Pay for Performance and Financial Incentives (D): Incentives for Managers and Executives @ DuraCoats

This caselet, fourth in a series of six caselets, is meant to introduce the participants/students to the relative importance of fixed and variable component of compensation package for Managers. In April 2013, Gambhir Kumar (Kumar) joined DuraCoats Pvt. Ltd. (DCPL) - a company dealing with production and sales of protective industrial coatings across the country - as a Sales Manager for the States of Andhra Pradesh and Telangana. He was a consistent performer who over-achieved the set sales target and was instrumental in roping in a few very big clients. However, he was dissatisfied, as the company offered him a fixed salary with no benefit/commission on sales. This concern was communicated to the Company Head, who assigned the task of designing an incentive program to the four Regional Managers.

Pedagogical Objectives

• To understand the importance of the fixed and variable component of compensation package and the various types of short- and long-term incentives for Managers
• To discuss the challenge faced by DuraCoats and design an incentive plan to motivate its Sales Managers keeping in view the long-term growth of the organization

Case Positioning and Setting

This caselet can be used in either MBA or Executive MBA or Executive Development Programs, for the following module/topic in the Human Resource Management course:

• Incentives for Managers and Executives – To understand the role of incentives in motivating managers and executives for long-term corporate growth and the various types of incentives suited to them

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