Team Members: Mr. Usman Zakir (BBAsp09-007) Mr. Qamar -uz- Zaman (BBAsp09-08)
Discussed Material Employee compensation Incentives Service management
Summary VDS was market leader in CAD (ComputerAided Design) software and hardware but PDM(Product Data Management) was critical marketfor it. So VDS hired two experts in the field.Management offered attractive incentives forgrowing the PDM business but unfortunatelythey remain loser to drive VDS forward in thisindustry. Things were not progressing quicklyand top management didn’t know what to donext.
Introduction VDS was a system integrator and seller of CAD systems along with customization and training services. The philosophy is empowerment combined with high rewards. Company was facing difficulties with a critical division – Product Data Management.
Philosophy of Company philosophy and valuesempowerment encourages atmosphere of friendliness Performance based pay everyone is a partner Decentralization
Recent Development inIndustry Engineering Analysis Tools: Automates the physical testing of parts created by CAD System To detect design flaws earlier and save on costs of real testing Reduces length of typical product design cycle
Contd…. Product Data Management: stores information CAD documents in and organized manner like an electronic vault. improves company ability to manage data. this market is not yet really operational – companies are investing but no one yet earning
Visionary Design Systems helping customers restructure their design process and get the most out of their CAD systems Strategy is to develop a long term relationship with customers Founded by ex-HP people, including #1 CAD salesman in the world 11 offices, each separate profit centre 20 sales reps, 25 Applications Engineers, 3 software engineers, 20 admin employees and 7 Specialists Specialist: hired within a field, eg analysis tools, Product Data Management, computer networking
Contd…….. Projects typically begin with development of customized CAD interface. Coming generation of mechanical engineering processes labeled Vision 2000 by VDS founders
HR Systems Founding Beliefs Partnership approach Teamwork and cooperative spirit Family sense, ethical, moral Mission, Goals, Tactics and Objectives Empowerment
Mission, Goals, Tactics and ObjectivesDefinegoals Objectives Tactics Keep on updating annually Develop Manager’s name action plans attached to each action plan for accountability Document laid 5 yrs strategy plan
Factors for success Give the autonomy of making decision to the employees after aligning the employees interests with the organization’s goals
Cooperating and Organization’s Employee’s Interest Interest friendly work environment •Giving Stocks to full time employees •Productivity •Giving stock options Motivated to •Profitability through bonus plans make right •Market recognition •Cash rewards decision at work •commissions Require SufficientLectures Training information (KASO) Education Increase the Group worth ofDiscussio employee n Able to make right Employee independent retention decisions
Compensation System Performance based pay Low fixed salary Base Salary < Industry Average Commissions and bonuses were significant portion of total compensation
Characteristics of VDScompensation Systemo Compensations such as commissions and bonus would vary fairlyo Commissions which account for 50% and 30% of their income for sales representatives and application engineers each are paid on the basis of output
Cont……. According to management stock option was also motivator but it seems that most of employees may not fully understand their stock shares and meaning of stock options.
BaseSalaries/Commissions/Bonuse Bonus –(10%)paid s monthly, annually and quarterly Monthly Sales reps: 150 options distributed to 3 reps rewarding sales booked, new business booked and ideas for improving the company. Means that best Sales Reps are incented to stay Applications Engineers: nearly identical to sales reps Specialists and Admin: 50 share options for
Contd……. Quarterly:only Sales Reps and AEs – used to encourage sales in strategic areas Annual: more customized and awarded in cash Sales reps: company wide bonus for exceeding goals; individual bonus for exceeding individual quota Applications Engineers: similar to sales reps
Stock Ownership All employees own stock Almost 100% of employees earn additional options through the year Awareness sessions has been conducted to explain the value of the options when it became clear that employees did not really understand
Performance Reviews Used at VDS to help employees to improve their performance and increase compensation Annual reviews on anniversary of start date
Contd…… 7 page questionnaire completed by manager and employee about KSAO as well as performance highlights and establishes objectives for the coming year
Issues Customers are satisfied with quality but sales volumes are low Not recognized in industry as a player in the area Fred always seeking consensus or asking permission rather than just doing it Hired a new specialist, Bill Braxton to help Fred but same problems continue to exist
Fred Bulatoa’s opinion Believes that this is a nascent industry that needs to be supported with software development hours and sales commissions Increasing Sales with Zero Credit: Feels they are under sourced because cannot support consulting staff
Contd…… Believes sales process is difficult – new language and other VDS staff are not knowledgeable about it. Currently training sales reps 1:1 because not included adequately in training program
Contd…… Customers cut the consulting time, because product is expensive – believes VDS should develop a software program that allows companies to get started with minimal consulting time, but he has not been given development hours
Bill Braxton’s opinion For the product to work it requires integration with CAD – currently not enough resources to integrate Need to develop infrastructure of capabilities before sales will come. Sales people not adequately educated
Source of problems with PDM Company was demanding zero investment growth allocation of resources to non-manufacturing sectors rivalry establishment of market awareness
Recommendations Need to modify the PDM plan Commit the appropriate amount of resources PDM plan should be treated as separate business unit
Contd….. Making the business plan would require the grouping of the software group with the staff responsible for the Product Data Management project
Steps Should be Taken byVDS We would recommend the following points which should be focused to get out of all these issues: shoulddevelop software program for clients to begin their operations with the least of expenses.
Contd…….. Trainingand tutoring sales representatives on Product Data Management advances the design procedure. VDS realizes the importance of consultation and tutoring as a means of solving PDM issues.