Swtantra Company

(Fixing the quotas)

Made by Ravneet Kaur (A-09) Nayan Mahajan(B-09) Ayush Jain (B-43) Abhishek Mitra(B-49) Dhruv Aggarwal (B-58)

Case Facts
Swtantra Company, an office equipment company was established in 1990 with more than 100 sales representatives. Adopted salary-cum compensation plan. Commission- based on percentage of quota achieved. New Territory quota- Rs 1000000 per annum. Mr. Arora received a pay packet of Rs 10000((5000 Salary+5000 commission) Mr. Kapurs pay packet- Rs 9500 only. Mr. Kapur was highly demotivated with his pay packet and he wanted to resign for the same reason. Branch Manager wanted to retain Mr. Kapur in the company and arranged a meeting with Zonal Manager to discuss the problem

Evaluation of the Case Problem

Mr. Kapurs sales quota for the year is 60,00,000 for which he
received Rs 9,500/- for his sales territory, whereas target for Mr. Arora was just 10,00,000 where he was able to get Rs 5000 salary + 5000 Straight Commission for achieving 200% of the quota . Mr. Kapur has been successfully achieving his targets for the last 10 years of his stay with the company.

Mr. Kapurs was disappointed not because he got less money than Mr. Arora but because after working for 10 years and having quotas up to 6 times more he was not being compensated fairly with respect to the amount of business he was generating.

Solution According to Market Build up Approach, sales people responsible for their particular territory should have equal workloads, which was not clearly their in this case.
Account Management = Straight Salary + Commission

* Here the straight salary should vary according to the workload in order to give a fair compensation to the employees.

Suitable Method
The quota should be increased as a percentage of the previous targets and not on the basis of the targets achieved. The fixed pay should be increased by the same percentage the quota is increased annually annually instead of approximately 8% in this case.

 As a zonal manager, Mr. Kapur should be retained by assuring him that the current system of quotas will be tailored keeping in mind the maturity of the market and experience of every employee.
Mr. Kapur can also be invited to be an advisor to help solve this problem. To help aid Mr. kapur to achieve more targets and in face of the maturity of present territory, he could be given a new territory to develop.