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ACCA Strategic Professional · Strategic Business Leader · Enabling success: talent management

Marlow Retail introduces a sales commission scheme of 10% of individual revenue for all store staff. Within a year, sales rise but customer satisfaction scores fall, staff stop helping colleagues, and two experienced employees who enjoyed advising customers resign. Which conclusion is best supported by motivation theory and reward design principles?

The scheme has distorted behaviour. Individual commission focuses staff on measured sales and crowds out intrinsic motivation and teamwork, hurting service quality and retention. Marlow should rebalance its rewards with team and customer-quality measures and non-financial recognition rather than simply raising commission.

  1. AThe scheme has succeeded, because sales increased and resignations are normal
  2. BHeavy reliance on extrinsic, individual financial rewards has crowded out intrinsic motivation and teamwork and encouraged behaviour on the measured target only, so reward should be rebalanced with team, quality and non-financial elementsCorrect
  3. CCommission should be increased to 20% to restore customer satisfaction
  4. DIntrinsic motivation is irrelevant in retail, so only pay-level benchmarking is needed

Explanation

Narrow individual incentives drive effort to what is measured (sales) at the expense of unmeasured aims such as service and cooperation, and can undermine intrinsic motivation, as seen in resignations of staff who valued advising. A balanced scheme including team and quality measures and non-financial rewards is implied. Raising commission would worsen the distortion.

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