-GROUP 3

Q -1

How equitable and sensible were the specific headcount and quota allocations given out by Jacoby in January 2006? In preparing your response, please consider each of the following: 1.Which region would likely yield the most profitable investment of headcount in H1 2006: east, west, federal, or Latin America? 2.Should the east and west regions be equally profitable (i.e., achieve the same revenues per unit)? 3.Force-rank Jacoby, Garton, Hall, Cheng, Chapas, and Dreyer in order of their likelihood to achieve their target, from 1 (most likely to achieve goal) to 6 (least likely to achieve goal).

Things to consider
Need for accountability in directors Whether team had become inefficient and poorly managed Challenges- Sandbagging, Lobbying, Gaming Headcount investments not used to address immediate needs-time lag in hiring High demand and hoarding of SE and TSMs

No penalty for excessive use of resources Slow sales cycle in Federal region but expected benefits in long term

Allocation in H1 2006
Had set the previous targets high Allocations comparable to West region H2 2005 Expectations for performance by MidAtlantic region Most promising region

Allocation same as Jacoby

Could have reduced headcount and tried to raise productivity

EAST

WEST

LATIN AMERICA
Smallest shortfall Comparable quota setting Headcount by 5 units Should have improved productivity

FEDERAL
Increase headcount; not decrease quota Sales force tripled in past 24 months Targeted Productivity also reduced

Most profits to the business will depend on

oThe sales team mix oTargets assigned to the sales managers

Highest possibility for Federal Region to achieve target since its lowered

In terms of revenue we can expect highest contribution from West owing to past performance , capabilities of the director of the region and headcount allocation

East & West Regions and profitability

Chances are that East should exceed West in terms of profitability Formation of Mid-Atlantic region can help in focused strategies and

reap maximum benefits

Data about the dynamics of two regions would throw more light Should be concerned about the lobbying of Garton

Predicted Rankings of achieving targets Jacoby Garton, Hall Cheng Chapas Dreyer 5 4 3 2 1 6

Reasons: Since the targets of Federal is lowered and Latin America not drastically increased from H2-2005 allocation, chances of achievement is more Hall has high chances of achieving target but the scenario could be tight since the revenue expected is high

Limitation: Info about Latin America Region and the details about the Inside Sales is missing

Q-2

Can Jacobys model for allocating headcount and quotas equitably account for realistic new hire productivity levels and still accelerate hiring times?

Allocating Headcount and Quotas equitably increases pressure on New Hires

New Hires should initially be assessed on Activity based outputs(Hiring CAMs was expensive)

Hiring decisions ought to be well in advance and at corporate level based on the company strategy for the next Half/Year and external conditions

Headcount based quote might decease the hiring times and make managers accountable for

However, it might result in a substandard sales force

Q-3

Should quotas be based on profitability (and not revenues) if managers will be judged on their contributions to profitability?

(Case Fact: Compensation was performance based & wide-variations were possible)
Stakeholder
Sales Force (CAM,TSM,SE,Fi eld Reps etc)

Impact on Stakeholders
Role

Impact
Increase in Rev through large accounts -> large bonuses -> decreasing trend of profitability -> reduce quotas? Increase quotas -> morale of sales rep? Increase in Rev through several small accounts -> lower bonuses -> increasing trend of profitability -> increase quotas? -> realistic? Thus, indirect alignment of goals could create complications

Closes the deal, gets the sales/revenue

Sales Managers of regions (East, West, Latin America etc) Regional Sales VPs

Manages accounts in the region

Challenge & complexity of forecasting cost of sales -> Need to calculate trends in cost of (say) a CAM for x% increase in rev -> Compensation/Bonuses have a wide range Receive Quota from SVP of worldwide sales based on revenue -> Need to achieve increase in rev based on increase in budget for resources

Responsibility of geographic territories

(Case Fact: Compensation was performance based & wide-variations were possible)

Productivity a useful metric

Simple approach converting headcounts into number of units Refer Mentioned Case Fact thus the weightage is different, inherits cost of sales

Field Mgr (Highest) 2.5, avg of 5 Field Mgr in regions, fixed component of salary must be high

This Metric gives visibility about the bottom line

Objective to the extent of factors considered for assigning weightage Facilitates Comparison Exhibit 5 : East v/s West -> Rev up by 23.75% by increase of 7% in headcount units Beneficial to keep a cap on increase in Headcount Units along with assigned Quotas

CAM actual sales , costly (2 units), bonuses/salary, has defined quotas

TSM, SE Less than TSM (1 unit), to avoid hoarding of resources, no quotas Managers like CSM, CSE, TSM & SE manager - similar units in range of 1 1.5, managerial role

Q-4

What areas, if any, of Jacoby.s model and processes for allocating headcount and quotas needed to be adjusted?

Understand sales cycle of regions Comparison of East & West regions to be done

Monitor allocations within regions

Achieve transparency in pipeline

Consider the cost factors

Collaborate for goal setting and forecast

Q-5

Assume for the moment that Jacoby believes that his sales organization would be most efficient at roughly the fixed ratio of one CAM to one TSM and one SE.
What do you think of his new policy of giving regional managers the power to spend units in any manner they choose? How would you amend, if at all?

Q-6

Who do you think should be involved, and what processes should be employed in this goal setting?

VP along with SVP should mutually decide the corporate goal. Process

VP should present the sales potential of his region on the basis of proper feedback from his sales managers. SVP should explain how the assigned corporate goal aligns with the overall financial goals of the company. This facilitates the VP to justify his sales quotas convincingly to his subordinate sales managers

Top-down approach of goal setting based on ambition should be balanced with bottom-up approach based on ground business realities to arrive at final corporate goals.

What are the issues that a company should consider in establishing the corporate sales goal? For each of the issues, how does this affect the various constituencies?

Issue
Industry conditions
Business growth in the region Nature of product or service - Nature of Customer base - Past Sales Size of the sales organization

Effect
Allows top management to set Realistic goals Gives top management benchmarking and measurement indices

Defines target market, will eventually lead to Effective sales effort by the sales representatives
Helps sales managers set sales quotas Limits the ability of the company to Scale up

The degree of sales force participation

Higher participation helps improve sales force Morale

THANK YOU