Individual Case Analysis

INTRODUCTION

Midwest Education, Inc. is a major supplier of educational materials for the United States. The
company focus is on learning tools and systems for use in technology, science and business
classrooms. In addition, it develops and provides books, manuals, videos, software and hardware
used in the fields of technology education, instructional development and business applications.

The company has its headquarters and primary manufacturing plant in a major Midwest
community. In addition, the Creative Development offices are located in Massachusetts and
California. Transportation, Service and Maintenance facilities are headquartered out of Texas,
with major branches in Baltimore and Phoenix.

COMPANY HISTORY

Midwest Education was started by Henry and Mary Dalton in 1985. Dr. Henry Dalton was an
industrial arts teacher before he got his MBA and went on to get his Ph.D. in Technology
Education. Mary was a software developer who also taught business seminars. At that time a
new wave of emerging technology was beginning to alter the way people learn and
communicate. By developing Midwest Education, Inc. the Daltons began work in an exciting
new field. They found a vast market for quality tools that educated people on how to use all the
new technology. Dr. and Mrs. Dalton are in semi-retirement now and travel extensively, but
remain major shareholders in the business. They personally hired the CEO when they went into
semi-retirement.

The company started with about fifty employees, but has grown consistently and now has a total
of 416 employees within its three major divisions: 183 employees work in the Manufacturing
Division, 123 work in the Creative Development Division and 135 work in the Transportation,
Service and Maintenance Division. There are also 71 employees working at the headquarters in
Kansas City (including the corporate staff).

At the end of the 1990s it became apparent that international business was becoming the rule
ramer than the exception. The company went international in 1999 and now is exporting to three
European, two Latin American, and two Pacific Rim countries. The Global Operations Division
is located within the headquarters.
HEADQUARTERS

The corporate headquarters are in Kansas City. The CEO of Midwest Education, Inc. is Judith
Lund. Ms Lund was hired by the Daltons in 2004 when they decided to take a less active role in
me company while remaining major shareholders. Ms. Lund has an MBA in business
management, and was previously the CEO of a small telecommunications company. In her
previous position, Ms Lund had successfully steered the company out of financial difficulties by
raising stock value. She had initiated a strong advertising campaign and had put me company 'in
the black' for the first time in seven years.

The COO of Midwest Education, Inc. is Frank Rose. Frank has been with the company since
1995. Mr. Rose, a cousin of Dr. Dalton, had a successful career with an international business
training group in California. His desire to move back to bis home town of Kansas City came at a
time when the Daltons were looking for a COO. He has worked out well for the company.

The Human Resources Department is also located at the headquarters. The Vice President for
Human Resources is Lawrence Wilson. Mr. Wilson has a degree in industrial and organizational
psychology and an MBA. He has been witib. me company for 1 1 years. He started out as a
generalist and was promoted as he showed good judgment with hiring and earned his MBA at the
same time.

Within the Human Resources Department there are four sections:

1. Staffing, the head of this section is Patrick Shew.

2. Compensation and benefits section, headed by Michael Martin.

3. Labor management relations section, headed by Keith Lane.

4. Training, career development and performance appraisal section, headed by Cynthia Burns.

There are also human resource specialists in each of the three divisions around the country.

SITUATION

Lawrence Wilson, Midwest Education's Vice President of Human Resources, sat down at his
desk after an executive committee meeting at which Carol Alphonse was introduced as me firm's
new - and first - Vice President of Sales and Marketing. After the meeting, Carol had walked
wim him back to his office and told Lawrence that she was looking forward to working with him
and his staff in building the sales force and that she'd like to get started on a staffing plan
quickly. They arranged a meeting for the following week. He thought for a few minutes and then
asked Patrick Shaw, section head of staffing, to explore how the human resource needs of a sales
force differ from meir current human resource.

"OK. Let's get started. Midwest Education is bringing the sales function in-house. As you know,
we've worked with a number of manufacturer's representative firms to move our product, and
that's worked really well. But we're at the point now where it makes more fiscal sense to field our
own domestic sales force. I'm meeting with our new Vice President of Sales and Marketing and
her team next week to discuss staffing. Patrick, what can you tell us about staffing a sales force?"

Patrick stood up. "Before we discuss the recruiting methods and avenues, I'd like to briefly touch
upon the various types of salespeople, meir tasks, and meir challenges, as these have a great deal
to do with recruiting and compensation.:"

"First of all, we can classify salespeople as being inside sales or outside sales. The use of inside
sales forces is increasing, as mey are less expensive in terms of both salary and sales expenses
(no travel). These folks work out of an office and sell to non-retail customers. While some inside
sales forces are order-takers who passively accept orders, I would expect that ours would be
order-getters who would actively call on customers through the telephone or other non-face-to-
face methods."

"On the other hand, outside sales forces, or field sales, call on customers and potential customers
at their places of business, typically face-to-face. Field sales positions, while more expensive
because of higher compensation and higher costs due to travel and entertainment expenses, are
the most appropriate in building and mamtaining long-term relationships with new and existing
customers."

"The job analysis is critical here - two elements of our company and products in particular are
relevant. First, our markets tend to be varied and complex - sometimes an individual teacher can
make the decision, sometimes the school board must approve any purchase. Most of the time our
salespeople will be calling on multiple people in each school and in each school district. Second,
we have a broad product line, and many products are technically complex, requiring some
significant expertise on the part of our salespeople. There is one omer element that will affect
both recruiting and compensation: me degree of autonomy afforded to me sales force. The more
autonomy, the more experience we need to look for and the more compensation needs to align
with company and salesperson interests."

"Now about recruiting. There are multiple avenues to recruit salespeople, some we're used to
using, some will be new. I've created a table detailing these sources and the advantages and
disadvantages of each source (see Table 1). One area I'd like to address in detail, though, is the
use of headhunters. We've rarely, if ever, used them, but mey are an option to consider as we
begin to build a sales force, particularly those recruiters that specialize in recruiting for sales
positions. Just as with other recruiting efforts, headhunting firms offer both advantages and
disadvantages. First, mey have experience in both human resources and sales recruiting. They
will also have broader access to the pool of potential applicants and are experts in screening
applicants, thus providing us with a pool of highly qualified candidates. Finally, they only get
paid if mey successfully place a salesperson with a company. This is also a disadvantage, as they
typically are paid a fairly hefty sum, and we'll have to take care in selecting the right headhunter
and in overseeing the process - many recruiting firms use a shotgun approach and flood the client
wim unsuitable candidates."

"As for screening candidates, there are a number of methods that we can use, either singly or in
combination. Our standard employment application, of course, provides significant amounts of
information about the candidate, such as work chronology and education. Not only do
applications help us screen for needed qualifications, they also provide preparatory information
for interviews. While all candidates will provide a resume, the application helps ensure that we
have uniform information from all candidates."

"Tests are increasingly used in screening processes for sales people - intelligence, aptitude, and
personality tests. However, even though testing has improved, many sales managers are leery of
the usefulness of testing in predicting success in sales positions. Aptitude tests, for example,
measure current skills, and, as many selling skills can be taught, relying on aptitude tests may
cause potentially successful candidates to be rejected. As to personality traits, no single
personality trait is consistently linked to productivity across selling jobs or firms; therefore tests
that purport to measure sales ability often just work for specific selling jobs or firms.
Additionally, as standardized tests capture the norm, talented and creative people who might
make significant contributions could be overlooked. Sales managers also worry about those who
know the right answers to provide on tests - right answers that don't really reflect the candidate's
true feelings or behavior. Finally, many worry that extensive testing is or could be seen as an
invasion of privacy and would thereby discourage good candidates."
"Personal interviews are critical and should be used as both a screening and as a selection tool.
Sales managers use interviews to gauge candidate's presentation ability, personality, experience,
and ability to think on her feet. Interviews are most effective when the candidate is interviewed
by several interviewers and when interviews are used with other selection tools."

"We also often see realistic job previews (RJPs) used. RJPs provide an opportunity for the
candidate to experience the job and to ask salespeople questions. They also allow an experienced
salesperson to observe how the candidate interacts with customers and to gauge me candidate's
experience and ability to do the job."

"Finally, we should continue our reference checking procedures. Reference checks, while time-
consuming and costly, can confirm or disconfirm the truthfulness of resume and application
information."

After Patrick finished, Lawrence thanked his team and began to prepare for bis first meeting with
Carol Alphonse and her team.

Student activity: at this point, students should tìiink about the information Lawrence needs to
develop recruiting and selection plans for the new sales force. This can be done with the entire
class, in groups, or as individuals.

"Lawrence, thanks for meeting with us this morning. Have you met Delaney Fox and Mark
Shea? Delaney is to head our field sales force and Mark is our inside guy. I'm going to let
Delaney start."

"Thank you, Carol. Lawrence, I've heard terrific things about the HR division and I'm really
looking forward to working with you and your team on this project. For the field sales force, we
anticipate slowly building each district. We've gained agreement from the current manufacturer's
rep firms to help us in each territory during the transition. As part of these agreements, however,
we've had to agree to not recruit meir representatives."

"Ultimately, we plan to field five districts, each wim a district manager. At this point, each
salesperson will be a generalist, handling all aspects of me sales process and selling our full line.
At some point the sales force will specialize, but not anytime soon. The geographic regions are
the Northeast, the Southeast, the Southwest, the West Coast, and me Mountain Plains. As Kansas
City is located in the Mountain Plains district, tìiat will be the first to rollout. With the exception
of the Mountain Plains district manager, we will not be providing physical office space for
district managers or for salespeople, rather, they will be provided with necessary equipment. This
will help keep our overhead costs down."

"Each district will be comprised of a district manager who will oversee the field sales force, eight
to ten sales representatives, and one or two key account managers who will work closely with the
largest accounts in the district (see Figure 2). Initially, our salespeople will be spending
considerable amounts of time building relationships with existing and potential customers; after
the first year or two, however, the emphasis will shift toward generating sales, whether through
existing customers or new customers. This isn't to say that relationship-building will not be a
priority; it just won't be a priority to the exclusion of all else."

"Finally, I'd like the Mountain Plains district to hit the ground running by hiring primarily
experienced salespeople. I can train them about the products we produce relatively quickly -
good selling skills take much longer to develop."

"Thanks, Delaney. Mark, your turn."

"Right. We'll actually be constructing two inside sales forces: one that will focus on account
management of smaller accounts and one that will focus on supporting the field sales force by
prospecting and qualifying leads, customer service, and other promotional support (see Figure 1).
My biggest concern, however, is finding the right people for the roles and men keeping them
here and motivated."

"Finding people who combine the aggressiveness of a salesperson with the customer-focused
empathy of a customer service person is going to be difficult. In addition, we'll be integrating
web sales as another inside sales channel. While I'd prefer using as many of our existing
customer service folks as possible, we'll still have to go outside the firm to find more."

"Motivating the inside sales forces is another challenge. Not only do they typically make less
than field sales people, me role is often considered of lower status. One way to keep them
motivated in the long-run is to use these roles as springboards into field sales. Firms have also
focused on extensive training, generous bonuses for peak performance, recognition programs,
and more opportunities for professional development, including more interaction with field sales
teams and customers."

"We plan to house the inside sales staffs here in Kansas City. Ultimately, I expect we'll hire
about 30-40 reps to work with the field sales force and about 75-100 reps to handle inside sales.
This inside sales force will be handling in-bound calls, but more often will be calling on accounts
through the telephone and web. We'll likely hire one supervisor for every 25-30 representatives.
We'll also slowly build mese two teams, and we'll be looking for both experienced and
inexperienced representatives."

After the meeting, Lawrence returned to his office and began to think about staffing the new
sales forces. He wanted to develop preliminary staffing plans to present to Carol and her team at
their next meeting.

ASSIGNMENT

Students need to submit an individual case analysis based on the conflict resolution techniques.