Business Profile: National Office Machines

Manufacturers of cash registers, electronic data processing equipment, adding machines, and other small office equipment Domestics sales: $1.4 Billion Foreign sales: $700 Million Operates in United States, western Europe, the Mideast, and some part of the Far East

Business Profile: National Office Machines Continued

In the United States, has the most aggressive and successful sales force Highly competitive industry Recently entered into a joint venture with Nippon Cash Machines

Business Profile: Nippon Cash Machines

Old-line cash register manufacturing company organized in 1882 Japan sales: $9 Billion yen; 15% loss from last year Only produces cash registers Needs managerial leadership High competition: Fourteen companies compete such as IBM, NCR, Unysis, and Sweda

Situation Analysis / Decision Situation

Sales compensation plan (straight commission, straight salary, or mix) Sales people need strong incentives Motivation High Competition from fourteen companies compete such as IBM, NCR, Unysis, and Sweda Japanese Distribution Systems based on reciprocity
on: favor of any kind that must be repaid

Traditional Labor-Management Relations

Traditional labor-management relations are a problem
Lifetime employment, Promotion through seniority Single company unions with contracts that act like the force of law Dismissal only for just cause such as theft or other major infarction Receive many fringe benefits through the company

Traditional Sales Force

Predominately order takers Paid straight salary Bonuses given semiannually Offered extensive benefits (loans, mortgages, discounted necessities) Offered little incentive to surpass basic sales quota

What should NABMC offer incentives or straight salary?

Incentive-based salary or Split percentage of straight salary and commission
Changing attitudes of lifetime employment by employers and younger employees and recent grads Life Goals Chart

Japan US UK Germany France

35.4 6.2 5.1 11.2 9 7.1 9.2 13.9 17.8 16.4

5.8
77.3 63.4 60.6 62.2 72.3 84.8 76

41.2

6.8

10.8 9.5 1.8 8.6 2.9 5.5 10.9 11.9 7.5 3.4 3

To get rich

To acquire social position To live as I choose

Switzerland 3.7

1 Sweden 2.5 .7
Australia India Phillipines Brazil

7.5 3.4 10.5 1.6 16.2 46.2 63.2 26.3 22 1.8 0.5 11.9 0.5

6.7 5.1 22.3 21.7 7.7 16.7 9.6 33.3

To work on behalf of society No answer

0%

20%

40%

60%

80%

100%

How Do You Motivate Salespeople and Get Them to Compete Aggressively?

Continue to stress and enforce traditional Japanese business values Offer and stress the fringe benefits with the offer of employment for life Recognition systems Idea of teamwork and the overall success of the firm as a whole Non cash incentives (holidays, vacation) Set realistic and challenging goals

Program for Motivation and Compensation with Implications

Reward programs and pay as part commissions Challenges:
Senior employees Union challenges Japan distribution system

Solutions:
Emphasize the goals for the company with some emphasis on individual production

New Pay System

Hybrid pay structure Base salary at xx% with xx% commission based on sales Bonuses
One based on company performance Second based on individual performance relative to others including seniority

Motivation and Aggressiveness in Japan

Cultural Norms Collectivist Culture Politeness Harmony Reciprocity

Motivation and Aggressiveness in Japan

Implications Less likely to compete against each other Less likely to be forceful and aggressively go after the sale Less willing to disturb or upset system of reciprocity and on

Principles of Motivation in Other Countries

Promote competition both within the firm and between the company and competitors Develop a sense of loyalty to the company Be as explicit and detailed as possible when informing employees of the payment system, and clearly and thoroughly express the benefits of such a system Use cultural values of specific country to help design the best methods of motivation (i.e. individualism in U.S. and collectivism in Japan)