90 percent market share

Intel was founded in 1968 by Gordon Moore and Bob Noyce, who decided to leave Fairchild Semiconductor and create their own company. The mission of Intel is to be the preeminent building block supplier to the worldwide Internet Company. The company’s products such as chip, boards, system, and software are indregients of computer architecture. Corporate culture of Intel was driven by the efforts of its CEO, Andy Grove.

This culture’s center point is trusting the employees and expecting them to make million-dollar decisions. Intel has its rewards and recognition program that is directly tied to performance and results. Pay, benefits, and results-driven bonuses become the base to make up the total compensation. For instance, in 2000, the cash bonuses of the employees totaled about an additional 10 percent of annual salary for every participating individual. The company also offers some other benefits that is not monetary such as vacation, sick time, holiday, sabbatical leave, and so on. Despite the fact that Intel has become the most successful company in the microprocessor industry with 90 percent market share, it still has some problems. One example of the problem is Intel’s forced ranking evaluation process that is disliked by most employees because it involves direct ranking of employees against each other.

Analysis Authority Delegation

Delegating authority to employees , that is implemented in Intel, may give more intrinsic motivation effect because it enables the employees to experience freedom, independece and discretion in completing their jobs. In Intel, all employees is responsible for all aspects of their work. Besides of its positive effect, a higher degree of authority means a higher level of job characteristics, which, according to Kreitner ; Kinicki, are associated with higher stress.

The role of supervisors as coaches and counselors can still be maintained. According to Kreitner ; Kinicki, in leading the employees toward intrinsic motivation, managers (including supervisors) play a major role in encouraging employees to self-manage. To cultivate the intrinsic motivation, managers can begin by creating a set of conditions necessary to allow intrinsic rewards to flourish. Managers specifically lead for meaningfulness, choice, competence, and progress by inspiring, modelling, empowering and delegating, supporting and coaching, and monitoring and rewarding, respectively. It means that, in motivating the employees intrinsically, despite the fact that the employees have high degree of authority, managers still play the role as coaches and counsellors.

Intel’s Ranking Evaluation process¬†Intel’s ranking evalution process has similarity with performance appraisal (that is mentioned in the book written by Kreitner ; Kinicki). Intel’s ranking evalution process is more difficult than other process that is normally implemented because all employees will be ranked directly against each other. The process put more pressure on the employees because competition for supervisor’s attention can reach an all-time high. To rank the employees against each other is not the only difficulty that appears in this process. It is also difficult to make the employee accept the result.

If everyone should be ranked against each other, there is a big probability that some employees that actually have almost the same quality and quantity of performance may be ranked differently. It is very difficult, especially in a company whose employee are already among the brightest of the industry, to prove that the judgments are already correct. There is a high posibility of disatisfaction that is caused by the feeling of treated unfairly.

According to Kreitner ; Kinicki, the ranking process indeed may increase the motivation because achievement-oriented people needs to know how they did and how they peers did. They need to know how their work measures up to competitive standard. It means that ranking process may thighten the competition. In Intel’s case, the environment is already highly competitive, so we can say that putting more pressure on the employees by using this kind of ranking process would be more likely to result in perceived stress rather than motivating the employees.

Benefit Program of Intel

The benefit program of Intel is an example of extrinsic reward system that comes from the company to motivate the employees. One part of the benefit program in Intel is bonus that is driven by the result of the employee’s work. According to the book written by Kreitner ; Kinicki, motivational impact of extrinsic rewards would be maximized by tying it to spesific results. So, we can say that the result-driven bonuses may give good impact in motivating Intel’s employees. Other part of the benefit program, the stock purchase and stock option plan, is the biggest perk offered by the company.

Based on a survey that is mentioned in Kreitner & Kinicki’s book, a stock plan is rated highly effective by 33% and moderately effective by 33%. It is also rated not at all effective by 18% of the respondents. A research is needed to measure whether the stock plan that is implemented in Intel is effective in motivating the employees. There is an evidence (based on financial data of Sari Husada) that a stock plan (specifically stock option) may result in higher cost that is caused by the loss that occurs when the stock price rises and the employees buy the stock at lower price.

The other benefits that is offered by Intel are Intel Home PC program, vacation, personal absence, sick time, holidays, sabbatical leave, employee assistance program, dependent care assistance, and recreation. These benefits is more likely to prevent problems than can be caused by perceived stress, work-versus family conflict or health problems that can affect employees performance.

Recommendation

For the next 2 or 3 years, I recommend Intel to implement human resource strategies that match with the strategies that Intel is following. One of the strategies is developing products for a broad range of market segments, saying that the company is aggressively moving its architecture into the entry level. To match with this strategy, Intel should provide human resource that is able to do the production more efficiently.

Training can be an option for enhancing the skill of the employees so they can improve their efficiency. Another option that can be implemented for supporting the strategy of moving the architecture into the entry level is having employees who are highly able to improve the technology so they can find the way to make the products much cheaper than before. In other words, to have products that match the entry level, Intel may reduce the costs by improving the technology and efficiency of the operation that can be supported by its human resource.

The other strategy is to decrease pressure that is put on the employees to avoid perceived stress. One step that can be done is to solve the problem that is related with the evaluation process. Intel may use a process that satisfy six criteria of legally defensible performance appraisal. The first criteria is that job analysis is used to develop the appraisal system. The second criteria is satisfied by having definitive standards of performance that is developed, written, and provided to all raters.

The third criteria is that raters are trained to properly use the rating instrument. The fourth one is that formal appeal mechanism are developed and performance ratings were reviewed by upper level management. The fifth criteria is satisfied by supporting the performance rating with documented examples of behavior, and the last one is that the employees are given a chance to improve their performance by provision of performance counseling or corrective guidance. Some of these criteria might have already satisfied by Intel’ s evaluation process. The process needs to be rearranged so pressure that is put on the employees can be reduced. To reduce the pressure in the evaluation process, Intel may use another type of performance appraisal that does not involve direct ranking of employees against each other.