Fred Moriano

Overview

Fred Maiorino began his career at Schering-Plough in 1958 at the age of 28. He had been a successful sales representative till Jim Reed took over the position of General Sales Manager for South Jersey sales district in 1987. In 1988, Fred received his lowest ever performance evaluation of “Good” which was lower than any other sales representatives’ in the district. In fact, Fred’s salary increase at the end of the quarter was less than half of the average of other sales representatives who were at least 20 years younger to him.

When Reed first came to New Jersey sales district, he turned to Fred for help and leadership. He implemented a new performance evaluation measuring system which rated salesmen according to two different measures. This new system included evaluations based on product market share gains and critical incidents of effective and ineffective salesmen actions recorded during joint calls made by district managers and sales reps. Moreover, Reed began coaching his subordinates and providing them with medical journals to help improve sales pitches.

Unfortunately, even after working at Schering-Plough for over three decades as a highly successful salesman, Fred was terminated over coffee with Jim Reed at a local diner. This paper discusses why the different initiatives taken by Schering-Plough to motivate Fred Maiorino had failed. It also examines Reed’s role in the alleged breach of psychological contract and, contributions to the injustice and discrimination against Fred. Finally, this paper will provide recommendations for alternative coaching, goal-setting and leadership approaches that Schering-Plough could have adopted instead to ensure employee retention and loyalty.

Breach of Psychological Contract

At the beginning of their relationship, Jim Reed informed Fred that he would require Fred’s help in leadership. Although Reed may have made the remark in a casual manner, Fred took it seriously as he was able to recall the conversation even after a few years. Older employees tend to enjoy collaborative tasks through social interactions more than competitive tasks (Kanfer & Ackerman, 2004, p. 441). In fact, employees in their midlife respond more positively to managerial strategies that promote cooperation instead of competition (Kanfer & Ackerman, 2004).  In this case, it is fairly logical to think that Fred may have assumed that he would be promoted or provided with a salary hike if he was successful in helping Reed design a leadership plan for the district. In fact, this particular conversation with Reed may have led him to believe that Reed would acknowledge his hard work and loyalty by actually taking Fred’s advice or letting him help with the new strategy thereby, creating a psychological contract between the two parties involved. A psychological contact emerges when an employee believes that a promise of future benefit or return has been made in return for his contributions and, an obligation has been created for the employer (Robinson, Kraatz, & Rousseau, 1994). In other words, a psychological contract refers to the belief or perception of mutual obligations of an employee (Rousseau, 1989). Unfortunately, the assigned case does not indicate that Reed lived up to his promise of taking Fred’s help in motivating, mentoring and training new employees. According to Humphrey (2003) such acts can be deflating as the motivational benefits of bottom-up empowerment are forgone or lost. Moreover, violation of psychological contracts may lead to lower motivation and increased intentions to quit (Raja, Johns & Bilgrami, 2011). Thus, breach of such emotional contracts in the workplace may give rise to distrust, dissatisfaction and in extreme cases dissolution of the relationship between an employee and his employer (Roehling, 1997). In fact, breach of the psychological contracts lead to behaviors that undermine organizational effectiveness and efficiency (Lemire & Rouillard, 2005). Reed’s behavior increased Fred’s state of vigilance to the point where he began to actively monitor how well Schering-Plough was meeting the terms of their psychological contract. Moreover, in Fred’s eyes, Schering-Plough has breached the psychological contract with Fred. Fred had dedicated over 35 years of him life to the company only to find out it had made plans to make him retire early. Furthermore, Fred began to lose his faith in Schering-Plough when he realized that younger salespersons were being hired to replace long-term hard-working employees like him. In addition, Reed referred Fred’s decision to decline the early retirement plan as a foolish act. According to Zagenczyk, Gibney, Kiewitz, and Restubog (2009), supervisors’ supportiveness/discouragement strengthens/weakens the relationship between employers and employees. A study that included 297 responses from 31 organizations confirmed a relationship between the existence of psychological contract and employee commitment. In fact, those with relational psychological contract exhibited more commitment to the workplace than those with transactional contracts (Chiang, Liao, Klein & Jiang, 2012).