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

Orlan Pharma links 60% of senior sales staff bonuses to quarterly revenue only. Over two years revenue rises, but customer complaints, mis-selling incidents and staff turnover also rise. Which conclusion best explains this outcome in performance management terms?

Narrow, short-term revenue metrics have driven behaviour that neglects unmeasured aims such as customer care, ethical selling and retention. People focus on what is rewarded. The remedy is a balanced set of measures covering quality and conduct, not lower targets or abolishing performance-related pay.

  1. AThe appraisal system suffers from a lack of rater training
  2. BNarrow, short-term metrics have driven behaviour that ignores wider objectives, so measures should be balanced and include quality and conductCorrect
  3. CRevenue targets were set too low to motivate staff
  4. DThe company should pay fixed salaries with no performance element

Explanation

Rewarding one short-term metric leads staff to maximise it at the expense of unmeasured goals such as quality and ethics, which explains the rising complaints and mis-selling. The fix is a balanced set of measures. Low targets would not explain the harmful behaviour, and removing all performance pay is an overreaction.

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