You are the sales manager of the Northwest region for a medium‐sized software manufacturer, and you’re knee‐deep in the process of analyzing quarterly sales volume, marketing costs, and profitability by different market segments. One thing surprises you: personal selling expenses seem about 10% higher this quarter than for the same quarter last year, even though inflation is up only about 2%. These increased selling costs are hurting profits compared to last year. Your company has a policy of reimbursing salespeople for all their legitimate selling costs – hotel, meals, travel, and customer entertainment expenses – although salespeople were expected not to spend extravagantly. Last year’s sales were off company‐wide because of a downturn in demand for your software products, which are a bit dated in comparison to those offered by competitors. You’ve heard that some salespeople are angry that their earnings are down, and it’s rumored they feel the company is letting them down by not developing new software products for them to sell. To make up for their lower earnings, some salespeople are taking their families and friends out to dinner and entertainment and claiming on their expense accounts that they entertained customers. Although you consider such behavior unethical and unprofessional, you understand the frustration of the salespeople and their anger toward the company. You’ve decided this behavior needs to be dealt with forthrightly, but you don’t want to make the salespeople even angrier. You’ve called a general meeting for all your salespeople this Friday morning, and you’re now trying to work out exactly what you’re going to say and anticipate their reaction.

Questions:

1. How will you start off your comments to the salespeople who may be quite defensive about their behavior with regard to selling costs?

2. Since the salespeople seem to resent the company’s failure to develop new software products for them to sell and apparently have made this an excuse for inflating their sales expenses. How will you handle this sensitive area?

3. What will you tell the salespeople about your future policy on reimbursing sales expenses?

4. In closing this meeting, will you promise or offer the salespeople anything to make them feel better?