Motivating desired performance

DMT Biotech is a biotechnology research and development company that designs products for the needs of life science researchers. The company consists of an administrative unit, a research laboratory, and a facility used to develop prototypes of and produce new products. The major costs in this company are the salaries of the research staff, which are substantial.

In the past, the research scientists working at DMT Biotech have been rewarded on the basis of their proven scientific expertise. Salaries of these research scientists are based on the level of education achieved and the number of research papers published in scientific journals. At a recent board of directors meeting, an outside director criticized the research and development activities with the following comments:

There is no question that we have the most highly trained scientists in our industry. Evidence of their training and creativity is provided by the number of research publications they generate. However, the knowledge and creativity are not translating into patentable inventions and increased sales for this company. Our organization has the lowest rate of new product introduction in our industry, and we have one of the largest research and development teams. These people are too far into basic research, where the rewards lie in getting articles published. We need these people to have more interest in generating ideas that have commercial potential. This is a profit-seeking organization, not a university research laboratory.

Required

(a) Assuming that the director's facts are correct, do you agree that this is a problem?

(b) The board of directors has ordered the president of DMT Biotech to increase the rate of new product introduction and the time devoted to new product development. How should the president go about this task?