Table of Contents
OVERVIEW 3
BACKGROUND 4
ARCK SYSTEMS 4
ARCK SYSTEMS’ MERGER WITH LUX SOFTWARE, INC. 4
DIFFERENCES IN SALES MANAGEMENT 5
THE CRITICAL ISSUE 6
ANALYSIS 6

Overview

This paper will discuss the history and background of Arck Systems and its merger with Lux Software. I will then examine, discuss, and analyze the nuances of the merger and the resulting issues that arose with different compensation packages for each company’s sales team. In my analysis, I will address the intended and unintended consequences of incentive compensation plans. Finally, I will offer my recommendations to Arck Systems. Background
Arck Systems
Arck Systems was a medium-sized manufacturer of network computers used by many …show more content…

The incentives should be designed in such a way that continuously motivates employees and recognizes both effort and achievement. Incentive compensation plans come with inherent tradeoffs; they are also excellent individual motivators for employees to succeed in the workplace and contribute significantly to the financial gain of the company. Incentive compensation packages also act as a tangible form of gratitude, ensuring that employees are properly rewarded for their diligence and dedication.
Unfortunately, these incentive plans do not always work. Incentive programs require effort beyond normal job responsibilities, instead of rewarding excellent performance an execution of normal job duties. Yes, incentive plans motivate employees to earn more revenue; however, it inevitably teaches how to manipulate the system in order to obtain the desired results.
In Arck’s Systems situation, Mynor noticed a discrepancy in compensation vs. productivity with Lux’s compensation package. He noted that the productivity levels simply did not match the payment level. The top sellers at Lux made 30 times more than the average salesperson, but were only 14 times as productive. The top sellers at Arck make for four or five times more than average and are four or five times as productive. Hence, Lux’s compensation plan seemed infeasible to Mynor. Mynor’s inability to full comprehend the Lux compensation plan stems from the fact