Yonghui Superstores: Profit-Sharing and Partnership Reform

In July 2018, several employees of Yonghui Superstores stood outside the company’s headquarters in Chongqing, China to protest a pay cut that had been imposed on them. In 2012, the national supermarket chain had rolled out a performance monitoring system that periodically identified employees with inferior results. A broad-range profit-sharing plan was linked to the new performance system and calculated results based on team performance. Yonghui Superstores also applied organizational reforms to support the new system. All measures were intended to stimulate overall performance and increase labour efficiency. After the implementation of these measures, Yonghui Superstores saw favourable financial results and improved performance. Its new policies also helped increase personal income for many of its employees. However, the system also sparked anger among some workers who failed to meet predetermined performance expectations. Incidents such as employee protests had to be avoided because they could tarnish the company’s brand image. From an organizational perspective, the company also had to balance the interests of the various business divisions, which faced completely different competitive environments. Yonghui Superstores needed a systematic solution for its performance initiative.

This case can be used in a graduate-level course on organizational behaviour. The case touches on multiple topics in the organizational behaviour discipline, including motivation, teamwork, work emotions, and work ethics. After completion of this case, students will be able to<ul><li>analyze the benefits and drawbacks of monetary incentives and inferior elimination, and discuss the conditions for their proper application;</li><li>discuss how team-based structure works as the basis for goal-setting and performance evaluation;</li><li>analyze the combination of a team-based cash incentive plan and participative goal-setting, and understand the phenomenon of “social loafing” or “freeloading;</li><li>understand the term “slack-building” and find the limitations of negotiated performance goals; and</li><li>learn to empathize with employees when setting performance policies, and understand how work emotions and work ethics can be as important as operational results.</li></ul>

• participative decision making, teamwork, peer-monitoring, work stress, cash incentive, unethical behavior