Problems on How Wilkinson Communicated His Freebird Company Goals - Case Study Example

December 3, Unorthodox Owner Summary Ward Wilkinson, www.Freebird.com major stockholder, proposed a new commission and bonus payment scheme (Warner 1). The scheme significantly aims to increase the current sales outputs of the sales department employees. The new compensation scheme coincided with appointing Omid Kinkhabawalla as the new chief operating officer. Ward prioritized the generation of new market segment revenues by not appointing the new sales Vice President. Wilkinson’s proposed unorthodox commission and bonus scheme confuses and discourages the sales personnel. 2. Analysis Problems on How Wilkinson Communicated his Freebird Company goals First, Mr. Wilkinson implemented an unorthodox marketing structure. The structure is completely wrong. It defies normal marketing standards. The prior standard indicates the employees with higher revenues will get higher commissions than employees with lower revenues. The new commission pool pays people who do not actually sell or complete Second, the confused employees did not know how to correctly respond to the new unorthodox marketing strategy. It is wrong to confuse the employees. The confused employees do not know the intricacies of the equality distributed commission pool. Third, Wilkinson did not indicate the responsibilities of the new chief operating officer. Consequently, the new COO does not know what he should do in the new job. Consequently, the COO may not be implementing what the owner, Wilkinson intents because of the miscommunication. Finally, Wilkinson wanted the commission pool to be evenly divided among the sales people, both top sellers and lackluster performing sales persons (Zoratti 19). It is wrong to distribute the commission equally among all the sales persons. The implementation will indicate that employees with low revenues will receive the same amount of commission as the sales persons generating ten times the amount generated by the low revenue-generating (Burton 26). For example, the sales person generating the $ 1,000,000 top selling sales persons will receive the same $ 10,000 commission as the sales person generating $ 1,000 sales for the same month (Ross & Lemkin 4). To generate the required net profits, the company must produce the profit-generating responsive revenues (Boone 14). In addition to the bonuses, Wilkinson increased the commission from 5 percent to 7.5 percent (Hartline 270). The compensation plan influences sales performance (Dougherty 1). 3. Recommendations A) Question 1: Proposed Freebird.com Structural and Organizational Changes Mr. Wilkinson should not implement the unorthodox commission and bonus scheme without fully explaining the details of the new scheme. Mr. Wilkinson’s spending more time giving a detailed explanation will stop the confusion. In addition, Wilkinson should indicate the responsibilities of the chief operating officer. For example, one of the responsibilities is to coordinate the efforts of all departments to achieve synergy among the members. Another responsibility hire and fire sales persons. (Zoratti 19). The company must implement both organizational and structural changes. There are some favorable changes to be implemented. COO Omid Kinkhabwall will ensure all departments contribute to the generation of higher overall revenues. To retain top selling marketing employees, all employees who cannot meet or refuse to meet the new sales benchmarks or successfully contribute to making the company’s products the customers’ first choice will be retrenched. Increasing sales includes updating the current and future customers on the company’s latest web-based products and services (Zoratti 38). B) Question 2: Proposed Commission and Bonus Pool Criteria Each sales person will continue to receive 5 percent commission on his/her own personal sale. Next, Wilkinson should not implement the proposed equal distribution of the commission pool and bonus. The implementation will be unfair to the top selling sales persons because the low performing sales persons will receive the same commission and bonus. However, Wilkinson must explain the benefits of distributing that the amount in excess of 5 percent commission pool and bonus will be evenly divided among the sales people, both top sellers and lackluster performing sales persons. The commission ensures that lazy and lackluster sales personnel will not be paid a commission for something they do not deserve (Hartline 159). Further, the remaining 2.5 percent (7.5 percent less 5.0 percent commission) will go to the commission pool. The 2.5 percent remaining commission will distributed to the nation’s 12 sales persons based on a fixed criteria. The 2.5 percent will be equally divided among sales personnel who received a passing grade. The 75 percent average passing grade is arrived at by getting the average grade of all four factors (Stevens 172). Furthermore, the proposed bonus structure should be implemented as is (Gibson 316). C) Question 3: Proposal on the new software and new position Issue The company will not purchase any new software or open any new position. The strategy will eliminate the cost of buying new software or increasing the sales department’s overall monthly sales salaries (Gibson 316). With the commission increased to 7.5 percent and the higher bonuses, there is no significant need for new software and new salesperson. 4. Implications (Conclusion) There are several implications of the recommendations. First, the implementation of the recommended organizational and structural changes will not confuse the employees. Next, the commission will be fairly distributed in accordance with one’s revenue output (Hartline 270). Second, the above proposed commission and bonus scheme ensures fairness. Compared to the lower revenue generating sales persons, the top performing sales employees receive higher commissions and bonuses. Compared to top sellers, sales persons who generate low revenues will receive lower or no commission amounts or/and amounts. Consequently, employees are paid their worth in commissions and bonuses. The proposed commission and bonus scheme will challenge and persuade the low revenue generating employees to sell more web products. They are persuaded to double their sales efforts in order to receive the same or ever higher commissions and bonuses as the current top selling sales persons (Hartline 270). Third, the company will save money on software and salaries for the new personnel. Software will not significantly increase revenues. The current sales personnel can meet the company’s revenue targets and organizational goals, avoiding the need for new hires. Evidently, Wilkinson’s perfectly scheduled proposed unorthodox new commission and bonus plan will only confuse and discourage the sales personnel to increase their current revenue outputs. Works Cited Boone, Louis. Contemporary Marketing. New York: Cengage Learning, 2011. Print. Burton, Phil. 42 Rules of Product Marketing. Cupertino: Happy About Press, 2012. Print. Dougherty, Jim. Here’s How to Really Size Up a Startup. 17 October 2013. Web. 2 December 2014 < http://blogs.hbr.org/2013/10/forget-business-plans-heres-how-to-really-size-up-a-startup/ > Gibson, Charles. Financial Reporting and Analysis. New York: Cengage Learning, 2010. Print. Goel, Vindu. How Facebook Sold You Krill Oil. 2 August 2014. Web. 2 December 2014. < http://www.nytimes.com/2014/08/03/technology/how-facebook-sold-you-krill-oil.html> Hartline, Michael. Marketing Strategy. New York: Cengage Learning, 2012. Print. Ross, Aaron, Lemkin, The Predictable Revenue Guide to Tripling Your Sales. Print. Stevens, Robert. Marketing Your Business. New York: Routledge Press, 2013. Print. Warner, Charles. The Unorthodox Owner. 2014. Print. Zoratti, Sandra. Precision Marketing. London: Kogan Press. Print. Read More