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Behavioural Consequences of the New Incentive System at Vintage Royalty

Case Study Instructions:

Instructions: 1. The answers to these questions can be found in the chapter on Motivation and the Ordónez et al., (2009) paper we discussed. 2. . Any answers that use the pronoun “I” for a team project will be marked ‘0’. Question: Apply the insights from Ordónez et al., (2009) to explain the behavioural consequences of the new incentive system at Vintage Royalty. In other words, how would Ordónez et al., (2009) explain these problematic behaviors?

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Goal Setting in Management
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According to Ordónez et al. (2009), Vintage Royalty is an example of goals gone wide. Vintage Royalty provided stable sales, but its market share dropped by 10%. Simon Cho, the new CEO, made it his mission to increase sales as he believed workers were not sufficiently motivated. However, he did not conduct detailed research to discover why there was a drop in sales. Instead, he devised incentives to give a bonus when a certain target was met. Consequently, there was no improvement in sales and thus wondered what the problem was.
Simon then changed the goal of selling and made reforms that he thought would change sales performance. He made the rewards commission based on which he reduced hourly pay and made hefty bonuses on commission and at least a 10% increase in any sales target surpassed. To him, the incentive was good, and sales increased by over 2000 US dollars in every store. However, there was an increased negative revi...
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