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Houston Fearless 76 Case Study

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Thank you for allowing us the opportunity to work with your company. As requested, we have examined HF76’s sales functions and critically evaluated the current sales incentive as well as the newly proposed plan as you requested. While I understand that the newly proposed system is to gear up profitability towards HF76’s targets, I believe that there are still some issues that are yet to be resolved. The unresolved issues are;
• Has the new system actually resolved the problem of sales forecast?
• How can this new incentive system motivate salespersons in the negative and low margin products?
• What about the sales assistants, how does the new system motivate them in line with the company’s goal?
This memo aside examining the current and newly proposed system, will also analyze these unresolved issues in the newly proposed system and attempt to offer recommendations where possible.
An Overview of Current Incentive Plan
The current system as rightly pointed out by M.S Lee, there is a “mismatch between our company objectives and our sales force incentives because our commission is based on sales, not product profitability.” This as well as inaccurate sales forecast to bank on are the major problems in the current system. Besides, other issues include: salespersons attitude towards getting new customers. Salespersons hardly reach out to new customers; lack of communication between departments especial the sales and operations departments; commission paid out to salespersons even when they did nothing to earn them and lack of performance evaluation of staff.
Although the currently existing incentive as clearly noticed lacks the direction of motivating staff towards the overall objective of HF76, there is no doubt that the system is easy to implement and staff are clearly aware of how the bonus system works as they can easily calculate what pay they will be…...

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