Kjell and Company: Motivating Salespeople with Incentive Compensation (D)
Kjell & Company was a Swedish retail electronics chain. The company's products consisted of home electronics and accessories. The company was noted for its excellent customer service and a fair "one-for-all" HR policy. Historically, the salespeople had been compensated by a fixed salary and a variable commission conditional on meeting a monthly sales quota. Anecdotal evidence suggested that the monthly-quota compensation scheme might have demotivated some salespeople toward the end of the month, as those who fell short early in a month simply gave up because they had no chance of meeting quota. Thus, to mitigate this problem, management proposed a shorter-temporal-horizon daily-quota scheme. The (A) case focuses on the decision faced by the CEO on whether to change the sales force compensation plan to a temporally shorter scheme and, if so, how to implement the change. The (B), (C), and (D) cases show the results of various metrics across different types of salespeople after the change in the compensation plan was implemented. The case series explores different ways to analyze data for inference about salespeople's behavior caused by a change in the compensation structure. Also, the case series shows ways to experiment with the compensation plan for causal inference.