visionary design systems(vds)
TRANSCRIPT
Visionary Design Systems(VDS)
Are Incentives Enough?
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 (Computer Aided Design) software and hardware but PDM (Product Data Management) was critical market for it. So VDS hired two experts in the field. Management offered attractive incentives for growing the PDM business but unfortunately they remain loser to drive VDS forward in this industry. Things were not progressing quickly and top management didn’t know what to do next.
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
everyone is a partner
Performance based pay
empowerment
Decentralization
encourages atmosphere
of friendliness
philosophy and values
Recent Development in Industry 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 Objectives
Define goals
Objectives Tactics
Develop action plans
Manager’s name attached to each action
plan for accountability
Keep on updatin
g annually
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
Employee’s Interest
• Giving Stocks to full time employees
• Giving stock options through bonus plans
• Cash rewards• commissions
Organization’s Interest
• Productivity • Profitability• Market recognition
Motivated to make right decision at
work
Cooperating and friendly
work environment
Require Sufficient
information (KASO)
Training
Education
Lectures
Group Discussi
on
Increase the worth of
employee
Employee retention
Able to make right
independent decisions
Compensation System
Performance based pay
Low fixed salary
Base Salary < Industry Average
Commissions and bonuses were significant portion of total compensation
Characteristics of VDS compensation System o Compensations such as commissions
and bonus would vary fairly
o 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.
Base Salaries/Commissions/Bo
nuses Bonus –(10%)paid 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 individual improvement or ideas that benefit company
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
PDM: The Problem Area
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
ANALYSIS
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 by VDS We would recommend the following
points which should be focused to get out of all these issues:
should develop software program for clients to begin their operations with the least of expenses.
Contd……..
Training and 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.