Any topic (writer’s choice)

You have been hired as a HR Consultant supporting the HR team in a small independent financial services company. The company has for the past few months traded in difficult economic conditions and has lost a number of key clients. The MD has called a meeting of senior management to discuss cost-cutting initiatives to work through the recovery. At this meeting the company decided to significantly reduce individual bonuses paid to employees in the current year. They also decided to reduce significantly travel costs and suspend funding for development and education programmes.

The HR team has significant concerns about these decisions. The company has struggled to improve engagement levels amongst staff. Engagement is measured on a six-monthly basis and the previous survey showed a small uptick in engagement after three periods of declining scores. The sales team which generated the majority of the company revenue are strongly motivated by targets and good bonuses for high sales targets. This has created a team culture that is highly competitive and where there is a strong link between performance and financial rewards. The HR team consider the decisions to reduce bonuses to be a risky decision. There is a fear that engagement levels will begin to decline again and employees with high skill levels will seek job opportunities elsewhere. The job market is particularly buoyant at the moment so there are a considerable number of attractive job opportunities available. The reality is that the company cannot afford to lose its high performers.
Critically discuss the potential impact of reducing individual bonuses on the motivation and engagement of employees within the case study organisation.
Theories of motivation,engagment and psychological contract should be mentioned as well.

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