PSYCH 629 Week 5 Motivation and Job Attitudes Example

A Commission Clawback, Two Resignations and a Morale Slump: Motivation, Fairness and Job Attitudes on a Solar Sales Team

[Student Name]

University of Phoenix

PSYCH/629: Introduction to Industrial/Organizational Psychology

Week 5 Assignment

[Instructor Name]

[Date]

The solar company, its sales team and the pay plan are composites written for a model paper; research findings come from the sources listed.

A change to pay can raise performance or wreck morale depending on how it is designed and introduced. This paper uses motivation theory and research on job attitudes to explain why a commission change at my company produced resignations and resentment, and how to fix it.

What Happened

Sunridge Solar's eight sales consultants visit homeowners, design systems and sign contracts. They earn a base salary plus a commission of about four percent of each contract's value, paid when the contract is signed. Roughly fifteen percent of signed contracts cancel before installation, often because of financing denials or homeowners' second thoughts. Last winter, the owner announced by email that consultants would repay the full commission on any contract canceled before installation, deducted from future paychecks, even months later. Within three months, the two consultants with the highest sales resigned, and a short anonymous survey showed satisfaction falling from an average of 4.1 to 2.6 on a five-point scale. Sales volume dropped twelve percent.

Do Incentives Work?

It might seem that commissions themselves are the problem. Research suggests otherwise. Jenkins et al. (1998) meta-analyzed studies relating financial incentives to performance and found that incentives were positively related to performance quantity, with a moderate overall effect, but not significantly related to performance quality. The effects held across laboratory and field settings. Commissions should therefore boost signed contracts, which they did for years at Sunridge. The clawback changed not the presence of incentives but how they were experienced.

When Rewards Feel Controlling

Deci et al. (1999) pulled together 128 experiments on what outside rewards do to people's own interest in an activity. Promised, concrete prizes tied to doing a task usually left people less keen to keep at it on their own time, whereas surprise rewards caused no such dip and sincere praise often raised interest. The authors interpreted the results through cognitive evaluation theory: rewards experienced as controlling reduce the sense of choice and lower intrinsic interest, while rewards experienced as information about competence can support it.

Consultants had described enjoying the problem solving of designing systems and helping families lower their bills. The clawback reframed every sale as a potential debt, and several consultants said they now felt they were "on probation for every contract." That shift from informational to controlling may explain why the best consultants, who had many options elsewhere, left first.

Fairness of Outcomes, Procedures and Treatment

Colquitt et al. (2001) pooled twenty-five years of fairness research and split it four ways: whether the result itself seems fair, whether the way it was decided seems fair (consistent rules, correct facts, no favoritism, a chance to be heard), whether people were treated with respect and whether they got a real explanation. All four predicted how people felt about their jobs and employers and whether they pulled away, and fairness of process stood out as the strongest driver of how people judged the company and its leaders.

The clawback violated several forms at once. Distributively, consultants saw it as unfair to lose pay for cancellations caused by financing denials outside their control. Procedurally, the policy was imposed without consultation and applied retroactively to contracts signed before the announcement. Informationally, the email gave no explanation of the company's losses from cancellations. In interviews, the consultants focused more on the process, "nobody asked us," than on the money.

The clawback took back a few thousand dollars; the way it was announced took back the team's trust.

Why Attitudes Matter

Some managers doubt that satisfaction matters for results. Judge et al. (2001) revisited the old question of whether happy workers perform better. Across more than three hundred samples the corrected link came out near .30, bigger than earlier reviews had claimed and bigger still in complicated jobs. They discussed several possible causal directions: satisfaction may lead to performance, performance may lead to satisfaction or both may share causes. A correlation of .30 is moderate, not a guarantee, but it means attitudes are worth attention, especially in a complex sales role where effort and persistence matter.

Goals and Expectancies

Two cognitive theories add to the picture. Expectancy theory treats effort as a bet on a chain: try hard, close the sale, get paid, and care about the pay. Weaken any link and the bet looks worse. The clawback weakened the second link: a consultant who signed a contract could no longer be confident the commission would stay paid, because a lender might later deny the homeowner's loan. Research on goals finds that clear, stretching targets lift results, but only when people buy into them and can see how they are doing. Under the clawback, consultants' monthly targets remained the same, but the uncertainty about which sales would count made the goals feel arbitrary. Several consultants said they stopped pursuing larger systems for marginal customers, whose financing was riskier, even though those sales were often profitable for the company.

The Company's Side

The owner's concern was real. Each canceled contract cost the company design time, permit fees and sometimes equipment ordered in advance. Some cancellations may have resulted from consultants overselling to close deals. A fair solution must address the company's losses and any incentive to oversell, while restoring consultants' sense of fairness and autonomy.

A Revised Plan

I proposed redesigning the plan with the consultants. First, split commission: half paid at signing and half at installation, so that consultants share in the company's risk without facing repayments months later. Second, exclude cancellations caused by financing denials from any reduction, since consultants do not control lenders' decisions. Third, track each consultant's cancellation rate over a rolling six months and coach those well above the team average, addressing overselling directly. Fourth, end retroactive application and repay deductions taken for contracts signed before the change. Fifth, form a small pay committee of two consultants, the sales manager and me to review the plan annually.

Introducing the Change

The process matters as much as the plan. The owner will meet the team in person, share the company's cancellation costs, acknowledge that the original change was introduced poorly and ask for feedback on the draft before it is finalized. The sales manager will add regular recognition of good design work, not only volume, to support intrinsic interest.

What Not to Do

It would be tempting to win back the team with a raise in the commission rate. The analysis suggests that would treat the wrong cause. Pay levels were competitive, and consultants' complaints centered on unpredictability and the way the change was made. A higher rate under the same clawback rules would cost more while leaving the sense of control and unfairness in place.

Evaluation

We will compare sales volume, cancellation rates, voluntary turnover and survey satisfaction and fairness scores for six months after the change with the period before and during the clawback.

Limits

The survey sample is small, and the two resignations may reflect other offers. Market conditions, such as interest rates, also affect sales and cancellations.

Conclusion

The clawback did not fail because incentives do not work. It failed because it turned rewards into a source of control and was introduced in a way consultants saw as unfair. Research on incentives, intrinsic motivation, justice and job attitudes points to a plan that shares risk fairly and is built with the people it affects.

References

Colquitt, J. A., Conlon, D. E., Wesson, M. J., Porter, C. O. L. H., & Ng, K. Y. (2001). Justice at the millennium: A meta-analytic review of 25 years of organizational justice research. Journal of Applied Psychology, 86(3), 425-445. https://doi.org/10.1037/0021-9010.86.3.425

Deci, E. L., Koestner, R., & Ryan, R. M. (1999). A meta-analytic review of experiments examining the effects of extrinsic rewards on intrinsic motivation. Psychological Bulletin, 125(6), 627-668. https://doi.org/10.1037/0033-2909.125.6.627

Jenkins, G. D., Jr., Mitra, A., Gupta, N., & Shaw, J. D. (1998). Are financial incentives related to performance? A meta-analytic review of empirical research. Journal of Applied Psychology, 83(5), 777-787. https://doi.org/10.1037/0021-9010.83.5.777

Judge, T. A., Thoresen, C. J., Bono, J. E., & Patton, G. K. (2001). The job satisfaction-job performance relationship: A qualitative and quantitative review. Psychological Bulletin, 127(3), 376-407. https://doi.org/10.1037/0033-2909.127.3.376