Reference no: EM133180050
"DEVELOPING LOYALTY"
INTRODUCTION
"Bosphorus" has been selling plastic windows and doors for 9 years and is one of the four largest players in this market in the region. Three years ago, the demand for construction and finishing materials increased sharply in the region: the resort base began to develop actively, numerous cottage villages are being built. As a result, since 2002, the company's sales have grown by 30% annually. Naturally, the potential of the region forced all major players in the market of plastic windows and doors to activate and attracted new ones. For example, 2 years ago in the neighboring town the company "O-Plus" appeared, which also established its own assembly production and has every chance of becoming a serious competitor. In order not to give up positions, "Bosphorus" needs a close-knit team. This is where the difficulty arose.
The company works with German KBE profiles. Components are purchased in Germany and at the German-owned plant in one city, and the products are assembled in another city's workshop of "Bosphorus". Finished windows and doors are sold through dealers and their own retail division. There are no complaints about many departments of the company - sales, installation work. The only problematic link was and remains the measurers.
«Suspicions that some of them are "leaking" orders to competitors have arisen for a long time, - says the head of the sales department of the company "Bosphorus" Marina - But since this year, when our own security service began to operate, we received confirmation. We became aware of cases when our measurers came to potential clients and recommended the services of another company, which will complete the project "faster and cheaper". In August alone, at least a dozen orders were outsourced».
How many orders were lost because of this, the company cannot calculate. But if earlier the number of refusals to continue cooperation with "Bosphorus" after communicating with the measurer did not exceed 3-4% per year, then over the past six months it has grown to 10%.
PROBLEM: Bad remuneration
The first thought was to immediately expel the violators. But then the leadership of the "Bosphorus" decided to figure out why this is happening and give the guilty a chance to improve.
The offenders explained: we work a lot, but we get little. The fact is that the tasks of the measurer include not only technical work (measurement, calculations, etc.) and drawing up a detailed report. He should make a small presentation: tell what is the advantage of the profiles offered by "Bosphorus", which option is suitable in a particular case, how serious alteration will be required to install new doors or windows. If the client agrees, then the sales manager deals with it, who draws up the contract and receives a certain percentage.
Measurers are paid a fixed salary of 400-500 USD per month with an average workload of at least 150 measurements per month. "This is good money for our region," says Marina. - In addition, if an employee was heavily loaded and carried out complex projects, he is entitled to a bonus of 50-100 USD. per month or a gift from the company: new blinds, assistance in installing windows or repairing a car. I personally made the decision on the promotion, because I had all the information about how much work each did in a month".
During the high season, starting in May and ending in November, employees received bonuses and gifts almost every month. But for some, it turned out to be less profitable than transferring a client to another company and getting their own interest for this.
It turned out that some of the company's dealers were in collusion with the measurers: often they were the unscrupulous measurers who gave orders, and they set prices below "Bosphorus" (the company admits that their prices are not the lowest on the market, since they include significant overhead costs, which small semi-legal cartels are not burdened). «Unfortunately, we did not manage to come to an amicable agreement with the dealers, and we cannot put pressure on them: they threaten to go to another manufacturer, - explains Marina. - For us, this is a loss of money and a gap that our retail network, which sells only 40% of our products, will not close. There are no funds to expand our own retail».
Award for violators
Reflecting on who to fight with in the first place - with an external enemy or an internal one, the company nevertheless decided to concentrate on its own personnel: if the employee does not have the desire to withdraw the order, then the problem of relationships with partners will disappear by itself. The idea of creating a control service in the company was rejected: it is costly, and the mechanism of this service is not entirely clear. "Bosphorus" decided to focus on developing effective employee motivation, which would make it unprofitable to work for a competitor.
The first step in creating a motivational scheme was to abandon the subjective assessment of labor results and introduce clear standards. As the main criteria, we chose the distance of travel (sometimes you have to travel 40-100 km to reach the client), the number of orders per day and the level of their complexity. But, as Marina admits, no clear scale was created: almost every order had some specificity. As a result, instead of standards, rough descriptions were obtained, with the help of which the problem could not be solved.
The next step was cash incentives. For each visit to the client, the measurer, regardless of the result, began to pay an additional 5 USD. If the meeting ended with the signing of a contract, the fee was doubled. In a successful scenario, about 800 USD per month came out.
At some point in "Bosphorus" they decided that it was wrong to develop solutions at the top, and asked the measurers themselves to come up with evaluation criteria and ways to stimulate. But nothing came of this venture. Employees asked to increase their salaries to a 1000 dollars, but at the same time they could not clearly explain how much work they were ready to perform for this. While opinions were being exchanged, several orders again went to competitors. Therefore, at the end of August, two employees had to be fired. On the one hand, it became an example for others. On the other hand, the company does not want to follow this path: it is not so easy to find a qualified replacement, and there is no time to train inexperienced newcomers.
Continuing searches
Having exhausted the stock of ideas, Bosphorus turned to the practice of other players: all sellers of plastic windows and doors face similar problems to one degree or another. As it turned out, large companies are trying to ensure that the measurer is interested in signing a contract. For example, he goes to a client with a laptop on which software is installed that allows you to accurately calculate the cost of the project, concludes a contract and, along with the sales manager, receives 1-3% of the order amount. At the same time, no more than two or three field visits are made per day.
However, this experience did not suit the "Bosphorus". "We do not have the opportunity to purchase laptops for all measurers: it is too expensive." - says Marina.
So far, the leakage of orders does not noticeably affect the business: sales continue to grow. But the management of "Bosphorus" is very worried that the company's image is suffering. The consumer does not have the best impression of the company if its representative advises to contact someone else.
Questions:
1. How to prevent employees from looking for opportunities to earn money on the side? The company believes that the answer to this question should be sought in the motivation system. There is also an alternative idea: control and punitive measures. The creation of a security service, internal investigation and the dismissal of malicious violators are the first steps in this direction.
2. Which way should the "Bosphorus" go? And what systems of protection against thieving personnel could you recommend to the company?
3. How should a company communicate and negotiate with employees?