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Read the following mini case and share your opinions about the 3 questions.

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Read the following mini case and share your opinions about the 3 questions.

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1.

-Internal competition, also known as internal friction, because rewards are based on the individual and employees only think about their personal interests;

-Variable sales of products and no restriction of products in terms of sales performance will lead to salesmen selling only for one product or only selling products with high profit margins;

-Lack of motivation for high sales because the maximum reward is 30 per cent;

2. Cannot, the existing programme is targeting profit and does not meet the objective of increasing market share;

3.

Individual performance is related to market share:

-Assessment can use the type of products sold + the number of sales, the combination of the two can namely ensure that the product line is sold diversified, but also to ensure that the market share;

-Reward: double the performance incentives to encourage breakthrough performance.

Team performance is related to profit:

-Managers can assess the profit, which can ensure that the company in the market expansion, can take into account the company's profit;

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Change: The business strategy from prioritizing profitability to prioritizing market share increase.

Q2's answer is No, the existing incentive system is not suitable for the new strategy.

Q1: What would the salespeople do?

1. Salespeople might tend to focus on selling high gross margin products rather than those that could help increase market share but have lower gross margins.

2. Salespeople might prefer to maximize their own achievements rather than focusing on the team or the company's overall objectives.

Q3: How to change the incentive package?

Criteria:

1. Incorporate market share increase and customer satisfaction into the key indicators for evaluating salespeople's performance.

2. Introduce team performance as part of the evaluation.

Contingency：

The new incentive package relies on individual sales performance, team results, market share growth, and the acquisition of new customers.

Frequency:

1. Periodically performance appraisal (e.g., quarterly) and more frequently feedback (e.g., monthly).

2. Review and update the incentive package regularly (e.g., annually) based on the changes in market and company strategy.

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1. The existing incentive package is structured to reward salespeople for individual product sales with a focus on gross margin. This system encourages sales to focus on selling products that generate the highest gross margins. Since rewards are tied to individual performance, salespeople are incentivized to maximize their own sales without necessarily collaborating or considering the overall strategic goals of the company, such as market share expansion or selling new product lines.

2. No, It‘s not helping

3. - Performance Management Criteria: Include performance metrics that directly contribute to market share growth, such as customer acquisition rates, sales volume of new products, and long-term customer retention metrics.

- Reward Contingency: Connect rewards not only to gross margin but also to strategic objectives like expanding into new markets or increasing sales of new product lines. This could involve bonuses for team-based achievements to encourage collaboration.

- Frequency: Implement more frequent reviews and adjustments to the incentive plan to ensure it remains aligned with dynamic market conditions and company strategies. This could include quarterly bonuses for reaching specific milestones related to strategic goals.

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1. Existing incentive programs encourage salespeople to focus on selling products with the highest gross margin, because they can receive a percentage of the gross margin in their region. This can lead to a focus on existing products with higher profitability and less emphasis on new, less profitable products.

2. No, existing incentive programs may not be well aligned with the new strategic direction of increasing market share by diversifying and entering new markets. Current incentives are related to profitability rather than market expansion or product diversification.

3. Align incentives with new strategies:

- Performance management criteria : Focus on indicators related to market expansion, such as customer acquisition, market penetration and new product sales.

- Reward contingency : Reward employees who achieve milestones in new markets or sell diversified products. Consider reducing the emphasis on gross margins and increasing incentives for expanding customer base and market reach.

Frequency : Implement more frequent reviews to quickly identify and reward behavior that aligns with strategic objectives. Consider quarterly or even monthly reviews.

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1.Market Share Growth: Salespeople may be encouraged to focus on driving market share growth for the company's products by competing with competitors for more customers and orders.

Sales Volume and Performance Oriented: Since the goal is to increase market share, incentive programs may be directly related to sales volume and performance. Salespeople may strive to achieve higher sales goals in order to receive more incentives.

Customer Satisfaction: There may be incentives related to customer satisfaction because long-term customer relationships are critical to increasing market share and expanding into new markets.

2.However, if the company decides to change its strategic direction to diversify its product lines and enter new markets, existing incentive programs may need to be adjusted to better serve the new strategic direction. 3.Diversified Incentive Programs: Introduce more diversified incentives that focus not only on market share growth, but also on product diversification and new market development. For example, create incentives for new product sales and for performance in new markets.

Teamwork incentives: Consider introducing teamwork incentives to encourage the sales team to work together to achieve the company's diversification and expansion goals. This will help eliminate possible internal competition and encourage teamwork.

Training and development incentives: As the company moves into new markets, it is critical to train and develop the sales team to meet the needs of the new markets. Create incentives related to training and development to encourage salespeople to continually improve their skills.

Adjust performance management guidelines: Adjust performance management guidelines to better align with the company's new strategy. Set clear goals, including for product diversification and new market expansion, and incorporate these goals into performance reviews.

Regularly Review Incentive Programs: As the company's strategy evolves, it is critical to regularly review and adjust incentive programs. Ensure that incentive programs are aligned with the company's long-term goals and vision.

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Q1 & Q2: Since incentives are directly tied to total gross profit, salespeople may be inclined to prioritize sales of products in the "harvest" category (which has the highest gross profit margins) at the expense of products in the "development" category. This incentive scheme is focused on maximizing short-term financial returns and relieving financial stress, and does not apply to Saucy Master's new strategic direction (expanding product lines).

Q3: The first step is to make the salespeople aware of the strategic change. A easy way to achieve that is to increase the sales incentive for products in the 'development' and 'maintenance' categories.

At the same time, it is not desirable to roughly and directly reduce the incentives of the "harvest" category, so you can require the salespeople to sell a proportion of the product. For example, 'development' products must account for 10% of the total sales of the salespeople to get the full incentive.

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1: The current incentive scheme motivates salespeople to concentrate on products within the 'Harvest' category due to their higher profit margins, fostering a preference for selling established products over new ones with lower awareness and market share.

2: The present incentive scheme is not well-suited to the company's new strategic objective of market share expansion since it does not adequately incentivize the sale of 'Develop' category products, which are essential for diversification and reaching new markets.

3: To realign the incentive package with the new strategic goals, adjustments could include implementing bonuses for achieving sales in the 'Develop' category, creating long-term growth incentives tied to market share, introducing team-based rewards, and incorporating non-financial incentives related to career advancement for significant contributions to strategic targets.