Beneath MarketingSeason 3Episode 4
You pay your branch manager for sales and hope for profit
In short: An owner and a branch manager who read the bonus sheet literally. What you pay for is what you get: no bonus on sales alone; pay on contribution.
A conversation between an owner and a smart branch manager who did exactly what he was paid to do
Abstract
Your branch manager isn’t gaming you. He has read your bonus sheet more carefully than you wrote it. What you pay for is what you get, and a measure you turn into a target stops measuring what you wanted.
When to come back to this episode: Before you write the branch managers’ incentive sheet for the coming quarter or year.
Month-end
Composite example, not a specific client; the numbers are hypothetical
the last day of the month. Branch 12 has topped the sales league for the third time, and its manager, Abu Faisal, will collect the bonus as usual.
But this time Abu Saad, the group’s owner, has read a second sheet: contribution after rent, branch by branch. After the monthly review he asks Abu Faisal into his office.
The dialogue
Abu Saad: Congratulations, Abu Faisal. First for the third time. You sold 620 thousand against a plan of 560, so 11% over. But look at this sheet. Your contribution after rent is 11%: that’s 68 thousand. Branch 7 sold only 540 thousand, and its contribution is 17%: about 92 thousand.
Abu Faisal: Branch 7 is in another district. Its rent is cheaper.
Abu Saad: True, and that’s already in its plan. I’m asking you about three things. First: your discount codes doubled.
Abu Faisal: The codes brought orders. And orders are sales.
Abu Saad: And the app? At peak the branch ran over capacity, 110%, and you never once switched on “busy” mode.
Abu Faisal: If I switch it on, the order goes to someone else. And I’m judged on what comes in, not on what goes away.
Abu Saad: And the rating dropped. And the new dessert you added without approval?
Abu Faisal: It sold, Abu Saad.
Abu Saad: (puts the two sheets side by side) So everything you did raised sales. And everything you did lowered profit.
Abu Faisal: With respect, sir. The bonus sheet you signed has one line on it: sales. You told me: sales.
Abu Saad: (after a silence) You’re right. I’m the one who wrote the sheet.
Abu Faisal: Write it differently and I’ll work differently. But judge me on what I can move, not on the rent and the site you signed for.
Abu Saad: Agreed. From next quarter: the bonus is on contribution after rent above your branch’s plan, and your rent is in the plan. And it isn’t paid if the standards score falls below the written floor.
Abu Faisal: And the discount codes?
Abu Saad: Any code that loses money now loses it from your bonus and from my profit at the same time. We’re on the same side.
Abu Faisal: (smiles) I’ll shut half of them tomorrow.
ChartComposite example; the numbers are hypothetical
The sheet you read decides who’s first
The sales sheet
The contribution-after-rent sheet
SAR thousand a month
Source: The dialogue in the episode.
Data as a table
| Branch 12 | Branch 7 | |
|---|---|---|
| Sales (SAR thousand) | 620 | 540 |
| Plan (SAR thousand) | 560 | — |
| Contribution after rent (SAR thousand) | 68 | 92 |
| Contribution after rent (%) | 11% | 17% |
The coach paid per goal
Picture a football coach paid for every goal his team scores, and nothing else. He’ll attack with ten players, top the scoring table and lose the league. Nobody told him to defend, because nobody paid for clean sheets.
Abu Faisal isn’t a bad coach. He’s a coach who read his contract.
The idea beneath the dialogue
In 1975 Steven Kerr published “On the Folly of Rewarding A, While Hoping for B”: organisations pay for one behaviour while hoping for another, then blame people for responding to what they were paid for. It was reissued in 1995 as an Academy of Management classic.1
The same year, the economist Charles Goodhart observed in monetary policy that any observed statistical regularity tends to collapse once pressure is placed on it for control purposes. In 1997 the anthropologist Marilyn Strathern put the idea in the sentence everyone quotes: “When a measure becomes a target, it ceases to be a good measure.”2
Sales are a good measure of a branch’s health as long as they stay a measure. Once they became a target with a bonus attached, the branch started producing sales, not health.
Someone might say: then let’s pay on customer satisfaction. Careful there too. In 2003 Frederick Reichheld wrote that “would you recommend us?” was the best single predictor of growth in most of the industries he studied.3 In 2007 Keiningham and colleagues tried to replicate that across 21 firms and more than 15,500 interviews, and didn’t find the promised superiority.4 Earlier, Ehrenberg and colleagues had documented “double jeopardy”: small brands have far fewer buyers, and those buyers are slightly less loyal.5 My reading is that a branch’s satisfaction score often follows its size and its district, not its manager.
One honest line: I found no published Saudi data on branch-manager incentives. Your reference is your own bonus sheet.
SimulatorIllustrative example
Read the bonus sheet the way your branch manager does
Sit in Abu Faisal’s chair: push discount codes and watch sales and your bonus go up while contribution goes down; then flip the sheet to “contribution after rent, gated by standards” and the same move stops paying.
Result at the default values (turn on JavaScript to move the numbers).
- For the owner: sales vs a no-code month
- +24,217
- For the owner: contribution after rent
- −15,680
- Promotion increment test
- fails
- For the manager: bonus under the selected sheet
- 5,822 (+242 )
- Under the other sheet
- 0
Stop The code buys revenue and gives away margin: 21,483 of extra contribution for 37,163 of discount. Sheet A still pays the manager +242 for it. No bonus on sales alone.
Rule source: Doctrine rule: promotion increment test
Hypothetical numbers. The test is the Doctrine’s (channel rules); tying the bonus to contribution with a standards gate is the author’s proposal, a starting point your group sets in writing. Idea: Kerr 1975, Goodhart 1975, Strathern 1997.
Data as a table
| No-code month | This month | Δ | |
|---|---|---|---|
| Sales | 558,000 | 582,217 | +24,217 |
| Contribution after rent | 145,300 | 129,620 | −15,680 |
| Sheet A bonus | 5,580 | 5,822 | +242 |
| Sheet B bonus | 0 | 0 | 0 |
How it’s calculated
- Orders = no-code orders × (1 + extra orders); discount = coded orders × ticket × discount
- Sales = orders × ticket − discount; contribution after rent = orders × ticket × contribution − discount − rent
- The Doctrine’s test: extra orders × contribution per order > the discount?
- Sheet A = rate × sales; sheet B = rate × (contribution after rent − plan) if the standards score is at or above the floor, else zero
Where the money leaks
A bonus sheet built on sales alone buys you four leaks, each one rational from the manager’s chair:
- Discounts that buy revenue and give away margin. The Doctrine allows no promotion without a pre-set incremental-contribution test.6
- Peaks over capacity. The rule is that demand generation into a branch stops above 100% of its capacity.7
- Items added because they sell, not because they earn, as we saw on the whale curve.8
- A board pack full of the numbers that are paid for, not the numbers that change a decision. The Doctrine calls these “vanity metrics” and measures them with signal purity.9
Chart
Four leaks from one sheet
Source: Doctrine rules as listed in the thresholds lexicon. (6, 7, 8, 9)
Data as a table
| Leak | The test that catches it |
|---|---|
| Discounts that buy revenue | Promotion increment test |
| Peaks over capacity | Above 100%: demand generation stops |
| Items added because they sell | Whale curve (episode 3) |
| A board pack of vanity metrics | Signal purity below 1: cut the pack |
The Sunday-morning question
One question, one metric, one rule
| Question | “If the branch manager read the bonus sheet literally… what would he do?” |
|---|---|
| Metric | Net contribution after rent per branch (metric 1 on the board dashboard),10 against the branch plan, with the standards score (visit audit or mystery shopper) |
| Decision rule | A starting point your group sets in writing:11 no bonus on sales alone. The bonus is paid on contribution after rent above the branch plan, and isn’t paid if the standards score falls below the written floor. |
This week
- Read your bonus sheet as if you were the manager, and write down three moves it rewards that you don’t want.
- Make contribution after rent the main bonus line from next quarter.
- Add one standards gate, an audit score, and announce it before the quarter starts.
Credit, and the next episode
Steven Kerr named the folly, Goodhart saw it in monetary policy and Strathern gave it its sentence. I moved it to the month-end review and gave the last word to the branch manager.
And the truest test of any manager, and any branch, isn’t the good month. It’s the weakest week of Ramadan. That’s the next episode: “Ramadan doesn’t flatter.”
Sources and notes
Steven Kerr, “On the Folly of Rewarding A, While Hoping for B”, Academy of Management Journal 18(4), 1975, pp. 769–783. journals.aom.org/doi/abs/10.5465/255378 (opens in a new tab) . Reissued in Academy of Management Executive 9(1), 1995.
C. A. E. Goodhart, 1975, in his papers on monetary policy. The popular phrasing is Marilyn Strathern’s: M. Strathern, “’Improving ratings’: audit in the British University system”, European Review 5(3), 1997, pp. 305–321. The attribution is documented in C. Mattson, R. L. Bushardt & A. R. Artino Jr, “’When a Measure Becomes a Target, It Ceases to be a Good Measure’”, Journal of Graduate Medical Education, 2021. pmc.ncbi.nlm.nih.gov/articles/PMC7901608/ (opens in a new tab)
Frederick F. Reichheld, “The One Number You Need to Grow”, Harvard Business Review, December 2003. hbr.org/2003/12/the-one-number-you-need-to-grow (opens in a new tab)
Timothy L. Keiningham, Bruce Cooil, Tor W. Andreassen & Lerzan Aksoy, “A Longitudinal Examination of Net Promoter and Firm Revenue Growth”, Journal of Marketing 71(3), 2007, pp. 39–51. journals.sagepub.com/doi/abs/10.1509/jmkg.71.3.039 (opens in a new tab)
A. S. C. Ehrenberg, G. J. Goodhardt & T. P. Barwise, “Double Jeopardy Revisited”, Journal of Marketing 54(3), 1990, pp. 82–91. journals.sagepub.com/doi/abs/10.1177/002224299005400307 (opens in a new tab)
Revenue Engineering Doctrine: failure mode 6, weak margin firewall; lexicon entry promotion increment test; and Season 1, Episode 2.
Revenue Engineering Doctrine: Principle 3, scale follows capacity. App orders count in capacity: Thesis 8 and the channel rules.
Beneath Marketing, Season 3, Episode 3: Every item you added to the menu took profit from another.
Revenue Engineering Doctrine: failure mode 8, vanity metrics, signal purity; lexicon entry signal purity.
Revenue Engineering Doctrine: board dashboard, metric 1, and who owns what.
Tying the bonus to contribution with a standards gate is the author’s proposal, not a Doctrine rule. The Doctrine makes net contribution after rent the first metric on the board dashboard.
Cite this
English
Alhajj, S. (2026, October 3). You pay your branch manager for sales and hope for profit. Beneath Marketing, season 3, episode 4 (BM S3.E4). seiflden.com. https://seiflden.com/insights/rewarding-sales-hoping-profit/
Arabic
الحاج، سيف الدين (3 أكتوبر 2026). «تكافئ مدير الفرع على المبيعات… وتتمنى الربح». «تحت التسويق»، الموسم 3، الحلقة 4 (BM S3.E4). seiflden.com. https://seiflden.com/ar/insights/rewarding-sales-hoping-profit/