. One of the prerequisites for proactive management in business is analyzing market behavior and trends (Escrig-Tena et al., 2018). The use of intelligent technologies helps to predict the behavior of the business system to the head of the corporation based on analyzed and created models of the development of the situation (Escrig-Tena et al., 2018). It can be done by taking into account previously accumulated and current data. The intelligent, proactive management complex includes various software and hardware platforms, universal and specialized applications that can be integrated into a single information system to solve a unique task for Engstrom. Thus, with the use of a human-machine system and a tool to support the effective intellectual predictive activity of the company, it will be possible to make the necessary changes without losing the companys efficiency.

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One of the strategic actions is adopting an appropriate change management method to avoid issues during the transition from Scanlon System to a new one. If a change process is not handled effectively, the organization is prone to issues such as employee resistance, which can reduce productivity. In this case, a change model such as Kotters 8 steps can be used to manage the process (Seijts & Gandz, 2018). A social support system is required, as change is rarely viewed as a positive, and the Scanlon Plans end will be difficult for many to accept. In addition, the model will ensure that all the employees are involved in the change process. It majors on eliminating employee resistance and providing a conducive environment for change. Therefore, the organization will effectively manage the change process and succeed with the change model.

Another strategic move that needs to be made is to increase employees engagement and participation by holding mandatory meetings once a month. Appropriate employee meetings include feedback that is often specific, regular, outcome-based, positive, and sometimes conversational (Escrig-Tena et al., 2018). These meetings will let management talk about what they want for the company, and the employees will be able to say what they think and give ideas for how to move forward. Allowing employees to speak up will make them feel more like part of the group, which will make them work harder. A theory called Theory Y will be used because it is a more supportive way to deal with problems and encourages employees to accept and take on more responsibility.

The other strategic action is to establish a channel of communication that is both open and honest. Communication is critical in light of the widespread mistrust between employees and upper management (Seijts & Gandz, 2018). Employees must believe that they can bring their grievances to a reputable organization and take their complaints seriously. Management must also learn how to communicate with employees effectively. Communication is the key to building strong relationships. Trust and loyalty are important parts of any relationship, and communication that focuses on meeting each persons needs can help build both. Thus, having good relationships with people outside the company makes it easier to talk about products, services, company culture, and values clearly and consistently.

Employees expect to be valued for their work and how well they do it. Bent must make sure that everyone knows about this, but he must also make it a part of the organizations culture (Seijts & Gandz, 2018). Bent is very upset that there is no way for each person to be recognized, but it is important to meet the need for achievement. In this way, the Scanlon Plan does not work. Financial incentives cant make up for organizational flaws or things that cannot be stopped, like the economy and industry slowdown. The system should be public and show appreciation from co-workers, management, and the organization. It should also be for exceptional work that does not happen very often.

Moreover, for employees to feel like they have done a good job, they need to be able to reach personal and professional goals, be proud of them, and get praise for them. Once these needs are met, team spirit should grow. Over time, the hostile environment will get better, and working there will be more fun (Seijts & Gandz, 2018). The collaborative approach will grow over time because employees will be happy with their work, feel appreciated, and meet their needs. As the business grows, changes, or grows, it is important to go back to the action plan and change it. Over time, these requirements should be met, which will lead to more satisfaction and, in the end, a motivated workforce that is productive and driven.

The use of digital technologies helps the management predict how the business system will act based on models of how the situation will develop that have been studied and made (Escrig-Tena et al., 2018). This can be done by combining data from the past with data from the present. The intelligent, proactive management complex comprises different systems and technologies, as well as worldwide and customized apps that can be integrated into a single unit to help Engstrom with a unique task. Based on this, using humans and technology to support the firms effective intellectual predictive operation will make it feasible to take the necessary steps without placing the organizations achievement at risk.

The organization managers should demonstrate honor and kindness in their daily actions. Trust is earned over time, and the most effective way to earn trust is to demonstrate your reliability consistently (Seijts & Gandz, 2018). Minor incidents, such as gossip or disclosing any form of secret, portray a person as untrustworthy in the eyes of the public. Therefore, making an effort to be honorable and kind in all daily activities and interactions will help establish an individual who can be relied upon. In addition, employees easily foster trust with their managers and leaders if they display empathy and concern.

Case Study: Description, Understanding, Prediction, and Control

With a well-chosen strategy and its optimal implementation, the movement of the participating elements is transformed from a chaotic state into an ordered one. It is worth noting that this significantly increases the effectiveness of the planned actions of the organization. The goal of the strategy is to hold the points of the present and the future simultaneously and implement a consistent and gradual transition of actions on these ideas (Olkiewicz, 2018). Forecasting plays a special role in developing the strategic image of the organization. Ideas about the future of a company can be very diverse. However, without them, the organization loses its development guidelines and the meaning of its existence (Olkiewicz, 2018). The importance of describing and understanding the situation in which the company is economically and financially located is manifested.

In the ever-changing conditions of the modern world, timely implementation of changes in an organization plays a significant role. This aspect is depicted in its existence as an integral structure and in determining the financial and social status of its employees (Olkiewicz, 2018). If global and long-term perspectives prevail when making a particular management decision, they are likely to be divorced from reality, and only general answers will be received to specific problems. If local organizational problems are solved without understanding broader relationships at the strategy level, then such decisions will not be properly prospectively justified; they will be focused only on the organizations present situation. Therefore, it is essential to control many aspects of the functioning of all company systems.

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An organization must place a high value on the descriptions, understandings, forecasting, and control of its operations as an integrated platform. This contributes to the development of behavior systems within the organization, including complex behavioral exchange patterns (Olkiewicz, 2018). A description is followed by understanding when the emphasis is placed on it, and these are two very important components of running a successful business enterprise. In addition, employees will benefit greatly from placing a high value on predictions because it will enable them to think for themselves and anticipate future needs. Based on this, recognizing and emphasizing the importance of control plays a role in ensuring a companys long-term success. It does not matter whether one is in control of oneself or control of the outputs.

Workplace: Organizational Issues

Original Milestone Three Analysis

The Engstrom Auto Mirror Plant located in Richmond; Indiana had problems on the horizon when a downturn hit the industry, the plant had been good over a seven-year period and the employees had become accustomed to The Scanlon Plan (the typical bonus paid to sales representatives) and the substantial bonuses. Therefore, when the bonuses stopped, the workers responded with anger and suspicion (Beer, 2008).

According to Dulebohn, Bommer, Liden, Brouer, & Ferris, 2012; job satisfaction is a complicated and multi-dimensional concept, which is related to mental, physical, and social factors. Emotional exhaustion is the mental dimension of job satisfaction that can affect personal performance.

As Bents uncertainty about these issues deepened, personal doubts arouse about his own performance (Beer, 2008). Managers take care of the railroad tracks, but leaders shift the tracks, change the boundaries, and redefine direction. To be a leader, you need to anticipate like a great chess player who looks ten moves ahead and quickly adjusts to the opponents play (Ashkenas & Manville, 2018). In other words, take initiative to move forward and be ready for any obstacles that may present itself. Employees may feel stress about their job due to the increasing levels of competition that the organization needs to face. Due to the market competition the increasing employees workload seems to be common issue in the workplace. Good colleagues or co-workers is one of those factors and more importantly, a co-workers support may increase employees productivity and at the same time will reduce error in work (Srimarut & Mekhum, 2020).

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The primary issue experienced in the organization is the failure of the Scanlon plan, which was introduced to motivate the employees. The initiative was effective when employees received it as benefits for the work done. However, problems emerged when the plan stopped due to a lack of adequate funds, and the employees became enraged and suspicious (Beer, 2008). Anxiety is a mental part of job dissatisfaction that can affect how well someone does their job. As Bents doubts about these things grew, he began to worry about how well he was doing (Beer, 2008). To be a good leader, you have to think ahead like a good chess player who looks ten moves ahead and changes quickly based on what the opponent does (Ashkenas & Manville, 2018). In other words, take action to move forward and be ready for any problems that might come up. Employees may feel stressed at work because the organization has to deal with more and more competition.

Workplace: Root Causes

The root causes of the Auto Mirror Plant began when the industry downturn that began in 2005 gradually dragged down the workforces morale along with the sales figures. When they occurred in the mid-2006, the layoffs shook the confidence of even the most fervent Scanlon Plan proponents among the workforce (Beer, 2008). Employees depend on incentive plans for necessities, such as living expenses, bills, emergencies, etc.

Employees can have fear, anxiety, and feelings of rejection from this course of action. And even deadlier combinations of interpersonal conflicts, individual differences, organizational factors, and extra-organizational issues can arise. Interpersonal conflicts are quite common at workplaces because we spend long hours in the offices dealing with the boss, subordinates, and peers (Shweta & Srirang Jha, 2008). These differences are why everyone is unique in their capabilities of learning, adapting, and adjusting to new stimulation.

Everyone has a different personality, attitudes, opinions, beliefs, culture, emotional stability, maturity, education, gender, language, etc. So, responses to particular stimuli will vary. Incompatibility, hostility, view of a particular manner, worldview, or value system can in fact emerge out of individual differences that often assume emotional or moral overtones (Whetten & Cameron, 1991).

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The Auto Mirror Plants root causes started when the sector recession that began in 2005 progressively reduced employees morale and sales. When the layoffs began in mid-2006, they shook even the most ardent Scanlon Plan supporters in the workforce (Beer, 2008). Employees rely on incentive plans to cover essentials like living expenses, bills, and emergencies. This course of action may cause employees to experience fear, anxiety, and feelings of rejection. This may also lead to aspects such as interpersonal conflicts, individual differences, organizational factors, and extra-organizational issues.

Interpersonal conflicts are quite common in most organizations because the management majors on other things such as creating ways of increasing performance. Based on this, managers pay less attention to critical aspects such as trust and building positive relationships (Shweta & Srirang Jha, 2008). Because of these differences, everyone is unique in their abilities to learn, adapt, and adjust to new stimuli. In addition, everyone is unique in terms of personality, attitudes, opinions, beliefs, culture, emotional stability, maturity, education, gender, language, and many more. As a result, responses to specific stimuli will differ. Furthermore, individual differences that often take on emotional or moral overtones can result in incompatibility, hostility, and views in a particular manner.

Workplace: Solutions

Enthusiasm waned and dissatisfaction grew with certain aspects of The Scanlon Plan. The distrust of bonus calculations and questions of fairness was felt by the employees. Employees thought their bonus were being reduced and thought that the company might be playing with the numbers (Beer, 2008).

What is the simplest, surest, and most direct way of getting someone to do something? Ask? Tell the person? Give the person a monetary incentive (and sometimes this doesnt work)? The most marvelous way of motivating people to work-getting them off the job! The fact is that motivated people seek more hours of work, not fewer. The cost of fringe benefits in the U.S. has reached approximately 25% of the wage dollar, and we still cry for motivation. Personnel managers concluded that the fault lay not in what they were doing, but in the employees failure to appreciate what they were doing. Management can order morale surveys, suggestion plans, and group participation programs. Communication is a two-way street. Another goal is giving employees a feeling that they are determining in some measures, what they do on the job. Employees harboring irrational feelings that interfere with the rational operation of a factory need counseling at this po

Introduction

The present literature review includes analysis and assessment of pertinent sources within the field of leadership. The goal of this literature review is twofold: The first goal is to examine the nature of abuse in the workplace, as it is necessary for a broader introspection into the specific problem of leadership abuse. The second goal is to determine how leadership abuse effects work performance and creativity, which is an integral part of the contemporary work environment. In line with the stated goals of the dissertation, the purpose of this literature review is to find any linkage between abuse and poor work performance. This will necessitate a deeper look into the reported consequences of workplace abuse, such as health, mental, economic, and other outcomes.

The first part of the literature review includes examination of literature regarding the concept of workplace abuse, its causes, effects, and methods of delivery; and discusses the various forms it takes depending on the setting. In the second part, the researcher will contextualize the findings from the first part to determine the effects of abuse on work performance. The volume of research about abuse and leadership is extensive. Publications that were consulted in the process of preparing this literature review included the Journal of Business and Psychology, the Journal of Occupational Health Psychology, Personnel Psychology, and the Academy of Management Journal. The consulted journals, articles, and other scholarly sources indicated the danger of abusive leadership and pointed to the severe psychological, physiological, economical, and social consequences of abuse. However, the most notable consequence, from the perspective of management, is the loss of productivity that arises from leadership abuse. This is the most frequent and expensive consequence, as it prevents individuals affected by abuse from performing their duties.

Conceptual Framework

Transformational Leadership

It has been acknowledged that the leadership style has considerable effects on employees performance and work environment, and transformational leadership is regarded as one of the most effective models. Transformational leadership can be defined as an approach by which leaders motivate followers to identify with organizational goals and interests and to perform beyond expectations (Buil et al., 2019, p. 65). Some of the most common features of this type of leadership include charisma or individualized impact, intellectual stimulation, inspirational motivation, and individualized consideration (Buil et al., 2019). These aspects may be manifested differently in a leader, which may affect the strategy the leader will utilize in different situations.

Intellectual stimulation encompasses leaders ability to encourage employees to explore their creativity, innovate, as well as the capacity to challenge personnel and facilitate the development of new ideas. Recent research shows that transformational leadership is instrumental in enhancing employees innovative effort and creativity (Ng, 2017). As far as inspirational motivation is concerned, transformational leaders articulate their vision and inspire followers to share it and achieve this vision (Buil et al., 2019). Such leaders facilitate the enhancement of employees proactivity and adaptability, which has a positive influence on their performance (Wang et al., 2017). Transformational leadership also contributes to the development of a learning organization culture where employees share knowledge and innovate, which enhances their and organizational performance (Para-González et al., 2018). Companies also need to provide ongoing training to the staff to maintain the established culture.

Individualized consideration is critical for the effective use of transformational leadership. Employees performance improves when their needs are met, including the needs in a specific amount of support from a transformational leader (Tepper et al., 2018). Sufficient or excessive amount of received transformational leadership has a positive impact on organizational citizenship and work attitudes. The increase in employees engagement and organizational citizenship is associated with the development of a psychological attachment to a transformational leader (Sahu et al., 2018). These attachment types play a mediating role in employees engagement with different levels of exhaustion. At that, personnel engagement is lower when transformational leadership is low on days with high job demands (Breevaart & Bakker, 2018). A high level of transformational leadership on such days is a mediator of employees engagement.

At the same time, transformational leadership has a darker side as well because it can have negative outcomes on certain aspects related to performance, motivation, and working environment. For instance, this leadership paradigm can hinder employees thriving if associated with a moderate or high level of employees exhaustion (Niessen et al., 2017). Inconsistent transformational leadership can also have mixed effects. For instance, transformational leadership does not correlate with the creativity of employees with a low level of perceived organizational support (Suifan et al., 2018). Therefore, it is critical to consider the diverse aspects and influences of transformational leadership.

Transformational Leadership and Abusive Supervision

Although the impact inconsistent transformational leadership has on performance at organizational and individual levels has received certain attention in academia, the relationship between transformational leadership and destructive forms of leadership is still under-researched. It has been found that leaders tend to alternate leadership styles, which has diverse effects on employees job performance, satisfaction, psychological wellbeing, creativity, and commitment (Mullen et al., 2018). For instance, although transformational leadership contributes to the enhancement of safety participation, the positive influence of this working environment can be hindered when abusive supervision occurs. When leaders alternate transformational leadership and abusive supervision, employees feel higher levels of stress and are less productive. Due to the damage to employees psychological wellbeing, their behavior can change to counterproductive, which will lead to negative effects for the workplace atmosphere. According to Mullen et al. (2018), in order to minimize the occurrence of abusive supervision, it can be effective to encourage leaders to develop successful leader-member relationships. Enhanced leader-member exchange mitigates the adverse consequences of abusive behaviors and makes leaders more empathetic and improves their emotional intelligence as well as the corresponding competencies.

Inconsistent transformational leadership can also lead to a change in employees engagement and performance on a daily basis (Huang et al., 2019). For instance, the personnels performance can be high on one day while employees may be disengaged on another day depending on the leadership the supervisor uses. Sustained abusive leadership results in low morale, disengagement from current tasks, and low performance. Huang et al. (2019) emphasize that researchers may need to explore the relationship between abusive supervision and employee performance in day-to-day contexts in order to identify the exact mechanisms involved in the process.

Transformational leadership can have no mediating effect on employees performance if abusive supervision prevails and the former leadership style is utilized occasionally (Barling et al., 2018). Leaders often switch to different forms of leadership due to the availability of resources, and it has been found that autocratic leadership was effective in the presence of scarce resources while abusive supervision had milder negative consequences compared to similar circumstances and the use of transformational leadership (Barling et al., 2018). It is noteworthy that Barling et al. (2018) conducted their research in the healthcare setting, which displays certain limitations and the need to address the topic in a larger context.

The abusive behavior of ethical leaders can have rather negative effects making subordinates more receptive to abusive supervision in the future. Prior use of ethical leadership posed the focus on interactional justice that had a moderating impact on the relationship between abusive supervision and work outcomes (Wang & Chan, 2020). Interactional justice is associated with peoples perceptions of the degree to which they are treated with respect and dignity in different contexts (Wang & Chan, 2020). On the one hand, when employees feel they are treated unfairly, their psychological wellbeing is negatively affected, which may result in vulnerability to abusive supervision and workplace deviance. Such people may become victims of abusive leaders or react in an increasingly intense manner. On the other hand, inconsistent leadership tends to increase peoples need for interactional justice, and if abusive supervision frequency or magnitude grows, negative workplace outcomes intensify.

Individual characteristics and skills of the staff also play a significant role in their performance under such conditions. For example, employees with high levels of mindfulness perform better when transformational leadership is utilized, but they are also increasingly affected by abusive supervision, which has detrimental effects on their psychological well-being and performance (Walsh & Arnold, 2020). Therefore, employees mindfulness can result in their poor performance and job dissatisfaction, or full work engagement, if inconsistent leadership is utilized, depending on the used leadership style on a daily basis. These findings are consistent with the results of previous studies, which makes researchers more attentive to inconsistent leadership and its outcomes. Walsh and Arnold (2020) also suggest that employees may need extensive training regarding effective coping strategies to ensure their mindfulness will not enhance negative responses to abusive leadership and will facilitate the development of a favorable working environment.

At the same time, Lange et al. (2018) found a positive relationship between leaders mindfulness and transformational leadership, while the leaders mindfulness and abusive supervision were characterized by a negative relationship. An important observation has been made as mindful leaders tended to exert transformational leadership when addressing innovation-related incentives and individuals ideas or performance rather than team-based aspects (Lange et al., 2018). This trend is explained by the resource-based approach as mindfulness is mainly related to personal links and interpersonal relationships. Although some aspects of inconsistent leadership use have been explored, the link between transformational leadership and abusive behavior requires further investigation, as well as the impact these leadership styles have on employees performance.

Workplace Abuse

Workplace abuse is a behavioral model that happens when one or more individuals  either other employees, managers, leaders, or others  persistently abuse another individual over a prolonged period. In most cases, the abuse is psychological, whereby the victim endures continued attacks on his or her dignity, professional reputation, or moral integrity (Duffy &Yamada, 2018). Further, workplace abuse is targeted and systematic, aimed at diminishing ones ability to perform. This causes harmful side-effects including damaging the work environment, limiting productivity, and a myriad of health-related issues for individuals (Bowling, Camus & Blackmore, 2015). The goals of abuse in the workplace are as diverse as the methods. In some cases, leaders use abuse to control their subordinates, or as a tool to push unwanted elements out of the team (Bowling et al., 2015). Abused workers are continuously exposed to degradation and physical torment, which limits their ability to function and reduces their communication with peers and managers, causing them to either leave the position or suffer through the abuse indefinitely (Okechukwu et al., 2014).

Workplace abuse need not be targeted to a single employee, rather, some leaders may use abuse in the workplace as a method of exerting control. In such instances, all, or almost all, employees are subjected to overt or covert abuse. Leaders who are particularly skilled at this form of control do not do it openly, rather, they exert different methods of abuse for different employees with the goal of subverting them (Kemp, 2014; Duffy & Yamada, 2018). It was noted that leaders who exert negative traits in the workplace have a significant degree of influence on the performance of their subordinates (DInnocenzo, Mathieu,&Kukenberger, 2016).

While not all leaders with negative traits abuse their subordinates, they do have a detrimental effect on employee morale. Job performance is a critical indicator for nearly all decisions within companies. For example, a good performer will earn promotions, bonuses, and other benefits more frequently than a low performer, which then determines the outcomes of employees careers (DInnocenzo, Mathieu,&Kukenberger, 2016).

Workplace abuse has three basic elements: It is systematic, it occurs over an extended period,andit is performed with the goal to cause stress and discomfort in the target. In the most extreme cases, workplace abuse can lead to other forms of abuse, such as sexual or physicalindividual (Bowling et al., 2015). The main motivator for workplace abuse is the destruction of the targets dignity and self-image, and it pertains only to traits that are linkedto the work environment. In comparison, sexual and racial abuse are linked with innate, unchangeable traits of an individual (Bowling et al., 2015).

Causes of Workplace Abuse

Interpersonal Aspects

In most cases, abuse is caused by interpersonal conflicts in the workplace. The most common causes are linked with the inadequate organization and work processes such as scheduling, the disproportion between work requirements and rewards, lack of autonomy, and accommodation for the specific skills of employees (Einarsen, Hoel, Zapf, & Cooper, 2011). Additionally, abuse can be caused by poor work conditions: exposure to dangerous substances, noise, high or low temperatures (Fox & Cowan, 2015). Lack of communication and inadequate management procedures are also very commonly associated with abuse, as are frequent changes in working conditions, re-assignment to different positions, and lack of managerial support. The cause of abuse is often linked with whistleblowing, as managers and leaders abuse subordinates who perform illegitimate or unethical business practices, contact authorities, or in any way undermine the position of the company (Fox & Cowan, 2015).

Generally, abuse is more frequent in companies with diminished interpersonal relationships as compared to companies with strong interpersonal relationships. Workplace abuse arises from unsolved conflicts between employees or between managers and employees, inadequate work procedures that lead to mistrust and conflict, and when the company faces legal confrontation with its employees over work rights (Fox & Cowan, 2015). Long-term unresolved personal conflicts can be especially volatile within a competitive working environment. According to Ashanasy et al. (2016), when coupled with inadequate managerial practices and low support, this can lead to horizontal abuse, whereby employees attack each other to eliminate competition. The most common victims of this type of abuse are over-achievers (Qureshi et al., 2014; Ashkanasy et al., 2016).

Vertical abuse is directly related to leadership. While most leaders do not engage in workplace abuse directly, there are instances when they can become hostile towards an employee, usually because of a perceived threat from that individual to the leaders station. However, leaders can be abusive if they lack the social and cognitive skills necessary to manage their departments, and they may use psychological and verbal abuse to exert control over subordinates (Hogh et al., 2011).

Leaders Traits

Leaders personal traits also pave the way to abusive supervision in organizations. Leaders creative mindset is linked to abusive supervision through moral disengagement (Qin et al., 2019). Leaders negative creativity is closely related to abusive leadership as supervisors use all possible means to achieve their vision irrespective of their followers needs, features, and performance. Leaders high in moral disengagement tend to have low capacity to self-regulate, which results in their abusive behavior. Qin et al. (2019) paid specific attention to day-to-day fluctuations in leaders supervision and employees performance and found a direct link between the mentioned variables and within-person factors rather than interpersonal aspects. For instance, the quality of sleep and the perception of work-family balance plays a more significant role in choosing a behavioral pattern than specific workplace processes or relationships.

Such personal characteristics as extraversion, openness to experience, conscientiousness, and neuroticism are associated with abusive supervision (Tahira et al., 2019). Such features as conscientiousness and neuroticism have been long associated with abusive behaviors as such people are often inflexible and prone to negative emotions. However, extraversion is not commonly linked to abusive behavior, which creates a considerable gap in the knowledge on the matter. Tahira et al. (2019) address this gap identifying the relationship between leaders extraversion and abusive supervision. It is stated that extraverted people feel freer when articulating their ideas and expressing their emotions, and this confidence tends to lead to abusive leadership. At that, diverse factors, such as organizational culture, cultural peculiarities, as well as employees perceptions and individual traits, can have a moderating impact on leaders abusive behaviors.

Leaders attachment orientation is an influential factor affecting their leadership style as well. Attachment theory has been widely used in studies examining leadership and peoples occupational behavior (Robertson et al., 2018). This theoretical framework is based on the exploration of the relationships between infants and their caregivers, as well as the influence of these patterns on cognitive and social models the former develop and employ during their adulthood. Diverse patterns and modes of adult behavior exist. When applied to occupational behavior, it is stated that people with anxious attachment orientation are more likely to display abusive supervision while close/dependent attachment orientation had a negative relationship with abusive leadership (Robertson et al., 2018). In contrast, supervisors high on close/depend attachment domains tend to think they are capable of cultivating effective relationships, so they do not engage in abusive behaviors. Social self-efficacy is a strong mediator affecting the use of leadership styles in both cases. The training aimed at the development of social skills and increasing leaders confidence in their ability to build successful relationships is regarded as an successful strategy to minimize abusive leadership.

In addition to personal characteristics, leaders beliefs regarding abusive supervision outcomes are also instrumental in their use of this type of leadership. It has been found that leaders who believe that abusive leadership is appropriate and results in better performance tend to display abusive behaviors (Watkins et al., 2017). Supervisors empathic concern plays a moderating role in the relationship between abusive behavior and adverse workplace outcomes. Such leaders may use abusive supervision irrespective of employees previous performance. High-achievers can also become victims of negative leadership due to their leaders beliefs regarding the effectiveness of abusive supervision and its favorable effects on performance (Watkins et al., 2017). Depending on the degree to which the leader exhibits empathic concerns, the leader uses abusive supervision to achieve organizational goals.

Employees Traits

Employees personal features are linked to workplace abuse in various domains. Worldviews and the attitude to authority, as well as the level of performance of individuals, can predict their victimization by abusive leaders (Khan et al., 2017). Khan et al. (2017) utilized the dual-process model to investigate the role personnels perspectives play in the relationship between abusive supervision and performance. The model implies the focus on the competitive and dangerous worldviews. In the former case, people attempt to achieve dominance in a group due to their assumptions regarding the competitiveness and the importance of dominance. In the latter case, people see the world as a dangerous environment and seek enhanced social cohesion, as well as collective security. These perspectives affect the staffs attitudes and responses to abusive supervision (Khan et al., 2017). People who have the dangerous worldview are more likely to be submissive and display obedience with autocratic and abusive leadership. Higher submission to authority is associated with poor performers and employees deviant behaviors in the presence of abusive leadership. Such employees tend to be victimized due to their poor performance and behavior (passivity and submissiveness).

Employees neuroticism and introversion were strong predictors of exposure to abusive supervision (Nielsen et al., 2017). Employees with such personal features were more likely to engage in workplace deviation and low performance. Extraversion, agreeableness, and openness to new experiences had a negative relationship with abusive leadership although openness had a less significant influence on peoples response to abusive supervision. It is also evident that people with such traits are vulnerable to victimization, so the vicious circle emerges as they are prone to enhanced reactions that lead to their further abuse. Nielsen et al. (2017) also add that the meta-analysis they implemented showed that methodology had an effect on the results as the variables (openness, extraversion, and the rest) were conceptualized and measured differently. Hence, further research on the relationship between individuals personal traits and abusive supervision is needed.

Machiavellianism is another characteristic feature of employees that is associated with the use of abusive leadership. Under abusive supervision employees Machiavellianism is activated and people engage in unethical behavior as a response to leaders abusive conduct (Greenbaum et al., 2017). Such Machiavellianism dimensions as a desire for control, distrust in others, amoral manipulation, and a desire for status have been in researchers lenses. The primary predictors of the counterproductive workplace and unethical behavior are the desire for control and amoral manipulation (Greenbaum et al., 2017). Hence, abusive leadership activates some negative traits in employees and deteriorates their commitment and performance, which leads to diverse negative effects, including but not confined to an inappropriate workplace environment.

Subordinates attentional bias and trait self-control is influenced by abusive supervision and can play a mediating role in employees safety behaviors (Yuan et al., 2018). Emotional exhaustion also moderates the link between abusive leadership and safety behaviors. Trait self-control had the strongest mediating effect on the relationship between emotional exhaustion and abusive supervision (Yuan et al., 2018). Employees psychological capital is another feature that can enhance the negative relationship between abusive supervision and employee productivity (Raza et al., 2019). Psychological capital is the complex notion consisting of such aspects and traits as self-efficacy, optimism, resilience, and hope. Employees with a strong psychological capital are less affected by leaders abusive behaviors and remain high performers. Psychological capital can be accumulated through the development of the corresponding culture and the enhancement of proactive relationships between the leader and followers, as well as a social exchange among employees.

Organizational culture also has a direct and indirect impact on the occurrence of abusive supervision. Companies with weak organizational cultures are often characterized by the existence of counterproductive work behavior (CWB) norms, which is one of the factors contributing to the use of abusive leadership (Ju et al., 2019). Employees personal control plays a considerable role in the process as the presence of CWB norms alone does not always result in CWB. Leaders personal traits, as well as workload, work-related stress, and personal control, intertwine with CWB norms, which results in abusive supervision. Companies with autocratic leadership tend to be an illustration of this phenomenon as they are associated with rather strong CWB norms. An effective way to diminish the adverse outcomes of abusive leadership and minimize its occurrence is training provided to managers who need to understand the detrimental effects of abusive supervision and ways to avoid undesirable behaviors (Ju et al., 2019). The establishment of proper organizational culture with no CWB norms is another goal to attain to make abusive supervision in the working place impossible.

Abuse in the workplace grew alongside globalization and market liberalization, mainly because of the development of authoritative management systems (Hogh et al., 2011). The need of authoritative managers to exert control over employees, coupled with increasingly competitive markets, and pressure from global competitors make authoritative leadership a contributing element tosuccess(Hogh et al., 2011). It should be noted that this applies only to authoritative leaders, as other types manage employees without the need to control them (Hogh et al., 2011). However, the need to increase efficiency of the organization, which is the key determinant of authoritative leadership, has led to reductions in employee representation due to the ossification of the vertical power structures (Hogh et al., 2011). This causes poor working conditions and creates friction for employees and managers. Under such circumstances, leaders turn to authoritative measures, among which abuse presents the least frequent but most detrimental measure available (Manotas, 2015; Zapf et al., 2011).

Leadership and Abuse

When observing the indicators of poor performance and their linkage to abusive leadership, several key themes emerge  mediating factors, group association, meaning derived from work. Primarily, this relates to the various mediating factors  such as salary, role in the organization, gender, age  that influence the damage abusive leaders exert on employee performance. Within this context, employees who value their work are more susceptible to abuse. Their counterparts, who derive little meaning from their work, can endure abuse because they are disconnected from their work and any abuse will not affect them as severely (Branch et al., 2013; Johnson, 2017).

Employees can be categorized into three broad groups according to their approach to work: motivated, unmotivated, and somewhat motivated. The level of motivation is mediated by the sense of meaning derived from work. Workers who derive meaning from their work are often highly motivated, highly productive, and valuable to the company. However, such employees are also the most common targets of abusive leaders, as they are perceived as a threat to the integrity of the leaders position, or as a competitor for the position (Branch et al., 2013; Johnson, 2017). Meaning of work is one of the strongest predictors of employee performance (Johnson, 2017; Branch et al., 2013). Out of the four key dimensions of psychological empowerment (meaning, competence, self-determination, and impact), meaning is the most notable predictor and the one that can be mitigated by abuse the most (Johnson, 2017; Branch et al., 2013). Performance is mediated by social interactions, interpersonal relationships, and intra-company power relations (Johnson, 2017; Branch et al., 2013).

Two of the theoretical approaches that can be used to measure the effects of abusive leadership on work performance is the COR (conservation of resources theory) or social exchange theory(Johnson, 2017; Branch et al., 2013). Under the framework of COR, there are four main conditions that mediate work performance: perceived thethreat of resource loss, resource loss, the individuals perception of excessive resource loss, and resource investment fails to accrue returns(Johnson, 2017; Branch et al., 2013). This implies that abusive leadership leads to either one of these outcomes, or more, and has a negative impact on employee performance. This costs the company resources as the workers do not provide any added value(Johnson, 2017; Branch et al., 2013).

According to the social exchange theory developed by Thibaut & Kelley (Johnson, 2017; Branch et al., 2013), reciprocity is a critical component of all social contracts, including employment. Employees reciprocate their rewards by providing added value to the company. Thus, with negative reciprocity,one wrong is reciprocated by another. For example, employees who are abused will not be as effective in their performance because they experience a negative approach by the leader who is then reciprocated by their unwillingness to perform(Johnson, 2017; Branch et al., 2013).

Managers are predominately the perpetrators of abuse in companies, especially in less developed economies, where the possibility of finding alternative employment are negligible. By cross-referencing the data from the most developed nations, it is possible to notice a very frequent theme: bossing (Gerstein & Friedman, 2017; Gu, Tang, & Jiang, 2015). According to research from the US and other countries (Okechukwu et al., 2014; Van Heughten& Schmitz, 2015; Yamada & Duffy, 2018), almost 81% of victims experienced vertical abuse, which is higher than the 63% of cases reported in the UK and other EU nations. In 83% of the cases, the perpetrator of violence is the manager who is a direct superior to the victim. Thus, workplace abuse is most frequent in environments where victims and abusers have frequent contact (Lavoie-Treemblay et al., 2016; Xia, Zhang,& Li, 2017).

Managers are most often the perpetrators of abuse, which has significant consequences on individuals who suffer from their abuse and on the company. One of the factors that influences company performance is employee motivation. Motivation is then influenced by a number of intrinsic and extrinsic elements such as workplace environment, salary, respect, recognition of excellence, job enrichment, career development, the ability to critique processes, and goal-oriented management (Lavoie-Treemblay et al., 2016; Xia, Zhang,& Li, 2017). Most of these elements constitute non-material factors, which lose their value in cases when vertical abuse is present. As a result, the company suffers and can lose its position in the global market (Lavoie-Treemblay et al., 2016; Xia, Zhang & Li, 2017).

Although abuse is often not the byproduct of the actions of victims, but rather the effect of personality and traits of abusers, disrupted interpersonal relationships in the workplace can lead to abuse. The problem of abuse is especially evident in companies operating within stress intensive markets, which causes frequent dissatisfaction among employees and managers. This, in turn, can lead to abuse. Individuals working in high-stress positions have a lower tolerance for aggression, and lower understanding of interpersonal conflicts as compared to individuals in low-stress positions.

Successful organizational management lies i

Introduction

The purpose of this paper is to examine, evaluate, and underline the financial and market position of Turkish Airlines, which is a major service sector company in the relevant industry. This research has highlighted the financial conditions of the company by using the most recent data available from the annual report of Turkish Airlines, textbooks, and academic journals in order to come up with the future trends, apposite benchmark, cross-sectional industrial analysis, horizontal and vertical analysis, and SWOT analysis of the business. To support the project report, this paper has also presented an industry analysis, activity analysis, scrutiny of the liquidity position, solvency, and debt management analysis, and profitability analysis for Turkish Airlines, which would offer readers an in-depth perception of the business, and assist the relevant stakeholders in making the investment decisions.

Background of Turkish Airlines

The Ministry of National Defense established Turkish Airlines in 1933 and it is the national flag carrier of Turkey; the Privatization Administration owned 49.12% share and publicly traded more than 50.8% share; at present, it is the fourth-largest carrier in the world (Turkish Airline, 2016). This company provides services in 119 countries with 298 destinations all over the world; in 2016, it had 334 aircraft and it intends to increase this number by 164 within the next 6 years (Turkish Airline, 2016). According to the annual report 2016 of Turkish Airlines, this company has been passing a challenging period because the fuel price increased by 20%, and boosted overall competition in the global industry; thus, its total revenues decreased by 6.9% in 2016 and it has experienced a significant loss, for instance, net profit and EBIT decreased by 107% and 116% respectively. However, figure 1 gives more information on this aspect.

The total number of the passenger was 39.045 thousand in 2012 and this figure increased by 23714 thousand within the last four years; however, figure 2 gives more information in this regard.

Table 1 provides more information about this airline-

Table 1: Profile of Turkish Airlines. (Turkish Airlines, 2016).

In order to get a better overview of the company, it is necessary to evaluate the return on assets (ROA) and return on equity (ROE) of the firm, so that a clear glimpse of its present performance can be assessed. It is essential to note that ROA demonstrates the percentage of income a business generates with respect to the corporate reserves and is usually characterized as the net income divided by the total-assets; as a result, net- income is obtained from the financial statements of the business and is calculated from the profit following the taxes and duties. The corporate assets must consist of funds and cash equivalent things, like resources, machineries, stocks, receivables, properties, as well as the actual worth for the intellectual properties (like copyrights, patents, and others); moreover, goodwill is included in the list, since the additional wealth rewarded to the business on top of its real book-value should also be taken into account. Since assets are likely to fluctuate in due course, most businesses use an average of the total corporate possessions; as a result, the return on total assets for one-quarter must be calculated from the net income for the period, divided by the average-assets during that period; consequently, even though return on assets is a ratio, it is typically represented as a percentage. Table 2 provides calculations for ROA-

Table 2: ROA of Turkish Airlines.

It is arguable that an elevated percentage of return on assets represents that the company is profitable, and is getting stronger with time  but for capital-intensive companies, it is truly tough to attain a higher percentage of the ratio. It is noticeable from the table above that Turkish Airlines had a comparatively strong ROA in 2012, 2015, and 2014, although it had dropped a bit in 2013 (Morningstar 2017). However, in 2016, for some unknown reasons, the company had failed to perform up to the mark, and as a result, there was a huge unexpected fall in the ratio. Such an unforeseen drop can be seen as potentially dangerous because the profit after tax has declined significantly during the period, indicating that the companys capacity to monetize its assets has declined all of a sudden.

The ratio of return on equity is an indication of the productivity of the business, which determines how much money the corporation has engendered with the equity of the shareholders; as a result, return on equity is not just an evaluation of the money-spinning capacity of the firm but is also the quantification of its efficiency level. An escalating ROE indicates that the firm is expanding its aptitude to engender income without having to exhaust all the capital resources; in addition, this also suggests that the firms administration is organizing the capital from the shareholders brilliantly; as a result, an elevated ROE is a good signal for the business, whilst a decreasing ROE is typically a setback. Table 3 shows the calculation of ROE-

Table 3: ROE of Turkish Airlines (Turkish Airlines 2014, p. 6 and Turkish Airlines 2016, p. 7).

Trend Analysis and Relevant Charts

It is notable from the above calculations that the return on equity was quite lucrative in 2012, 2014, and 2015 for Turkish Airlines, although it had dropped by half in 2013. However, in 2016, just like the abrupt and unexpected fall in the percentage of the return on assets, the percentage of the return on equity had also dropped to a great extent for some unanticipated reasons. This type of surprising plunge in the two most imperative ratios is not just alarming for the internal trading environment of the firm but is also an issue of fear for the investors of the company. However, table 4 shows operating cash flows-

Table 4: Operating cash flows (Morningstar 2017).

Net-profit from operations is a measurement of earnings, which does not include the expenses or tax-benefits of debt funding; it is suggested that this calculation merely considers the earnings before interest, and is a vital evaluation in the scrutiny of a company, as it allows an apparent sight of the functional efficiency (an observation not obscured by the businesss ascendancy). It can be comprehended from the table above that the net profit from operations of Turkish Airlines has fluctuated to a great extent throughout the last five years. For this Turkish market player, the net profit from operations was 657 in 2012, but it dropped to 357 in 2013 before rising to 845 in 2014 again (Morningstar 2017). Subsequently, the company performed wonderfully in 2015, for which its net profit from operations rose to 1,069, but then all of a sudden, it plunged to 77 in 2016, which indicates abrupt poor corporate performance.

Retained Earnings (RE)

Retained earning is chiefly the income that a business has generated, minus the dividends rewarded to the shareholders; it is necessary to argue that when the retained earnings are high, this would indicate that the business is economically strong; on the other hand, firms that have made fewer profits and more losses suffer from a negative balance (or accumulated deficit). Table 5 shows the calculation of retained earnings 

Table 5: Retained earnings (Turkish Airlines 2014, p. 6 and Turkish Airlines 2016, p. 7).

It can be seen from the table above that the retained earnings of the company have improved significantly in 2015. This is a very positive indication because the retained earnings of Turkish Airlines have been increasing gradually throughout the last five years. To be precise, the retained earnings were 903 in 2011, 1357 in 2012, 1714 in 2013, 2559 in 2014, and 3628 in 2015.

Debt Ratio

Businesses that have an elevated debt ratio are reasonably weak because this indicates that they possess a large amount of debt in comparison to their assets; in addition, such a situation suggests that the firm has been troubled by huge burdens, whilst the finances invested on interests are huge, putting a negative impact over the cash flow of the corporation. Table 6 shows the calculation of debt ratio-

Table 6: Debt ratio (Turkish Airlines 2014, p. 6 and Turkish Airlines 2016, p. 8).

It can be seen from the above calculations that the debt ratio has sharply risen in 2016, which can be detrimental towards the reputation of the business. In such situations, the investors usually become reluctant to keep their trust on the business, which can be a stressful scenario for the future growth of the firm.

Earnings per Share (EPS)

It is essential to note that the earnings per share of the company have reduced significantly in 2016, which means that now the shareholders will be discouraged to buy the companys shares because EPS shows the profitability of a corporation. As a result, the company must identify the root cause behind the drop in the earnings per share and employ its highest effort in improving this in order to gain back the confidence of the shareholders in the upcoming years. Table 7 shows the calculation of EPS of Turkish Airlines-

Table 7: EPS of Turkish Airlines (Turkish Airlines 2016, p.7).

Market Capitalization

Market capitalization is an indication of the market value of a firms outstanding shares; it is notable from the table above that the market values of the Turkish Airlines were 7,512 TRY in 2012, 8,887 TRY in 2013, 13,289 TRY in 2014, 10,198 TRY in 2015, and 6,914 TRY in 2016. This means that the market values of the firms outstanding shares were the highest in 2014 and 2015 respectively, but were lower in 2012 and 2013. However, it became the lowest in 2015, which means the market values of the company are plummeting  this can cause a real panic amongst the stakeholders of Turkish Airlines.

SWOT Analysis of Turkish Airlines

Strengths

• Brand image: Long experience and most valued brand awareness of Turkish Airlines is the main competitive advantages of this company since it provides high-quality flying experience; in addition, as the National Flag Carrier of Turkey, it has the capacity to hold its leading position in the domestic market (Myre 2015);
• Loyalty: The customer satisfaction rate of this company is too high; therefore, it has a large loyal customer base both in domestic and international destinations, for instance,
• Flight network: According to the annual report 2016 of Turkish Airlines, it successfully operates almost 119 countries and 298 destinations; furthermore, it has a large fleet size;
• Strategy: Outstanding promotional and marketing strategies play a significant role to increase market share in the European market (Sahin 2015); as a result, it becomes one of the largest companies in the aviation industry;
• Training: It has more than 24,124 employees who are skilled, high-qualified, trained, and experienced person; however, Turkish Airlines had already taken many initiatives to increase team spirit to get better performance from them;

Weaknesses

Operating costs: According to the financial report of this company, it is one of the main challenges to control operating expenses while it adversely affects the overall financial performance; moreover, it pays a comparatively high payment to their staff and board members; here, table 8 demonstrates data for three years-

Table 8: Total operating expenses of Turkish Airlines (Turkish Airlines (2016, p.4).

• Pricing strategies: Turkish Airlines seek price more than other major competitors for which are of market share low cost domestic and international companies is increasing (Myre 2015);
• Route: As it uses Ataturk Airport for most of the flights, passengers of the opposite side may prefer service of other companies;
• Other operating weaknesses include a low focus on the issues related to corporate social responsibility, restricted cold beverages, increase customer hassle rate due to poor online service, unusual financial risks for merger and acquisition, dependence on technology, and so on.

Opportunities

• Market leader: International traffic is rising faster (Santos, and Creighton 2014); thus, it has the opportunity to advance reputation as a global air carrier and to be the market leader in the aviation industry;
• Affiliates and Subsidiaries: It has two directly owned and nine jointly owned subsidiaries, which assist to widen the service of the Turkish aircraft industry;
• Open the third airport at Istanbul: It has the opportunity to turn it into a significant flight hub;
• Demand: As demand is increasing, it has scope to start the journey to new destinations in Europe and Asia; however, the high population of this country is also an important issue for this company;
• Unique offers: Turkish Airlines has the capacity to provide quick and quality service with high satisfaction of the passengers and other clients (Santos, and Creighton 2014);
• Other factors: it has scope to generate more revenues due to the development of the national tourism sector; however, other potential factors include an adaptation of modern governance principles, no visa requirement in the different geographical zone, sound economic condition for further business expansion, and so on;

Threats

• Competitors: The market share of international low-cost airlines is rapidly increasing; therefore, these companies enter destinations of Turkey due to a liberal business environment and capture a significant part of the domestic market share.
• Recession: At the time of the global financial crisis, the tourism revenues of Turkish Airlines have decreased and operating costs have increased, which directly affected the performance of the company; as a result, it needs to observe the financial condition of the countries where it is operating to design strategy.
• Other: Many other external factors may create a hassle for this company, such as pricing structure and promotional strategy of the competitors, the Swine Flu virus, and risk of terror attacks, the chance to lose domestic market share, the volatility of fuel price, natural crisis, boost ticket costs, and so on.

Comparative Cross-sectional and Aviation Industry Analysis

The aviation industry has been suffering from insufficient profitability for the last several decades, but rather than reducing the capacity, the industry players are continuously investing for further capacity expansion and such a difficult scenario has identified by plotting ROCE and WACC of publicly listed 69 aviation companies who jointly own 70% of global aviation market (Wojahn 2012, p. 3). This has been illustrated in figure 3:

The above figure demonstrates that irreconcilable difficulties of the aviation industry for thirty years (1981 to 2010) that the industry generated expected profit in 1994 and next five years the industry was capable to generate profit at the level of cost of capital and the rest years except 2000 aviation companies were unsuccessful to generating cost of capital. The most conflicting nature of the aviation industry that the companies continuously increase their capacity although the existing capacities are unutilized, for instance during the recession of 2009 the industry increased its capacity globally up to 1%; thus it would be questioned why the investors allocate for the expansion of such industry or why the aviation operators utilize big resource for insufficient return from this market.

The major reason for investment for continuous expansion without sufficient return is that the ownership, operation, and control of the publicly listed companies are different from each others while the managers make investment decisions for the greater interest of the shareholders of concerned companies. Another reason of this dilemma is that unutilized overcapacity of the aviation industry derives comparatively less barrier of entry, but very high obstruction for exit due to the irreconcilability huge fixed cost, if an unprofitable aviation company wants to cut capacity due to deteriorating economic condition, it would adversely impact on the remaining operation. There is less mobility among the aviation industry, even if an aviation company turned into bankrupt, the capacity would not be forced to reducing and the bankrupt companies continue their operation just like other operators in the industry (Wojahn, 2012, p. 2).

Due to such deregulation of the industry and the aggressive interactions among the customers and firms has identified the requirement of some adjustment of the business model within the industry where the full-service carriers (FSC) are under serious threats new orientation of the players (Vidovi, `timac, and Vince 2013, p. 87); this has been illustrated in figure 4:

Low-cost carrier (LCC) has revolutionized and liberalized the aviation industry during the seventies in the European market and now globalize with Ultra Low-cost carrier (ULCC) for a significantly lower price that generated further shock for the Full Service Network Carrier (FSNC) (Vidovi, `timac, and Vince 2013, p. 69). Due to half of the price charging from passengers than the FSNC, lower operating cost and different strategies than traditional airlines, the LCC are exploring their operation routes, and segments like chartering, long-haul, and even cargo sector where merger, acquisition, alliance provided them additional scope to explore.

Horizontal Analysis Tables of the Financial Statements

Horizontal -Comparative Balance Sheet

The horizontal comparative balance sheet has been provided in table 9:

Horizontal -Comparative Income Statement

The horizontal comparative income statement has been provided in table 10:

Table 10: Horizontal comparative income statement (Turkish Airlines 2016).

Vertical Analysis Tables of the Financial Statements

The balance sheet as been provided in table 11:

Table 11: Balance sheet (Turkish Airlines 2016, p.8).

Vertical Analysis Comparative Income Statement

Table 12 contains the vertical comparative income statement:

Posted in Uncategorized

Dissertation Title

The Impact of Online Shopping Applications on Impulsive Buying Behaviour: An Analysis of the Differences in the Behaviour of Online and Offline Shoppers

Proposal Summary

The presented proposal describes a dissertation that would aim to investigate the effects of online shopping applications on impulsive buying behaviour. The topic is noticeably understudied; the preliminary literature review found only one article that considered it (Park, Jun & Lee 2015), and the results could not be viewed as very generalisable. The phenomenon of impulsive buying behaviour is studied better, and many factors that influence it have already been found (Amos, Holmes & Keneson 2014; Badgaiyan & Verma 2015; Lai 2017), but online shopping applications remain overlooked. At the same time, online shopping applications are becoming increasingly important for modern businesses, which means that their investigation is required. Similarly, impulsive buying behaviour is a critical factor for businesspeople to consider (Amos, Holmes & Keneson 2014). As a result, the proposed study intends to contribute to the examination of the two phenomena and the relationships between them. The significance of the investigation is justified by the absence of evidence on the topic, as well as its importance for marketing and business, which explains why it could be considered of interest to modern researchers.

In order to achieve the desired outcomes, the study will employ a mixed methods design guided by critical realism. In particular, the researcher will engage online and offline buyers and investigate their buying behaviours with the help of a survey. Additionally, buyers and marketing experts will be asked to review the results of the survey and reflect on the effects that online shopping applications have on buying behaviours. By incorporating different approaches to inquiry, the study will be able to objectively track the presence or absence of the relationship between phenomena and investigate it in depth with the help of expert opinions. The project is supposed to take seven months.

The dissertation is meant to assist a specific company, but its results can be of use for many businesses that plan to or already employ online shopping applications. Indeed, impulsive buying behaviour is of great importance as it signifies the sudden, impulsive decision to buy a product. According to recent analyses, up to 80% of purchases can be the result of impulsive buying behaviour (Amos, Holmes & Keneson, 2014, p. 1). Therefore, the ability to cause such impulses is invaluable for a retailer, which prompts the investigation of the phenomenon and its causes.

Based on the project objectives and anticipated project outcomes, the proposed research will offer some new evidence that will describe the nature of the relationship between online shopping applications and impulsive buying behaviour. Thus, it will present an opportunity to understand the factors that affect impulsive buying behaviour better. Eventually, the study will attempt to produce practically applicable knowledge in the form of recommendations related to the use of online shopping applications. This knowledge can be of interest to marketing specialists and other people who are engaged in business. Thus, the research will have both theoretical and practical importance in that it will offer some data on an understudied topic and discuss the practical implications of the results.

Topic Literature Review

Out of the chosen phenomena, impulsive buying behaviour is relatively well-studied. The research on the topic demonstrates that impulsive buying behaviour is complex and can be influenced by multiple factors (Lai 2017). Some of them include personal characteristics (for instance, age or extraversion), moods, the availability of funds, specifics of socialisation, and marketing activities (Amos, Holmes & Keneson 2014; Badgaiyan & Verma 2015; Lai 2017). Regarding the latter, a recent study showed the effects of the site personality on impulsive buying behaviour (Rezaei et al. 2016), and another one considered the impact of the interactivity of product presentation (Vonkeman, Verhagen & Dolen 2017). However, no recent study was found that would specifically focus on the effects of online shopping applications on impulsive buying behaviour.

In general, modern articles indicate that despite the growing interest of buyers in online shopping applications, as well as the increase of the importance of online marketing for business, the topic is relatively understudied (Badgaiyan & Verma 2014; Rezaei et al. 2016). At the same time, there is an increase in impulsive buying behaviours online (Lai 2017). Additionally, there is some evidence which indicates that mobile shopping may have an impact on impulse buying, increasing it (Lee, Park & Jun 2014; Park, Jun & Lee 2015). A study by Park, Jun and Lee (2015) also produces some data which suggests that online shopping applications may have an impact on impulsive buying behaviour. The research had a large sample (400 people) and used surveys and statistical analysis to prove the presence of the relationships between phenomena. However, this study did not focus on the topic and only recruited people from South Korea, which limits the generalisability of the results to this country. No other similar research was found during the preliminary literature review. Therefore, the significance of the proposed investigation is highlighted: it will contribute some data that will help to cover an understudied topic.

Objectives

The project has the following key objectives:

• To determine if the results of the surveys indicate that there is a relationship between online shopping applications and impulsive buying behaviour.
• To present the hypothetical reasons for the presence or absence of the relationship based on the results of the interviews.
• To present the effects that online shopping applications can have on impulsive buying behaviour based on the results of both surveys and interviews.
• Based on the found relationships and effects, to offer recommendations that will target marketing specialists and focus on the fostering of impulsive buying behaviour through the use of online shopping applications.

The objectives are specific, relevant, and achievable. The measurements and timeframes can be found within them. For instance, as can be seen from the first objective, it will be achieved after the surveys analysis, and its success will be measured by the fact of determining the relationship or its absence. Thus, the objectives are SMART.

Project Outcomes

The anticipated outcomes follow the objectives.

• The study will contribute some evidence which will prove or disprove and characterise the relationship between online shopping applications and impulsive buying behaviour. The characterisation will include the description of the effects of the former on the latter.
• The study will offer hypothetical reasons for the presence or absence of this relationship.
• Based on the findings, the study will consider the implications and propose recommendations for marketing specialists, especially with respect to fostering impulsive buying behaviour.

Note that the study will not be able to prove or disprove the relationships, but it will contribute some data indicating their presence or absence.

Why are you interested in the project?

Online marketing is a relatively new tool, which has great potential and is becoming increasingly important. However, due to its novelty, it is not investigated very well. The lack of relevant knowledge implies the difficulties in applying the tool. Therefore, additional research on the topic is needed. The proposed study will not be able to describe the relationship between online shopping apps and buying behaviour exhaustively, but it will contribute some data that can be of use to businesspeople. The significance of the topic and the lack of research on it explains why it can be described as interesting.

What are the key questions the project attempts to answer?

The following research questions are proposed.

1. Is there a relationship between online shopping applications and impulsive buying behaviour?
2. If there is a relationship, what kind of effects do online shopping applications have on impulsive buying behaviour?
3. Can any potential reasons for the found effects (or the absence of effects) be hypothesised? What are they?
4. What are the implications of the findings for marketing and business? Can any recommendations on the topic be offered? What are they?

What Research Methods do you intend to use?

The proposed study will be guided by the critical realism research paradigm. This stance can be briefly characterised as a middle ground between positivism and constructionism (Eriksson & Kovalainen 2016). In other words, it postulates that there is an objective reality which humans can observe, but it also points out the significance of the social construction of knowledge and the impact of subjectivity on what humans can learn. Eriksson and Kovalainen (2016) note that critical realism can be particularly appropriate for the designs that incorporate multiple methods. For the dissertation, both quantitative and qualitative approaches can be useful. Quantitative methods can help to investigate the relationships between the two phenomena of interest in a relatively objective way. On the other hand, qualitative approaches can provide insights into these relationships (Creswell 2014). Consequently, a mixed methods design is proposed for the study.

To investigate the presence of the relationship between the two phenomena of interest, the buying behaviour of online and offline buyers will be compared. The participants will be provided with a survey that will be based on the information about impulsive buying behaviour. The results for the two groups will be checked for statistically significant differences using a test that would fit the final sample. This way, the presence of the relationship between the phenomena will be determined (Benzo, Mohsen & Fourali 2017), which will help the study to produce some objective evidence on the topic.

To investigate this relationship or its absence, semi-structured interviews are proposed. They are a common approach to qualitative research, and they can provide the required insights (Hair et al. 2015). The interviews will focus on the perceived relationship between phenomena and ask the participants to interpret the results of the quantitative part of the dissertation. The reasons for the findings and their implications will also be considered. This way, both objective reality and subjective perspectives will be investigated as appropriate for critical realism.

Regarding the planned sampling approach, the surveys will be aimed at consumers, and the key parameter that will be sought out in the potential respondents will be their use of online apps. Additionally, it is planned to study more or less similar groups; in particular, middle-income people with similar sociocultural backgrounds and marital statuses will be recruited. This approach will help to minimise the effects that demographic factors might have on the buying behaviours of the respondents. Some of the participants will also be asked to participate in in-depth interviews to determine their subjective perceptions regarding the influence of applications on their buying behaviour. Furthermore, the study will need to recruit experts. Here, the expertise in the field of marketing, especially the understanding of online applications, will be considered. The potential participants will be inquired about their education and the experience that they have in the field. Other demographic characteristics are going to be considered irrelevant.

Regarding the sampling strategy, it will include convenience and quota approaches (Hair et al. 2015). It is planned to use online and offline stores to find the consumers who can fit the requirements of the research. Admittedly, convenience sampling is a non-probability technique, which affects the representativeness of the sample negatively (Benzo, Mohsen & Fourali 2017; Creswell 2014). However, given the studys objectives and limitations (especially time-related concerns), this approach seems to be appropriate if the restrictions of the sampling strategy are taken into account when interpreting the results. As for the quota sampling, it involves determining the limits for the number of participants belonging to particular groups within the recruited population (Benzo, Mohsen & Fourali 2017). It will be used to ensure that both online and offline buyers are sufficiently represented. Currently, it is planned to recruit 50 online buyers and 50 offline buyers for the surveys and employ five people from each group for interviews.

For the expert interviews, the convenience approach to sampling will be used. The stores that will be contacted to engage customers are also likely to have marketing experts who will be asked to participate as well. About 10 participants will be recruited for this task. Additional stores can be contacted if there is a shortage of experts. Furthermore, snowball sampling might be employed if more interviewees are needed (Benzo, Mohsen & Fourali 2017). In summary, a number of different research methods will be used to ensure that the studys objectives are achieved.

A preliminary survey tool can be found in Appendix A; it can be easily transformed into an online survey. Regarding the interview tool, it will depend on the findings of the survey, which is why it cannot be presented yet. Basically, it will consist of the interviewer presenting the survey results (percentages, trends in data, and so on) and asking the interviewee to provide commentary based on their expertise. The purpose of the tools consists of providing the data necessary for the study, and since there are no ready tools that would be appropriate for this goal, their development is justified. However, they have not been tested for reliability or validity, and some trials will be necessary to perfect them. Also, they are self-reported tools, which is another limitation that will be noted when describing the results. Still, they will be tailored specifically for the study, which means that they will provide the necessary data and, therefore, fulfil their purpose.

What primary and/or secondary data sources do you intend to use?

The study will be based on both primary and secondary data. The secondary data (existing evidence) will be employed to contextualise the research and develop the tools for data collection (survey and interview questions). For example, given the difficulty of quantifying or otherwise measuring impulsive buying behaviour, the study will use published research, including the article by Amos, Holmes and Keneson (2014), to develop relevant questions.

However, the bulk of the research will be based on primary data. This fact is explained by the shortage of secondary information that can be employed to meet research objectives. Thus, the key sources of data will be the surveys and interviews that are described above. Regarding the specifics, currently, it is planned to contact online and offline stores in search of the customers who would agree to complete the surveys. Concerning online options, Farfetch.com, Matchfashion.com, and senses.com are being considered. Additionally, Amazon and eBay are a possibility. As for offline stores, they will be found based on their location, which should be convenient for the researcher.

Please provide draft chapter heading for your report

The following chapter headings are based on the structure that is commonly employed in dissertations, research reports, and articles. They may be revised in future.

1. Abstract.
2. Table of contents.
3. Introduction.
4. Background and literature review.
5. Methodology.
6. Findings.
7. Analysis and discussion.
8. Conclusion.
9. Recommendations and implications.
10. References.
11. Appendices.

Plan

The proposed plan highlights the fact that the literature review is likely to be a continuous effort, as well as feedback solicitation. Additionally, note that the report development stage signifies the process of putting together and revising the materials that will be written throughout the project. For example, the literature review activity includes the process of writing the background and methodology chapters, and the analysis stages presuppose developing the drafts related to findings and discussion.

List of References

Amos, C, Holmes, G & Keneson, W 2014, A meta-analysis of consumer impulse buying, Journal of Retailing and Consumer Services, vol. 21, no. 2, pp. 86-97.

Badgaiyan, A & Verma, A 2014, Intrinsic factors affecting impulsive buying behavior  evidence from India, Journal of Retailing and Consumer Services, vol. 21, no. 4, pp. 537-549.

Badgaiyan, A & Verma, A 2015, Does urge to buy impulsively differ from impulsive buying behaviour? Assessing the impact of situational factors, Journal of Retailing and Consumer Services, vol. 22, pp. 145-157.

Benzo, R, Mohsen, M & Fourali, C 2017, Marketing research, SAGE, New York, NY.

Creswell, J 2014, Research design, 4th edn, SAGE, New York, NY.

Eriksson, P & Kovalainen, A 2016, Qualitative methods in business research, 2nd end, SAGE, Los Angeles, CA.

Hair, J, Celsi, M, Money, A, Samouel, P & Page, M 2015, Essentials of business research methods, 3rd edn, Routledge, New York, NY.

Lai, J 2017, The comparative research on online impulsive buying behaviour between the U.K. and China, Journal of Residuals Science and Technology, vol. 14, no. S1, pp. S119-S124.

Lee, T, Park, C & Jun, J 2014, Two Faces of Mobile Shopping, International Journal of E-Business Research, vol. 10, no. 1, pp. 15-32.

Park, C, Jun, J & Lee, T 2015, Do mobile shoppers feel smart in the smartphone age?, International Journal of Mobile Communications, vol. 13, no. 2, p. 157.

Rezaei, S, Ali, F, Amin, M & Jayashree, S 2016, Online impulse buying of tourism products, Journal of Hospitality and Tourism Technology, vol. 7, no. 1, pp. 60-83.

Vonkeman, C, Verhagen, T & Dolen, W 2017, Role of local presence in online impulse buying, Information & Management, vol. 54, no. 8, pp. 1038-1048.

Appendix A

A Preliminary Survey

Thank you for agreeing to participate in this survey! It will focus on the instances of you buying things in a brick-and-mortar store or an online shopping application without planning the purchase beforehand.

Part A: Do You Buy Spontaneously?

Please consider the statements below and mark the answers that describe you the best.

1. 1. I try to plan my purchases.

2. 2. I buy unplanned things when using online applications.

3. 3. I buy unplanned things in brick-and-mortar stores.

4. 4. I buy things spontaneously.

Part B: What Leads to Spontaneous Buying?

Please consider the statements below and mark the answers that describe you the best.

5. 5. When using an online application, I am less likely to buy unplanned things compared to a visit to a brick-and-mortar store.

6. 6. Advertisements result in me buying unplanned things.

7. 7. Seeing something new results in me buying unplanned things.

8. 8. Discounts result in me buying unplanned things.

9. 9. The influence of my family (e.g. child, parent, spouse) results in me buying unplanned things.

10. 10. Limited-time offers result in me buying unplanned things.

11. 11. Seeing another person buy a thing from a brick-and-mortar store results in me buying unplanned things.

12. 12. Knowing that another person bought a thing using online applications results in me buying unplanned things.

13. 13. Colourful pictures in an online store result in me buying unplanned things.

14. 14. Detailed descriptions in an online application result in me buying unplanned things.

15. 15. Online apps recommendations result in me buying unplanned things.