Incentive Problems In A Software Company Case Solution
Question no 1
An England-based private software company: Orange Kimono, which is approximately 10 years old, has been suffering from a few problems. Two of their co-CEOs and their colleagues were having issues with their payment system and incentives. After going through so much turbulence; they thought to write a letter to Jeffrey, a professor at Stanford University, whom they met at an event 18 months ago. They were so inspired by Jeffrey’s work so they thought to send an email to him and ask him to advise them of the possible solutions to their sufferings.
To resolve all the basic issues and to execute your company properly; it is very important to build a strategy map according to your organization’s requirements. The strategy map is very important to hold the companies’ priority and goals into periodical order. It is the most important element in understanding the customer’s requirement and the company’s goals, and helps in perfectly overlapping these two.
Every organization and their employees have to face a resistant time where they do not contribute to each other’s requirements in a proper manner. To avoid and resolve these situations; we need to first look into the four perspectives of the company and its management.
One of the most important elements in building a strategy map is to look after the finances of the company, such as: productivity and revenue growth. This means “what the company is getting” in general. For example:as the two co-workers who were having issues with their pay scale, needed to look after the finances of their company, which means that what the company is getting by their regards and functioning.
After finances, customer values and intimacy are among the core factors of running any company, such as:the Orange kimono, successfully. To meet the customer’s satisfaction, the company and representatives need to look after intimacy and operational excellence. It means delivering reliable products with minimal difficulty or inconvenience.
Orange kimono needs to assist its’ sales preps regarding the customer’s requirements and to develop its strategic approach.
- Internal processes
Once your financial and customer values are established; you need to focus on the processes and internal strategies that help you in achieving your financial growth and strategies. For instance: the Orange kimono needs to focus on growth by expanding its market competence. It is very important to enhance the customer value by working towards the internal relationship, operational excellence and by improving the company’s KPIs.
It is the basic foundation of the strategy. This is quite beneficial in improving the company’s financial conditions and revenues by developing the potential customer’s relationships. Orange kimono needs to assist and train their employees and sales reps to prepare themselves with the designated knowledge that is required to run the processes smoothly. This will built the employee’s and customer’s relationship stronger, which in turn improves the overall financial condition of the company.
Question 2 (a)
KPI’s are the basic factors that will help the management to measure the performance of the employees. KPI is an indicator which is used to measure the employee performance. Actually KPI is the indicators that are measurable and also analyze how well organization is achieving their organizational goals and business objectives. KPI’s are used almost for different managerial levels to measure if the goals are successfully achieved. The high level KPI’s focus on the employee overall performance and overall business performance. Whereas the low level KPI’s help to measure the performance of departmental level, i.e. sales, marketing, support and HR.
The sales team is the departmental focus of the company in which there are few issues in the performance of the sales team. The team members have fluctuations in their performance. Some employees are earning high because they meet the targets; whereas some employees earn low due to their performance. The performance measurement is equally important for all the employees. Orange Kimono is the software company and organization should have effective performance measurement plan that should justify the incentives and the earni8ng of the employees at the end of the month. The sales teams KPI’s are listed below:
- Sales cycle length.
- Volume sales with respect to products.
- Volume of sales with respect to location.
- Percentage of sales team quota.
- Average deal size per salesperson
- Sales revenues
These are few indicators that will help the company to measure the sales team performance. Further the employee performance will be measured semi-annually. The monthly targets for the employees will be set and after every 6 month employee performance will be measured based on the sales volume, software reputation and the locations they have covered. Every team manager will be assigned the performance appraisal forms to evaluate the employee performance the ratings will be assigned to these indicators through Likert scale and the final calculations will be based on the their performance and their sales record. To maintain the quality of the measurement the performance appraisal process will be made transparent for the employees so that they do not have any objection with their performance appraisal measures.
The incentive plan is equally important to focus on because this will participate in the employee motivation. The employee incentive plan should be designed in a way to balance the living for the employees. So the incentive would a mix system. The employee will receive a portion of fix salary and a fix bonus after fulfilling the target. The monthly target would be attainable. Incentive pay is actually the pay that employee receive on the basis of their performance rather than there are different type of incentive plans. Time based plans, production bases plans and group incentive plans. These all plans differ from each other on the basis of time production and performance. To increase the employee performance the best incentive method would be to reward all team members rather than top performer because this reduce the remaining employee motivation whereas the good incentive plans first try to motivate average and low performing employees. So, rather than only keeping the incentives for the target achievement the reward will be assigned on other factors as well in order to motivate all other sales representatives i.e. employees will be rewarded when they show the improvement in the performance. This will motivate the employees to improve their performance and will ultimately contribute to the achievement of the organizational goals. The major thing in this whole process is communication. The organization should continuously share their objectives and future plans in order to make them aware of the conditions and the company’s vision.
Question no 3
Being a CEO of a software company, I would divide my team into two possible groups, i.e. group 1 belongs to the people that handle all the office work and queries; whereas group 2 will lead the marketing and sales reps to work. Group 1 belongs to a total of 25 members, they all are responsible for the software queries and the workload. Whereas group 2 consists of 10 members that execute these work and market them. The marketing aspect of any product is a very sensitive part to handle. I have made the team leaders according to the rationality of knowledge and experiences.
Configuring the team in terms of their composition, experiences, and incentives is a quite hard and important factor. Every member of the team wants to treat equally and with unity. I would categorize my team according to the factors given below:…………………………
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