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Executive Summary

Executive Summary: Write it on the Title Page of the paper.

In order to retain market share, which they believed was being lost to firms with more specialized sales people, the Boston office of Campell and Bailyn restructured into Key Accounts Teams (KAT) of five specialists assigned to each market segment. At the same time a new performance measurement system, based on a high degree of subjectivity, was put in place to stress the sale of high profit products.

We recommend retaining the KAT and adding customer visits to drive specialized product sales. The performance measurement system will be revamped to focus on objective growth figures. We expect sales to continue to grow and customers to be satisfied by the specialized products and personal attention they receive. Good.

Situation Analysis

New York based Campbell and Bailyn (C & B) consists of several divisions, with fixed income being the fastest growing. Kevin Winston is the regional sales manager of the Boston office of C & B that works in conjunction with the New York office selling the fixed income products to large investors. The fixed income industry has been undergoing rapid change over the last ten years. Lower -priced broker shops have resulted in lower margins on many products and given rise to a new higher margin product set, which is complex and requires specialized expertise. The taxable division was losing clients to competitors who had more detailed product knowledge. This, coupled with the recent financial crisis, has necessitated changes to the way C & B has previously done business. Good.

Winston sought to reorganize the taxable sales group. The generalists were struggling to keep up with customer needs. After much consideration, Winston created the Key Accounts Team (KAT). With this new implementation, each generalist would now head up a specialized group focusing on one of the taxable group's products and the individual clients would be pooled among the specialists and subsequently changing the commission structure.

In addition to the new structure, the New York office has instituted a new performance management system which was designed to increase sales of higher margin products. Under the new performance management system, a salesperson's compensation was now weighted anonymously by feedback from traders, product managers and researchers. Factors considered include: "Level of motivation to learn new and more profitable products, and use of sales data to accelerate sales."(p. 6). This change appears to have increased sales of these higher margin products.

Summary of Issues from Recent Changes in the Fixed Income Industry

Issue Organizational Change Resulting

Rapid industry changes over the last 10 years have led to reduced margins on products and given rise to higher margin products that require specialized knowledge New Performance Management System instituted. Utilizes peer feedback and measures motivation to learn new more profitable products and utilize data to make sales.

The recent financial crisis has led to customer loss on bond portfolios. The industry has become more complex and the Boston office is losing clients to competitors who possess more specialized product knowledge. The Key Accounts Team was created. The five generalists now each head up a specialized unit focused solely on their product and clients have been pooled, so that they benefit from working with these specialists for their business needs.

You did a good job on this section. Information included was relevant and had good detail but more information about the reaction to the changes would be helpful in your problem analysis.

Problem Diagnosis

The KAT team structure has created some problems. Prior to initiating, Winston engaged the sale team in the decision making process and discussed several options. (Kim & Mauborgne) The five generalists would now become specialists, each responsible for a different product set. Specialization assignment was based on "fit". (Kainen: 4A) Paul Callahan was named head and assigned to the corporate high yield group. The clients were split among the groups and commissions were paid out according to sales within their specialization. This could mean a potential decrease in commission or could lead to increases. Customers had mixed feelings with this new change. The new structure has meant less contact for clients with the salesperson they were accustomed to and made larger trades more complex due to dealing with multiple specialists. Some of the generalists turned specialists have voiced concern over specialization potentially limited their career prospects and commissions, this may lead to employee attrition, as one is feeling stifled and may be considering leaving for another firm. To further complicate matters the team seems split on the decision.

The second organizational change was the new performance management system. To increase sales of higher profit products, peer feedback was added to the performance management process. The sales staff does not like the power it gives to those in New York with regards to the compensation process. The system has a lot of subjectivity in evaluation. Criteria such as peer feedback on "responsiveness to needs" and "level of motivation" make for an unpredictable standard of measuring performance. (Kainen 5A) It is lacking key components of an effective performance management system, such as " a framework for differentiating performance and for linking those judgments to appraisal ratings and compensation decisions" (Gary p. 5 ) Well done. Winston is not convinced it solves for the most significant company issue, customer attrition due to lack of specialization. The performance management system does not meet the goals of the "Making Performance Happen Model". The measurement appears to be lacking in alignment with overall goals. (Kainen 5A)

Nice job on this section.

Summary of Problems Stemming From Recent Organizational Changes

Organizational Change Problems Resulting

Creation of the Key Accounts Team Client Confusion around new team structure

Increased complexity for clients when conducting larger trades

Less personalized client service from salespeople they have developed a relationship



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