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The Massachusetts Restaurant Appliances Company Management Case Study


Abstract

David Epstein is the current sales manager at Massachusetts Restaurant Appliances, one of the leading distributer of industrial appliances used in restaurants within the United States. David has eight employees within this department that work in various parts of the country to promote and distribute various products of the firm. The performance review indicated that some employees such as Erin and Johnny registered impressive performance while that of others such as Derik and Samantha were unsatisfactory. The best performing candidates will need to be motivated to continue with their impressive performance. The underperformers may need their tasks to be redefined in order to improve their performance. This way, the sales department will be able to achieve its set objectives in the market.

Background

Massachusetts Restaurant Appliances (MRA) is a leading supplier of large industrial appliances to restaurants in the United States. Currently, this firm is ranked second in market share, after New York’s Ruth Restaurant Services. Since the appointment of David Epstein as the firm’s sales manager, the firm has experienced a phenomenon market growth. Epstein has been with the firm for the last nine years and has been working with various heads of this department to help the firm to expand its market share.

At 31, he has the experience, energy, and commitment to ensure that this firm achieves massive market growth to help it become the leading supplier of large restaurant appliances in the entire country. This sales manager is convinced that the firm can achieve this growth in the near future if the marketing team works appropriately to achieve the set targets. To achieve his objective of making MRA the leading supplier of restaurant appliances, Epstein has decided to make individual sales persons at this firm responsible for their output within the firm. Their expenses and salaries awarded to them at this firm must be commensurate to the value they deliver to the firm. That is why the management came up with the performance review strategy.

Issue

The sales department of Massachusetts Restaurant Appliances has a team of eight dedicated sales people working under the sales manager, Mr. David Epstein. Epstein is convinced that within the next one year, this firm can overtake New York’s Ruth Restaurant Services as the country’s leading supplier of restaurant appliances. However, this can only be achieved if the current sales team is able to double its effort in service delivery. The manager has decided to come up with performance evaluation system to make employees more accountable in their work. The performance review looked at specific issues of interest such as sales volume, number of accounts that each employee has, number of orders per employee, expenses that they use in delivering their services, number of calls they make, and the number of days worked.

This review of performance would help the firm to identify areas of strengths and weaknesses per individual employees so that solutions to their weaknesses can be found (Deutschendorf, 2014). However, some employees feel that the performance review criterion is unfair and may not reflect their true effort in the firm. Robert Smythe and Derek Francona have clearly stated that they are working in regions with a lot of challenges, and using the same measure to determine the overall performance of individual employees is unfair. Their claim was factual, but this did not stop the sales manager from reviewing their performance. To achieve unity within the firm, Epstein will need to address concerns of these employees.

Data, Facts and Information

David Epstein is keen on ensuring that Massachusetts Restaurant Appliances becomes the leading market player in this industry. To achieve his objective, this manager can use a number of strategies. However, it will be necessary to evaluate the current situation to determine areas of weaknesses and strengths that will have to be put into consideration as the firm tries to come up with a winning formula in the market.

According to, Balu (2015), performance review does not necessarily mean that a firm intends to use the data provided to make significant decision on issues such as the specific employees to promote, to lay off, or to increase their salaries. The assessment makes the firm to understand areas where the firm finds challenge so that a strategy can be developed to overcome these challenges. It may not be a personal issue that targets individual employees. On the contrary, such evaluation may help to understand where a firm needs to inject more resources to improve the overall performance of the sales department (French, 2012). The table in the appendix shows the outcome of the performance review done by the sales department.

A brief overview of the data and facts presented in the table shows that Erin McCloud has the best sales record of all the sales persons working at this firm. His sales growth is also very impressive, outsmarting that of all other employees within this department. Erin has been working for an average number of days per year compared to other fellow employees. On the other hand, Derek Francona has recorded the worst sales record within this team.

His sales growth rate also remains the worst. Derek is one of the employees who were opposed to this form of review. He claimed that over the past year, he had lost one of the most important clients, making it difficult for him to achieve the set targets. One interesting fact noted about this employee is that he had the highest number of days worked within the year compared to his colleagues. It is clear that although Derek has had one of the worst performances at this firm, he has been putting great efforts to ensure that his performance is improved. David Epstein may need to investigate the logistical issues and any other factors that could have hindered the performance of this particular employee. His efforts were not rewarded as well as that of his colleagues in terms of increase in the sales volume.

The information gathered from the performance review is very important for David Epstein when making strategic decisions that will enable this firm to emerge as the leading supplier of restaurant appliances in the country (Hein, 2012). He now knows that specific regions such as those where Derek and Robert are working may need special attention. He also knows that there are some employees such as Erin who have committed themselves to delivering excellent performance at this firm. All these factors will need to be put into consideration when coming up with both strategic and operational strategies for the sales department.

Case Study Questions

Question 1

Sales growth

  • Derek Francona: 481,000/480,000= 1.002
  • Johnny Schilling: 883,000/750,000= 1.177
  • Daphne Gellar: 613,000/576,000= 1.064
  • Robert Smythe: 852,000/745,000= 1.144
  • Jennifer McCarver: 860,000/765,000= 1.124
  • Manuel Lopez: 835,000/735,000= 1.136
  • Samantha Kerrey: 670,000/665,000= 1.008
  • Erin McCloud: 925,000/775,000= 1.194

Sales to quota

  • Derek Francona: 481,000/575,000= 0.837
  • Johnny Schilling: 883,000/835,000= 1.057
  • Daphne Gellar: 613,000/657,000= 0.933
  • Robert Smythe: 852,000/850,000= 1.002
  • Jennifer McCarver: 860,000/850,000= 1.012
  • Manuel Lopez: 835,000/825,000= 1.012
  • Samantha Kerrey: 670,000/720,000= 0.931
  • Erin McCloud: 925,000/875,000= 1.057

Sales per account

  • Derek Francona: 481,000/1100= 437.272
  • Johnny Schilling: 883,000/1600= 551.875
  • Daphne Gellar: 613,000/1150= 533.043
  • Robert Smythe: 852,000/1350= 631.111
  • Jennifer McCarver: 860,000/1300= 661.534
  • Manuel Lopez: 835,000/1400= 596.429
  • Samantha Kerrey: 670,000/1600= 418.750
  • Erin McCloud: 925,000/1700= 544.118

Average order

  • (780+1970+1020+1650+1730+1790+960+1910)/8
  • Average order=1476.25

Sales expenses

  • 9300+12300+7500+11000+11300+11500+10800+12800
  • Total sales expense= 86,500

Calls per day

  • Derek Francona: 1300/235= 5.532
  • Johnny Schilling: 1800/223= 8.072
  • Daphne Gellar: 1650/228= 7.239
  • Robert Smythe: 1700/230= 7.391
  • Jennifer McCarver: 1750/232= 7.543
  • Manuel Lopez: 1750/220= 7.955
  • Samantha Kerrey: 1550/200= 7.750
  • Erin McCloud: 1850/225= 8.222

Orders per call

  • Derek Francona: 780/1300= 0.600
  • Johnny Schilling: 1970/1800=1.094
  • Daphne Gellar: 1020/1650= 0.618
  • Robert Smythe: 1650/1700= 0.971
  • Jennifer McCarver: 1730/1750= 0.989
  • Manuel Lopez: 1790/1750= 1.023
  • Samantha Kerrey: 960/1550= 0.619
  • Erin McCloud: 1910/1850= 1.032

Ranking the sales persons based on sales growth

  1. Erin McCloud: 925,000/775,000= 1.194
  2. Johnny Schilling: 883,000/750,000= 1.177
  3. Robert Smythe: 852,000/745,000= 1.144
  4. Manuel Lopez: 835,000/735,000= 1.136
  5. Jennifer McCarver: 860,000/765,000= 1.124
  6. Daphne Gellar: 613,000/576,000= 1.064
  7. Samantha Kerrey: 670,000/665,000= 1.008
  8. Derek Francona: 481,000/480,000= 1.002

Question 2

Epstein should realize that the performance of each of the employees can be improved if they are given appropriate guidance and support. Epstein should encourage Erin McCloud and John to continue using their current sales strategies to improve their performance which is already very impressive. Robert Smythe feels that performance measures would be unfair given that making sales in the region is not easy.

However, he has come third, meaning that his efforts are good enough. Epstein should talk to him and address all his fears because he is among the best salespersons that this firm has. Manuel Lopez and Jennifer McCarver’s performances are average. They need to improve their strategies of reaching out to the clients and making sales (Herzberg, Mausner, & Snyderman, 2009). The same advice should go to Daphne Gellar and Samantha Kerrey whose sales growth rate are slightly below the average. Derek Francona’s case should be considered special. In fact, Epstein should consider working with Derek from time to time to sharpen his marketing skills. He should be informed that loss of a single client may not mean a loss of the entire market.

Question 3

This evaluation system has a number of limitations that may need to be addressed. The first limitation is that it has overemphasized on the statistical values of the employees without looking at other qualities that these employees bring to the firm. For instance, some employees may offer inspirations to others. This is not captured in this review. Other employees may play major roles in the technical areas of marketing, especially when coming up with new strategies of managing market competition or managing emerging trends. These are good qualities that should be captured in a review process. Epstein should address these weaknesses to ensure that the each salesperson’s true worth is established (Walker, 2011).

Analysis and Evaluation

David Epstein, the sales manager has gathered the relevant information about the performance of individual sales employee at Massachusetts Restaurant Appliances. In this section, it will be necessary to conduct a close analysis and evaluation of the data presented in the sales performance. This will help in finding ways of lowering the expenses while increasing revenues at the firm. This analysis and evaluation will be based on the eight areas of performance measurements conducted in the previous section of the paper.

Sales growth was the first performance measure that was used in the evaluation. The sales manager understands that the only way this firm can emerge as the top provider of restaurant services is to increase its sales volume. Under this measure, Erin Mcloud, Johnny Schilling, and Robert Smythe registered the best performance of all the employees. Erin had a 19.4% market share increase while that for Johnny and Robert was 17.7% and 14.4% respectively. The worst performance was registered by Derek who had a 2% increase in sales volume. Samantha did not have an impressive increase in sales volume either, recording an 8% increase. The best perfuming employees will need to be motivated to continue with their impressive performance. The underperformers may need special attention from the relevant authorities to overcome their challenge (Terpstra, 2009).

Sales to quota were set by the employees as a target that they had to achieve in their effort to improve their sales volume in that particular year. Five of the eight employees were able to surpass their sales quota. Erin and Johnny were able to go beyond the set targets by 5.7%. Only three employees were unable to meet their targets. The employee who was had the lowest performance in terms of meeting the set target was Derek who was 16.3% off the set target. The sales manager should help these employees to address their deficits in terms of meeting their targets in the coming financial year.

Sales per account helped the sales manager to determine how individual customers assigned to the employees were performing in terms of purchasing the products of this firm. Different employees were assigned different number of accounts based on the number of years served in the firm, the region of work, and personal capabilities. Jennifer and Robert emerged as the best and second best employees respectively in terms of the best performing accounts. Samantha and Derek had the worst and second worst performing accounts respectively. The average order was found to be 1476.25 per employee per year.

Calls per day would enable the sales manager to determine the effort made by the employees to keep the clients close by maintaining close communication with them. The calls had to be relevant. The highest number of calls per day was recorded by Erin followed by Johnny. This may be directly attributed to their high number of accounts. The least number of calls were made by Derek.

Sales expenses would enable the sales manager to compare the revenue generated by each employee against their expenses. This would enable the management to determine the value of the employees working in this department. The sales manager also needs this information to come up with strategies on how to cut the average cost of operations. The total sales expense was determined to $ 86,500. Erin and Johnny had the highest sales expense, while Galler had the least. The expenses correspond to the sales growth of these employees.

Number of orders per call was another important performance parameter that enabled the sales manager to determine the capacity of the individual sales representatives to convince clients to purchase products of this firm. Based on the review, Johnny, Erin and Manuel had the best performance in that order. In fact, these were the only sales representatives that had at least an order per call. The worst performance was registered by Derek who registered a paltry 0.6 orders per call.

Ranking the sales persons based on sales growth was finally used to determine the best performing employees at this firm. Top of the list was Erin who was followed by Johnny and Robert respectively. The last in the list was Derek and Samantha came as second last performer.

Solution

David Epstein will need to find a solution to address the performance record of Derik and Samantha. These two employees registered the worst sales volume increase within this firm. The two also recorded the worst performance in terms of orders per call they made. This is a clear indication that they lack skills to convince clients to purchase their products (Robbins & Judge, 2013). The challenges affecting these two employees may need to be addressed differently.

For Samantha, she did not make any complaints when the performance review was initiated. It means that the management is still unaware of the reasons that could have led to her poor performance. It may be necessary for Epstein to talk to her personally and understand her areas of weaknesses. She can be assigned a different role within the firm in case she finds her task as a sales representative quite challenging. For Derik, he had clearly stated that one of his major clients went out of operations.

The sales manager should talk to him and offer him any necessary assistance within the coming year to help determine if his performance will improve. In case no improvements are registered, then his role within the firm may be redefined. Robert registered complaints and was uncomfortable with the performance review process. However, the review revealed that he was the third best performing sales representative.

He and Derik threatened to quit this firm if the performance review outcome was used to make major decisions that could affect the employees. This firm cannot afford to lose this employee. The management should engage him and understand his fears when it comes to performance evaluation (Siyli, 2015). All the hurdles mentioned by the employees should be addressed conclusively. The sales manager should make an effort to ensure that all the employees have even playing ground. After this is assured, then measures can be taken to reward excellent performers within this department.

Conclusion

David Epstein, the sales manager at Massachusetts Restaurant Appliances, is determined to ensure that his firm surpasses New York’s Ruth Restaurant Services in terms of market share. Already the firm has experienced a phenomenon growth in its sales volume. To achieve this target, David has initiated a performance review process to ensure that employees become responsible for their output. This performance review is a positive step towards identifying strengths and weaknesses within the sales department. The sales manager will need to use additional strategies to evaluate the real value of the employees. After the evaluation, various measures should be taken to address weaknesses within the department.

References

Balu, T. (2015). Digital Marketing using Google Services: Make your website visible on Google Search. New Delhi: LSDP Limited. Web.

Deutschendorf, H. (2014). 7 Habits of Highly Emotionally Intelligent People. New York: Springer. Web.

French, R. (2012). Organizational behavior. Hoboken: Wiley & Sons. Web.

Hein, R. (2012). Career Mapping Offers a Clear Path for Both Employees and Employers. London: McMillan. Web.

Herzberg, F., Mausner, B., & Snyderman, B. (2009).The motivation to work. New York: John Wiley & Sons. Web.

Robbins, S., & Judge, T. (2013). Organizational Behaviour. London: Pearson Education Limited. Web.

Siyli, L. (2015). Search Inside Yourself Leadership Institute. Hoboken: John Wiley & Sons. Web.

Terpstra, D. (2009). Theories of motivation: borrowing the best. Personnel Journal, 58(1), 376-399. Web.

Walker, A. (2011). Organizational behaviour in construction. West Sussex: Wiley-Blackwell. Web.

Appendix

The outcome of the performance review.
Table 1: The outcome of the performance review.
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