Assume you are the newly appointed internal auditor for the Foleo Group. Tracey Chen has asked you to assist her and Peter Singh in assessing the organisation's staff motivation levels and incentive programs currently in place for the Foleo Fones business unit. As a result of your investigations into Foleo Fones, you have uncovered a number of concerning issues relating to the Sales Office, Warehouse and Production Plants. At your first monthly meeting with Tracey and Peter, you present your findings in the form of the below report:

Foleo Fones:

Allan Raymond and I met last week to review the implementation of the newly updated internal controls across Foleo Fones. Allan noted that in recent years, absenteeism has been steadily increasing, as has staff turnover across the entire business unit. Furthermore, he notes that theft of inventory from the Warehouse has been and is still a significant problem. The introduction of new internal controls should attempt to address this theft issue, however, I believe that all these dysfunctional behaviours have been directly influenced by poor levels of job satisfaction and motivation within the workforce. We need to address these problems in order to boost the employees' motivation. In order to achieve this, we must demonstrate our commitment to them through the incentive programmes we offer. Existing rewards systems must be assessed for their effectiveness, so to that end, Allan and I have documented the array of incentive programs in place across Foleo Fones, which are presented below:

The Production Plant: The Production Plants now have a number of performance measures in place ranging from individual process outputs and cycle times, to quality and on-time delivery measures. Each group of employees are assessed separately according to their work processes, but compete against each other for a share of the monthly bonus pool allocated to the Production Plants. It would appear that currently, performance targets may be met by a group of employees, but if they do not exceed their targets by the greatest margin compared to the other groups within the Production Departments, they do not receive their bonus. This has led to significant dissatisfaction across the production plants and needs to be addressed sooner rather than later. I asked Allan about how the Production Managers address staff morale, given the evident level of dissatisfaction. He advised that many years ago, the Production staff had a social club that organised various functions across the plants, however the employee that took on that responsibility has since left and no one has "picked up that ball".

The Sales Office: The Sales staff are assessed on the basis of sales targets which are linked to quarterly bonus payments. The more successful sales achievers have also been offered the opportunity to participate in a profit share scheme, which allows them to share in a portion of the business unit's profits. On paper, these incentive programs should motivate staff, however over the years, it seems there have been some problems with their implementation and subsequent payment of bonuses and profit shares. Historically, the bonuses have only been paid when Foleo Fones has achieved a pre-determined level of profit and if that was not achieved across the entire business unit, then the Sales bonuses were not paid. Unsurprisingly, this has led to poor staff morale in the Sales Office and, consequently, poor performance. We have introduced a number of performance measures in addition to sales targets, which should boost performance, however Sales staff morale is still an issue of concern.

The Warehouse: Staff morale in the Warehouse is particularly problematic at the present time. The Warehouse Manager reports that he receives countless emails of complaint from staff regarding their work conditions, remuneration and career path opportunities. I read a selection of these emails which suggest that the Warehouse employees are concerned with the lack of opportunities for advancement and increased remuneration offered to them in comparison with those offered to other Foleo departments and business units. Allan has introduced a range of relevant performance measures into the Warehouse as part of the Balanced Scorecard initiative and he hopes that in time this will address the staff morale issues. In addition to these new measures, a few months ago Allan "borrowed" the I.T. Department's initiative and introduced his own informal reward system - each time a Warehouse employee exceeds their performance target, they receive a "WareVoucher". When 20 vouchers have been accumulated, the employee receives a free "Scratch & Win" card. He is hoping that in time this will boost the Warehouse staff morale and ultimately improve performance.

For your next monthly meeting, Tracey and Peter have asked you to analyse your observations and present suitable recommendations for resolving the identified motivation issues.