Question

a- Using clear rationale and evidence from the case, discuss the reasons behind the lack of
motivation to sell the new program. Also, offer the manager recommendations on how to
solve the identified problem(s) using each of the following theories. Please discuss the
issues and solution using each theory separately: (24%)
i- Expectancy theory
ii- Equity theory
iii- Goal-setting theory

b- Using operant conditioning theory, discuss what are the main problems in the manner by
which the organization is trying to increase the probability of selling the new product and
reducing that of the old one. Cite evidence from the case. Give a clear and concrete
recommendation to solve each of the issues you identify. (8%)

Question 3 Safi manages a team of elite sales representatives at a mid-sized software company. Due to technological changes, their main document-management product has become redundant. The old product helped companies manage complex libraries of data such as their patents, the technical specifications of their products, and policy and procedure manuals. The new content management product handles similar tasks, but with an important innovation: it also helps companies manage the largest and most complex websites that have many authors contributing simultaneously. Since these software systems are complex and customized to each organization, it usually takes 7 to 9 months to close a deal—that is, from the first contact with the customer to when the system is installed and the client receives training. Safi has noticed that the sales reps aren't really pushing the new product and sales are sluggish. The sales reps get a small salary (about $22,000), but on average 65 to 85% of their total income comes from commission. Both products have commission rates of 6% for new sales and 15% for annual maintenance contract renewals. Renewals for both products are required for ongoing access to technical support services and are therefore considered mandatory by the overwhelming majority of their customer base. The existing customer base is quite large; it is possible to achieve the minimum acceptable sales quota by selling only renewals in some territories. Employees believe that achieving quota is the single most important thing, as it is what sales representatives receive public recognition during their annual sales meetings. New deals are considered more prestigious than contract renewals, but they are also riskier. The average new deal is worth anywhere from $100,000 to $450,000, but such deals can take months to close and some fall through at the last minute. Renewal prices are based on the value of the original contract and range from 5% of the original purchase price to 12% depending on the level of service desired. At the end of the year, salespeople receive a reward of 5% of the overall company's net profit. Safi attempts to motivate the sales reps to push the new product. She repeatedly discusses the product with them. Also, since the product is so new and customer feedback is still lacking, she was hesitant to come up with a fixed number representing "good performance.” Instead, she simply told them that she needs them to work hard at it, and in doing so "good things will come." Finally, to incentivize them more, she also told them that she might be able to get the company to push the yearly reward up to 7.5%. Three months later, Safi was still seeing sluggish sales, and began to wonder whether there was something wrong with her approach. (32%) a- Using clear rationale and evidence from the case, discuss the reasons behind the lack of motivation to sell the new program. Also, offer the manager recommendations on how to solve the identified problem(s) using each of the following theories. Please discuss the issues and solution using each theory separately: (24%) i- 11- 111- Expectancy theory Equity theory Goal-setting theory b- Using operant conditioning theory, discuss what are the main problems in the manner by which the organization is trying to increase the probability of selling the new product and

Answer 1

Solution -

a. The issue currently is that the sales of the new product is sluggish and Safi is unable to get the sales representatives motivated enough to sell the product. Let us examine the solution for this issue through the application of the following theories -

i. Expectancy Theory - This is all about the expectations of the employee from the employer by acting in a particular way. Safi wishes to promote the new product but the commission attached to both the products is the same. So one of of leveraging on the expectancy Theory is by attaching some greater reward such as a higher rate of commission to the new product.

ii. Equity Theory - This is all about equanimity within the organization. In the current situation the sales representatives believe that achieving the sales quota is the single most important objective but what they need to be reminded that concentration on the sales of the new products is equally important. This can be achieved by putting some award for people achieving new sales and also those who made efforts but just missed out on the last bit. This will allow to bring all those who concentrate on new sales at par with the ones who achieved their quota through renewals. This equal treatment and motivation will bring thrust to the sales of the new product.

iii. Goal Setting Theory - This is about setting a target that can motivate the employees to go for achievement. The feeling of competition motivated the employees to excel. Safi in the above case has not set any clear sales goals for the representatives to go for. There is not target baseline for the new products. Safi can start a small target campaign and motivate the employees to achieve the threshold.

b. As per the operant conditioning theory a person will not produce any action till their is a proper stimulus either reward or punishment attached to it. In the above case with Safi trying to make efforts for the sales of the new product has the following issues -

1. No higher reward attached with the sales of the new product. The commission of both old and new products are the same

2. No extra reward or punishment attached to the sales through new deal or failing to do so.

3. No clear targets set for sales of the new product.

4. Any follow-up on sales of the new products is missing.

Now the above issues can be fixed in the following manner -

1. The new product sales targets to be fixed and achievement should attract reward and recognition while the non-performance should attract some penalty in terms of commission rates.

2. To promote the sales of the new product their should be higher commission rate for the new product and much lower commission rate for the old product.

3. There should be a regular follow-up on the specific targets set by Safi. This should be done through daily catch-ups and calls so that the thrust on sales is established and all representatives are focused towards it.