A bank introduces an aggressive sales incentive scheme. Within six months: • sales figures increase substantially, • employees begin competing excessively with one another, • customer complaints increase, • some employees manipulate sales records, • teamwork declines. The HR department proposes simply increasing the incentive rate further to improve sales. Which response would be most strategically appropriate?

This is the most important integrated application question in the set. The reward system has produced dysfunctional behaviour because employees are being rewarded excessively for one narrow outcome—sales. This creates a classic problem: What gets measured and rewarded tends to influence employee behaviour. The organisation should therefore introduce a balanced performance-management system incorporating: • Sales performance, • Customer satisfaction, • Quality, • Compliance, • Ethical conduct, • Teamwork. Why C is superior It aligns individual incentives with broader organisational objectives and prevents employees from maximising one indicator at the expense of others. Why A is wrong Increasing the incentive further could intensify manipulation and unethical selling. Why B is wrong Performance incentives are not inherently problematic; the issue is poor incentive design. Why D is wrong Collective punishment ignores individual responsibility and may create perceptions of injustice. Why E is wrong In banking, customer trust, compliance and ethical conduct are critical organisational outcomes.