Madison Fiber Corporation
Introduction, Size-Up & Role
Stating of role; that the student is a consultant and will tackle the problem(s) Madison is facing; professional introduction etc.
Statement / Summary of the Problem(s) the Organization is Facing
Decision Criteria?
Summary of Key Alternatives
Should basically just list options for revamping Madison's salesforce compensation scheme.
Compensation Plan Changes
Total Amount of Compensation Did the student comment upon whether or not the Madison salesperson's TTC (total targeted compensation) should go up, down, or stay the same (p. 7). (Madison reps. make ~$54-56 K per year, so that's in-line with the industry norm when you factor in the free company car).
Student should do PROS / CONS of each of the FIVE options. The grade here will be based upon a total assessment of how good the student critiqued each of the five options.
o Option # 1 - "Straight Salary" - this is worst, b/c it will encourage complacency, and does not push reps. toward Madison's challenges / strategic objectives.
o Option # 2 - "Current Plan" / Status Quo - this is better than # 1, but again - encourages "farming" selling behavior; not in-line with corp. strategy; and bonuses are decided on subjective evaluations - NOT achieved sales results.
o Option # 5 - "Capitalized Sales Expense", a nice idea, and good for management, but complicated plans are tough to administer (and hated by salespeople). Does have the pro of rewarding the reps. for keeping expenses down, though.
o Option # 3 - "Straight Commission" - would definitely motivate the salesforce, but how many reps would quit in the short-term (a few for sure)? Also, would reps get competitive amongst themselves? What about teamwork with the rest of Madison - would there be problems now?
o Option # 4 - "Salary plus Bonus Based on Sales into 3 Product Lines" - problems here include what does the rep. make if he / she doesn't achieve quota (i.e., do they get their FULL salary for selling, say, ½ of their quota?). Also, doesn't seem like they can make much money - they would really have to sell a lot over quota to achieve a bonus. Also, how are quotas to be set - would they be seen as fair? But: (i) easy to understand, (ii) and would help with new inventory issues.
Quantitative Analyses of the Five Plans - did the student make any effort to try and figure out what would be "paid out" under any / each of the plans?
o The easiest way to do this would be to use the 1992 sales results and salary figures etc. from
Exhibit 1 on p. 10 of the case. This at least allows for some "projections" / sensitivity analysis.
Other Areas of Madison's "Sales Management System"
Did Student discuss other employees at Madison, and how they relate to the salesforce?
Final Recommendation from Student
Is there a sound recommendation from the student on what is the path forward
o What option was recommended?
o Was the option clearly supported?
o Is there a path forward or next step to be followed?
Intangible Elements - Overall Report
Good writing style? Grammar, attention to detail, spelling etc.?
Professional and convincing paper / arguments. Do you want to implement their suggestions after reading the paper?
Innovative ideas (graphs, neat Exhibits, numerical analyses etc.)?