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At Ollie Bollie Incorporated, the leadership wants to encourage their management team to be motivated to achieve the company's objectives and targets every quarter. They
At Ollie Bollie Incorporated, the leadership wants to encourage their management team to be motivated to achieve the company's objectives and targets every quarter. They have implemented a bonus system and are hoping that it will be a powerful motivator. However, a key concern of the new CEO is that extrinsic rewards can result in unintended consequences that may have a negative effect on the company. The CEO gave examples that she previously dealt with in other companies: Example : A Regional Division Manager of a large merchandising company receives a bonus if her division exceeds the budgeted profit target This Regional Division Manager has responsibility for all aspects of the value chain within the Western Canada region Example : A Sales Associate at a cell phone service and provider receives a commission on all customer sales Assume each retail outlet location has multiple sales associates that are all eligible for sales commissions and they have access to offering discounts to customers within a range Required : a For each of the above examples provide and explain one unintended negative consequences that could have longer term impacts that might arise as a result
b For each of the above examples, identify some controls a company could put in place to reduce the likelihood that the unintended consequences you identified in part a will occur. Provide one control for each example above marks
of the extrinsic incentives employed
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