Itis the goal of every organization to realize profits that can aid insustaining the operations of an organization. When an organizationmakes losses for a prolonged period, it is not capable of sustainingits operations. Therefore, any organization should aim at makingprofits and avoid losses as much as possible. Sales are a significantcomponent of profits in an organization and their contribution iscritical in determining the performance of an organization. Besides,employees are also a critical determinant of the performance of anorganization (Zoltnerset al, 2001. Pp 18). Employee turnover, which is the proportion ofworkers leaving an organization in a given period, may affectproductivity of an organization that may in turn affect theperformance of an organization. For instance, when employee turnoveris high, an organization may decrease its productivity and this maylead to a decrease in the performance of an organization. Thus,organizations should be in a position to prevent a high employeeturnover since the longer employees stay in an organization, the moreproductive employees become. The organization under consideration hasthree major concerns it is in a poor financial position, thecompany’s profits and sales and profits have fallen, and employeeturnover has risen. The company has a long term goal of improving itsfinancial performance, which would need the company to utilizedifferent measures that can increase the financial performance. Asthe new manager, it is critical to first identify the reasons behinddeclining sales and profits and the increasing employee turnover inorder to come up with a comprehensive solution that would help inrestoring the performance of the company. Therefore, the aim of thisassignment is to discuss possible causes of the declining sales,declining profits, and an increase in employee turnover. Besides,factors influencing individual, group and organizational performanceand potential causes of company’s worsening performance would bediscussed. In addition, recommendations would be offered and theireffectiveness analyzed.


Performanceof an organization is exceedingly vital since it is from theperformance that an organization is capable of paying for itsdifferent operating costs. This is an implication that in case anorganization is performing poorly, it is also likely to pay itsemployees poorly. This may result to employees lacking motivation tocarry out the tasks that they are assigned to in an organization. Inthe company under consideration, there are different issues that arethe basis of this paper. One of the issues is that the company hasbeen faced with poor financial performance for the past few years.Financial performance is everything to an organization because strongfinancial performance indicates that an organization is capable ofsorting out any cropping issues in its operations. For example,strong financial performance in an organization is a clear indicationthat an organization is experiencing growth and can be in a positionto sustain most of its operating costs such as paying its employeeswell. On the other hand, poor financial performance is an indicationthat an organization is experiencing difficulties in growth andcannot be in a position to cater well for some of its operating cost.For instance, due to poor financial performance, an organization maynot be capable of paying its employees attractive remunerations. Assuch, this company can be perceived to struggle with handling some ofits operating costs because of its poor performance for the past fewyears, which an issue of concern.

Anotherissue that is facing the company is that it has declining sales andprofits. In most cases, sales and profits go hand in hand that is,an organization that has high sales is likely to record high profitsand declining sales may imply declining profits (Zoltnerset al, 2001. Pp 29). An organization has to ensure that its sales aresteady in order to prevent its profits from falling. It is probablethat a sales team that is not motivated would not have steady sales,which risks an organization to having falling profits. Decliningprofits in an organization is a depiction that an organization hasdecreased revenues or its operating costs have increased. Therefore,in this company, it is likely that the company is experiencingincreased operating costs or the company has reduced revenues.However, the likely reason resulting to falling profits emanates fromfalling revenues.

Besides,the company is also faced with the issue of rising employee turnover.Employees are a critical element of any organization since withoutemployees it is exceedingly difficult to realize productivity.Employees should be managed well in order to ensure that they areencouraged to engage in the production part of an organization.Without any motivation, it is likely that employees would notcontinue working for an organization this may make an organizationlose its productive capacity. As employees stay in an organization,they become more productive since they become more experienced asthey continue doing the same thing over a long time. Thus, anorganization needs to have employees that have stayed for long in itsbusiness since these employees help in increasing the productivity ofthe organization. In case an organization does not keep employees, itis likely that the organization will have low productions since notall employees that join the organization have the required experiencein enhancing the organization’s productivity. In the company,employees are leaving at an exceedingly high rate, which may becaused by lack of employee motivation or poor pay. Alternatively,employees may be leaving the company due to harassments. In order torealize good performance in the company, it is important as theacting manager to understand what is causing these issues and howthese problems can be resolved. These would be discussed in theparagraphs that will follow.

PossibleCauses of Declining Sales

Businessesfear having a sudden and unexplained decline in sales. It is criticalfor businesses to identify reasons leading to a decline in sales inorder to take the necessary actions almost immediately. One of thepossible causes of a decline in sales can be as a result of demandexceeding the capacity of the sales team. Although excessive demandis predicted to lead to an increase in sales volume, sometimes thismay not be the case since in most cases the rise in demand is usuallytemporal (Weymes,1998. Pp 18). When there is an increase in demand and the capacity ofthe sales team is limited, there is a confusion concerning whichprospective customer to serve first or else, when to meet a certainprospective customer. This may lead to prospective customers becomingdisillusioned and stop ordering for products or services from acompany, which could be a driving force to declining sales. In thiscase, the sales team may not have the capacity of scheduling andkeeping appointments with the new prospects because of timeconstraint.

Anotherpossible cause of declining sales in the company may be internaldisruptions, which may decrease morale and productivity. It isdifficult to manage change and when difficult changes occur andimpact the sales team it is likely that a temporal drop in saleswould be experienced. One of the most common disturbances to morale,which leads to a decrease in sales entails leaving of ahigh-performing sales person, sales manager or a corporaterestructuring (Weymes,1998. Pp 42). In case one of these scenarios have occurred in thecompany, it is likely that it is due to these reasons that thecompany is facing declining sales.

Salesof the company may also be declining as a result of the companyhaving ineffective incentive and compensation system. In order tomake the sales team to have consistent sales, it is critical to havean incentive and compensation systems that encourage selling behaviorof the sales team and support expected sales in all projectedsectors. It may also happen that sales teams become incentivized inthe inappropriate areas. Incentive and compensation systems need tobe scrutinized in order to establish whether they are workingproperly in case any of the system had been recently updated, it maybe the reason behind declining sales. Although these reasons havebeen highlighted as the likely reasons that may cause decliningsales, it is crucial to engage sales team members in order to getother probable reasons.

PossibleCauses of Declining Profits

Thereare two possible causes for the company’s declining profits. One ofthe possible causes is a drop in sales. In most cases, a drop insales can result in falling profits however, this may not always bethe case. Sometime, a company may experience a drop in sales, butmake profits at the end since the drop in sales may be as a result ofjust a drop in a given area, which may not be of great value. Thiscan be a more likely reason because it has already been reported thatthe company is experiencing a decline in sales. The other possiblecause of declining company’s profits is increased expenses. Anincrease in the costs of running the company is likely to have aneffect of mitigating the profits made by the company. Therefore, anincrease in the expenses of the company can be a likely cause of thecompany’s decreasing profits.

PossibleCauses of an Increase in Employee Turnover

Ahigh employee turnover can result from different factors. One of thefactors that can lead to a high employee turnover is low pay(Branham,2012. Pp 12). Employees are usually motivated by high remunerations.In case the company is paying them lowly, it is likely that theemployees will always tend to leave the company and seek employmentin other companies that have motivating remunerations. Thus,compensation system of the company may be have been updated a longtime ago, which may indicate that employees are not receiving ratesthat are comparable to other companies. This may make the employeesleave the company.

Thehigh employee turnover rate may also be as a result of employeesbeing managed poorly. Employees are likely to leave employmentbecause of poor relationship that they may have with their directmanagers (Branham,2012. Pp 13). The relationship that human resource manager or theclosest manager builds with employees is exceedingly critical inensuring that employees stays happy. However, in case the managerclose to employees manages employees poorly, it is likely thatemployees would feel miserable and end up leaving the organization.Sometimes, employees may be committed to a company, but they mayexperience bad treatments from the management, which may make themleave the company. Therefore, it is likely that the high employeeturnover is a result of employees being managed poorly in thecompany.

Poorworking conditions and unfriendly environment are also key factors inpredicting the high employee turnover in the company. Poor workingconditions may make employees discouraged in working in a company,which may lead them to seeking employment from other companies wherethey have favorable working conditions. Where employees may feel thatthey are surrounded by an unfriendly working environment, they arelikely to leave. For instance, where employees become harassed whilein the workplace, they are likely to leave their employment and seekemployment elsewhere. Hence, it is likely that poor workingconditions and unfriendly environment are present in the company.

OrganizationalPerformance Theories &amp Models

Thereare different theories that can be associated with performance of anorganization. Such theories can be used in ensuring that anorganization improves its performance. These performance theories areas described in the following paragraphs

Right-Brainand Left-Brain Thinking Theory

Mostindividuals tend to have one side of their brain being dominant tothe other this influences the learning styles and choice ofthinking. Different management styles may originate from either theleft or the right side of the brain (Leonard &amp Straus, 1997. Pp14). The left part is usually devoted to numerical figures, analysis,details, sequential thinking, and time-bound logic among other things(Al-Khouri, 2010. Pp 2). Thus, the left part can effectively dealwith cash flow and the results of mismanagement of finances. Itusually processes information in a sequential and analytical manner.On the other hand, the right part is usually based on emotionaldecisions, synthesis, intuitive decisions and holistic thinking thatis, it is involved in processing data in an intuitive manner, whereit first looks at a whole picture and then fills in details. Althoughthis approach may yield immediate success during the short term, itmay have problems of sustaining success in the long term. Accordingto this theory, it is critical to follow a balanced thinking in orderto analyze and come up with aspects that contribute to the attainmentand maintenance of highest productivity and performance levels. Incase this balanced way of thinking is encouraged, it is possible torealize overall performance of projects in an organization(Al-Khouri, 2010. Pp 3). The model of the right-brain and left-braingoes above simple issues of management style, but it mirrorsorganizational thinking and the manner it approaches problem solving,and may address situational uniqueness of projects better and win theproblems of contemporary projects.

Beliefsand Perceptions Model

Thebeliefs ad perceptions of individuals may inhibit individuals fromlearning and development. Motivation entails a hidden power, whichstems from a rooted belief system that drives conduct and gives itdirection. Motivation is highest when it comes from the inner part ofan individual ((Eccles &amp Wigfield, 2002. Pp 121). Therefore,through understanding motivation, it is feasible to empowerindividuals. This is critical in improving behavior and performanceof individuals. Organizations need to understand the association amidthe unconscious mind and the manner in which it may establish givenmotivated behaviors. In the present organizations, leadership isperceived to be exceedingly important and it requires more thanpossessing the appropriate technical skills. Present leaders arerequired to recognize their feelings and those of others inmotivating themselves and effectively managing relationships,increasing morale and motivation, improving productivity, promotinggreater cooperation and team work as well as increasing preservationof top talent.

Maslow’sHierarchy of Needs Theory

Thistheory can be used in understanding human needs. The theory chieflyidentifies five common levels of needs, which include physical,safety, social, esteem, and self-actualization needs. This theory isgrounded on four premises one of the premises is that needs ofindividuals are usually arranged in a hierarchical order thatcommences with the most basic needs and proceeds to the most complexneeds. Another premise is that only unsatisfied needs may influenceactions and satisfied needs are not considered as motivators.Besides, an individual will at least minimally satisfy every level ofneed prior to feeling the need at the next level. In addition, thetheory is based on the premise that the satisfaction level of needsis always fluctuating (Al-Khouri, 2010. Pp 9). The Maslow’s theoryrepresents a framework that helps in understanding motivation ofindividuals as they try to satisfy their needs within differentlevels.

Vroom’sExpectancy Theory

Thistheory tends to explain why individuals select a certain behavior insatisfying their needs. The theory states that prior to choosing agiven behavior, individuals would evaluate different possibilitiesbased on how much task is involved and the reward emanating from thetask. The theory argues that motivation can be perceived as afunction of how bad people want a certain thing and how possible theythink they would get it (Al-Khouri, 2010. Pp 12). According to thistheory, individuals in an organization would be influenced to performbased on the motivation that the organization provides to employeesand the outcome that the employees expect from the organization. Incase, an organization offers an appropriate motivation to employees,employees would exhibit desired behavior in realizing the outcomethat an organization expects to achieve. Therefore, this theory iscritical in predicting the performance of an organization.


Inorder to prepare the company for a strong performance, it is criticalto consider different aspects these come from the issues affectingthe company. These aspects are as described in the followingparagraphs

IncreasingEmployee Turnover

Therising turnover in the company can be solved through different ways.As discussed earlier, there are three probable causes of the risingemployee turnover low pay, poor management, and poor workingconditions. Finding solutions to these issues can help in resolvingthe problem of the rising employee turnover. One of the ways ofsolving the increasing employee turnover problem entails checking thecompensation system of the company. The compensation system should bechecked in order to establish whether the remuneration given toemployees match those in the market. In case, the salaries paid toemployees do not match those in the market, the company should reviewthe salaries in order to reflect market pay. This would help inretaining employees longer in the company a move that can help inenhancing the performance of the company in the long term. Thecompany can also correct the problem through matching theremuneration of employees with the work that they do.

Anotherway of correcting the increasing employee turnover is throughenhanced employee management. The style used in managing employees iscritical in determining whether an employee would stay in anorganization or not. In organizations, where there is poor employeemanagement, employees are likely to leave the organizations and seekemployment in organizations that manage employees well. Thus, thiscompany needs to check the relationship of closest managers withemployees. The management should ensure that employees are close toexecutive in order to facilitate smooth running of issues and solveemployee problems as they emerge (Jones et al, 2000. Pp 28). Thecompany’s organization structure is that there are five layersthese layers are many in ensuring that problems involving employeesbecome solved as they occur. These layers should be eliminated tomake sure that employees communicate with the executives directly.This would help in communicating employee problems fast and providinga quick response to the problems. This can provide a solution to theincreasing employee turnover since an issue that could make employeesleave the company would be addressed as soon as it happens.

Theincreasing employee turnout can also be resolved through improvingthe working conditions and working environment (D`Annunzio-Greenet al, 2004. Pp 55). Conditions given to employees may be oppressiveto employees, making them look for favorable conditions in othercompanies. Besides, the working environment may hinder employees fromworking in a company. This company needs to look at the policies thatguide employees in order to establish whether they are oppressive ornot. In case they are oppressive, the company needs to revise them soas to make them friendly. Besides, most of the managers are male,which may imply that there may be policies favoring male employeeswhile oppressing female ones. Therefore, the company needs to ensurethat there are female managers that represent female workers in theorganization. This would aid in making sure that both male and femaleemployees are well represented in the making of company’s policies.


Sincethe sales of the company are declining, this problem can be solvedthrough providing incentives to the sales team. The sales team may beunderperforming because there is no motivation of carrying out theirtasks. Incentives help in enhancing the performance of employees(Covey, 2004. Pp 16) therefore, the company needs to introduceincentive to the sales team in order to drive sales. In case thesales team is already provided with incentives, but the salesproceeds to decline, it is critical to check whether incentives havebeen provided in the correct areas. Thus, it is critical to ensurethat incentives are provided in the right areas. For instance,incentives need to be offered to sales teams in areas that haveindicated a drop in sales. This would make the sales teams in theseareas improve their sales. Besides, it is critical to ensureteam-building in the sales team. Presently, the company valuescarrying out tasks individually this may not motivate employees.However, introducing team work in the sales team may help inencouraging each other while making sales. This can help in boostingthe sales revenue of the company. The company can also overcome theproblem of decreasing sales by adding quality sales individuals toits sales team. The problem of decreasing sales may emanate from theincapacity of the present team to meet schedules, when there aretemporary changes in demands. As such, the company should addcompetent individuals in its sales team in order to boost thedelivery of the team in increasing sales. Furthermore, communicationwith the sales team is a critical aspect since it can help thecompany discover the source of the problem leading to decreasedsales. Therefore, a discussion should be held with the sales team.


Oneway of ensuring that the company resolves the problem of decliningprofits is through enhancing its revenues. The company can enhanceits revenues through looking for an alternative source of income. Thecompany may introduce a new commodity that falls in the line of thecommodities that it deals with. The new commodity may offer a sourceof new revenues, which may help in augmenting the revenues of thecompany. Additional revenues would mean increased profits for thecompany. Another way of increasing the company’s profits entailsreducing its operating costs. The company may reduce its operatingcosts by trimming its work force in case it has more than therequired number for its operations. The company can also reduce itsoperating costs by removing unnecessary processes in the company thatlead to extra costs.


Inorder to realize the goal of enhanced financial performance withinthe medium to long term period, there are some recommendations thatthe company has to consider. One of the recommendations is that thecompany should review its compensation and reward systems. Reviewingthe compensation and reward systems of the company would be criticalin motivating all employees in the company. Since rewards tend tomotivate employees to be more productive, reviewing the compensationand reward systems would make the employees more productive. Thiswould help in improving the profitability of the company sinceemployees would be willing to work for a prolonged period for thecompany. Besides, the sales team would become motivated a move thatwould boost the sales revenue of the company.

Anotherrecommendation that the company needs to consider in order to realizeits goals entails reorganizing its organizational structure foreffective communication. The company has five layers of management,which may not facilitate effective communication. Therefore, in orderto foster effective communication, the company needs to restructureits organizational structure. Effective communication would ensurethat problems become solved as they emerge. Effective communicationwould also enable the executive to understand its employees in abetter way this would help in realizing the different potentialsthat employees have, which can be tapped by the organization forenhanced performance (WatsonWyatt Worldwide,2005.Pp 6). Therefore, with effective communication, it would be feasiblefor the company to realize the goal of enhanced financialperformance.

Besides,another recommendation is that the company should change itsmanagement style. The management style used by the organization seemsnot to favor employees. Therefore, a change in management style wouldhelp in focusing more on employees. The management style that thecompany would use should be in a position to motivate employees to bemore productive. As employees improve their productivity, the companywould be capable of enhancing its revenues and profits. In case thereare company policies to be followed, the company should engageemployees in the formulation of the policies this would makeemployees feel part of the organization and become more productive.

Furthermore,the company should encourage team work amidst the employees.Currently, most tasks are done individually, which may be the reasonbehind poor financial performance. The company should encourageperforming tasks as a team in order to enhance its performance.Through team work, it is possible for employees to educate oneanother on an area that an employee is not conversant with (Harris &ampHarris, 1996. Pp 28). Thus, team work would motivate employees toperform their tasks with certainty (Donne, 2011. Pp 3). This iscritical in improving the financial performance of the company sincethe sales team and other employees would be motivated and generatemore revenues for the company.


Theserecommendations can be implemented through various ways. Foreffective communication within the company, the company shouldintroduce a social media platform that it would use in connectingwith the employees. For instance, the company can open a twitter orfacebook account, where its employees would become members andinteract freely with other members of the company, including theexecutives. Besides, the company should organize face to facemeetings regularly with its employees in order to identify andresolve any problems. In introducing a new management style in thecompany, the company should discuss the move with the differentstakeholders in order to ensure that they agree to the style. It iseasier to apply a new management style, when all the stakeholdersinvolving employees know of the plan. Thus, it is critical to firstof all communicate the idea to different stakeholders prior tointroducing it for easier integration in the company. In order tointroduce team work into the company, the company should firsteducate employees the need for team work and why employees need towork as a team. With this knowledge, it would be easy to encourageemployees work as a team. On the other hand, for the working of thecompensation and reward systems, the company should engage all thestakeholders in order to know what is lacking in the compensation andreward systems. This would give the company an easy task in decidingthe rewards and compensation to apply.


Thecompany is faced with the issue of declining sales and profits,rising employee turnover, and poor financial performance. The likelyreasons for these problems are poor management style used bymanagers, poor communication, inappropriate compensation and rewardsystems, and unfavorable working conditions among other things. Inorder to realize the goal of enhancing its performance, the companywould need to find solutions for its problems. It is recommended thatthe company should review its compensation and reward systems.Reviewing the compensation and reward systems of the company would becritical in motivating all employees in the company. It is alsorecommended that the company should reorganize its organizationalstructure for effective communication. Besides, anotherrecommendation is that the company should change its managementstyle. In addition, the company should introduce team work ratherthan having employees complete their tasks individually.


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