Justin is a super-franchiser for a large chain of soup-and-sandwich shops. He owns twelve shops in the same region, having invested $2 million to own these stores. Half of the investment in the stores came from inheritance and investments Justin had made prior to becoming a franchisor. The other half of the money was borrowed, so Justin feels considerable pressure to earn enough gross profit from the stores in order to make his debt payments and earn a living.

Justin concluded that he needed to increase revenues from his stores about 15 percent in order to net enough profit for a comfortable living. He believed that his business processes were good enough to make a profit, and that the company was giving his franchise operations enough marketing and advertising support. Justin also thought that his managers were running efficient operations. He was concerned, however, that they weren’t trying hard enough to achieve good customer service byencouraging the order takers at the stores to pay more attention to customers. For example, when Justin visited the stores (or sent a family member in his place), it seemed that the ordertakers didn’t smile enough or ask frequently enough, “What else would you like with your order?”

Justin decided that he shouldn’t micromanage by telling the store managers how to motivate their staffs. Yet he decided to discuss with his managers what he wanted—more profit by doing a better job of motivating the order takers and cashiers. He also pointed out to his twelve store managers that he would be rewarding and recognizing their accomplishments in boosting store revenues. After consulting with the managers, Justin established the goal of a15 percent increases in revenues within 12 months.

Two weeks after the goal-setting discussions with the 12 store managers, Justin announced that he would be recognizing and rewarding a 15 percent or better increase in revenue with two of the following forms of recognition:

A wall plaque designating the manager as a“Store Manager of the Year”A year’s membership in an athletic club for the manager and a spouse or partnerA bonus equivalent to two percent of annual salaryAn iPadAn expense paid trip for the manager and hisfamily for one day at an amusement park or a theme parkJustin waited for responses from his man- agers to the proposed recognition plan. He received several e-mail messages acknowledging an appreciation of his program, yet no burst of enthusiasm. Justin thought to himself, “I guessthe managers don’t understand how great itfeels to be recognized for making a tough financial target. When they earn their recognition awards, I’m sure I will see a lot more enthusiasm.”

Discussion Questions

  1. What advice can you give Justin Salisbury about the most likely motivational consequences of his recognition program?
  2. What other form of recognition should Justin offer the store managers?
  3. Would it be better for Justin to have a recognition program aimed directly at the order- takers and cashiers than at their managers? Explain your reasoning.

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