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

7.7 16.7 63.2 11.9 0.5

21.7 9.6 46.2 22 0.5

22.3 33.3 16.2 26.3 1.8

6.7 5.1 76 10.5 1.6

2.51.7 84.8 7.5 3.4

3.7 9.2 72.3 11.9 3

7.1 16.4 62.2 10.9 3.4

9 17.8 60.6 5.5 7.5

11.2 13.9 63.4 8.6 2.9

6.2 5.1 77.3 9.5 1.8

35.4 5.8 41.2 6.8 10.8

0% 20% 40% 60% 80% 100%

Brazil

Phillipines

India

Australia

Sweden

Switzerland

France

Germany

UK

US

Japan To get rich

To acquiresocialposition

To live as Ichoose

To work onbehalf ofsociety

No answer

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)