Background:
Your Selling Career at S-B&D Continues to progress. As a successful initial role as an Inside Sales representative and your more recent role as Key Account Manager where you acquitted yourself extremely well and delivered beyond expectation. This has led to your current promotion as Regional Sales manager Power Tools and member of the compensation committee. In this new role beyond leading a team of Territory Managers [TMs] you have been assigned the task of studying and bringing forward and negotiating a recommendation to the SLT [Senior Leadership Team] and an external consultant {TCG- Toronto Consulting Group] on a new sales compensation structure.
However, the challenge is that S-B&D is experiencing high levels of staff turnover (leaving the company or going to different departments) plus the lack of performance [over-achieving quota] by the best Sales Representatives.
The [Senior Leadership Team] SLT has high hopes for this committee and the recommendations, this is high profile and can only help your career if done well. Below is the general structure of the employee level and number, and you are in direct managing of them:
Level 1: Inside Sales (IS)[4]
Level 2: Territory Managers (TMs) [10]
Level 3: Regional Sales Managers RSMs [3]; National Account Managers NAMs [4]
NOTE 1: Numbers in brackets above [4] are the number of salespeople in each role
NOTE 2 : Total Compensation assumptions include:
Level 1= $50,000 (OTE) * On Target Earnings
Level 2 = $100,000 (OTE)* On Target Earnings
Level 3 = $150,000 (OTE)* On Target Earnings
NOTE 3: For Budget Calculations, assume that on target earnings [OTE] sales plan is $100,000,000. Think of this as a bonus, you only get it if you hit the target.
NOTE 4: Directors/ VP/ CROs will be excluded for this phase of the compensation project.
Question #1: [20 Marks] Create a compensation plan recommendation (Hint: Core Elements could include: [base pay, commissions, bonuses,] & Non-Core Elements [Choice of plans; Incentive pay horizon]
Questions # 2: [20 Marks] If Using commissions in the sales compensation plan- Identify if [Absolute, relative, straight-line, gross margin] and why you selected the one you did.
Question #3: [20 Marks] Outline what potential challenges sales compensation plans must avoid and describe how your plan will ensure these challenges are avoided. Note: Consider: complexity of the sales compensation plan; capping sales compensation, less motivated employees and motivating higher performance plus any other challenges you can offer.
Question #4: [20 Marks] Since Sales Staff Turnover has been raised as a key concern, outline what plan elements you would include to ensure better staff retention. NOTE: Include in your thinking: Hiring/ onboarding (discuss with candidates what to look for/ industry choices and career paths; Long -term job outlooks; types of compensation and personality fit) Also Consider: Salesperson motivation, training and performance management elements to better ensure the sales team stays engaged.
Question #5: [20 Marks] If all three levels of employees hit the OTE, how much compensation in total should you pay as remuneration?
