Pay for Performance and Financial Incentives (C): Incentives for Salespeople @ Tiles & Styles

Third in a series of six caselets, this caselet introduces the participants/students to the challenges involved in designing an effective incentive plan for sales personnel. Thomas Isaac (Thomas) owned a high-end tile and sanitaryware showroom Tiles & Styles (T&S) in a posh locality in the heart of Delhi city. Even after more than one year of the stores' establishment, Thomas observed that the sales at his store were not picking up. Thomas discussed with his Store Manager and his salespeople to identify the issue. But they opined that as the store was new the sales had not picked up and were hopeful that it might do well in the future. However, Thomas believed that his staff was not motivated enough to drive the sales in his store. He was contemplating to change the pay structure and design an incentive plan for his team to trigger higher store sales. However, he was not sure of a fool proof method to design such an incentive plan.

Pedagogical Objectives

• To understand various types of compensation plans for salespeople and the importance of setting sales quotas and commission rates in order to maximize sales forces' outcomes
• To analyze the problem faced by Thomas and discuss about the effective pay and incentive plans to motivate his team

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 Salespeople – To understand the common types of sales compensation plans and the role of incentives in motivating the sales force and maximizing the results

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