Business Profile: National Office Machines

1. Business Profile:National Office Machines • Manufacturers of cash registers, electronic data processing equipment, adding machines, and other small office equipment • Domestics sales: $1.4 Billion • Foreign sales: $700 Million • Operates in United States, western Europe, the Mideast, and some part of the Far East

2. Business Profile:National Office Machines Continued • In the United States, has the most aggressive and successful sales force • Highly competitive industry • Recently entered into a joint venture with Nippon Cash Machines

3. Business Profile:Nippon Cash Machines • Old-line cash register manufacturing company organized in 1882 • Japan sales: $9 Billion yen; 15% loss from last year • Only produces cash registers • Needs managerial leadership • High competition: Fourteen companies compete such as IBM, NCR, Unysis, and Sweda

4. Situation Analysis / Decision Situation • Sales compensation plan (straight commission, straight salary, or mix) • Sales people need strong incentives • Motivation • High Competition from fourteen companies compete such as IBM, NCR, Unysis, and Sweda • Japanese Distribution Systems based on reciprocity • on: favor of any kind that must be repaid

5. Traditional Labor-Management Relations • Traditional labor-management relations are a problem • Lifetime employment, • Promotion through seniority • Single company unions with contracts that act like the force of law • Dismissal only for just cause such as theft or other major infarction • Receive many fringe benefits through the company

6. Traditional Sales Force • Predominately order takers • Paid straight salary • Bonuses given semiannually • Offered extensive benefits (loans, mortgages, discounted necessities) • Offered little incentive to surpass basic sales quota

7. What should NABMC offer—incentives or straight salary? • Incentive-based salary or Split percentage of straight salary and commission • Changing attitudes of lifetime employment by employers and younger employees and recent grads • Life Goals Chart

9. How Do You Motivate Salespeople and Get Them to Compete Aggressively? • Continue to stress and enforce traditional Japanese business values • Offer and stress the fringe benefits with the offer of employment for life • 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

10. Program for Motivation and Compensation with Implications • Reward programs and pay as part commissions • Challenges: • Senior employees • Union challenges • Japan distribution system • Solutions: • Emphasize the goals for the company with some emphasis on individual production

11. New Pay System • Hybrid pay structure • Base salary at xx% with xx% commission based on sales • Bonuses • One based on company performance • Second based on individual performance relative to others including seniority

12. Motivation and Aggressiveness in Japan Cultural Norms • Collectivist Culture • Politeness • Harmony • Reciprocity

13. Motivation and Aggressiveness in Japan Implications • Less likely to compete against each other • Less likely to be forceful and aggressively go after the sale • Less willing to disturb or upset system of reciprocity and “on”

14. Principles of Motivation in Other Countries • Promote competition both within the firm and between the company and competitors • Develop a sense of loyalty to the company • 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 • Use cultural values of specific country to help design the best methods of motivation (i.e. individualism in U.S. and collectivism in Japan)