Conference 7.286::digital

    
    
    I "won" my first DEC100 this year.  My wife of two months could not get
    time off from her job to go.  I *REALLY* was not interested in going. 
    It was "suggested" I go for political reasons.  I went. Hated it. 
    
    See my not on the abolition of DEC100 and Circle Of Politi.. umm..
    Excellence.
    
    -Ed
    

    re: .0 "DEC salaries are not low..."
    
    No, for Sales, DEC's salaries are high. It's Sales' earning potential
    that is LOW. Most companies pay a smaller salary plus commission. THe
    earning potential for a good Sales Rep in those companies is 2, 3 or
    more times higher than at Digital. Digital's current response is to
    give "awards" to the "better" performers, as measured by Sales' metric
    structure. Many Salespeople view these "awards" as .1 does.
    
    Current Sales metrics drive what Bob Palmer has politely called
    "unintended" behavior. Palmer and Don Z. are going to fix the metrics
    to drive "good" behavior, and change the Sales compensation structure
    to reward Salespeople who contribute more with real money to spend on
    things that are of value to the Salesperson. Who knows, maybe we
    they can finally get rid of these so-called Sales "Awards." 

    Sales and Marketing will always exist...hence we will continue to hear 
    about these groups taking advantage of our company. It is very sad.
    Clearly this is a case of overstaffing and a waste of our companies
    profits. As long as this continues....I hope your listening Bob Palmer,
    DEC will continue to falter. Why is there no control over these types 
    of things happening?
    

    re: -1
    
    Huh? I guess this is tongue in cheek?
    
    Johnse

    re -1 I did'nt intend my reply to be of humor. Do you think
    irresponsible spending of company profits resulting in our stock
    declining is a funny matter? Explain yourself please.

This topic is already covered in note 2002.  This comes up every year at this time...

The basic argument goes like this...

Pro "Perks"

1)  perks like trips are part of all selling organizations period.  Therefore, it
is expected.

2)  perks are part of the compensation plan.  All groups have perks.  In the field
it is trips.  In engineering/marketing it is stock  options/patent money, wellness
centers, better cafeterias, etc. 

3)  perks build team spirit and therefore increase profits.



Con "Perks"

1)  They are a waste of the company's money.

2)  Field people don't "deserve" them

3)  Since internal people don't get them no one should.


I haven't really heard any new ideas on this (including my replies to the various
notes) in many years.

To me it comes down to this...

1)  Management has decided on what they think will be the best "compensation" plan
for thier functions.  If the organizations don't perform the management goes and
the next team can choose to compensate differently.  The second part of this has
not happened up till now but I think it will start happening.

2)  Argue with the reasons behind the plans, not the plan itself.  No one creates
a plan to waste money.  They create them to motivate or something like that.

3)  It is not appropriate to take away someone else's compensation because you don't
get it.  If thier compensation is so compelling then go do thier job.

4)  Management should be allowed to compensate thier people however they want to.  The
corporation should hold them accountable for thier results and the employees will 
either continue to do thier jobs or go elsewhere if the compensation is not correct.


Ken Slattery

           <<< HUMANE::DISK$DIGITAL:[NOTES$LIBRARY]DIGITAL.NOTE;1 >>>
                          -< The DEC way of working >-
================================================================================
Note 2052.6                Are we separate companies?                     6 of 6
METMV7::SLATTERY                                     48 lines  17-AUG-1992 13:54
                             -< Already Discussed >-
--------------------------------------------------------------------------------
    This topic is already covered in note 2002.  This comes up every year
    at this time...

The basic argument goes like this...

Pro "Perks"

    1)  perks like trips are part of all selling organizations period. 
    Therefore, it is expected.

    2)  perks are part of the compensation plan.  All groups have perks. 
    In the field it is trips.  In engineering/marketing it is stock 
    options/patent money, wellness centers, better cafeterias, etc. 

    3)  perks build team spirit and therefore increase profits.



Con "Perks"

    1)  They are a waste of the company's money.

    2)  Field people don't "deserve" them

    3)  Since internal people don't get them no one should.


    I haven't really heard any new ideas on this (including my replies to
    the various notes) in many years.

    To me it comes down to this...

    1)  Management has decided on what they think will be the best
    "compensation" plan for thier functions.  If the organizations don't
    perform the management goes and the next team can choose to compensate
    differently.  The second part of this has not happened up till now but
    I think it will start happening.

    2)  Argue with the reasons behind the plans, not the plan itself.  No
    one creates a plan to waste money.  They create them to motivate or
    something like that.

    3)  It is not appropriate to take away someone else's compensation
    because you don't get it.  If thier compensation is so compelling then
    go do thier job.

    4)  Management should be allowed to compensate thier people however
    they want to.  The corporation should hold them accountable for thier
    results and the employees will  either continue to do thier jobs or go
    elsewhere if the compensation is not correct.


Ken Slattery
    

    .6
    
    The point is not to decide whether perks are good or bad....my point is
    that we are laying off.  Next week it hits my office personally....it
    has already hit our admin group.  I feel the timing is wrong.  We will
    never end "perks" deserved or not.  BUT at least wait until the lay
    offs are over.  I worked for a group back east and from managers on
    down when we worked we ALL worked and when there was slack time we ALL
    enjoyed it.  My point....we ALL should be working to get DEC back on
    its feet....Get the lay-offs over with...get behind the company and
    work....THEN we can enjoy the "perks"...all together.  I must be to
    idealistic....

>    BUT at least wait until the lay
>    offs are over.  
>    ...Get the lay-offs over with...get behind the company and

I see the above statement constantly, but, I wonder if the problem is....
that nobody can determine WHEN they will be over...

- George

    .9, George -
    
    I hope that somebody in control has a handle on the lay-offs.  What I
    see out in the field is the "good boy" network saving the people that
    should have been the first to go.  This company will not become
    profitable with a constant threat of a lay-off....people out here are
    discouraged and the 'workers' who could help DEC turn around are finding
    other jobs....outside of DEC.
    
    -pat

    Re: .6/.7
    
    I think the point the base note and several others wish to stress is
    that the results you mention, at least of the recent past, do not seem
    to warrant management's flaunting of a "party perk" in apparent indiff-
    erence to the low morale at all the lay-offs.  You may see it as a
    form of compensation but obviously others see it as unjustifiable and
    ill-timed.  Management should have seen it as divisive.  
    
    Let's not be too quick to defend bad decisions.
    

    Thanks you .11....well said. Now who is responsible for this waste, and
    how can these people be reprimanded? Sickening.

RE: .11 and .12

Please refer to note 2053.36.  This is the best explanation of "field 
perks" that I have seen.  If, after reading this, you still hold your
beliefs I have the following to add...  Other than that, I guess that
we are in the no man's land of religious preference.

The following scenario has many assumptions on my part.  I believe that
the numbers I will state are accurate.  I have erred on the side of making
the trips seem like a worse deal for the company.  The example district
I am using is the one that I am in.

1)  District population approximately 40 Sales and 20 Sales Support 10 
	other

2)  District Budget for FY92 approximately 75 million

3)  District profit committment approximately 6 million

4)  District performance approximately 120% on certs (75 * 1.20 = 90)

5)  District profit performance approximately 120% (6 * 1.2 = 7.2)

6)  Cost of DEC100 
	- About 60 people * 2(spouses etc.) = 120 people went
	- Estimated cost of 1000 per employee = $60,000 cost to the dist
	- DEC100/profit = 60000/7,200,000 = .83 %
	- DEC100/certs =  60000/75,000,000 = .08 %

7)  If you assume a fully burdened cost of 100,000 per employee this 
	program cost les than 1% or cost.

8)  COE costs less than DEC100 since the participation rate is so much
lower

Conclusion:  The cost of these programs is almost non-existent.  It is
roughly equal to a couple percent of salary.  Based on these numbers, it
seems to me that other organizations ought to fund this sort of activity
since it is so cheap.

Now let's look at the benefit side.

No one goes to DEC100 unless they make their goals (i.e. 100% of budget).
For COE it is 5 DEC100s or about %250 of goals.

I believe that this incentive makes people perform at least 5% better.
This of course can be debated ad nauseum, this is my assertion.

If you accept this the following follows.

1)  Digital gross margins are about 50%.  Because of this, the profit
on "incremental" income is 50%.  The reason for this is that no additional
cost are incurred beyond manufacturing cost.  Even some of these would
not be incurred.

2)  On a budget of $75,000,000 this translates into 3,750,000
	(75,000,000 * 5% (incremental certs DEC100 provides))

3)  This then translates into (3,750,000 * 50% = 1,875000) in profit

4)  Ratio DEC100 cost/incremental profit = ($60,000 / 1,875,000) = 3.2%

5)  Ratio DEC100 cost/incremental certs = (60,000 / 3,750,000) = 1.6%

Conclusion: DEC100 would still be cost effective if it cost 20 or
30 times what it costs today!!!!!!!!!!!!!

So the bottom line questions are:

1)  Is there anything wrong with my logic?

2)  Why would anyone want to rob this corporation of the 5% additional
certs 20% or so additional profit that these programs generate?  If it is
because you find them sickening, how sickening do you find going out of
business?  How sickening do you find laying off even more people because
the cash isn't coming in?  How sickening would you find it to take a
2% pay cut so that your sacrifice equalled mine?  This last one, by the 
way would be ludicrous since the problem is not that we pay people 2% too
much.

3)  Many people will find fault with my assertion that DEC100 makes people
perform 5% better.  I don't have hard data to back this up.  I only have
8 years of experience watching people scramble to meet thier numbers at
the end of quarters and years.  The reason that they always state is that
they are doing it to make DEC100.  If you argue that there is no 
relationship between reward and performance, then we should pay everyone
in the corporation minimum wage since the government would force us to 
do that.  This means that YOU would be making minimum  wage.  If you
agree that there is a relationship between reward and performance then
the only question should be:  Does the reward cost less than the benefit
of the incremental performance?  If you believe this, then these trips
are money VERY well spent.

Ken Slattery

    re: .13
           Numbers are fine, I appreciate your detailed analysis. But the
    real facts are obvious. We are in deep sh**. We are in so deep, NO one
    knows how to start a recovery. It obviously beyond our/corporates
    control. The snowball is rolling faster getting bigger, going faster.
    Accept it. The old perk routine isn't going to work this time.
    Investing is not a solution to recovery for a company spinning out 
    of control into the ground. That won't do any good at all. Please don't
    spend anymore of our savings on vacation. Read between the lines of
    1612.75...I believe it is trying to say somthing similar?
     
    

    RE: .14
    
    No offense, there MANGAN, but I still work for Digital, and if I
    didn't feel Digital was capable of pulling itself out of hard times,
    I would work for someone else.  I don't know what personal challenges
    you face, but when you write such _stuff_ in a company notesfile, I
    feel 'empowered' to address it.

    I cannot fathom an employee who is working for the company that not
    only believes we are in the dumpster, but beyond repair, spinning into
    an abyss.  I can only imagine employees that WORK FOR Digital, and
    feel that way, are feeding off the much touted Digital welfare system
    until their number is finally up.  I can't imagine anyone could feel
    that attitude will assist in our company healing itself.  (Or is
    part of the problem, not the solution)

    I am, as an employee, as a stockholder, as a coworker, quite disgusted
    at that type of attitude in my (our) company.

RE: .14

>Numbers are fine, I appreciate your detailed analysis. But the
>    real facts are obvious. We are in deep sh**. We are in so deep, NO one
>    knows how to start a recovery.

How can the statement "We are in deep sh**" be interpreted as a real fact?

If it can be interpretred as a real fact, how can someone formulate policy
or create an action plan in support of that fact?

In fact you state that NO one knows how to start a recovery.  If this is
true why would you kill DEC100 and COE.  If eliminating them won't help
start a recovery what is the reason for killing them?  It sounds to me like 
you want to punish people who have earned these things in the same way you 
have earned your last pay check.

>Read between the lines of
>    1612.75...I believe it is trying to say somthing similar?

What I got from reading between the lines of this announcement was...

1)  General celebrations that have no bearing on the company's results
	will cease.  This is Canobie Lake.  This is NOT DEC100 or COE.
	You only qualify for these if you contribute to the company's 
	success.

2)  In his last DVN BP said something to the effect that he did not like
	socialist schmoozing systems in which compensation was not based
	on performance and that he would move the company in a pay for
	performance direction.  This is why Canobie Lake was cancelled
	and not DEC100, COE.

>The snowball is rolling faster getting bigger, going faster.
>    Accept it. The old perk routine isn't going to work this time.
>    Investing is not a solution to recovery for a company spinning out 
>    of control into the ground.

I never asserted that the "old perk routine" would pull us out of anything.
What I did assert was that eliminating DEC100 and COE would impact our
revenues and profit severely.  Do you have any facts that suggest otherwise?
I also asserted that removing these would excellerate the decline.  Do you
have any facts (real or other) to suggest otherwise?

If investing is not a solution I guess we should...

1)  Kill the new Hudson plant that will be our most important manufacturing
plant in a few years...savings ($500,000,000)

2)  Kill all raises until we go out of business...savings (5% of payroll per 
	year)

3)  No more hardware or software for any part of the company...


We could probably pay everybody for a couple years with our cash and service
revenues...  What a great idea...  Can you say W-A-N-G.

You seem to think that nothing will work to save the company.  I guess if I
felt that way I may be trying to minimize others compensation because
it may have the effect of raising (or prolonging) mine.  I have a different
view.  I believe that pay for performance and re-engineering ourselves will
give us the best chance for long term success.  

Ken Slattery

    RE.15  My objective was to try and get the point across that we MUST BE
    conservative in our spending. We can not use traditional stratagies
    without looking at other more conservative measures FIRST. Ok, let me
    re-phrase my comments in .14. We are in trouble financially. We are
    still in a position of learning how to move in a positive direction. I
    don't believe we are moving that way yet.  I do believe we can move
    that way with a little more caution in our spending habits. I work for
    Digital also. I remember the old Digital. I don't think Digital can
    survive without the basic philosophy present which the company was 
    built on.
    My statements were not intentionally ment to offend. They were mearly,
    in my opinion NESSASARY, to drive the point home, lets think before we
    spend.
    
    RE: .16  Perhaps your numbers do work out for the better. That's you
    perogative. I don't see it as a safe strategy to the companies recovery
    . That's just IMHO. It is obvious at this point that the company as
    well as the country is having trouble putting a finger on the correct
    answers to a successfull recovery. I don't see any difference
    philisophically between Canobie Lake and DEC100, COE. BTW I agree with
    the cancellation of Canobie,however am saddened that it will effect so
    many employees families.
    
   >> Can you say W-A-N-G.
      Wang's departure is exactly what I am referring to. Spend,Spend
      Spend. Bye,Bye Bye. I agree investing in the future in some
    capacities is nessasary. Hudson for example. Can we say that
    aprreciation/perk or whatever one wants to call it is as equally as
    important as building technology to meet the industries future? I can't
    equate these 2 at the present time considering the state of the
    company.
     
    
    
    

    RE: .17
    
    Good, the emotion is out of it now.
    
    I think our differences come down to a few points that are likely to be
    "religious".
    
    I see a great difference between Canobie Lake and DEC100.  One is for
    everyone and the other is for performers.  One is an "everyone gets a
    5% raise" and the other is "some people get 0 and some people get 10".
    
    This is a basic philisophical difference.
    
    I don't mourn the loss of Canobie Lake although my 4 an 1 year olds
    would have loved it.  I guess I'll just have to dig in and pull out the
    price of admission myself.
    
    You seem to think that rewarding sales with trips is an unnecessary
    expense.  I feel that it is very necessary and cheap.  My earlier reply
    points out my reasons here.  We will not be in very good shape if
    Hudson puts out a billion MIPS chip and there is no sales force (or a
    demoralized one) to sell it.  The company is moving more in my
    direction here with the announcement that sales people will be able to
    earn up to an extra $50,000 this year.  I think all organizations
    should do this.
    
    I have seen many (5- 10% per year) sales people leave to go to other
    companies because the compensation was better.  These people, almost
    without exception, were in the top 20% of performers.
    
    I feel that the company's problems stem from having FAR too many
    people, not from paying the ones we have too much.  In the past we
    have used salary freezes.  This was effective because it was a short
    term problem.  We currently have a long term problem that short term
    solutions won't fix.  Therefore, limiting spending on things that
    you need long term (like Hudson and incentive programs) is not a
    solution.  I believe the company agrees with me on this one.
    
    The fact that we have too many people does not mean that we have any
    BAD people.  Because of this, GOOD people will be leaving.  We don't
    need to have 4 MicroVAX 3100s, 4 VAX 4000s, 7 VAX 6000s, 4 VAX 7000s
    and 4 VAX 10000s.  These groups are redundant hard working people, some
    must go because we don't need what they do.
    
    Finally, our industry is in transition, we need to act more quickly and
    better than Wang, PRIME and DG or we will be next.  BP is moving in the
    right direction with his re-engineering effort.  I believe the results
    of this process will be:
    
    1)  Better pay for performers either in the form of cash, trips or
    other in all organizations
    
    2)  15,000 - 30,000 fewer people.  This gets us in the right
    sales/employee range.
    
    3)  Processes (like order placement and delivery) that work for the
    customer and cut out needless waste
    
    4)  A streamlined set of products that the field  can understand and
    hence sell
    
    Ken Slattery

re: .18
    
    
>    I see a great difference between Canobie Lake and DEC100.  One is for
>    everyone and the other is for performers.  
    
I'm rankled now! I am not eligible for DEC100 or COE, BUT, I do perform!
Where is my reward? dont tell me my pay because as you mentioned, everyone
gets that.

I don't see a difference between the two, I also agree that if it wasnt for
the support people all throughout DEC nobody would be going to DEC100 or COE.
Yes, Sales people have a very tough job and should be rewarded for excellence
but again what about those that deliver what those salespeople sell?
Shouldn't they get a slap on the back as well? If this is truely a team effort,
and its now necessary to stop Canabie et al, then its also time  to stop DEC100
and COE.

    RE: .19
    
    Wrong.  DEC100 is for a select few that met their goals and are being
    recognized for it.  Few people of the entire sales workforce go to 
    DEC100.
    
    Canobie lake is open for everyone, wonderous performers, great
    performers, good performers, fair performers, poor performers.
    
    The two can't be compared.
    
    I am a field consultant, I can't participate in COE and since I'm in
    Cincinnati, I can't go to Canobie Lake.  I do see the value of COE as
    a carrot for the Sales force to identify folks who met their goals.
    
    I would guess once we turn into a  direct and pure commission company,
    things like COE would go bye-bye.

    The answer to the question, then, is yes.  We're obviously separate
    companies.  The issue of perks is misunderstood by many, and is a
    constant sore point.  It would seem to be divisive and counter-
    productive.  I fail to see the justification for them.  They seem
    to be an example of discretionary spending to me.
    

RE: .19

I'm not eligible for DEC100, COE, and Canobie lake.  However I can the
the folks who get DEC100 deserve a whole hell of a lot more than a trip.
Sales reps are the single most important people in Digital.  They are
the last people we should be messing with.  Besides, of the three, DEC100
is the only one you can't get by sitting around all day with your thumb
shoved in a sphincter.

    Excuse my ignorance,but could someone please tell me what,
    
    "COE and DEC100" are ????
    
    I am employed at South Queensferry in Scotland and so far we have been
    lucky in the fact that the pay off situation hasn;t reached us yet.
    
    
    SQF Jambo

    RE: .21
    
    As I suspected, we differ philosophically.
    
    I don't see DEC100 and COE as any more discretionary than your last pay
    check.  If paying people is discretionary, then DEC100 and COE are as
    well.  As I have discussed before, lowering everyone's compensation
    would solve nothing since are problems don't reside there.
    
    If my factual arguments (and those of others) have not convinced you
    then I guess your conclusion follows from your perception of the facts.  
    I disagree with your conclusion.
    
    RE: .19 
    
    You can be miffed about not being elligible...I would be too.
    
    The solution is not to take the motivation away from others.  The
    solution is to convince your management that they would best serve
    themselves and the corporation if they had the same programs.  If you
    are unsuccessful there and you feel strongly enough you should attempt
    to transfer to the field where your effort may be better rewarded.
    
    Ken Slattery
                                                                     

re .18:

>    I see a great difference between Canobie Lake and DEC100.  One is for
>    everyone and the other is for performers.  

	Well, actually, some performers. Those in sales. Which is fine, we 
	need to motivate our sales force, and an incentive to the top
	n% isn't a bad idea. But there should also be some sort of incentive
	for the top n% in other areas of the company as well....

					Tom_K

    RE: .23
    
    DEC100 and COE (Circle of Excellence) are programs to reward
    individuals for achieving and over-achieving thier goals.
    
    Here's  how it works...
    
    - at the beginning of each fiscal year everyone in Sales and Sales
    Support are given goal sheets to sign.  These goal sheets have various
    objectives.  For Sales it is $ of certified orders (CERTS) and a few
    other things.  For Sales Support it depends on the organization.
    
    -  If these individuals meet there goals they are eligilbe for DEC100
    (the 100 part stands for 100%)
    
    - DEC100 is a 2 night trip someplace relatively local (driving
    distance).  This year, mine was on Nantucket (an island off the Mass.
    coast).
    
    - COE is a more extensive trip (Hawaii this year).  To be eligible for
    this Sales must do one of the following.  Received 5 DEC100s or be in
    the top 10% (about) in performance against goal.  This year, that meant
    about  260% of goal.  For Sales Support, management votes and sends
    about 10% of the organization based on who they think deserves it.
    
    - In my district 2 out of 20 Sales Support people are going to COE (19
    out of 20 went to DEC100 - we had a VERY good year).  Out of about 40
    Sales people 2 went because of single year budget performance and about
    5 are going because of having 5 DEC100s.  About 35 went to DEC100.
    
    Hope this helps,
    
    Ken Slattery

    re.26..
    
    Thanks Ken,
               It now makes it easier for me to understand.
    
    
    Colin

I'm not miffed at not being eligible, I was responding more to the choice
of words used that seemed to say that the only "performers" were/are those
employees that go to DEC100 or COE.

I don't want the job, why? because i'd make a lousy salesman! I like what I do
now, so why change? But! stop telling me that we are a team here at DEC!
WE ARE NOT! 

- George

    It seems to me that the real issue here is two-fold:
    
    	1) Sales has figured out a set of metrics on which to measure their
    	people and has chosen a reward vehicle - COE etc.  Other
    	organizations have the same opportunity to figure out their metrics
        and reward their employees. Some do, some don't.
    
    	2) Are the metrics that reward by organization promoting or
    	harming the teamwork required to engineer, market, sell, support
        administer, etc products and services?
    
    My personal opinion is that metrics by organization must fit within
    a more general framework of metrics that reward all members of the
    team.  If there is no general reward structure then organizational
    awards foster stovepipe mentality.

    
    If the past two years of down-sizing has taught us anything at all,
    it is that the whole concept of lay-offs is based on the fact that
    management views our paychecks as a discretionary expense item.
    

    re:>>.22 Sales reps are the single most important people in Digital???
    First of all I consider myself as important to the company as anyone
    else (including,VP,s CEo or anybody in corporate area of this company).
    Sales people are important to our company,,,I agree, however
    considering your above bullish statement, I'll defend by saying, "I've
    never needed a salesperson for anything I've ever bought in my life. I
    know what I want and go out and buy it. Why do salespeople exist?>....
    
    Slattery:; I feel less guilty everytime another reply is added. I guess
    this perk/money spending issue is important to a lot of people besides
    me. You had me worried there for a moment. Re: .16,17,18,
     

First.  I've worked here in the east, and in the field, at customer sites, in
the Pacific Northwest.

While all sites do not get turkies, there is a fund provided so that they 
employees are to get something.  I've heard of it being a gift certificate
to a local store (DECwest Engineering), and I've heard of it being used to
help defray the costs of a holiday party (Northwest District and Boeing 
Business
Group).   If you work in an area that doesn't seem to get anything, contact
your PSA and find out why.  (PS:  I don't work in Personnel or in Activities,
but this was explained to me when I asked the question.)

As for Canobie Lake. While in the Seattle area, there was no Canobie Lake.
But there was an annual kick-off meeting, and it always had some sort
of Bar-B-Q or picnic where families were invited.  That was the Canobie Lake.
Do you folks elsewhere have a picnic or something?  If you don't - if your
account group or area has nothing, again, simply ask the question.

JD

    re:.26 Thanks for the definitions.
           In Japanese managment, as well as in the managment of many
           groups in Digital is is enough to know that one has reached
           there goal,"by meeting the schedule" Or has exceeded their
           qoal (you use the word quota) by helping to cost reduce or
           another similar saving to the company. It is the honorable
           thing to do. To exceed and not EXPECT reward. Why do sales
           need to have rewards? Nobody else expects them (especially in
           these tough,tough times).
           
           BTW: Nantucket huh.....hmmmm very nice. (for those who don't
           know Nantucket is off the coast of Massachusetts is very exclusive. 
           
           

RE: .34

>	    Why do sales
>           need to have rewards? Nobody else expects them (especially in
>           these tough,tough times).

First of all, what do you mean no one else expects them?  If I do an
excelent job in spite of the bad times I certainly expect rewards.  If I
don't get them then I'll just leave and go to a company that does give
rewards.  There are a lot of companies out there that are looking for
good technical people and, of course, good sales reps.  There are a lot
of other companies out there that are looking for good people.  Remember
all the great work the 6 month salary freeze did.  This is not a
communist society.  The people Digital needs to keep and reward are the
people who can easily find a job somewhere else.

As for motivating sales, we need to sell more than the "quota".  Assume
you are a sales reps and you have made your quota.  You know that you
will also have a quota next year that if you don't make you are going to
be back on the scum list.  If you sell more that your quota then you are
taking away from sales that you can make next year.  Since it is in a
company's interest to sell more NOW, the usually offer commissions
(incentives) for people to sell more.

>Why do sales need to have rewards? Nobody else expects them
>(especially in these tough,tough times). 
           

Because sales is sales. It's not engineering, marketing, finance, 
human resources, or any other group. Sales Reps have been conditioned 
(not just Digital, but ANY sales rep) to be rewarded for selling. The 
most common reward is commission. A sales rep on a commission (the guy 
you bought the TV from, the guy at the car repair shop, etc) gets more 
money the more he/she sells. That's an incentive to go beyond what 
your "goals" are. If you get $X for meeting your goals, but can get 
$X++++ for exceeding your goals, you have more incentive to exceed 
your goals. Otherwise, a sales rep might make his/her goals in Q3 and 
take Q4 as vacation - the goal for the year is met. 

Digital (up til now) has not paid commissions. So to attract and keep 
a competant sales force (minus a few bozos here and there) they have 
had to offer additional "bonus" plans like DEC100, COE, etc. However, 
even companies that pay commission offer similar rewards for exceeding 
goals. 

Is it fair that sales gets this but other organizations don't ?? I 
don't think so. Could Digital attract and keep a viable sales 
organization if we didn't offer these ?? Probably not since the 
competition offers them. So Digital does it out of necessity, not the 
goodness of it's heart or to be "unfair".

    Abraham Lincoln said:
    
    	A man who does only what he is paid to do
    	  is not worth what he gets.
    
    Seems to me that the corollary to that these days is
    
    	The company will get less than it expects
          if it doesn't pay the man more than he gets.
    
    It doesn't take long for a person giving 110% and always getting 100% to
    subconciously decide to just shave off the extra 10% and spend it
    somewhere else.
    
    Of course, Lincoln never had to think about the consequences of the
    destruction of bi-directional loyalty between a business
    and its employees.
    
    
    Jack           
    

    
    	Wouldn't we be better served here if we tried to understand each
    other's environment and pressures and reward sysytems instead of taking
    potshots at each other?  This bickering reminds me of the old joke
    about the parts of the body discussing which was more important.
    
    	We are a TEAM - interdependent and not separate, just different. 
    If the COMPANY is going to be a viable entity in the future, the team
    must function together as a UNIT (meaning one, e pluribus unum and all
    that).  Otherwise we're just going out of business, all of us!
    
    	So now that we all know how sales is driven, what 'drives'
    engineering and manufacturing?
    
    JN

Each functional organization within Digital is in competition with
parallel organizations at other companies.  Our engineering organization
competes with other computer, software, and electronics companies for
talent.  General administrative functions (personnel, law, etc.) compete
with those same functions in all companies for talent.  Our reward
structures, pay scales, etc. are driven by what the competition offers.
For nearly all job functions this usually boils down to two things,
salary and benefits, and the company makes a serious attempt to keep us
competitive in those areas (not necessarily a leader, just competitive).

The customary pay system for sales people in most industries, and
definitely in the computer industry, is some kind of minimal salary plus
commission basis.  Sales, in all industries, is also highly drive by
"contests" wherein top sales people win things.  My uncle was a an
appliance salesman and would win multiple vacations to the carribean,
Mexico, etc. This is just the way that sales works, almost universally,
in the U.S.

Because of KO's philosophy DEC has bucked industry custom and been the
only major vendor to not have a commissioned sales force.  This is
certainly a separate argument, though most external observers have
considered this a weakness for us.  Because contests don't buck the basic
philosophy they have remained part of the sales compensation system here
at DEC.

If you want good sales people, and we need them (I'm not into this crap
about who is most important at DEC...if a function is needed in
order to succeed then the people performing those functions are equally
critical to that success) to survive, then we have to compensate them in
such a way that the TOP performers are willing to come and stay at
Digital.  That means compensation systems closer to those employed by our
competitors.  That means DEC100 and COE, and it should mean a true
commission system.

There are other special case compensation systems used elsewhere in DEC
as customary in other functional areas or job classifications.  For
example, stock options are much more common for individual contributors
in engineering than in most parts of the company.  Clerical employees
(WC2) probably rarely if ever receive stock options, but they get
overtime.  European employees generally start at 4 weeks vacation instead
of the customary 2 here in the U.S.

The fundemental principle should be that we do whatever is necessary to
attract and keep the best people, and eliminate the non performers, in
each position within the company.  We shouldn't strive for identical,
equivalent, or necessarily similar compensation, benefits, or perks for
everyone.  That approach won't attract or keep the best people leading to
overall mediocrity and our eventual failure.

    A few dumb questions:
    
    Do sales folks in other companies get a base pay + commission where
    the base is generally lower than Digital sales salaries? In my own
    peripheral contact with sales compensation, I've gotten the impression
    that while Digital sales folk didn't get the commission potential
    they also haven't had the low base salary of others. Is this true?
    
    Also one comment about our sales metrics - If we want to be a
    profitable company, then sales should be measured on profit not certs.
    
    -Terry
    

re: .40

How about measuring on repeat business?  If the customer doesn't come
back to us for more, then the first sale wasn't as big a success as we
thought at the time.

   Gary

    I replied in another note weeks back and I can't remember where, so
    please forgive any redundancy.
    
    In order to foster Team Unity, Company Loyalty and Pay for Performance
    among all segments of our company, I propose a system another Fortune
    100 company uses (since I used to work there and still have friends
    there.)
    
    Each organization was given goals from its most senior management which
    coincided with the total company's goal.  (Top managers talking to each
    other and planning together.)  For us individual contribuotrs in each
    organization (100% of the company's population) we COULD receive up to
    10% of our quarter's salary if we met our stated goals.  Our Manager's
    incentive was 20%.  This was only paid out if Sales met 100% of that
    quarter's goal.
    
    In addition, we could receive semiannually an additional incentive if
    the company was profitable for that 6 month period and we met a certain
    ROA (Return on Assets).  There were times that this was well into 4
    figures COMPANYWIDE!
    
    This company did have a commissioned sales force who were also
    receiving the equivalent of our DEC100 and COE.
    
    Needless to say, this cost money, but the company enjoyed and still
    enjoys great profitability and has more than 50% of its Market Share.
    The employees were paid for performance in all segments of our company.
    
    Now if DEC would have all its employees compensated for performance and
    those who didn't perform shown the door, we would not only have a more
    profitable corporation but a happier and more productive employee
    population.
    
    Regards,
    Ron
    
    For

re: .40

>    Do sales folks in other companies get a base pay + commission where
>    the base is generally lower than Digital sales salaries? In my own
>    peripheral contact with sales compensation, I've gotten the impression
>    that while Digital sales folk didn't get the commission potential
>    they also haven't had the low base salary of others. Is this true?

Generally, yes. However, the non-comissioned Sales force also can not 
make the really BIG bucks that someone on commission can. In the 
non-commission mode, say your salary is $50K. You are given a
budget of $4M to make this year. If you make that budget, you get the 
$50K. If you make 200% of your budget, you make $50K. Where's the 
incentive ?? In the commission mode, say your base salary is $40K. If 
you don't make your goal (even at 99%), all you get is the $40K base. 
If you make your budget, you get $50K, but if you make 200% of your 
budget, you make $70K... there's some incentive there to exceed your 
goals. BTW, according to Mr. Z's DVN, this is the way the DEC sales 
force will be compensated starting "soon".


>    Also one comment about our sales metrics - If we want to be a
>    profitable company, then sales should be measured on profit not certs.

That is also suppossed to be the new metric based on Z-man's DVN. 
Problem, is, there's a great deal more computin' to do when you want 
to measure profit and not just certs.


Also, regarding compensation: it is EXTREMELY rare for someone lower 
than a manager in the field to be granted Stock Options, while the 
rumor is that the folks in engineering and marketing were granted 
options as a reward for exceeding goals. I know the statement about 
the field is true, but what about the other ?

    I've been in engineering for 17 years, and I've never gotten a stock
    option.  I know only a couple of engineers who have.  One person I know
    has an option to buy DEC at $135/share - there's a good chance that
    that option will expire worthless.  Good thing most engineers are
    self-motivated...
    
    /Charlotte

>In the 
>non-commission mode, say your salary is $50K. You are given a
>budget of $4M to make this year. If you make that budget, you get the 
>$50K. If you make 200% of your budget, you make $50K. Where's the 
>incentive ?? 

	If I design and develop products which are a heap of crap,
	have an enormous bug rate, and aren't really what the customer
	wanted anyway, I get $xx.   If I design and develop products
	which are exemplars of fine design, have no bugs, and are
	just what the customer needed, then I get $xx.  Where's
	the incentive?

	The answer, I suppose, is that (a) I'm supposed to like doing
	what I do as well as I can do it, and (b) I progress to greater
	levels in the organisation if I make stuff that works.

	What I can't understand is why this sort of answer is ok for
	some of us, but not others.   Don't salespeople like their
	jobs, or what?

	[Actually, I'm not opposed in principle to sales staff being
	 on commission.  I just don't think your argument supports the
	 conclusions that you seem to think it does.]

    Seven years ago, it was up to the discretion of the manager to divvy up
    the options to have the best impact on the group.  A few trickled down to
    me then, and were described as "golden handcuffs" by the awarding manager.
    With the stock at 135 heading for 190, they were golden.  Now they're
    papier mache...

    I don't know if that's the way options or their replacement still work.
    Right now the only benefits I'm interested in maintaining are the ones
    which pay my mortgage and my family medical bills.  :-)

re .46

>	If I design and develop products which are a heap of crap,
>	have an enormous bug rate, and aren't really what the customer
>	wanted anyway, I get $xx.   If I design and develop products
>	which are exemplars of fine design, have no bugs, and are
>	just what the customer needed, then I get $xx.  Where's
>	the incentive?

	And (c) I get to play again. Engineers with successful track
	records get the plum assignments. Engineers who develop 
	buggy stuff get to do whatevers left (and the worst actually should
	be shown the door).

				Tom_K

        Re: .41

> How about measuring on repeat business?  If the customer doesn't come
> back to us for more, then the first sale wasn't as big a success as we
> thought at the time.

        At first thought, it sounds bad because it encourages salesmen
        to go back to old customers and therefore discourages going out
        after new customers.  If the sale was good then the old customer
        will come back, but the new customers need the work.

        On second thought, it sounds worse.  If a different salesman
        handles the second sale, is the second sale because of, or in spite
        of, the actions of the first salesman?  Also, the `repeat' metric
        doesn't cover friends of the first customer who were influenced
        by what they heard about the sale, and a sale won't show up as
        repeat business if a buyer moves from one corporation to another
        and continues to purchase our equipment.

        					B.J.

re: .46

>	If I design and develop products which are a heap of crap,
>	have an enormous bug rate, and aren't really what the customer
>	wanted anyway, I get $xx.   If I design and develop products
>	which are exemplars of fine design, have no bugs, and are
>	just what the customer needed, then I get $xx.  Where's
>	the incentive?

It's all based on goals set by management and how those goals affect 
Digital's profit. 

How about if you manager cuts your salary by 20% and tells you that if 
you meet all your deadlines, meet certain (out of your control) 
guidelines for quality, and can show on paper where your work brought 
in a certain dollar revenue over a fiscal year they'll give you back 
the 20% ?? That's what Sales was just told.

If your "goal" (set by your management) is to "design and develop
products which are exemplars of fine design, have no bugs, and are
just what the customer needed" then you should get your salary if 
that's what you achieve. 

If your goal is to "develop products which are a heap of crap, have an
enormous bug rate, and aren't really what the customer wanted anyway"
and you build the best finest product around, the question should be
"did doing so bring in more profit to Digital?" If it did, then you
should somehow get a piece of the action. However, if by building the
bext widgit you did not increase our profit beyond what it would have
been had you designed a "piece of crap", then there is no reason the
company should reward you for the extra effort.. there is no extra 
income to Digital.

I'm not in Sales, but I am in Sales Support. I have a goal to help
make certain Sales Reps or certain accounts successful (based on
dollars). If I exceed that goal by a bazillion percent, I still just
get my salary... you and I are in the same boat. But I don't quote 
prices, give allowances, and other things that affect the revenue or 
profit.. I just give technical "advice". My incentive is to do a good 
job, keep my job, and get a raise once in a while (I gave up on COE 
years ago).

Sales is just a different way of life. Incentives, customer relations, 
golf "meetings", etc. are all issues that are part of Sales and not 
part of most other jobs. I could never be a Sales Rep, but I do know a 
great many excellent reps (and a few loosers) who have a tough job in 
a tough market. It would be real easy for a rep to "give up" once 
they've met their goal for the year 'cause that's all they have to do 
to make their manager successful (and happy). But the extra incentive 
of a commission, bonuses, trips, etc. makes *some* of them want to 
exceed their goals, which can help make up for those who don't reach 
the goals.