George P. Baker, Samuel L. Shimer
Harvard Business School (190067-PDF-ENG)
October 20, 1989
Describes the design and implementation of a bonus plan for video store managers. The problem for the chain’s top management is getting store managers to “push themselves”, keep business orderly and organized, and be courteous and efficient with customers. The design of the bonus plan is simple: Instead of trying to measure the neatness of the stores or the quality of the customer service directly, give the managers a fraction of the income of the store and leave the details to them. The case ends after six months of experimentation. period with the new plan and the chain’s top managers say that while revenues have increased, the store’s management has not improved in terms of managing the details.
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