Reference no: EM132287763
SCENARIO
It’s been eighteen months since he took over the Des Moines office, and Doug Bloom is finally feeling like he has the job under control. His office has exceeded their sales quotas for each of the last 5 quarters and profits are improving. He also felt like he understood himself better and that he had grown as an individual. At dinner the other night, he mentioned to his wife, “You know, as you get involved in this job, your personality changes. Some managers become very people-directed and others are more sales- and customer-directed. I doubt that you find many people who are perfectly balanced on these dimensions. I think I’m leaning toward the people side now, which surprises me. I always loved the customer contact so much when I was selling.”
The next day at work he received a call from Vinny Raccioppi, Vice President of Marketing and Sales for D & M, informing him that as part of his management development he was given a special assignment. Vinny would like to meet with him in New York the following week to discuss his assignment.
In New York, Doug is informed that his special assignment is to plan for the phasing-out of independent insurance brokers in the mountain states of Montana, Idaho, Wyoming, Utah, and Colorado. D & M intended to hire full-time salespeople to cover these geographies. Among other reasons for the change, the population in these areas is growing and the company feels that it can get better penetration of the market with its own dedicated sales force. Vinny also mentions that he believes the sales agents have grown “older and wealthier” and are losing the “energy and drive” of earlier years.
D & M currently has two regional sales managers responsible for managing the brokers in these states. The regional managers are responsible for recruiting high-quality brokers, working with them to ensure that understand and know how to sell D & M’s products, and producing the sales volumes quotas in these areas. The sales manager will need their help to put together an in-house sales force and to undertake damage control when the sales agents are informed of the new organization.
Doug’s reaction is one of surprise, followed by a realization of the magnitude of the undertaking. One of Doug’s immediate concerns was in controlling the damage to customer relationships that may arise when the brokers are informed of the new sales organization. Vinny informs Doug that he has two months to complete a plan for starting the new sales force. Doug says that he had better get started right away and suggests that he meet with the two regional sales managers this week.
The following week, Doug arranges to meet with the two regional sales managers. Doug informs the managers of the impending change in organization and of the necessity to develop a through and thoughtful plan of action. After expressing their surprise, the regional sales managers mention their concern with agents’ reactions. They both indicated that there is no way this plan can be kept a secret until it is implemented and that the brokers are likely to be angry about losing the 20 percent commissions they have become used to receiving. During this discussion, possible retaliatory actions by the brokers are discussed. At the conclusion of the meeting, the vice president suggests that they all think about how to “ease out” the 34 agents without suffering undue economic recriminations. They agree to get back together for a meeting the next week to discuss alternative plans.
Explain and Detail
1. How would you attempt to control the potential economic damage that may occur when switching from brokers to your own salesforce ?
2. What would you suggest doing if one of the brokers asked you whether it was true that shield was going to release all its brokers and switch to a dedicated sales force?
3. What issues would you have to address it starting your own sales force?