In this chapter, we will have a small case study to analyze how incentives influence personal productivity.
Turnbuckle Fisheries was started with 22 employees in 1982. After the first year, it was found that the company was not able to expand beyond the current list of clients. Thinking that this would be a resource-related issue, he hired 10 more. However, after the dismal show in the second year, the owner of the company, Jonas Allroy decided to make a performance evaluation of the employees. It was found that all the employees were happy doing their work, however no one was pushing himself to do a better job for himself.
Allroy understood that even if his employees were satisfied at their jobs, they didn’t have the drive to exceed their expectations because of the absence of any incentive system. He declared that any employee who gets new clients will be rewarded with 10% finder’s fee and 5% of all the business that comes from that client.
In the third year, Jonas Allroy was thrilled to know that not only had the employee performances eradicated the business deficit of the last two years, but had actually earned him premium of 10% to invest further in the business.