Describe the compensation issue that is involved in the case – incentive pay, executive compensation, etc. Based on information provided in the case, present information regarding the organization’s industry, competitors and business strategy. Explain the factors that the organization is dealing with in terms of internal and external impacts and whether they are thinking about changing compensation or recently changed the compensation structure
In June 1990, Doug Tyson, Jerry Cohen, and Gerald Stark founded the company by the name Visionary Design Systems (VDS). A close study on the company revealed a few compensation strategies and issues regarding its employees. Incentives and basic salaries are the first noticeable compensations. The company believes that it should base its pay per employee on performance rather than their occupational position. Incentive pay is the compensation or payment made depending on an individual’s performance and can be commissions or bonuses.
According to the case provided, compensation varies as per the number of sales made in a particular month. As such, the compensations occupy 50% of the total income of sales representatives, bonuses occupy 10%, and the basic salary takes up 40% of the total income. The percentages, however, vary for the application engineers, specialists, and administration. The main issue with the incentive pay is that the basic salary is low, hence a discouragement for other employees. Another problem is that there is a lack of executive compensation, thus lowered morale in the organization.
The case study also reveals that the average of the industry is performing better than Visionary Design Systems. The company embraces the Product Data Management tool and the predictions in the industry state that there is a probability of an increase in market size. The competitors of VDS have a strong forefront in that they employ people with high skill and potential, and they maximize on promoting market awareness. Its competitors also implement the PDM tools much better than VDS.
Unfortunately, implementing the Product Data Management is a major problem and according to Bill Braxton, a business strategy is in effect. One of the strategies included providing the target consumers with a new interface that allowed them to use Computer Aided Designs easily and integrate it into engineering analysis tools. Another important strategy is the Missions, Goals, Tactics, & Objectives document, which the company distributed internally. ….