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 organisations staff motivation levels and incentive programs currently in place for the Foleo Scapps business unit. As a result of your investigations into Foleo Scapps, you have uncovered a number of potentially problematic issues and, at your first monthly meeting with Tracey and Peter, you present your findings in the form of the below report:

FOLEO SCAPPS: As a result of the introduction of the financial performance measures, the Foleo Scapps business faced some serious employee motivation problems. Brian Williams believes that many of these issues have now been addressed by the implementation of the Balanced Scorecard, with the newly implemented performance measures, in addition to the initiatives he has introduced updated over the last couple of years. During our discussions regarding the incentive schemes currently in place for the programmers, sales and testing staff, Brian also identified some potentially challenging issues that I believe, are directly related to the poor levels of staff motivation in the external app testing area. These include ongoing copyright actions resulting from poorly tested external apps, as well as steadily increasing absenteeism and staff turnover rates. Brian believes that these issues are confined to the testing area and that the introduction of new internal controls should address some of these issues, however, I believe that all these dysfunctional behaviours have been directly influenced by poor levels of job satisfaction and motivation. We need to address these problems in order to boost the employees commitment to Foleo and in order to achieve this, we must demonstrate our commitment to them. Brian and I have documented the array of incentive programmes in place across Foleo Skills, which I present below:

The Testing Area: This area of Foleo Skills currently has a basic and poorly designed rewards programme in place. The performance of the testing staff was previously assessed on the number of external apps tested, with bonuses being paid each time the testing employee uploaded 200 apps to the Scapp Store. This led to short-cuts being taken in the testing processes as staff tried to maximise their bonus payments, resulting in poor quality and plagiarised apps being uploaded to the Foleo Scapp Store. This has been addressed under the new Balanced Scorecard approach to performance measurement, with testing staff now being paid their bonuses based on customer satisfaction scores of the apps they test, rather than the number of apps they test and upload. An external app must now rate an average satisfaction score of 7/10 to achieve a reward for the tester responsible for uploading it to the Scapp Store. This has not gone down well with the testing staff. The change in performance criteria to the customer satisfaction measure has resulted in significantly fewer bonus payments being achieved by all the testing staff, perhaps due to the scores more broadly measuring the quality of the app rather than the functionality or originality of it. The employees have complained bitterly about this, arguing that their performance should be assessed on their output, rather than on the quality of the external app developers work (which, they claim, is what the customer satisfaction measure actually relates to). Some employees have even expressed concerns to Brian about their future with Foleo, as they fear they are now viewed as less valuable employees as a result of their apparent drop in performance.

The Marketing/Sales Office: The Sales and Marketing staff of Foleo Scapps are paid a base wage plus a team-based commission based on the value of the monthly sales of Scapps from the online Store. This scheme has been introduced as a result of the implementation of the Balanced Scorecard in the hope that it will provide incentives for improving team-based performance. The team have been set a monthly sales target, which if exceeded, results in the members sharing 2% of the excess sales value. Historically, months when the team have missed exceeding their target have been rare, and consequently, bonus payments are usually paid to the Marketing and Sales staff. However Brian reports that in recent months, the level by which the team are exceeding their target has been steadily diminishing. Furthermore, he notes that he has been receiving regular complaints from the staff regarding the size of the bonus-pool they are expected to share. By the time it is shared among all the staff, they argue, there is very little received by each of the team-members. They are pushing Brian to increase the size of the budget pool from 2% to 5% of the excess sales value.

The Scapp Developers: It is evident that the broad range of initiatives Brian has implemented for the programming staff has resulted in improved performance and innovative ideas that he has been able to introduce across the entire business unit. He completely redesigned the programmers offices into a free-flowing Space that now includes treadmills, lounges with headphones on stands next to them, an espresso coffee machine and gaming consoles attached to large screen TVs. Brians rationale for this seemingly bizarre office fit-out was to support his programmers creativity. Some think, he contends, as they walk (hence the treadmills), others tick over ideas as they play games (hence the gaming consoles), whilst others need some quiet time doing nothing to generate ideas (hence the lounges and headphones). The SpaceTime brainstorming sessions he introduced with the staff have led to innovative testing techniques being adopted by the testing area, as well as new and creative ideas for new Scapps and the Store. From all reports the staff look forward to these monthly sessions where they share not only ideas for Foleos future, but also a beer and pizza. Also popular with the staff is the MyTime initiative, where programmers are allocated a half day per month to pursue their own creative endeavours using Foleos resources and time. Brian notes that Foleo has directly benefited from this, as a number of programmers have developed effective Scapp Store management ideas and programmes in their MyTime hours and have offered these for Foleos use at the brainstorming sessions. Programmers are paid a base salary but have the opportunity to earn the Scapp of the Month reward, if their Scapp is the highest revenue earner for the previous month. This earns the successful programmer a choice of rewards, including a dinner for two at a local restaurant (to the value of $150), or an extra half day of MyTime for the next month, or a cash bonus equating to 2% of the sales earned by their successful Scapp. Brian reports that he receives regular feedback from the programmers in SpaceTime sessions as well as in the form of emails that seems to confirm that he has got it right with this group of employees.

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.

Required:

(a) Using Maslows Hierarchy of Needs theory, assess and explain the current level of motivation in the Foleo Scapps Testing Area. In your discussion, refer to your observations presented to Tracey and Peter, as well as the case facts from this and previous weeks chapters of the Foleo Fones story, where relevant. (HINT: Ensure you assess the current level of motivation as either high or low using evidence from the case facts and then explain why using the theory.) (HINT: Identify the types of employee needs currently being met/not met by the organisation & explain how these affect motivation levels.)

(b) Using Hertzbergs Two-Factor theory, assess and explain the current level of motivation for the Foleo Scapps Development Staff. In your discussion, refer to your observations presented to Tracey and Peter, as well as the case facts from this and previous weeks chapters of the Foleo Fones story, where relevant.

(HINT: Ensure you assess the current level of motivation as either high or low using evidence from the case facts and then explain why using the theory.)

(HINT: Identify what the Foleo Scapps provides (or doesnt provide) in terms of the 2 factors and explain how these affect employee motivation levels.)

(c) Using Expectancy theory, assess and explain the current level of motivation in the Foleo Scapps Marketing & Sales Office. In your discussion, again refer to your observations and case facts from this and previous chapters of the Foleo Fones story.

(HINT: Ensure you assess the current level of motivation as either high or low using evidence from the case facts and then explain why using the theory.)

(HINT: Assess the linkage between each component of the model as either positive or broken and explain the impact on motivation levels.)

(d) Select one (1) individual incentive programme that is currently being used within the Foleo Scapps business unit. Using Reinforcement theory, explain how this programme attempts to enhance the motivation levels of the participating employees & assess how successful it has been. In your discussion, refer to your observations above, as well as relevant case facts from any of the chapters of the Foleo Fones story.

(HINT: Ensure you identify the type of reinforcement being applied as well as the schedule used to apply it.)

(e) Suggest two (2) improvements to any two (2) existing incentive programmes for the Foleo Scapps business unit that will address your observed motivation concerns. Using any of the content or process theories discussed above, explain how each of your suggested improvements will increase the current level of motivation in the business unit. In your discussion, refer to your observations above and relevant case facts from any of the chapters of the Foleo Fones story.

(HINT: Ensure you justify your two suggestions using any of the theories discussed in parts (a), (b) or (c) above.)

(HINT: Refer to lecture materials for the types of improvements you might wish to suggest.)