THE PROJECT:

Background:

Your Selling Career at Black & Decker continues to progress. You have been promoted to the position of a Regional Sales manager and made a member of the compensation committee.

In this new role, you have been assigned the task of studying and recommending to the Senior Leadership Team a NEW sales compensation structure for vour team.

The problem and other considerations are as follows:

• The problem: Simply put the company is experiencing high levels of staff turnover (leaving the company or going to different departments) plus a lack of performance (over achievement of quota) by the Best/Top Sales Representatives.
• The total sales target for your team is $10,000,000 per year.
• The team consists of: o Level 1: Inside Sales (IS)..

...... 2

o Level 2: Sales Representatives (SR)..........

o Level 3: Sales Managers (SM...

... [2]

o NOTE: Numbers in brackets above [ 2,4]-are number of salespeople in each role

Competitors of Black & Decker pay the following

TOTAL compensation (includes fixed and variable pay like commission or bonus) at each level.

o Level 1 ... Inside Sales.

. .

Total

compensation = $ 20,000 to $50,000.

Commission between 0 - 1% sales.

o Level 2..

... Sales Representatives... Total

compensation = $ 55,000 - 80,000.

Commission between 0 - 3% of sales.

o Level 3...

.... Sales Managers.... Total

compensation = $ 100,000 - 175,000.

Commission between 0 - 3.5% of sales.

Assumptions for Total Compensation at each level:

o Level 1= No target. Focus on customer service and handling incoming customer calls.

o Level 2 = 40% of the total team target, for the

sales target amount see above. Divide equally.

o Level 3 = 60% of the total team target, see above. Divide equally.

Your Assignment: Recommend a Sales compensation Plan which answers the following questions:

Q1. What fixed salary, if any, and/or commission, bonus or other forms of compensation will you recommend for each of the roles/levels? Justify why you are offering any of the compensation to each level

... (40 marks)

Hint: THINK OF ALL THE TYPES OF SALES COMPENSATION AND ALLOCATE FOR EACH LEVEL A COMPANSATION THAT WILL MOTIVATE THEM AND IS BEST SUITED FOR THEM FROM THE MANAGEMENT'S PERSPECTIVE.

Q2. If Using commissions in the sales compensation plan - identify if [absolute or relative, or gross margin] and why you selected the one you did...

(5 marks)

Q3. What is the total amount of your compensation plan, i.e., what will be the total amount that will be paid out by the company if targets/sales quotas are achieved 100%. Is this amount justified? Why?.....

(5 marks)

Q4. Outline what potential challenges sales compensation plans must avoid and describe how your plan will ensure these challenges are avoided.......... (30 marks)

Note: Consider the following challenges: complexity of the sales compensation plan; capping sales compensation, motivation of employees, any other challenges.

Q5. What time management "tools & techniques" you would incorporate to (a) better allow the sales team to achieve goals and (b) reduce stress and frustration... (20 marks)