Sales Force Integration at FedEx (A) Case Study Solution
Annual bonuses should be given on annual cumulative performance of the employee as this incentive set the higher level of success. Intrinsic rewards are as important as extrinsic. Non-monetary compensations increases their motivation level. Appreciation for their work, weekly or monthly recognition and best salesman award will boost their motivation level and they will tend to give their best for every target. FedEx employees were very particular about President’s Club membership so this reward should also be added in the new compensation plan.
Along with the above suggestions regarding an optimal integrated compensation plan, the management must set some key metrics to evaluate the efficiency of the new compensation plan.
Metrics for Evaluation
The metrics could include;
Employee Retention Rate:
One of the key metrics for evaluation the performance of the compensation plan is the retention rate. As, experienced employees are considered to be better than the new employees, so the compensation plan must increase the employees’ retention to have a group of experienced employees.
Number of units Sold:
Another metric of evaluation the plan’s performance is to determine the increase in sales quantity after the implementation of plan. Sales is the ultimate objective of any team and the compensation plan arranged for those teams. Therefore, if the implementation of a compensation plan increase the number of units sold at a level where the company could bear the costs of compensations, the plan could be considered as effective. (Mendonca, 1988)
Target Achievement:
Another metric for evaluating the effectiveness of the plan could be the achievement of the designed targets. If the plan increase the rate of target achievement by employees and the company as a whole, it could be considered as an optimal plan.
Achievement of Organizational Goals:
Along with the achievement of the targets, the achievement of organizational goals is the key metric for the evaluation of the compensation plan. Achievement of small targets through the compensation plan led to the achievement of overall organizational goals.
Evaluation of the Cultural Differences
Express and Grounded sales force team’s culture is hierarchy based it means that both work on stability and efficiency. Hierarchy based cultures are controlled so employees can achieve targeted goals. They difference between Express and Grounded sales force culture are level of hierarchy. In Express sales force there are six hierarchy levels of pyramid. The first level is inside telephone sales and marketing which earns $6 k annual revenue, second level is inside sales accounts which earns $6 to $40k annual revenues, third level is field sales accounts which earns almost $50 thousand annual revenue, fourth level is local national accounts which earns $ 1 million annually, fifth level is global accounts which earns $10 million annual revenue and the last the last entity worldwide account which earns almost $10 million revenue annually. As it is a very large force so it is structured in centralized manner. At each and every level there are executives who manage the entire team and try to achieve targeted revenue.
While on the other side, Grounded sales force has only three levels hierarchy. The first one is inside sales reps who handle small customers, second hierarchy is of field sales account executive with medium sized customers and at last level there are national accounts executives who handle top 50 accounts. As this force is covers less than half the size of FedEx Express sales and number of employees are also less so it has less hierarchical levels.
The culture of “ARISE” team should be hierarchical because as both teams will merge together number of employees will increase and it will be more complex team. Hierarchy based team will work more effectively because of centralized authority.
As the sales team has to achieve targets so it should be centralized so that company’s targets and goals should be achieved easily. Centralization improves the work quality and reduces the cost. Everyone would know that who will report to whom.
Appendices
Appendix-1: Express Compensation V/s Ground Compensation Plan
Appendix-2: Objectives of New Compensation Plan
Appendix-3: Evaluation Metrics
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