Sample case study on Compensating Sales Professionals

Introduction

Sales professionals perform a very important role in an organization through promoting the products of the company. Profit revenues for any business association are derived from the sales of its products. However, the competitive nature of the business environment has led to a situation where HR managers have to develop strategic policies to compete with other firms. These policies range from product improvements to strategic plans for compensating sales professional (Cascio, 2012). The latter is undertaken to initiate the motivation levels of the workers so that they can meet the sales target set by the corporation. On the other hand, providing a stable compensation package is a challenging responsibility because HR managers have to consider various factors during the computation (Reda, 2014). Further,  the main problem results from the antagonism of these factors that are used in the computation process. For example, sales volume and customer service are opposing factors that make the compensation process difficult. This paper will analyze a CyberTech Inc. case and propose recommendations about compensating the sales profession with emphasis on the M1 and M2 products.

The case study

CyberTech Inc. is a business entity that deals with hardware and software for handheld solutions for the service and maintenance of their systems. The company provides its products and services mainly in the US market, but it has established subsidiaries in a number of foreign countries. In its capital base in the US, the organization has a staff of seven sales professionals who work directly in the field whilst three are based at the headquarters. To achieve its corporate goals, the organization pays its field sales staff a basic salary and a 5% commission on the sales. On the contrarily, the inside sales professionals are only enumerated a basic salary of $48,000 every year. In addition, all the employees of the company are subjected to competitive benefit packages. The major product provided by the company is the M1, which stores data about heating and ventilating, safety issues and information for repair and maintenance of complicated mechanical systems. Conversely, the competition in the market has increased considerably and this has prompted the organization to introduce a more competitive product irrespective of the M1 reputable performance for eight years. The new product, M2 has a new web application that enables the handheld device to access real-time interface that is significant in providing vital information about the costs of the repair and maintenance. Here, the corporate strategy is to replace 15% of M1 products by the new M2 with a 500 targeted additional unit sales during the first year.

The challenge

The new product has more features than the initial product, but the customers have complained that the product is complicated. On the other hand, the sales volume of the M1 product has remained steady in the market and the management is faced with the challenge of slow M2 sales. The sales professionals complain that they do not have enough time to take the customers through the additional features and this has resulted to a situation where the customers view the additional features as unnecessary. Conversely, the complex features of the M2 product make it difficult for the sales professionals to contact the customers through the phone because they are very specific. As such, focused has been moved to customers who have purchased the product so that they can be taught about the features of the product. Therefore, the main challenge is that the outside sales team does not give these customers enough training.

Compensation perspective solutions

The competitive nature of the business environment requires a proper design for giving compensation and benefits to the employees to realize business success (Devine, 2014). A designed plan will increase workers motivation and control excess expenditure on giving benefits.  In the case study, the first compensation perspective solution is to cultivate a culture of education within the workers. Learning helps to improve the technical skills of the workers, gives motivation, and should be fit on yearly basis (Estreicher, 2010).

Secondly, the M2 sales volume can be boosted through providing a constant and consistent feedback to the workers. It is an important aspect in developing education within the business through precise feedback. Also, it helps to remove confusion of information that may cause poor communication, especially regarding the customers opinion about the additional features of the new product. A reliable communication channel should be established within the business to relay information. In addition, CyberTech can initiate frequent meetings with the sales professionals to help HR managers an opportunity to review their top outside sales workers to be rewarded. The best-fit practice here is to hold such meetings on weekly basis (Cichelli, 2009).

Another important compensation perspective solution is to initiate a proper management of grunt work. All activities within the business may not be rewarding because all business activities take time to grow. Here, policies should be developed to promote the growth of the M2 product. CyberTech management needs to inform the workers about the projects that are slow rewarding. The best-fit practice is to handle workers properly through balancing the amount of work in grunt projects and good projects (Chaudhuri, 2010). Therefore, the 500 unit sales of the M2 product should be reduced so that it picks slowly. Further, it is important to publicly appreciate good work done by the workers. This is a motivational strategy and helps to identify the best workers. Through praising the workers in public, the managers save the benefits costs in rewarding individuals.

References

Cascio, W. F. (2012). Short Introduction to Strategic Human Resource Management. Cambridge: Cambridge University Press.

Chaudhuri, K. K. (2010). Human Resource Management: Principles and Practices. Mumbai [India]: Himalaya Pub. House.

Cichelli, D., J. (2009). Compensating the Sales Force: A Practical Guide to Designing       Winning Sales Compensation Plan. New York: McGraw-Hill, Inc.

Devine, M. (2014). Managing Talent: Recruiting, Retaining, and Getting the Most From Talented People. New York: Public Affairs.

Estreicher, S. (2010). Employee Benefits and Executive Compensation. AH Alphen: Kluwer          Law International Press.

Reda, J. F. (2014). The Compensation Committee Handbook 4th ed. Hoboken, New Jersey: Wiley.