...Cybernetics Method to Incentive compensation Management | @ TCS | | Amit Sharma ,Jasveen Singh, Rajat Bindlish,Siddharth Tiwari,Vaibhav Attree | | Group 11 | 6/12/2013 | | Contents 1 Introduction: 1 1.1 What is Sales ICM? 1 1.2 What is Cybernetics? 2 2 The Cybernetics Approach to Sales ICM 2 2.1 Cybernetics Influence Diagram (CID) 3 3 Sales ICM CID 4 4 Feedback Loop Analysis 6 4.1 Feedback Loop – Commissions Calculations 7 4.2 Feedback Loop - Clawback Calculations 8 4.3 Feedback Loop – Revenue and Cost of Sales 9 4.4 Feedback Loop – Dispute Management 11 5 Conclusion 12 * Introduction: Sales Incentive Compensation Management (ICM) Model is increasingly becoming the key decisive and motivating factor in influencing sales execution to impact the business performance. As sales models are being re-engineered to incorporate more market dynamics and adversities, sales compensation models are also becoming increasingly complex. In the global market where increasing customer reach is a major challenge, it has become essential to include dealers, partners, distributors, retailers, contractors, buying centers across various sales channels into the business’ Sales ICM model. Accurately measuring and rewarding the performance of the sales force (both internal and external to the business) has become the key to driving desired behavior in achieving the business objectives. Failure to understand Sales ICM as a key influencer...
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...For decade the company, protected by patents, has been enjoying a sale growth with high average margins in the range of 40-50%. However competitors, entering the market with comparable chair designs due to patents expiration, and the early 2000’s worldwide recession flattened sales and dropped profits. Kevin Wentworth, CEO and cofounder of KCC, came up with a new strategy to sustain their competitive advantage: value leadership. Kevin wants to move from KCC previous strategy of growing sales through quantity to focus on quality of sales. KCC wanted to differentiate itself by developing a stronger customer focus, understanding better customers’ needs and wants, and improving customer service levels. In order to implement the new strategy, Kevin decided to change the organization structure from functional to divisional. Kevin thought that divisionalization, if implemented properly, could help KCC achieve its objective. Jobs and responsibilities were redesigned and a new performance measurement and incentives program have been created to support Kevin’s new direction of corporate focus. Despite the conviction from most managers that this was a good idea, Kevin was privately worried about the risks involved. Unfortunately KCC’s early experiences with the divisionalized structure created more concerns. In this report we are going to produce a comprehensive analysis of KCC’s management in terms of its objectives, strategy formulation and its management control system. The first session...
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...and Strategy NAME: Professor: Institution: Course: Date: Introduction Xactly is a software company offering science oriented solutions on incentive compensation programs and performance management. The company develops software that enables other companies survive in this fast changing technological environment by enabling them shift from the old complex paradigm of using sales compensation incentives based on spreadsheets to cloud based sales compensation incentive programs. This helps them manage, design, and optimize sales compensation incentives hence saving on costs, time, reducing risk, and aligning workers behaviors with company goals. Magal and Word (2009) argued that, “business processes are the tasks of activities that companies use to produce goods or services, and these activities are supported by Information and Communication Technology (ICT), such as computers, the internet and information systems." Therefore, it is imperative that the company’s business processes are aligned to its business strategies. Xactly’s business strategy of mass customization lieu industrial standardization calls for targeted focus and stringent campaign co-ordination, which are essential for promoting an enabling environment for continuous growth and improvement. Xactly also recognizes that constant communication is imperative for building profitable relationships. Therefore, the company adopted a proactive social strategy as another business strategy to steer...
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...AST1 Task 305.6.2-05 Distribution Strategies Washington Governors University Strategies for Motivating Dealerships as Intermediaries Company S is a new manufacturer entering the scooter market. The company’s objective is to motivate dealerships as intermediaries. Company S wants the existing scooter dealerships to sell its product instead of the competitions. The company will motivate the dealerships as intermediaries through Incentive Programs, Profit Opportunities, Sales Quotas, Decision Making, and Frequent/Timely Delivery. Incentive Program. Company S can motivate scooter dealerships as intermediaries by offering compelling incentives. The company could offer a quantity discount on large purchases. A discount will be given to a dealership when purchasing a large quantity of product. This incentive will encourage dealerships to sell the product from Company S versus the product from a competitor who doesn’t offer a quantity discount when making large purchases. The advantage to an incentive program is it creates a strong relationship between Company S and the dealership. Having a strong relationship means loyalty from both Company S and the dealership, which means repeat business for Company S. Repeat business means that the dealership has had an increase in demand for the product, resulting in an increase in Sales Volume for Company S. The disadvantage to an incentive program is the decrease in profit for Company S. Instead of selling 10 scooters profiting...
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... Intermec is a manufacturer in the Automatic Identification and Data Capture Market and offers a broad mix of products and services. The firm uses a multi-channel strategy to sell its products and services, which includes a direct sales force channel, an e-commerce channel, and an indirect channel consisting of distributors and different types of resellers. In 2009, Intermec’s revenues declined dramatically due to the global slowdown. Since Intermec’s competitors were offering discounts, allowances, and other incentives to promote their product, Intermec fell behind in the market. The CEO came up with six different options to regain their market share and increase their profits. After analyzing the six alternatives, as well as additional options, Intermec needs to start offering the same trade promotions to their channel members as one of their main competitors, Motorola, offers in order to regain their competitive position and increase their sales. Introduction Since 1966, Intermec has become a leading manufacturer of mobile computerized devices that are used in the Automatic Identification and Data Capture (AIDC) Industry. Some of the devices the firm designs include mobile computers, barcode scanners, wireless barcode printers, and radio frequency identification products and it also sells after-sales repair services. Intermec is known as an innovator and has introduced many technological breakthroughs since they opened. However, they have numerous patents, copyrights...
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...Compensation Plan The purpose of this document is to present a proposal for a compensation plan for the newly formed sales team detailing the plan components, incentive packages, benefits, and the reasons the plan will work. Strategic benefit planning helps the company to balance the cost with the value and results obtained. It supports the mission and the employees who are the internal customers of such plan (Rappaport & Barocas, 1993). 1. Business Strategy Alignment InterClean’s new business strategy is about growing and expanding by developing and selling full-service solution packages to existing and new customers in the large institutional and industrial cleaning and sanitation industry. Linking compensation programs to business strategy is about: • Aligning performance objectives to the aggressive growth and transformation strategy. • Measuring the progress and rewarding the achievement of such aggressive goals with aggressive compensation plans that will motivate employees to strive for its achievements. • Compensating for the long-term strategic objectives to ensure the change of the company culture. As previously mentioned, it is key to clearly and frequently communicate the strategy, the objectives, and provide feedback from the measurement results. Key measurements for top compensation: 1- Business growth and increased market share 2- Creation of new customer accounts with new significant business 3- Maintaining and growing existing major customer...
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...Internationalisation of SMEs: Options, Incentives, Problems, And Business Strategy Mohd Khairuddin Hashim & Romle Hassan Faculty of Business Management University Utara Malaysia ABSTRACT Internationalisation presents firms with various opportunities to expand their business activities. The review of the small business literature however, indicates that as a field of study, internationalisation has not attracted much research attention, particularly among small and medium-sized enterprises (SMEs) in the Malaysian context. This study initiated an attempt to address this issue. More specifically, the study strived to explore the internationalisation options, incentives, problems, and business strategy among manufacturing SMEs. INTRODUCTION Globalisation offers various internationalisation opportunities to not only large enterprises, but also to small and medium-sized enterprises (SMEs). Internationalisation provides firms with opportunities to expand their sales, lower their costs, and improve their profits. Although internationalisation presents firms with tremendous opportunities, the complexities and challenges of international marketplace appear to restrict their interest and frustrate their efforts at internationalising (De Noble et.al, 1989; and Burpitt and Rondinelli, 2000). 1 In the case of small and medium-sized enterprises (SMEs), they seemed to be slacking in the area of internationalisation. In spite of the fact that international markets can provide them...
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...which developed strong sales and distribution networks, and sales topped $2 billion annually. Bringing consumers “the finest-quality and best-tasting products” was the company’s mission. It marketed and produced a wide range of shelf-stable grocery products from tomato sauce to ethnic food. The company had more than 300 customers and Wal-mart was one of their largest customers. CAGP’s headquarters were located in Fullerton, California. The market for food industry has all time been a crowded place with the increase in product introductions and changing consumer tastes. To succeed, it is important to keep up with product development trends, customers’ profitability and create brand identity as well as brand equity. Product development is the lifeblood of any food leading companies. Therefore, R&D should be the main focus in combination with good marketing strategy, which will maintain products quality and/or create new products that in turn create new customers. Creating and building brands involve various marketing strategies, which include promotions, advertisement campaigns and competition for display location at retail stores. A company should also take into consideration that their marketing strategies have to match its retailer stores strategies, for retailers will decide which products they want to be more appeal to consumers through their marketing channels. No stranger with these success factors in the food industry, CAGP had their own strategies. However, the old marketing...
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...Analysis Sales promotion is an important component of business' overall marketing strategy. It acts as a competitive weapon by providing an extra incentive for the target audience to purchase or support one brand over another and then makes companies earn immediately sale growths. On the other hand, consumers also prefer instant reward when they do shopping. Therefore, when companies execute sale promotion strategy, they usually create a sense of urgency and trigger target audience purchase products immediately to get the sale today. In 1970, Walter Mischel launched “the marshmallow test” discussing the reward of self-control and delayed gratification. Children who could control themselves to delay gratification probably got better SAT scores in later life. Self-control and delayed gratification also relate to consumer’s buying behavior. Derived from consumers’ buying behavior, they do shopping because they want to satisfy different kinds of gratifications. Marketer usually creates an extra incentive to encourage consumers to take an action that they might prefer to delay. Since the ability to delay gratification correlates with socioeconomic status, after marketers define the target audience, they should be able to create marketing strategy to persuade consumer into gain gratification without delay. Implementing sales promotion probably is the most common strategy to stimuli consumer’s buying motivation immediately. According to the Advertising and Promotion, sales promotion...
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...Incentive pay can be defined as a wage system that rewards a worker for productivity above an established standard. Incentive pay plans rely on being an important reward for the employees. Incentive pay, also known as pay for performance is generally given for specific performance results rather than simply for time worked. While incentives are not the answer to all personnel challenges, they can do much to increase worker performance. A good incentive pay scheme can motivate employees to work better, but, on the other hand, a badly thought out scheme can be divisive and demoralizing. Incentive pay shows appreciation and crates a sense of participation in the company’s well-being that salaries, no matter how large, don’t convey. A well designed incentive pay plan can also help pull people together and give that extra push that every company need in today’s competitive environment. One important aspect of a successful incentive program is a well-founded salary program with appropriate base pay. Effective incentive pay systems are based on three assumptions; Individual employees and work teams differ in how much they contribute to the company, both in what they do as well as in how well they do it. The company’s overall performance depends to a large degree on the performance of individuals and groups within the company, To attract, retain and motivate high performers and to be fair to all employees, a company needs to reward employees on the basis of their relative performance...
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...advertise and sell his product in a market where he will be competing with other independent producers, backyard mechanics, and major brand companies such as STP, Gumout, and Dupont. According to Evans and Wherry (2011), “Trade promotion programs are pivotal to driving sales, building brand equity with consumers and strengthening channel partnerships” (p. 1). A well-executed trade promotions program will be instrumental in moving Hot Fire into national prominence. Hot Fire Objectives * The first step in creating a trade promotions program is to establish objectives in order to guide subsequent marketing efforts and sales. The main trade promotions objectives for Hot Fire Fuel Injector Cleaner begin with the overall goal to drive consumer demand, increase sales, and build a reputable corporate image. In order to boost demand, a business must increase its product visibility and brand awareness. According to Clow and Baack (2014), “A strong brand image causes retailers to stock the product even when fewer trade deals are offered, because a strong brand by itself can help pull customers into retail stores” (p. 346). Establishing a brand marks a pivotal benchmark for Hot Fire where proper marketing strategies and advertising are essential for success. * Initially, Hot Fire must create a distribution channel by targeting auto repair shops, replacement part and auto supply retailers, convenience stores, and possibly race tracks. Once these relationships are established, the...
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...1. Identify all the accounting policy changes and the accounting estimates that Harnischfeger made during 1984. Estimate, as accurately as possible, the effect of these on the company’s 1984 reported profits. a. Changes that affect the Harnischfeger Revenues: • The company start to account Kobe Steel sales in US, previously it only add the gross margin in the financial statement. (this sales represents $28 millions) Following are the accounting policy changes and accounting estimates that Harnischfeger made during 1984 : • Starting November 1, 1983, products purchased from Kobe Steel, Ltd. and sold by the Corporation were included in its net sales., previously only the gross margin on Kobe-originated equipment was included in the financial statement. During fiscal year 1984 such sales aggregated $28 million. • Sales to a foreign subsidiary starts to be consolidated as a net revenues (this sales represents $5,4 millions) • Foreign consolidated subsidiaries are effectively included in the financial statement in fiscal year 1984. (This change increased the net sales by $5.4 million. (tax) ) b. Changes that affect the Harnischfeger profitability: • Change in the depreciation accounting method from accelerated to straight line method. Increase of $11 million in 1984 income • Change on the company’s net residual value. Increased net income in $ 3,4millions • Harnischfeger reduced its inventory level in 1984, 1983 and 1982, resulting in a liquidation of LIFO inventory. This...
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...Exhibits 8 Part 1 – Executive Summary To date, implementation of the Just in Time Distribution System (JITD) has not been successful. It has been resisted both internally with our sales force, and externally with our distribution network. The potential benefits of the JITD remain the same as they did upon the conception of the system designed by Brando Vitali. Rather than placing traditional orders with our factories, the distributors will instead provide us the demand information from the retail store locations. Using the data from the retail store orders, we can determine the optimum schedule upon which to base our production and distribution plans. This will eliminate demand fluctuation and the current lack of ability to plan. We will determine the replenishment orders for the distributors, offering them an additional value added service and minimizing stock outs. The benefits of the JITD system include reduced manufacturing costs, reduced inventory and carrying costs, production planning ability, and increased supply chain visibility. Despite our lack of success, the issue is not whether or not we should continue with the JITD system, but rather how best to ensure the success of the implementation. Obstacles that need to be overcome include a lack of support from both our internal sales department and the distributor network, also complexity of the implementation due to the...
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...Incentives and Compensation In order for a sales force to be successful there needs to be incentives and bonus. A bonus from the textbook is a payment made at the discretion of management for achieving or surpassing a certain level of performance. The incentive will work as follows: one if you sell a warranty on a cell phone the salesperson receives an extra five dollars on their check. Another incentive for the salespeople is a $200 dollar bonus for going over their quota by 100 cell contracts or cell phone. The incentives for the sales team are below. Also a superstar employee can be promoted from within, Sales Supervisor, Manager and store Manager. The employee will receive health insurance if they work twenty-five hours a week. The health insurance is through Humana which covers, dental, doctor visits, emergency room care. Each employee will receive one week of sick time and two weeks of vacation per year Sold Warranty | $5.00 | Selling 50 over Quota | $100.00 | Selling 100 over Quota | $200.00 | Selling a Credit Card | $50.00 | Manager Yearly Bonus for Over Quota | $1000.00 | Sales Associate | 10.00 an hour | Sale Supervisor | $15.00 an hour | Manager | $35,000 a year | Store Manager | $50,000 with Stock options | Salesperson | $10.00 Commission on a sale of a 499.99 phone | Plan for Motivating the Sales Force The plan for motivating the sales team is to have weekly manager meetings to evaluate their staff and determine new incentives and...
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...Pay for Performance and Employee Incentive are two compensation systems an organization may choose to adopt in designing a compensation package for their employees whereby monetary rewards are based on measured performance within the control of participants and groups.. Pay-for-performance is by far one of the most popular forms of compensation that employees can offer their workforce, even with its popularity, the question of whether or not it is the best way to compensate remains. The term “pay for performance” refers to a pay strategy where evaluations of individual and/or organizational performance have significant influence on the amount of pay increases or bonuses given to each employee. It makes major contribution to performance through...
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