Case Study : Bodine Electronics

The Bodine Electronics l Corporation currently employs approximately 150 sales engineers to cover the United States and Canada. Sales engineers are paid a straight salary. Unlike other companies in the electronics industry, Bodine offers no commission or incentive plan. However, Rufus is well known for an outstanding fringe benefits package.

The sales force at Bodine is generally well respected and talented. It is a strong organization, known for its ability to carry the division even through hard economic times. In this fiscal year, however, the sales force was slipping in performance, earnings were declining to all-time lows, and the pressure from corporate headquarters was beginning to bear down. The national sales manager expects all the district managers to find out what the problem is and to recommend alternative solutions.

During the following week, Dave Simmons was getting feedback from his sales engineers. He called a district meeting for all his subordinates to meet in the office. The following exchange took place:

Dave: OK folks. Sales are down. Profits are down. Enthusiasm is down. I want to know why. What are the problems? What is keeping us from achieving our sales goals?

Bucky: I'll tell you, Dave. It's a little tough to sell something we don't have. Those bums in the product marketing department are who to blame! In the past three years, 21 new products were introduced to the field and only two made it to the market on time. We go out pushing these new products only to find out there are none in stock.

Tom: That's right! And then we pet 16 weeks delivery time to quote a customer.

Bev: This kind of thing hurts our credibility with the customers. We promise we'll have a certain new product by a certain time, and it never happens.

Jim: What makes me mad is that we are forced to include these new products in our forecasted sales plan each year. Often the product has not yet been completed but we have to forecast sales of it anyway. Later, if that new product never makes it to the market, I've committed to sell, let's say, $100 M worth. Now, I've got to scramble around and find that business elsewhere!

Woody: Yeah! How come we can always "revise" our sales quotas upward based on new information, but never downward?

Jim: Our job performance is directly affected by those turkeys in product marketing. I could do my job 150 percent, but if marketing doesn't get these new products out the door, I still have to sell an equal dollar amount in existing products! There's only so much business out there for mature product lines.

Tom: And when job performance is negatively affected, so is my salary increase! That's not fair! I am dependent on the product marketing group and when they don't come through, I fall short of my quota and get a measly percentage increase at the end of the year, if I'm lucky.

Sam: I'm not surprised at all. We have to rely on a bunch of hot-shot MBA'ers, who have little or no field sales experience. They are not customer-oriented. They don't understand the critical importance of timing and responsiveness.

Chuck: Those product marketing clowns are one issue, but another reason we're behind our year-to-date goals is that they were set too high in the first place. This MBO (Management by Objective) program we introduced two years ago is a real joke! Management tells us we can set our own goals. But management already has a predetermined goal dictated from corporate headquarters. If our individual forecasts don't total high enough, management raises our goals for us! That's some democratic participation!

Bev: And management always sets the goals too high. They're not based on real customer opportunities; pie-in-the-sky forecasts designed to impress somebody! Our performance would be much better right now, if we had stuck with our original forecasts. They were realistic.

Tom: If we could get a bonus or commission instead of just straight salary, it might be easier to put up with all the abuse we take out there.

Jim: I don't know, Tom. Being on commission would make us even more dependent on our product marketing department. We'd really be at their throats if our weekly bread and butter depended on them.

Bucky: I agree with Tom. There's no incentive to sell more than our annual quota. If I do 100 percent of goal or 150 percent of goal, I get about the same level of salary increase. Why should I get ulcers and bust my hump when I don't get compensated for it!

Dave: OK, I've heard enough. That's all for today.

After everyone had left. Dave sat alone in his office and wondered what alternative courses of action he would recommend to Ben Billings as corrective measures to cure the sales slump and the negative attitudes expressed by the sales force.

Discussion questions:

2. Explain why the salesmen were so low in morale. Provide your recommendations for Bodine Electronics in light of any CONTEMPORARY motivation theories.