Presented By:

Group 08 Section A Under the guidance of Dr. Madhurima Deb

Anupam Mitra | (PGP18013)
Avinash Kumar Pankaj | (PGP18017)
Pratik Jadhav | (PGP18034)
Khushie D | (PGP18039)
Mrudul Naik | (PGP18046)
֎ FedEx Corp. was founded by Fred Smith in the year 1973

֎ Company offers both air and ground delivery services

worldwide

֎ In the year 1983, it became the first U.S start-up (excluding

mergers or acquisitions) to achieve $1 billion in revenues
within 10 years

֎ It acquired Caliber System Inc. for $2.4 billion in January 1998

֎ With RPS, a subsidiary of Caliber, FedEx had the second 01

largest ground delivery network after UPS
 Express Plans
֎ 70%(salary) + 30%(incentives)
֎ Sales goals set quarterly
֎ Min. performance to qualify for bonus was
96% of the goal
֎ Goals adjusted as per changes in
marketplace
֎ Other awards like being part of President’s
Club
Ground Plans
֎ 82%(salary) + 18%(incentives)
֎ Sales goals set yearly
֎ To qualify for bonus, must reach 50% of
sales goals
֎ No adjustments were made to their goals
֎ Activity targets in addition to sales targets
02
֎ Right mix of Salary and incentives(for eg. 75% salary + 25%
incentives)

֎ Incentives should be based on achieving of quarterly or half

yearly goals

֎ Goals set should be different for Express and Ground account

executives (with same sales structure)

֎ Incentives could be based on the extent the targeted goals

exceeded (or underachieved)
03
104 Acc. | > $10 mn annual revenue

Global Account
237 Acc | Multi Location: $ 1mn $10 mn
Executive
Single Location: From $1.5 mn

200 Acc. | $ 500K to $ 1mn Local National Account

Executive

600 Acc. | $ 40K to $ 500K Field Account Executive

Inside Sales
60 Acc. | $ 6K to $ 40K Representation

04
211 Acc. | < $ 6K
 National 59 Acc | Top 500 Firms

Field 616 Acc | Medium sized Customers

Inside States 155 Acc | Small Customers

ADD A FOOTER 05
 Revenue Per Package Net Profit Margin
$5.60 $16.40 14.00%
12.30%
$5.50 $5.55 $16.20 12.00% 11.12%
$5.40 $16.16 9.99%
$16.00
10.00%
$5.30 $5.36 $15.80
$5.20 8.00%
$15.60 5.97% 6.23% 6.31%
$5.10 6.00%
$15.56 $15.40
$5.00
$5.04 4.00%
$4.90 $15.30 $15.20

$4.80 $15.00 2.00%

$4.70 $14.80 0.00%

1998 1999 2000 1998 1999 2000
Express Ground Express Ground

06
 Revenue Ratios Income Ratios
100.00% 90.00% 84.03%
89.80% 88.16% 79.04% 78.74%
90.00% 86.70%
80.00%
80.00% 70.00%
70.00%
60.00%
60.00%
50.00%
50.00%
40.00%
40.00%
30.00%
30.00% 20.96% 21.26%
20.00% 15.97%
20.00% 11.84% 13.30%
10.20%
10.00% 10.00%
0.00% 0.00%
1998 1999 2000 1998 1999 2000
Express Ground Express Ground

07
 Skills
Sales Forces
Sales Force Changes

Territory Changes

Sales Process
Training Course Changes

Special Reporting

08
Compensation Structure Staff to fire
֎ Set measurable sales targets that is adjusted half yearly (Such as how
much additional yield or revenue?)

֎ Making base salary should in the range of 70%-80% of anticipated total

compensation so there is enough breathing space for incentives

֎ Include differential motivating incentives that would encourage star,

core performers and laggards – like including prizes, awards and
recognition

֎ Not capping commissions that would discourage them to work beyond a

set quota
09
֎ Simple and Fair
 Minimum (95%-99%) Meets Expectation (100%) Exceeds Expectation (till 175%)
Express 0.7X to 1.2X 1.3X to 1.6X 1.7X – 4.5X
International 0.7X to 1.2X 1.3X to 1.6X 1.7X – 4.5X
Ground 0.7X to 1.2X 1.3X to 1.6X 1.7X – 4.5X

֎ Quarterly bonus based on $X target

֎ But if they achieve more than 99% on all 3 product lines, their bonus would be 1.5 times the
actual bonus
֎ For instance for a $1000 target
֎ A person achieving 95%, 110%, 110% target in all 3 would get a bonus of $4182
10
֎ A person achieving 105%%, 105%, 105% target in all 3 would get a bonus of $ 6318.9
Sales contests with awards for :

֎Excellent performance

֎Teamwork

֎Overachievement Awards

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• The salesforce based on the motivation can be broadly
classified into the following three categories

 For a laggard-heavy salesforce

Pace setting bonuses and natural social pressure

 For a star-heavy salesforce

No ceiling on commissions and Overachievement bonus

 For a normal distribution of salesforce

Incentivize core performers by Multi Tier Incentives and Multiple 11

winners
֎ Job-Relatedness:
 Should meet the needs of specific sales organization

֎ Reliability:
 Stable and internal consistency

֎ Validity:
 The Measures should provide accurate assessments of the criteria

֎ Standardization:
 Measurement instruments and evaluation process should be similar throughout
the organization 12
֎ Practicality:
 Should be understandable & implementable in a reasonable amount of time

֎ Comparability:
 Be able to Compare the performance of individual salespersons directly

֎ Discriminability:
 Capable of detecting differences in performance

֎ Usefulness:
 Evaluation must be valuable for decision making
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֎ Salespeople might find the plan complicated, hence initial training for
educating the sales people about the working of the compensation
plan will be required
֎ The training can also be used to clear doubts and handle resistance
towards the plan by teaching them how they can get better incentives
by achieving higher targets in all business lines
֎ Once training is given, plan would become easier to understand and
any further changes could be incorporated with minimal training
֎ The employees will be motivated to sell across all the three business
lines which will drive revenues higher 14