Clearion Software

Case Q&A
GROUP NO. 4
MANISH BHATIA B006
SAURABH BHATT B008
VIKRAM JEET B026
PRANAV MALIK B034
MRINAL OJHA B040
SWARNAYU DE C019
PRAYAG MULAY G038
VIKRAM JUNEJA I028
Question1

Looking at the Exhibit 5 in the case, West was the only region which had achieved its Quota,
infact had a surplus of 20% compared to other regions all of which had fallen short of their
Quota. Also, the West region had highest Revenues/Unit at $ 0.19 million. In addition to that
the West region had highest overall revenue as well.
Question1
Issues in the various regions:
 West Region:
 Hall, the regional director of West took longer to fill openings, on an average 5
months per new hire which was leading
 Federal Region:
 Allison Chappas, regional director of west had more than tripled the size of her
organization in last 24 months, the results were yet to be seen in her sales quota.
 Chappas was selling to federal government which was very slow-moving due to
which the sales cycle was longer as compared to other regions.
 East Region:
 Due to Garton’s tactics of sandbagging, lobbying and gaming, the region was
given particularly high targets which it couldn’t achieve. Also, the region’s
productivity had fallen short compared to West region which was also similar in
nature by $30,000.
Question 2
Old model of assigning targets and resources:
 Quota-setting process was largely subjective. He gave each manager a number
based on assessment of the situation.
 Jacoby faced a number of challenges related to his process for allocating targets
and resources including sandbagging, lobbying and gaming.
 He had no way to measure his performance in setting quotas
 Jacoby allocated headcount on an ad hoc basis. He faced two major challenges
- (i) his managers required more time to fill openings (ii) SEs and TSMs did not come
with any quota, so these resources were in high demand. They were being
hoarded by a few managers
 There were no penalties in compensation system for excessive use of shared
resources, only top-line performance was measured.
 Question 2
New model of assigning targets and resources - quota and headcount allocation
 Headcount was converted into units. Baseline was set at one unit - SEs and TSMs, CAMs
were set at two units. It was possible to calculate how much Jacoby had invested in each
region.
 By dividing revenues by its number of units, he could calculate each region’s contribution
per unit and determine the productivity of each region
 SEs and TSMs came with quotas, they weren’t free anymore. This prevented hoarding of
resources.
 He could hold his sales managers accountable for their consumption of resources and
track the performance of an investment in headcount
 Incremental quota was associated with the headcount, hiring times were accelerated and
managers were empowered to share information and work collaboratively. Decisions
about headcount and quota allocations were merged into one decision.
 Question 2

New system is better than the old system because -

• Transparency into the profit contributions by each region, enabling him to make better
investment decisions
• Headcount was allocated at the beginning, and not on ad hoc basis, requests for new
headcount would bear incremental quota
• Hiring times accelerated. Managers knew SEs and TSMs came with quotas. This prevented
hoarding of resources
Question 3

 The headcount and quota allocations given by Jacoby in January 2006 are
analysed separately as follows:
 West region – The expectations were of increased revenues since they had
already over achieved. Profitability was not the major concern here as the %
growth in revenues/unit did not increase as much (1%).
 East region – Jacoby felt that Garton indulged in most sandbagging, gaming and
lobbying practices. He had this particular bias fixed in his head. Also, he had
given increased targets for H2’05 to the east region and they failed to achieve
them by 19%. Although, all present evidence establishes that they must be
making growth in line with the west region since they were targeting the same
customer segments, but still, Jacoby should dive deep into the problems in the
east region.
 Question 3
He could look at the following points –
 Was there any weight in the claims of Garton backing the falling/low sales in the east
region and if found to be true, what efforts besides sales force could be used in the
east region to generate higher revenues (i.e. marketing activities, better lead
generation etc.)
 It also seems inequitable as they’ve been given yet higher sales targets (even after
them failing to meet the last quarter’s targets), with least resource count
improvement (10%) when its known that the maximum resources are being used by
the west division
 A deep dive is needed with the east division manager to understand the issues and
aligning their activities and objectives with the company goals.
 Also, it had to be identified what were the numbers brought in by the new territory
created and accordingly numbers should have been assigned
Question 3
 Federal – The low revenue per resource is a concern. The quota allocation is
certainly not inequitable since Jacoby has given Chapas a lower target than last
half year and also 13% growth on the headcount to achieve it. The only concern
can be if she had sandbagged/lobbied and gotten Jacoby to believe that the
federal sector was low potential (in terms of resource utilization vs revenue
generated) and gotten numbers to fall for H1’06. The major issue here was her being
called out in the meeting in front of other sales directors and it could have been
handled more tactfully.
 Latin American region – They were given low growth targets (2.75 Mn in H2’05 was
their original target and 2.8 Mn was their new target with 27% higher resource
allocation). This number maybe calculated better with delving deep into the
potential opportunities and issues of the region.
Question 4

 We will use the additional revenue/resource in H1 2006 to evaluate a profitable

investment of headcount. The Eastern region will most likely be the most profitable
investment of headcount in H1 2006 as the quota is increased by the highest margin
(19%) and the headcount is reduced marginally (10%).
 The salesforce will thus work harder to meet the quotas while the additional
resources will not be too high thus maximizing the additional revenue per added
unit.
Question 5

 When a new person is hired, his performance is not at the same level as an
experienced employees, but they are measured at same productivity
 Comparison of different territories on absolute numbers might not be justified
given the nature of clients are different. Example- Federal group was
handling government clients, where contracts require more time and
resources to close
 Regional managers would be better off hiring CAMs over SEs and TSMs. How
would the new system stop managers from hiring only CAMs and not SEs and
TSMs?
Question 6

 We believe the target should be based on the past numbers and Y-O-Y Growth
levels.
 Goal setting should innolve all the VP Sales as this would lead to a shift in
outlook from an Empire view to the Organizational view.
 Since the focus is on Revenue and not the margin while goal setting, this leads
to the issue of overusage of the resources.
 Some regions would not be mature enough as compared to region like
America to adopt the product, so allocating quota based on Corporate sales
goal might not be a good decision in all the Geographies.
 The process should focus on margin while setting the goal.