Motivating Japanese sales people

1. Motivating Japanese sales people
Straight salary or commission
National Office Machine
PRESENTED BY :
Abdulrahim Hytham

2. OVERVIEW

3. National Office Machine (NOM)
• Located in Ohio, USA
• Founded in 1884
• Western Europe, the Mideast,
and some parts of the Far East

4. National Office Machine cont..
• Manufacturer of cash registers, electronic data
processing equipment, adding machines, and other
small office equipment.
• Domestic sales: $1.4 billions
Foreign Sales: $700 millions.
• NOM is one of the leader in the field and is
considered to have one of the most successful and
aggressive sales forces in USA

5. Nippon Cash Machines
• Located in Tokyo, Japans
• Founded in 1882
• Many competitors, such as, IBM, National
Cash Register, and foreigners companies

6. Nippon Cash Machines
• Produce only cash machine.
• Major manufacturer of cash register
equipment in Japan.
• Japan Sales: ¥9 billions.
• Since 1970, it has been loosing ground.
• Problems: - Needs managerial leadership
- producing only one product

7. Nippon/American
Business Machines Corporation (NABMC)
• National Office Machines entered into a joint
venture with Nippon Cash Machines.
• Agreement:
- Doubling the sales force within a year.
- NOM: hiring and training new sales people.
- Sales people needs to be young and
college educated from Japan.
• Retain current Nippon sales force.

8. PROBLEM
Sales compensation plan to use
Japan's tradition VS US method
Japan’s tradition
- Straight salary
- No individual incentive
US method
- Commissions
- Individual incentive for sales performance

9. The difference between Japanese culture and
American culture
• Japanese culture
• Mildly hierarchical
• Collectivistic
• Highly masculine
• High uncertainty avoidance
• Long-term oriented
• American culture
• Low power distance
• Highly individualistic
• Moderately masculine
• Uncertainty accepting
• Short-term oriented

10. The life of Japanese "A"
• Live in a house provided by his company.
• Can obtain a loan from the company almost free
of interest.
• Free medical treatment.
• Break time - full salary.
• Holidays in lodges at seaside or mountain resorts.
• Lump-sum retirement allowance of a pension.
• Stable living for the rest of his life.

11. MOTIVATION

12. What young generations wanted?
• Realized unfairness of Japanese system
- promotions are based on age and seniority
• Prefer American incentive way.
• Seeking for jobs with foreign firms.

13. How the company solved the problems?
1- Toyo Rayon
. Reevaluate all senior employees every five years
. New contract with the company every two years to
employees over 42.
2-Marco and Company
Travel plan incentive for who topped their regular
sales quota.
3- IBM
Semiannual bonus

14. Questions

15. Q1. What should NABMC offer- incentives or
straight salary?
Commissions motivate employees to sell
products to customers. However, they can
motivate shirking on other tasks such as on-
going customer service, investing in a long-run
relationship, training the customer, etc. In
particular, if the employee is paid a bonus for
selling and no extra compensation for these
other tasks the employee will naturally
concentrate on selling more products.

16. The optimal compensation scheme for salespeople is
likely to vary across environments. In environments
where non-selling activities are particularly
important, the employee is more likely to be paid a
straight salary. In environments where the firm
wants the employees to concentrate on selling,
commissions are more likely. Therefore, NABMC
should focus on incentive pay.

17. Q2. If incentives are out, how do you
motivate salespeople and get them to
compete aggressively?
One of a greatest incentives and motivator is
sense of accomplishment and recognition.
• Continue to stress and enforce traditional
Japanese business values A. Offer and stress the
fringe benefits with the offer of employment for
life

18. • 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.

19. Q3. Design a U.S. - type program for motivation
and compensation of salespeople. Point out
there difficulties may be encountered with
your plan and how the problems are to be
overcome.
1- Reward programs and pay part as commissions.
2- Challenges:
a. Employees.
b. Union challenges.
c. Japan distribution system.
3- Solutions: Emphasize the goals for the company with some
emphasis on individual production.

20. Q4. Design a pay system you think would work,
satisfying old salespeople, new salespeople,
and other employees.
The following pay system would work favorably for
NAMBC
For old sales people:
• Guarantee of job security.
• Acquisition of seniority status.
• Giving straight salaries without bonuses.

21. For new sales people:
• Incentives of promotion and seniority status
based on their performances.
For other employees:
• Straight salaries with fixed levels of bonuses.

22. Q5. Discuss the idea that perhaps the kind of
motivation and aggressiveness found in the
United States is not necessary in the
Japanese market.
The individuals are less:
a. Less likely to compete against each other
b. Less likely to be forceful and aggressively go after
the sale
c. Less willing to disturb or upset system of
reciprocity and "on"

23. Q6.Develop some principles of
motivation that could be applied
by an international marketer in
other countries.
A clear principle that emerges from the
National Office Machines (NOM) case is the
need to adapt to the local environment. When
working in an international environment, every
company must analyze the local cultural
environment. Simply transplanting a traditional,
American competitive model into Japan will not
'work' to encourage all Japanese employees to
succeed.

24. 1-Promote competition both within the firm and
between the company and competitors.
2- Develop a sense of loyalty to the company.
3- 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.
4- Use cultural values of specific country to help
design the best methods of motivation
(i.e. individualism in U.S. and collectivism in
Japan).

25. THANK YOU