Abstract

A renowned auto service and repair solutions provider in India had been witnessing declining revenues over the past few years. To turn the situation around, the CEO, Sudhir Gupta, directed the Marketing Head P. Ashwath and HR Head S. Nagesh to imple-ment a series of changes in the marketing, performance management, and compen-sation systems. As part of the changes intro-duced, the compensation of the employees was to be linked to their performance. The changes aimed at: a) changing the culture of the company to bring around a ‘sales’ orientation, b) increasing revenue, and c) increasing employees’ motivation. As a result of the changes made, the company did register higher revenue. Employees’ motivation levels also rose. However, custo-mers were not happy and there were also some serious accusations leveled against the company. The top management at the company wondered what had gone wrong.

Learning Objectives

The case is structured to achieve the following Learning Objectives:

• Analyze economic effectiveness of perfor-mance-related rewards
• Understand the influence of performance-related rewards on organizational culture management
• Under-stand the powerful and predictable side effects of associated with narrowly defined goals. and Understand the interplay between organi-zational culture and goal setting theory.

Keywords

Performance-related rewards, Organizational culture, Organizational culture management, Goal setting, Performance management, Incentives, Goal setting theory, Rewards, Motivation, Ethics