Management Case Assignment

Premium Finish practices a very traditional management and rewards structure for attracting new customers and expanding sales with current customers. This approach has been successful in the past; however, the company has started to lose market share in an increasingly competitive market. The sales representatives are the lifeblood of the company as they are closest to the customers and industry and best know the needs. Currently the role of a sales representative is limited to operational activities such as taking orders and ensuring stores are well-stocked stores. In order to regain and expand market share, Premium Finish should design a performance management and reward system that will provide intrinsic and extrinsic rewards to empower and motivate the sales representatives. This system should offer the extrinsic rewards of employee bonuses for meeting sales and advertising targets and the intrinsic rewards of quarterly employee recognition awards and promotional opportunities.

In the recommended performance management system, employees will have the opportunity to meet set sales and advertising targets and earn bonuses based on their results. This provides employees high monetary incentives by gaining more and more sales with customers. For sales targets, employees will earn a bonus equaling 30% of manufacturer’s price of the cost of goods ($53 per case i.e. 30% of $53=$16) for each case of product sold, multiplied by the sales target met (for example, 3 cases multiplied by the cost of goods sold ($16) earn a $48 bonus). Sales targets will be stretch goals; however, reachable for hard working sales representatives. The following chart illustrates the bonus structure:

Customer Account Sales Target Goal

(in cases of wax) Sales Target Met

(in cases of wax) 30% Cost of Goods Sold (per case of wax) Bonus Earned

Auto Zone 5 4 X X

Track Auto 3 3 $16 $96

Caddy Shack 6 6 $16 $160

Total Bonus: $256

Employees also have the extrinsic reward of...