Reward & motivation: a case study in incentivising retail sector staff

As competition and consolidation in UK retail increases, retail organisations increasingly realise that store employee contribution, motivation and behaviour are the primary determinant of competitive advantage and business success.This paper examines the experience of one of the UK’s top 5 retailers in introducing an incentivisation scheme for its 40,000 store based employees. It focuses on the challenges the business had in establishing the scheme, the success of the scheme and ways in which it could have been more effective.The learning from the study informs debates about the nature and extent of incentivisation within retail and the wider UK service sector, supported with empirical and secondary evidence that has a strong degree of external validity.The paper explores the relationship between reward and motivation and explores a number of hypotheses including the notion that team based rewards are more powerful than individual rewards, that incentive schemes contain coded messages about what the business really values and that the role and motivation of store management is pivotal for the success of staff incentive schemes. The idea that it is the perception of both the equity and attractiveness of rewards that influences motivation is explored together with the notion that the greatest barriers to effective incentivisation are lack of training, ineffective communication and a lack of a conductive sales culture. In addition, the role of recognition and its relative importance versus reward is examined.The research study presented is based on a combination of qualitative and quantitative methodologies applied across 500 stores in 18 regions. The aim of this study was to establish the effectiveness of one specific incentive scheme and the relationship between the study findings and broader literature on reward and motivation.The results reveal that the incentive scheme, whilst successful in increasing sales by 20% and motivating a minority of store managers and staff, had a negative impact on store teamwork, ignored the role of recognition and demotivated some staff. A key finding was that management developed locally configured ‘shadow’ incentive schemes at store level that were more successful at motivating staff than the ‘official’ scheme. This informs practical insights about the limits of success of any centralised incentive and the impact of local reward and motivation initiatives. The scheme mechanics were sub optimal, with levels of reward for staff (c20p - 80p per sale) held to be too low to change behaviour and managers of smaller turnover stores felt unfairly treated. The majority of Store and Area Management, however, achieved significant material rewards from the scheme.Statistical analyses revealed that store management attitudes and ability to motivate staff are the primary determinant of store sales success. In addition, effective communication, a spirit of healthy competition, belief in the product, its price and the reward level appeared to be the key drivers of success.The paper concludes by recommending a new model for retail incentivisation intended to assist practitioners and academics to explore, devise and implement successful incentive schemes in retail organisations. This model encompasses the findings that the keys to successful incentive schemes are to incorporate a team based reward element, devolve responsibility for the implementation and choice of reward to store management, to pilot the scheme to ensure all implementation issues are sorted before launch. A significant conclusion is that an incentive scheme should also form part of an integrated and strategic approach to reward that flows from and supports the business strategy. The fact that the study focussed on one retailer, combined with methodological constraints, reduces the generalisability of the findings. However, the study illuminates a number of views on incentivisation, which would repay further study and scrutiny