You are a regional manager of W-Pure for the Northern region of Wonderland. W-Pure is the
largest company in Wonderland that sells water purification systems for individual households.
One of the largest and most important employee groups in the company (and also for your
Northern Regional Office) is the salespeople. The sales methods that these employees utilize
include visiting individual homes, setting up an information booth in various retail stores and fairs,
running a blog on the company’s purification systems, and more. The salespeople work
independently, and sales of the purification system are mostly based on the individual effort of a
sales employee. The business of W-Pure has been very successful in the last decade, but sales
have been plummeting recently due to the recession in the economy of Wonderland. It seems
that purified water in the house is less of a concern for people when they are struggling to survive
throughout the recession. Furthermore, the company predicts that it will be losing money for the
next two years. Most of the employees, including salespeople, are aware of this situation.
The pay of salespeople in W-Pure consists of two parts. A base pay that is about 10 percent below
the market level for water purification system salespeople in Wonderland and a more generous
bonus system. The base pay increases by the tenure within the firm, and the bonus amount is
based on a formula that is linked to the company’s profits. For example, if the company’s profit in
a given year is between 0 and 1 million Wonderland dollars, all sales employees receive 5 percent
of their base pay as a bonus. If the company’s profit in a given year is between 1 and 2 million
Wonderland dollars, all sales employees receive 10 percent of their base pay as a bonus, and so on.
When the company’s net profit is below 0, no bonus is given out to sales employees.
You have recently surveyed the sales employees in your region to measure their job satisfaction
and engagement level. But to your disappointment, the job satisfaction and engagement level of
your sales employees were very low. The survey results also demonstrate that the sales
employees are very dissatisfied with the bonus system, and many of the salespeople feel that the
system does not motivate them to sell more water purification systems.
So, you have decided to make some changes to the bonus system for the sales employees in your
region.
Question 1.
From the Expectancy Theory perspective, what can be some problems within the bonus system
for the salespeople of W-Pure that makes the system demotivating?
Question 2.
Now provide a solution to the problem that you have identified in Question 1. Also, explain how
your solution can strengthen the three factors within the Expectancy Theory that you have
outlined as lacking in Question 1.