ARCK SYSTEMS Case Study

Decision Problem:
To restructure a sales compensation plan in the software company.

SWOT Analysis:
1. Strengths:
 Currently have knowledgeable and qualified sales representatives in both hardware and
software industries
 Acquisition of Lux’s middleware- increased efficiency
2. Weaknesses:
 Changing company structure and payment plan
 Merging management cycles between Lux and Arck
 Poor employee retention
3. Opportunities:
 To recruit new and more qualified sales-people
 Possibility of hiring the people who quit
 Take over a new segment of market
4. Threats:
 Remaining up to date with the technology advancements
 Being able to remain the premier choice for hardware after acquiring Lux

Factors:
 Industry compensation figure*
 Commission cap
 Pay linked with performance*
 Competitive advantage
 Motivation for increased sales*
 Combined synergy of software and hardware staff*
 Base pay*
 Pay structure/ scale*
 Quota
 Sales commission
 Other bonus
 Total rewards
 Accelerators
 EVP
 Employer Value Proposition
 Retention of sales people*
 Future benefits
 Different pitching style
 Different target customer
 Soft sales touch
 Sales figure
 High compensation

Critical Factors:

Constraints:

Alternatives:

Evaluation of Alternatives:

Factors Plan of lux Plan of

Arck Sales comp
plan (scale
back)
Base pay 32000 65000 50000

Quota 100000@3%= 100000@3%= 50000@2%=

3000 3000 1000
Sales 16%comm on 9% of 81000= 5% of
comm 900000= 47,500
144000
Total 179000 149000 98500

BP Pay for perf Other perks Motivation Star

employee
retention
Alt 1 3 1 1 1 1

Alt 2 1 2 1 2 2
Alt 3 2 3 1 3 3

Selection:
