Case Study on EFI, Inc.

Since there is a difference in R square and Adjusted R square, hence we can’t conclude anything from 2005 due to data insufficiency. While in 2006, First Quarter – there is no co-relation while in second quarter, the coefficient of co-relation is 1. Hence, it could be said that sales of hardware & sales of software are dependent to each other in second quarter. We could also mention that there is an intended behavioural change in Sale force team.

Q: Has the intended change in behavior happened?
We have observed that by changing the compensation plan, there is an intended change in the behaviour and this has resulted into higher sales for some of the SDMs. This seems to be because the successful SDMs were putting together individual plans to grow the business. And for growing the business they are exploring all the avenues. They are going beyond the conventional meetings with only color specialists or analysts and now they are meeting with VP, GM and Directors also, which has resulted into higher sales.

Q: What are your recommendations?
We should plan the extra pay for exceeding the sales target too. As the original intention for changes in the compensation plan is to reward people who are selling more. We believe that the fix variable ratio should be kept at 60:40 only, but within the variable component of 40%, we should further segregate it as given below:

Gradually we will move towards more individualistic plan and group component will be reduced over the period. Gradually we will move towards more individualistic plan and group component will be reduced over the period.