PoS Jan 2019 | Will Venkat’s Plan Work?

Venkataraman Aravind is an experienced sales manager. Venkat, as he is known in the industry, has made a successful career for himself in B2B firms. As the Head of Sales of a mid-sized firm that deals in construction materials, he is battling a problem: his sales executives do not submit daily report of activities regularly

The firm sells directly to builders and also through dealers. Sales executives engage with them to understand their requirements, map projects, and promote their products. They visit architects and consultants to brief them about products, and win specification in their projects. Regional Managers, to whom they report, travel frequently to meet and work with them in the field.

Reports Are A Chore 
The Company expects sales executives to submit reports of their daily activities so that managers can assess whether they are working to an agreed plan.

Daily reports provide managers insights on opportunities and challenges in the field. They enable timely intervention so that sales efforts are effective. Unfortunately, compliance has been patchy as is the case in many B2B firms.

The Company’s fifteen sales executives are headquartered in major cities all over India. Some of sales people are experienced; others have been in the firm for less than two years. Their ages range from 23 to 32 years. Their annual gross income from the Company (Cost to Company) is between INR 500,000 and 1 million.

They usually meet for one or two days every quarter in their regional offices in the North, South, East, and West of India to review quarterly performance and plan for the future. Regional Managers anchor these discussions. Once a year the entire sales team meets in the Company Headquarters or an offsite location to plan for the next year.

Owing to their dispersed locations, they are required to file individual daily reports online. Reports are not shared with other executives, nor does anyone other than Regional Managers and Venkat have access to them.

Limits of Persuasion 
Venkat has tried persuasion, and occasionally mild punishment. They have not had lasting impact. Executives see daily reports as an avoidable chore. It is not that they shirk work. The majority work sincerely, not necessarily smartly or effectively. Daily reports are intended to help sales people improve performance. However, success here has been limited. Venkat is now toying with an idea: to offer an incentive for compliance.

A Game Theoretic Carrot 
Venkat has recently outlined the incentive scheme to the Managing Director thus. Rs. 30,000 will be shared equally among executives who submit at least 80% of daily reports due each month. Anyone who does not achieve this target will not earn any of it.

On the other hand even if one person meets the target, (s)he will get the entire sum (Rs. 30,000) that month. Winners of the incentive scheme will be announced in the first week of the following month and the amounts credited to their bank accounts immediately.

Imagine you are the Managing Director. Do you think Venkat’s plan will work?