Question

Assume you have been hired as the national sales manager for a newly formed electronics distributor .Your sales force will sell directly to electronic retailers  Although the company is not widely known it will use little other than the sales force to promote its products in a highly competitive market. Thus sales people skills are very important. Sales people will be responsible for providing complete customer service ,including handling damage claims, helping with merchandising, providing advice and following up after the sale to ensure the customer is completely satisfied.

1. Device a reward system for your sales force, being sure to address the type of compensation plan you will use and why, as well as the types of non financial compensation you will provide.-   8 marks

2. Discuss the challenges the sales managers face when using team based compensation? What guidelines can they follow to use team based compensation to make it motivating for the sales force. -7 marks

Note : The Answers should be in your own words and computerized in Word Format

Answer 1

The reward system aims at providing both financial and non-financial compensation to the sales force of the electronics distributor. A team-based compensation plan is to be adopted. Sales teams deliver the best results in a constantly changing business environment. The sales reward systems have shifted from individual-based performance pay to team-based compensation. Teams provide the synergy effect of the sales team members in a collective manner increasing the productivity of the company. This is the major reason to adopt a team-based reward plan. Also in a team, all team members receive the rewards in the same manner with fairness developing team spirit and supporting each other in the team. This helps in the development of high performing work teams. Team-based reward plan is popular and a survey reveals that more than 70 per cent of the fortune 1000 companies adopt this reward plan to motivate their sales force. The team-based compensation plan has proved to increase the commitment of the employees, increase the motivation levels of the team members and support organization changes in a better manner. In a team reward system, the entire team is rewarded through a hike in base pay, profit sharing and non-financial rewards like recognition, praise, gift cards, movie tickets, vacation trips, T-shirts, coffee mugs with imprinted photos of team members, TV, plaques, DVD player and theme park passes etc.
The challenges faced in a team based compensation plan include handling the ineffective sales member in the team. Conflict arises when a team member does not perform or becomes absent or fails to meet the deadline set by the sales team. This affects the performance of the entire team with other members getting more workload delegated to them due to the ineffective team member. Another major challenge in team-based compensation plan is handling the behavior of the team members based on sales revenue, customer satisfaction, target achievement and various other measures. Team behavior is considered crucial to the success of the sales team on a whole. The guidelines to be followed in developing a high performing team include the pay based strategies and development of member competencies in the form of skill development, attitude development, behavior development and fostering a positive team culture that ensures success both in the short term and the long term. Positive attitudes must be developed among the sales team members to make it a high performing sales team.