EFI has a unique sales compensation issue. They can not provide credit for the sale of its core product for individual sellers. Thus, they have historically paid the sales team. This worked out fine, as they were almost a monopoly seller of one product category. However, this has changed. Not only are they faced with new competition in their core product, they also will have diversified into other products that allow them to determine the sales by salesperson. Do they have to pay people individually on these new products, while maintaining a team-pay approach to the core? If so, this would increase the potential problem with the avoidance of the core product. However, do not do this, it may be limited to the sale of new products. Depth discussion of the case allows for a variable base compensation on offer, including the observability of the efforts and results, risk aversion, the team against individual wage and marginal impact of effort. Context is also an interesting and important for sales management. OEM sales of "Hide
by David B. Godes, Lauren Barley Source: Harvard Business School 21 pages. Publication Date: February 6, 2008. Prod. #: 508044-PDF-ENG
Related Case Solutions & Analyses:
The Trust Development Process
Achieving Full-Cycle Cost Management
CRM: Profiting from Understanding Customer Needs
New Leaders for New Schools
Expense Recognition
Procter & Gamble Canada (B): The Canadian MDO
LVMH: Managing the multi brand conglomerate
Chandpur Enterprises Limited, Steel Division
St. Louis: Inner City Economic Development, Spanish Version
Competitive Environmental Strategies: When Does It Pay to Be Green?
