Houston Fearless

Apryl

Houston Fearless

September 17,

Houston Fearless is a pretty large company, with four different divisions that sell their own products. The main issue with the company is that they aren’t doing as well as their competitors and the CEO wants to change that. He thinks they need to start with their incentive plan. If feels that if he changes the plan, the employees attitude and motivation will change and therefore, his company will do better.

President/CEO MS Lee really wants to push for his employees to grow their customer bases, develop into new markets and achieve consistent revenue growth. He and his son come up with a new incentive plan for the employees. The old plan had commission based on sales, which was easy to understand and calculate. However, there were people receiving bonuses for just working in the same geographical location rather than actually helping on the project. New people had lower commission rates that didn’t give them proper motivation.

The new plan that Lee wants to put into place also has its pro and cons. This new plan is based on gross profit. That would make employees more motivated to make more profits. Another problem in the company was forecast accuracy. In this new plan, accuracy is rewarded with a bonus. That should definitely motivate employees to make better forecasts. An as for the MBO targets, I think that they would be great to implement because employees will know exactly what management wants from them and if they reach their target, they are rewarded. The downside of the new plan would be that salespeople could set low forecasts and then when their forecasts are met, they are rewarded. Which is like cheating the system. The MBO plans, as great as they sound, are hard to be evaluated because everything is so subjective.

I think the company should definitely implement some of their ideas into this new incentive plan but add some more factors to make sure everyone is working hard and that receiving a...