What Really Works
The given case here throws light on the compensation models of companies, the effect of such compensation models on employees and various ways to improve the compensation model so as to maximize the productivity of employees. The case talks about the compensation model from two different points of view. The sales executives look for ingenious ways to motivate their sales team. They promise exotic trips to their rainmakers. They hold contests when the business is slow. This motivates them to increase their productivity and boosts their morale as sales can be a demotivating job. But on the other hand the finance dept views the compensation plan as an expense to manage. This is because Sales Force Compensation represents the single largest marketing investment for most B2B companies. Thus Finance tries to ensure that comp plans have cost control measures designed into them. Some companies offer flat commission rates (i.e. fixed commission on the no. of products sold) so that compensation costs rise and fall with revenues. The more the revenue brought into the company, the more the compensation given and vice versa. Others cap compensation once salespeople hit certain performance targets. But a few companies have been able to coax better performance from their team by treating their sales force like a portfolio of investments that require different levels of attention. A research has classified the sales force into three different categories Stars, Laggards and Core Performers. They get motivated through different types of compensation plans. The case then talks about how different types of performers are motivated through different facets of comp plans. CORE PERFORMERS:-
They are those sales people who fall between Stars and Laggards. As they are average performing employees they get the least attention. If they are given proper incentives and attention, they are most likely to increase their productivity.