Sunrise Bakery Co operates a chain of six bakeries across Cape Town, South Africa. The business employs 45 workers, most of whom are shop assistants and bak...

(a) Financial motivation refers to methods of encouraging employees to work harder or remain loyal to a business by offering them money or money-related rewards [1], such as bonuses, commission, profit-sharing or wage increases [1].

(b) Two financial methods of motivation Thandiwe could introduce:

1. Bonus scheme linked to daily sales targets [1]: Thandiwe is already considering this approach. A bonus is a one-off payment given when a specific target is met [1]. For Sunrise Bakery, tying bonuses to daily sales targets would encourage both bakers and sales assistants to work efficiently and proactively, directly linking effort to reward. This could help retain staff who might otherwise leave for the rival chain's higher base wages, because the bonus provides an opportunity to earn more through strong performance [1].
2. Commission on special orders [1]: Thandiwe is also considering paying sales assistants a percentage of the value of birthday cakes and catering orders they secure [1]. Commission directly rewards sales effort, motivating assistants to actively promote high-value products rather than passively serving routine customers. Since birthday cakes and catering orders are higher-margin sales, the commission cost can be absorbed while still increasing overall revenue [1].

(c) Advantages and disadvantages of using commission for bakery sales assistants:

Advantages:

• Commission directly links pay to sales effort, so assistants are incentivised to actively upsell catering orders and birthday cakes rather than waiting for customers to ask [1]. This increases revenue at a low fixed cost to the business, because the commission is only paid when a sale is made [1].
• It motivates proactive customer service, which suits a bakery where special-occasion orders (birthdays, events) represent significant additional revenue beyond routine bread and pastry sales [1].

Disadvantages:

• Assistants may pressure customers into purchases, creating an unpleasant shopping experience in what should feel like a friendly neighbourhood bakery. Aggressive selling could damage the brand's reputation [1].
• Staff income becomes unpredictable - some weeks may produce many special orders, others very few. This uncertainty could actually increase turnover among assistants who prefer stable, reliable pay [1].
• Commission may create rivalry between assistants competing for the same customers, harming teamwork and collaboration during busy periods when cooperation is essential [1].

(d) Whether Thandiwe should introduce a profit-sharing scheme for all 45 employees:

Arguments for profit-sharing:

• Profit-sharing unites all 45 employees - including the experienced bakers who are leaving - around a common goal of business success. This creates a sense of shared ownership and collective responsibility that could improve loyalty and reduce turnover without a large fixed cost increase, since the payout depends on actual profits being generated.
• It improves teamwork between bakers and sales staff, since everyone benefits when the business does well, reducing the risk of commission creating unhealthy competition.

Arguments against profit-sharing:

• Individual employees may feel their own effort has little effect on overall company profits, especially across six bakeries. A baker in one branch cannot directly influence what happens in the other five, weakening the motivational link between effort and reward.
• Bakery profits may be low or volatile, meaning the profit-sharing payout could be disappointingly small, failing to compete with the rival chain's straightforward higher wages.
• It does not address the immediate problem: experienced bakers are leaving because a competitor pays more. A profit-sharing scheme takes time to show results and may not be enough to retain staff in the short term.

Conclusion: Profit-sharing alone is unlikely to solve Thandiwe's retention problem. The experienced bakers leaving for higher wages need a more immediate financial response - such as a targeted pay increase or the bonus scheme linked to productivity. However, profit-sharing could be introduced alongside these measures as a longer-term tool to build loyalty and a sense of collective purpose across all six bakeries. The most effective approach would combine targeted bonuses for bakers (addressing the immediate retention crisis) with profit-sharing for all staff (building long-term engagement). [6]