Arck Systems Case Analysis Essay

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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
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Differences in Sales Compensation

It wasn’t until Mynor began to review the compensation plan for Lux salespeople that he realized that he may have more of challenge managing the Lux sales team. The Lux Sales compensation package was vastly different than the Arck’s. Lux’s compensation package included accelerators, which increased the percentage commission a salesperson could earn based upon quarterly sales. A salesperson could potentially earn 24% commission. Arck’s compensation package included a standard 9% base commission paid after the quota was met. There was also a $50,000 bonus if the $6 million sales cap is reached.

The Critical Issue

The critical issue facing Arck Systems is attempting to figure out how to best manage the Lux sales team. While reviewing the plan, Mynor noticed that “top guns” at Lux make 30 times more than the average salesperson. Whereas the best sellers at Arck make only 4 or 5 times more than the average salesperson. He understands that the sales approach differs from Arck because it requires a more personable approach, rather than a technical one. If he decides to change the compensation plan, he needs to be able to anticipate how the sales people react. And predicting or anticipating reactions is a near impossible task.

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