Transcript www.csccapital

CORPORATE REVITALIZATION
TOOLS FOR A
COMPETITIVE ADVANTAGE
I
AGENDA





Introduction
Organizational Structure
Financial Restructuring
Budget Planning and Accountability
Breakeven Costing & Pricing
*** INTERMISSION ***
AGENDA







Employee Evaluation & Job Descriptions
Compensation Structure
Sales Commission
Inventory Management
Sales & Marketing
Implementation
Wrap Up – Question and Answer Session
C. S. COLVIN
Chairman, Managing Partner & CEO,
CSC Capital
CSC Capital Corporate
Restructuring
Summit Mergers &
Acquisitions
NWX Financial Group
Compass Park Consulting
Partners
Clearwater Advisors
RESTRUCTURING/TURNAROUND/
M&A INDUSTRY EXPERTISE

Over Eighty Corporate Restructurings

Retail, Wholesale, Manufacturing,
Health Care, Government, Finance

One Location to Fifty Locations

Revenues from $1M to $ 1Billion

Over Thirty Times Interim CEO
NATIONWIDE CLIENTS
INDUSTRY PERSPECTIVE

Industry Structure

Doing Business in a New Way

Holistic Restructuring

Industry Software Issues
ORGANIZATIONAL
STRUCTURE
TYPICAL DECENTRALIZED
STRUCTURE
AREA D
Area E
Purchasing, Sales,
Marketing, A/R and AP,
Policies and Procedures,
Recruiting, Training,
Inventory, Yard Ops etc.
Purchasing, Sales,
Marketing, A/R and AP,
Policies and Procedures,
Recruiting, Training,
Inventory, Yard Ops etc.
Corporate
Office
Area C
Purchasing, Sales,
Marketing, A/R and AP,
Policies and Procedures,
Recruiting, Training,
Inventory, Yard Ops etc.
Area B
Area F
Purchasing, Sales,
Marketing, A/R and AP,
Policies and Procedures,
Recruiting, Training,
Inventory, Yard Ops etc.
Area A
Purchasing, Sales,
Marketing, A/R and AP,
Policies and Procedures,
Recruiting, Training,
Inventory, Yard Ops etc.
Purchasing, Sales,
Marketing, A/R and AP,
Policies and Procedures,
Recruiting, Training,
Inventory, Yard Ops etc.
BETTER CENTRALIZED STRUCTURE
Corporate
Office
Centralize Key Functions such as Purchasing,
Inventory Management, Accounting, Budgeting,
Training and Marketing. Establish Policies and
Procedures Company Wide and Communicate the
Accountability Required of all Locations.
Individual locations are responsible for developing Sales, and for
addressing their Customer Service and Product Delivery needs.
Area
A
Area
B
Area
C
Area
D
DISTINGUISH YOUR CUSTOMERS

Retail/Consumers

Business to Business

Commercial/Government Accounts

Manufacturing / Assembly / Installation
Operations
FUNCTIONAL ORGANIZATION CHART
Board of Directors
Board Liaison
Ganeral Manager
Professional Services
Controller
Purchasing &
Inventory Control
Manager
Administrative
Assistant
Purchasing &
Inventory Control
Assistant
Systems &
Information
Specialist
Staff
Accountant
Accounts
Payable
Administrator
Credit &
Collections
Clerk
Credit &
Collections
Supevisor
Communications
Assistant
Retail Sales
Manager
Contractor Sales
Manager
Lumber Counter
Sales Rep
Outside Sales
Reps
Cashiers
Inside Sales
Reps
Purchasing Agent
Special Order
Buyer
Receivable
Coordinator
Industrial/
Commercial
Sales Manager
Executive Committee
Committee for
Strategy & Budgets
Assistant Store
Manager / Floor
Sales Supervisor
Floor Sales
Reps
Warehouse &
Stock
Cleaning &
Maintenance
Millwork Sales
Specialist
Distribution &
Logistics Manager
Millwork
Manager
Yard
Foreman
Dispatcher
Milwork
Foreman
Loaders/
Customer Service
Drivers
Production
Employees
Fleet
Mechanic
Warehousemen
Milwork
Purchasing &
Receiving Coord.
Kitchen &
Bath Manager
Senior
Designers
FINANCIAL
RESTRUCTURING
TYPICAL FINANCIAL STRUCTURE

Sales

Cost of Goods Sold

Expenses

Profit
By Location
or
By Company
TYPICAL FINANCIAL STRUCTURE
Comparative Income Statement
XYZ Company
1997
$
Sales
%
1996
$
%
1995
$
%
11,702,917.00
100.00
11,818,464.00
100.00
10,335,819.00
100.00
Cost of Goods Sold
9,178,805.00
78.43
9,138,294.00
77.32
8,040,579.00
77.79
Gross Profit
2,524,112.00
21.57
2,680,170.00
22.68
2,295,240.00
22.21
1.17
0.53
0.77
0.12
0.15
0.00
0.04
1.24
1.14
0.55
121,450.00
60,826.00
46,408.00
11,508.00
16,074.00
2,562.00
2,209.00
112,053.00
118,424.00
35,407.00
1.03
0.51
0.39
0.10
0.14
0.02
0.02
0.95
1.00
0.30
105,308.00
55,985.00
31,344.00
7,700.00
19,636.00
745.00
2,177.00
72,109.00
103,365.00
24,318.00
1.02
0.54
0.30
0.07
0.19
0.01
0.02
0.70
1.00
0.24
General and Administrative
Autos and Trucks
Advertising
Bad Debts
Bank Charges
Computer Expense
Consulting
Contributions
Depreciation
Insurance
Interest
Expenses
137,065.00
62,016.00
89,559.00
13,528.00
17,542.00
75.00
5,240.00
144,891.00
133,188.00
64,632.00
NEW FINANCIAL STRUCTURE

Organize Product Lines by Customer

Organize Expenses Around Profit Centers
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Re-allocate General & Administrative,
Purchasing and Traffic/Warehouse into Profit
Centers

Financial Structure Combines Typical P&L and
Sales Analysis Reports into a Cohesive Total
Company Operating Statement. ANALYZE
Customer Group / Manufacturing and/or Assembly
= Profit Center
NEW FINANCIAL STRUCTURE EXAMPLE
Operating Income
NEW FINANCIAL STRUCTURE EXAMPLE
Cost of Goods Sold
NEW FINANCIAL STRUCTURE EXAMPLE
Indirect Expenses
NEW FINANCIAL STRUCTURE EXAMPLE
Bottom Line
NEW FINANCIAL STRUCTURE

Requires Management Accountability

Large Task (Setting up Financial Package)

Not Easy….Unless You’re a Math Whiz

Takes Commitment of All Managers,
Especially CFO/Controller
BUDGET PLANNING
AND
ACCOUNTABILITY
BUDGET PROCESS

Set Up Management Team by New
Organization Structure

Each Manager has Responsibility Over One
Profit/Cost Center

Train Managers in Management Accounting

Continual Rolling 3 Month Forecast
Comparing Budget to Actuals
BUDGET MEETINGS

Hold Monthly

Dissect All Product Lines by Profit Center
and Location (product sales/margins by
profit center sales, by location A)
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Analyze Sales, Expenses and Gross
Margin (both budget & actual) by Profit
Center
INCLUDE IN BUDGET MEETINGS
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Retail/Consumer Sales Manager
B to B Sales Manager
Large Commercial /Government
Sales Manager
Production Manager
Purchasing Manager
Distribution /Yard Manager
Controller
President / Owner
BUDGET BENEFITS

Improved Profitability
-Gross margin increase by product line
-Reduction of unnecessary expenses

Knowledge & Eventual Elimination of Obsolete
Inventory and Over 90 Day Receivables

Increase in Sales Volume Due to Focused
Efforts of Managers to Customer Groups
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Holds Mgrs. Accountable for Individual Areas
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Overall Increase in Company Valuation
ESSENTIAL TO SUCCESS

Commitment to Change, Change, CHANGE

Ability to Make the Hard Decisions
Example: Changing a location manager to a
profit center manager, or worse, determining a
once good location manager is unqualified as a
profit center manager.
FISCAL BUDGET EXAMPLE
Operating Income
FISCAL BUDGET EXAMPLE
Cost of Goods Sold
FISCAL BUDGET EXAMPLE
Indirect Expenses
FISCAL BUDGET EXAMPLE
Bottom Line
FLEXIBLE BUDGET

Trains Managers in Management
Accounting

Indicates Where Profits Drop Due to Lack
of Sales
FLEXIBLE BUDGET EXAMPLE
Operating Income
FLEXIBLE BUDGET EXAMPLE
Cost of Goods Sold
FLEXIBLE BUDGET EXAMPLE
Indirect Expenses
FLEXIBLE BUDGET EXAMPLE
Bottom Line
BUBBLE CHART
ABC Lumber & Hardware
Company Wide - Store Items
Sales Volume
55. 00
09 Office Supplies
STARS
PROBLEM CHILDREN
04 P lumbing
45. 00
01P aints
03 Electrical
08
Hand
02 P oTools
wer & Hand To o ls
35. 00
10 Sto re B uilding M aterials
Gross Margin
07 Lawn & Garden
06 Ho usewares
25. 00
CASH COWS
DOGS
15. 00
Plywood
Power Tools
5. 00
200,000
(5. 00)
175,000
150,000
125,000
100,000
75,000
70,000
60,000
50,000
40,000
30,000
20,000
10,000
-
BREAKEVEN COSTING
AND
PRICING
UNDERSTANDING:

Where Profit Begins - On Every Single Product Sold

Gross Profit Analysis - Identifying Changes in Costs,
Volume, Mix, and Selling Prices

Accurate Burden Rate of Expenses - allocating
fixed, variable and reallocated expenses.

Breakeven Analysis and Financial Format - a
management accounting system, by profit center, will
provide clear delineation of sales, costs and expenses
thereby supporting sound business decisions.
BREAKEVEN & PRICING
WORKSHEET INSTRUCTIONS
The purpose of this narrative is to address the methodology to be used
when costing and pricing. There are probably as many costing and
pricing systems, as there are companies. Each has its own special
system and is satisfied with that system because “it works and we’ve
always done it that way”. The problem with this logic is that it does not
answer the following questions:
1. Did we achieve the maximum profit available for this unit?
2. Did we overprice/price to high?
3. Did we consider all costs when determining price?
While the basic instructions for each of the calculated lines is included
on the form itself, specific instructions on where to get the necessary
numbers for each are provided here.
1
BREAKEVEN & PRICING
WORKSHEET INSTRUCTIONS
2
Line 1 - Description of Item / Unit – The common verbal description of the product for which
breakeven and pricing is being calculated, as well as the unit size in which the product is bought and
sold.
Line 2 - Product Line – The major product line category under which the above item falls.
Line 3 - Purchase Price per Unit – The current purchase price of the item.
Line 4 - Total Sales (Product Line / Profit Center) – The total sales volume in dollars for the product
line (line 2) taken from the appropriate P&L Statement. For example, if costing the item for the entire
company, use the “Full” statement, or for the Trade Store, use the “Trade Store” statement. It is
important that this and the following number be from the specific profit center for which the item is
being priced.
Line 5 - Total Sales (Profit Center) – The total sales for the profit center.
Line 6 - Portion of Sales of Product Line – The amount in Line 4 divided by the amount in Line 5,
left as a decimal.
Line 7 - Cost of Goods Sold (Product Line) – The total cost of goods sold for the given product line
as it appears on the appropriate P&L Statement.
BREAKEVEN & PRICING
WORKSHEET INSTRUCTIONS
3
Line 8 - Total Indirect Expenses – The total given on the bottom of the P&L Statement for the profit
center entitled “Total Indirect Expenses.”
Line 9 - Indirect Expense Allocation for Product Line – The amount of the total indirect expenses
allocated to the product line, calculated by multiplying Line 8 by Line 6.
Line 10 - Indirect Expense Ratio – The ratio of indirect expenses to cost of goods sold, calculated by
dividing Line 9 by Line 7.
Line 11 - Total G&A Expense Allocation for Profit Center – The amount of the G&A Expense
allocation as it appears at the bottom of the P&L Statement for the profit center.
Line 12 - G&A Expense Allocation for Product Line – The amount of the total G&A expenses allocated
to the product line. Calculated by multiplying Line 11 by Line 6.
Line 13 - G&A Expense Ratio – The ratio of G&A expenses to cost of goods sold. Calculated by
dividing Line 12 by Line 7.
Line 14 - Indirect Expense Cost – The amount of indirect expenses incurred in the sale of one unit of
the item. Calculated by multiplying Line 3 by Line 10.
BREAKEVEN & PRICING
WORKSHEET INSTRUCTIONS
4
Line 15 - G&A Expense Cost – The amount of G&A expenses incurred in the sale of one unit of the
item. Calculated by multiplying Line 3 by Line 13.
Line 16 - Total Cost of Doing Business – The sum of the indirect, G&A and Operations expense
portions. Calculated by adding Line 14 and Line 15.
Line 17 - Breakeven Price – The amount that must be charged in order to cover all costs for the item.
Calculated by adding Line 3 and Line 16.
Line 18 - Breakeven Markup – The multiplier for calculating the breakeven price. Calculated by
dividing the Breakeven Price by the Purchase Price; or Line 17 divided by Line 3.
Line 19 - Operating Profit Margin Goal for Profit Center – The profit margin goal for the profit center
set by the Budget Committee. Taken from the Fiscal Budget line marked Operating Profit Margin. It
is important to use the percentage listed beside the number rather than the number itself.
Line 20 - Markup Factor Divisor – An intermediary step in the calculation of the sale price of an item
based upon the Profit Margin Goal listed in Line 19. The quantity of 100 minus the percentage in Line
19 is then divided by 100 to get a decimal number between 0 and 1.
BREAKEVEN & PRICING
WORKSHEET INSTRUCTIONS
5
Line 21 - Price – The amount in dollars that must be charged to obtain the profit margin listed in Line
19. The Breakeven price is divided by the Markup Factor Divisor, or Line 17 by Line 20.
Line 22 - Markup – The multiplier for calculating the final price, calculated by dividing the price by the
purchase price, or Line 21 by Line 3.
REVIEW THE CALCULATED PRICE FOR MARKET ACCEPTABILITY.
 You may wish to decrease the calculated listing price in order to match competitive prices; or price
certain products to allow for penetration of a certain market.
 In a non-competitive situation, or one in which you feel comfortable in raising the estimate or
quote, you will be in a position to recover overhead at a faster pace with that particular product.
BREAKEVEN / PRICING WORKSHEET
1 DESCRIPTION OF ITEM
UNIT
2 PRODUCT LINE
10 Store Building Materials
15.84
3 PURCHASE PRICE PER UNIT
PORTION OF SALES
4
Total Sales (For Product Line for Profit Center)
From Fiscal Analy sis for Profit Center
43,727.37
5
Total Sales (for Profit Center)
From Fiscal Analy sis for Profit Center
5,473,520.20
6
Portion of Sales of Product Line
7 COST OF GOODS SOLD FOR PRODUCT LINE
Line 4
/
Line 5
0.0080
From Fiscal Analy sis for Profit Center
26,219.88
From Fiscal Analy sis for Profit Center
632,657.83
INDIRECT EXPENSE ALLOCATION
8
Total Indirect Ex penses
9
Indirect Ex pense Allocation for Product Line
Line 8
x
Line 6
5,054.24
Indirect Ex pense Ratio
Line 9
/
Line 7
0.1928
10
GENERAL AND ADMINISTRATIVE EXPENSE ALLOCATION
From Fiscal Analy sis for Profit Center
153,264.86
11
Total G&A Ex pense Allocation for Profit Center
12
G&A Ex pense Allocation for Product Line
Line 11
x
Line 6
1,224.42
13
G&A Ex pense Ratio
Line 12
/
Line 7
0.0467
1
BREAKEVEN / PRICING WORKSHEET
2
COST OF DOING BUSINESS
14
Indirect Ex pense Cost
Line 3
x
Line 10
3.0534
15
G & A Ex pense Cost
Line 3
x
Line 13
0.7397
16
Total Cost of Doing Business
Line 14 +
Line 15
3.7931
BREAKEVEN
17
Breakev en Price
Line 3
+
Line 16
19.6331
18
Breakev en Markup
Line 17
/
Line 3
1.2395
19
Breakev en Gross Margin
(Line 17 -
Line 3)
/ Line 17
19.3198
PROFIT
Taken from Fiscal Budget for Profit Center
4.84
20
Operating Profit Margin Goal for Profit Center
21
Markup Factor Div isor
22
Price
Line 17
/
Line 21
20.6311
23
Markup
Line 22
/
Line 3
1.3025
24
Gross Margin
(Line 22 -
Line 3)
( 100
- Line 20 ) /
100
/ Line 22
0.9516
23.2227
PRICING RED FLAGS

Pricing on Retail Items Never High Enough
(Example: 95% of restructurings conclude
that retail prices are the same or just a
couple of points higher than B to B)

Pricing on Special Orders are Lower Than
Stock

Pricing Markups Over Gross Margin is Flawed
INTERMISSION
EMPLOYEE EVALUATIONS
AND
JOB DESCRIPTIONS
EMPLOYEE EVALUATIONS

Critical to Motivating Employees

Conduct Twice a Year

Tie to Comprehensive Job Descriptions
(doing so makes the job description as
well as the organizational chart a living
and adapting thing)
JOB DESCRIPTION
1.0
1
PURPOSE
This Job Description outlines the functional scope of the position of Purchasing and Inventory Control
Manager at XYZ Company.
2.0
BASIC FUNCTION
2.1
The basic function of the Purchasing and Inventory Control Manager is to accept the responsibility for all purchasing
and inventory control within the Company.
2.2
To manage the performance, oversee, and coordinate the inventory control at XYZ Company so all inventory levels
are maintained, tracked and accounted for in an orderly, clear and accurate manner. The individual General
Managers, Retail Sales Managers, Door Shop Manager, Installed Sales Manager and Distribution - Operations
Manager are in charge of the physical receiving and merchandise stocking functions in coordination with the
Purchasing Department.
2.3
To provide ongoing staff support to the Owner / Chief Executive Officer and other profit center managers.
JOB DESCRIPTION
3.0
2
AUTHORITY
The Purchasing and Inventory Control Manager is appointed by and receives authority from Owner / Chief Executive Officer in
the fulfillment of functional responsibilities. The Purchasing and Inventory Control Manager has complete authority necessary to
carry out the assigned responsibilities and duties as outlined herein, including:
3.1
Conduct, supervise and coordinate all purchasing and inventory control functions for the Purchasing Department and
the company.
3.2
Purchase all stock materials, including yard and store items, to ensure the efficient and timely performance of sales
delivery for the Contractor Sales, Industrial/Commercial, and Retail Sales areas.
3.3
Oversee the purchase of all special order items. The Purchasing Manager oversees the purchasing of and
purchasing procedures for all special order items, coordinating these efforts with the Door Shop Manager, the
Installed Sales Manager and the Contractor Sales Manager s (for Windows). The goal here is to establish unified
and consistent Special Order policies and procedures throughout the company and work toward placing as many
special orders through the central Purchasing department as possible.
3.4
Provide guidance and direction to all key managers and employees regarding purchasing, pricing and inventory
control.
3.5
Work with all key managers to implement and enforce company procedures to ensure the maintenance of accurate
company inventories at all times.
JOB DESCRIPTION
3
3.1
Ensure that all legal and regulated obligations for the company from a purchasing standpoint are met, and to take
action needed to ensure that the actions of the company and employees meet all Federal, State, and Local Laws
and Labor Regulations.
3.2
Supervise the activities of employees reporting directly to this position, including hiring, training, disciplining, and
firing these employees, if necessary, and conduct bi-annual performance evaluations of all assigned employees.
3.3
Take any reasonable action necessary to carry out the responsibilities of this position, so long as such action does
not deviate from established company policies and is consistent with good sound business judgment.
4.0 REPORTING RELATIONSHIPS
4.1
The Purchasing and Inventory Control Manager reports directly to the Owner / Chief Executive Officer.
4.2
The Purchasing and Inventory Control Manager has a staff responsibility to the Controller, General Manager,, the
Retail Sales Managers, Commercial/Industrial Sales Manager, the Contractor Sales Managers, Installed Sales
Manager, Door Shop Manager and Distribution – Operations Manager.
4.3
The following positions reports to this position.
4.3.1
4.3.2
Purchasing / Inventory Control Assistant.
Purchasing Agent / Special Order Buyer (if needed)
JOB DESCRIPTION
5.0
4
RESPONSIBILITIES
The Purchasing and Inventory Control Manager is responsible to the Owner / Chief Executive Officer and to the employees and
customers of XYZ Company. The Purchasing and Inventory Control Manager is granted sufficient authority by the Owner /
Chief Executive Officer to carry out all assigned responsibilities, including, but not limited to, the following:
5.1
5.2
5.3
5.4
5.5
5.6
Overall responsibility for the retail and commodity purchasing and inventory control
functions of the company.
12345
Set up and utilize a system to track all time-critical deliveries to ensure vendor
promises/commitments are met. Notify Owner / Chief Executive Officer and other
managers of potential problems.
12345
Conduct assigned work in a manner that will provide timely and accurate purchase
and pricing data to achieve the short- and long-range goals and objectives as
established by the Owner / Chief Executive Officer.
12345
Supply all functional managers with the most current price information, including
recent cost / pricing movements or anticipated cost / pricing movements in the
retail and commodities markets.
12345
Responsible for vendor contacts and to negotiate all purchases with the intent of
securing the highest possible return for the company.
12345
Strive to achieve balance between high inventory turns and minimal out of stocks.
12345
JOB DESCRIPTION
5.1
5
Perform special purchasing, pricing research and projects, as directed by the
Owner / Chief Executive Officer.
12345
5.2
Provide hardware, commodities, special order, and other material purchasing
support, for the Owner / Chief Executive Officer, Contractor Sales Managers, Door Shop
Manager, Commercial/Industrial Sales Manager, and Retail Sales Managers.
12345
5.3
Provide support to and coordination with the Distribution - Operations Manager for
development and maintenance of the inventory ID Reference (i.e. inventory location)
and inventory controlprocedures with the assistance of the Purchasing and Inventory
Control Assistant.
12345
In conjunction with the Owner / Chief Executive Officer and with input from the
functional managers, prepare a Purchasing budget prior to each fiscal year.
Prepare for the monthly budget meeting by supplying an inventory report for top
management, including identification of excess inventory, current inventory turns,
and obsolete and slow moving items.
12345
5.4
JOB DESCRIPTION
5.1
Ensure that effective personnel development and training is an ongoing program
in the department. This will improve productivity and profitability by making sure
that all employees are aware of XYZ Company ’s policies and
procedures.
6
12345
5.2
Keep current on the industry, market, market trends, and industry developments
including new products, new techniques, etc., by reading trade periodicals and maintaining
close contacts in the lumber and industrial building supply industry.
Be aware of industry shows and other trade events and recommend participation
and/or attendance to the Owner / Chief Executive Officer if warranted.
12345
5.3
Maintain product files and computer records. Keep the computer information on
inventory and purchases up to date with the assistance of the Purchasing
department employees.
12345
5.4
Maintain daily inventory in warehouses including accurate inventory counts, inventory
security, organization and control, in coordination with the Distribution - Operations
Manager and Retail Sales Manager.
12345
5.5
Establish Purchasing and Inventory Control policies and procedures to
be followed by all departments and functional units.
5.14
Protect the integrity and image of XYZ Company .
12345
12345
JOB DESCRIPTION
6.0
7
DUTIES
Effective discharge of the responsibilities of the Purchasing and Inventory Control Manager requires performance of the following duties:
6.1
Planning:
6.1.1 Select, hire, train, supervise, discipline, evaluate, promote and, as necessary, terminate personnel
reporting to this position.
12345
6.1.2 Establish and revise purchasing and inventory goals and targets regularly, seeking to maximize inventory
turns while minimizing out of stocks.
12345
6.1.3 Serve as permanent member of the Committee for Corporate Strategy and Budget and participate
in all meetings.
12345
6.1.4 Work with other departments, particularly the Contractor Sales Departments and Distribution – Operations
Department to effectively plan for and manage customer requirements and expectations
regarding materials and deliveries for new and ongoing projects.
12345
6.1.5 Coordinate the fulfillment of customer needs as determined by the Contractor Sales Departments,
Door Shop and Installed Sales Department along with the Distribution - Operations Department
to ensure customer service and product delivery in line with realistic customer expectations and
achievable company performance goals.
12345
JOB DESCRIPTION
6.1.6
Ensure all Contractor Special Order activities and order placements are
coordinated with the Contractor Sales Departments and the
Distribution – Operations Department.
12345
6.1.1
Conduct regular cycle counting of major product lines and categories
in conjunction with the other functional managers to ensure perpetual
inventory accuracy and correct any problems as they arise.
6.1.2
6.2
8
12345
Develop new purchasing and inventory ideas and strategies and
implement them upon approval of the Owner / Chief Executive Officer. 1 2 3 4 5
Organization
6.2.1
6.2.2
Ensure maintenance of the purchasing organization consistent with
the goals of the Owner / Chief Executive Officer.
12345
Coordinate purchasing activities with the General Managers at both
locations, the Contractor Sales Departments. Commercial/Industrial
Department, Distribution - Operations Department, Door Shop, Installed
Sales Department and the Retail Sales Departments, in particular,
keeping an open line of communications regarding stock levels,
customer demands and future needs and anticipated market / price
movements.
12345
JOB DESCRIPTION
6.3
9
Finance
6.3.1
6.3.2
Recommend capital expenditures to the Controller and
Owner / Chief Executive Officer as appropriate.
12345
Understand overhead as percentage of profits and how it affects profits and
pricing / breakevens of the products.
12345
6.4 Preparing a Fiscal and Flexible Purchasing Budget for the Department with the
assistance of the Controller.
12345
JOB DESCRIPTION
6.5
10
Purchasing and Inventory Control.
6.5.1
Review all special orders and review all commodity lumber and retail material
purchase requisitions on a timely basis, working with the requisitioners to ensure
that the information is complete and clear. Requisitions should be completed
with the quantity requested and estimated costs - basis last price paid.
12345
6.5.2
The Purchasing and Inventory Control Manager may delegated to the Contractor,
Installed Sales and Door Shop Departments purchasing authority for special
order items, including insulation and gutter materials, doors, and window
packages, but will review these purchases and procedures on a regular basis.
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6.5.3
Report all purchasing related information to the Owner / Chief Executive Officer,
especially vendor and market price changes and increases and market
irregularities. Discuss purchase strategies and actions with Owner / C.E.O. in l
light of this information prior to taking action or recommending changes.
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6.5.4
Meet regularly with vendor contacts and evaluate them for cost effectiveness,
to include negotiated pricing, credit and defective goods policies, dating
discounts, terms, rebates, advertising and special events support and other
incentives offered.
6.5.5
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Coordinate with the Owner / Chief Executive Officer, General Managers,
Contractor Sales Manager s, Retail Sales Managers, Commercial/Industrial
Sales Manager, and Distribution – Operations Manager, the selection of specific
products and commitments to handle branded inventory items and new stock
items.
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JOB DESCRIPTION
6.5.6
Meet with the other managers regularly to review individual product
departments and categories, to determine which items to keep, which
to discontinue, and which new items to bring in.
11
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6.5.7
Establish appropriate order guidelines, including min-max figures and
review inventory alert reports and purchasing procedures on a regular basis,
checking for shortages and overages.
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6.5.8
Establish and achieve or exceed inventory turn goals, and minimize
the quantity of obsolete and excessive inventory items.
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Assist in updating product price lists, as necessary and required.
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6.5.9
6.5.10 Oversee purchase order entry and tracking of all open Purchase Orders,
including Special Order items with the assistance of the Purchasing and
Inventory Control Assistant.
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6.5.11 Perform new material or vendor sourcing as needed or requested.
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6.5.12 Be familiar with product lines and their prices and sources.
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6.5.13 Maintain and adhere to approved company policies regarding
purchasing.
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JOB DESCRIPTION
12
6..5.14Maintain current and prospective vendor/product files, library of catalogues,
price lists, product announcements, and other source information, providing
applicable information to functional managers on a regular basis.
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6.5.15 Know the product component requirements for the lumber, industrial,
and building materials industry. Coordinate product sales needs with
vendor lead times to maximize turns and meet customer expectations.
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6.5.16 Conduct vendor returns for retail items and commodities; review and make
arrangements to dispose of obsolete materials, with assistance from the Retail
Sales Managers, Distribution - Operations Manager and other functional
managers.
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6.5.17 Supervise, monitor, and maintain the correct material and operating supply
levels with the Distribution – Operations Manager, the Retail Sales Managers,
the Contractor Sales Managers and Commercial/Industrial
Sales Manager.
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6.5.18 form special analysis and research as requested or directed by the
Owner / Chief Executive Officer or functional managers.
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6.5.19 Provide guidelines and coordinate, monitor and control the inventory with
the assistance of the Distribution- Operations Manager, the Retail Sales
Managers, the Contractor Sales Managers and the Commercial/Industrial
Sales Manager
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6.5.20 Coordinate with the Distribution - Operations Manager, the General Managers,
the Retail Sales Managers, Contractor Sales Managers and the Commercial/Industrial
Sales Manager so that the quality of materials received meets the
purchase order requirements and customer expectations.
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6.5.21 Maintain current and prospective odd stock, obsolete and close out reports
on a monthly basis.
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JOB DESCRIPTION
6.6
13
Whenever substandard performance or unprofitable activities are recognized in the
day-to-day operations of the department or in the inventory control activities, the
Purchasing and Inventory Control Manager seeks to correct the problem through
the Owner / Chief Executive Officer and functional managers if applicable.
6.7 Perform all other duties on a temporary or permanent basis as assigned or requested
by the Owner / Chief Executive Officer.
6.8
Enforce compliance with all company written policies and procedures and ensure
that all subordinates follow them.
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JOB DESCRIPTION
7.0
14
MEASURES OF PERFORMANCE
The Purchasing and Inventory Control Manager will be evaluated specifically on the following functions:
7.1
Timely and smooth coordination of special order, retail, industrial and commodity
purchasing duties requiring minimum senior management involvement.
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7.2
Demonstrated ability managing cost effective Inventory Control Functions.
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7.3
Demonstrated capacity for cost-effective purchasing.
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7.4
Demonstrated ability to take advantage of vendor discounts, as directed.
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7.5
Demonstrated ability in monitoring and increasing inventory turnover and other
inventory control functions.
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Demonstrated ability to reduce and keep obsolete and excessive inventories to a
minimum.
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7.6
JOB DESCRIPTION
15
8.0 STANDARDS OF PERFORMANCE
The following general Standards of Performance are used in evaluating this position.
8.1
Punctuality in:
8.1.1
Arriving and beginning work promptly.
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8.1.2
Completing assigned tasks within estimates.
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8.1.3
Meeting deadlines.
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8.1.4
Meeting budgetary objectives.
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8.1.5
Meeting purchasing requirements.
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JOB DESCRIPTION
8.2
16
Attitude as reflected by:
8.2.1
Willingness to communicate
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8.2.2
Flexibility in adapting to changes.
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8.2.3
Willingness to spend the time and necessary efforts to get the job done. 1 2 3 4 5
8.2.4
Learning new skills to improve effectiveness.
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8.2.5
Compatibility with and support of other managers and co-workers.
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8.2.6
Respect for authority and established channels of communication.
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8.2.7
Loyalty to the company, its management and its employees.
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8.2.8
Acceptance of responsibility.
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8.2.9
Commitment to excellence.
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8.2.10 Reflection on company image.
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JOB DESCRIPTION
8.3
8.4
8.5
17
Effective Use of Time:
8.3.1
Planning and executing tasks effectively.
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8.3.2
Delegating tasks to lowest possible level while maintaining responsibility.
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8.3.3
Minimizing wasted time on the job due to personal business and socializing.
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Job and Communication Skills:
8.4.1
Problem recognition and prevention.
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8.4.2
Problem solving capability.
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8.4.3
Leadership by example.
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Accuracy and Effectiveness of Work:
8.5.1
Minimal rejects, reworks and special order returns.
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8.5.2
Frequent quality checks and prompt corrective action.
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8.5.3
Overall cost-effectiveness of assigned areas of responsibility.
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JOB DESCRIPTION
8.6
18
Appearance:
8.6.1 Professionalism in all workmanship and cleanliness and neatness
of person and department work areas.
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8.6.2 Professionalism as reflected in personal appearance,
personal grooming and hygiene.
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This job description is presented for informational purposes only, and can be changed at any time. This is not an
employment contract, expressed or implied. No representative or the Company has any authority to enter into any
agreement that is contrary to the foregoing.
I have read and understand the above duties, which are expected of me.
Signed
Date
I have read and understand the above performance evaluation and it has been reviewed by me.
Signed
Date
PERFORMANCE EVALUATION
SUMMARY
1
1.0
INTRODUCTION
This procedure provides detailed information and instructions for the completion of the Performance Evaluation Summary & Development
Plan form as a component of the Employee Evaluation System.
2.0
GENERAL INFORMATION
2.1
The form consists of two sections:
2.1.1
The Employee Performance Summary:
components.
This serves as an overview of the entire evaluation, summarizing all
2.1.2
The Performance Development Plan: This serves to point out weaknesses and guidelines for improvement.
2.2
Before completing the Performance Evaluation Summary & Develoment form, the supervisor must have read Standard
Procedure ES-001 (“Employee Evaluation System’).
2.3
During the evaluation process, the employee will be given a blank copy of this form with which to perform a self-evaluation.
2.4
The evaluator completes the form using information obtained from other forms and components of the Evaluation System.
2.5
The completed form is reviewed and discussed with the employee, as detailed in Standard Procedure ES-001 (“Employee
Evaluation System”).
PERFORMANCE EVALUATION
SUMMARY
2
3.0
COMPLETION OF THE FORM
3.1
Personnel Information:
3.1.1
Employee Name: First and Last Names of employee being evaluated
3.1.2
Department: Name of Department in which this employee works
3.1.3
Dept. Manager: First and Last Names of the manager in charge of the department in which this employee works
3.1.4
Completed Report Due: Date on which evaluation is due to be performed
3.1.5
Job Classification: Current Job Title of this employee
3.1.6
Last Review Date: Date on which this employee was last evaluated
3.1.7
Reviewed By: First and Last Names of the supervisor performing the evaluation
3.1.8
Review Date: Date on which evaluation was reviewed with employee.
PERFORMANCE EVALUATION
SUMMARY
3
3.2
3.3
Overall Evaluation:
3.2.1
Job Description RF: Rating Factor (RF) value as scored by the evaluator using the Job Description
3.2.2
Performance Evaluation RF:
Performance Evaluation form.
3.2.3
Overall Rating Description: Overall rating of the employee’s performance, or an average based on the scores obtained
from all components of the evaluation system.
Rating Factor (RF) as scored by the evaluator using the General Semi-Annual
Signatures:
3.3.1
All parties listed are to sign the completed evaluation as the final step in the evaluation process.
3.3.2
Employee signature indicates he/she has reviewed the evaluation with the evaluator, and has been given the opportunity
to provide written comments regarding the review.
3.3.3
Evaluator signature indicates he/she has reviewed the evaluation with the employee.
3.3.4
Reviewer signature indicates that the Controller has reviewed the entire package and verified that it is correct and
complete.
PERFORMANCE EVALUATION
SUMMARY
4
3.4
Strengths/Accomplishments:
3.4.1
3.5
3.6
Summarize the employee’s strengths and any significant results/accomplishments
contributing to the organization.
Development Plan:
3.5.1
Identify weaknesses, setting specific goals for improvement. Include target dates.
3.5.3
Any plan for improvements must be a joint effort. An "imposed" plan will not be effective.
Employee Comments:
3.6.1
The employee must be encouraged to provide input regarding the evaluation and to
make written comments explaining his/her position.
3.6.2
The employee must be informed that any comments he/she makes will not change this
evaluation in any way.
EVALUATION WORKSHEET
1
GENERAL SEMI-ANNUAL PERFORMANCE EVALUAT ION W ORKSHEET
POSITION:
NAM E:
JOB DESCRIPTION RF:
REVIEW DATE:
CHARACTERISTICS For each characteristic below, circle the score for the statement which most closely describes the employee.
QUALITY OF WORK Undependable. Does
not meet standards.
Frequently below standard.
M anagement constantly
points out items to
correct.
30
60
CONSISTENCY OF Wastes time. Allows
Sometimes does not seem
PERFORM ANCE
others to waste time.
interested in job. Puts forth
No organization. Work
effort if he/she perceives
is very erratic.
owners are watching.
15 Communicates poorly. 3 0
JOB
Has difficulty with
Gets by with present work.
KNOWLEDGE
present work. Would
Pretty much limited to a
need extensive training/
specific work area.
follow-up to do anything.
14
28
WORK ADJUSTM ENTShort attention span.
Can handle some pressure
AND ADAPTABILITY Frustrated and confused
and charge but has large
easily. Does not handle
swings in mood and
pressure well.
attitude.
15
30
COOPERATION
Causes friction with
Occasionally difficult to
other employees. Blames
work with. Sometimes
others for mistakes.
gossips about others.
30
Usually meets standards.
Performs work on schedule.
Needs minimum
management follow-up.
90
Adequate performance.
Performs only those duties
assigned and directly
stated in job description.
45
Handles his/her job
satisfactorily. Gives
management flexibility in
job assignment.
42
Seems reasonably happy
with current job. Does not
volunteer but will usually
accept change.
45
Willing to meet others halfway. Has a reserved attitude.
Sometimes works well in
a group.
60
90
Work usually exceeds
management's standards.
Requires very little correction and follow-up.
12 0
Steady regular performance
of assigned job. Organizes
work time very well.
Occasionally exceeds
required performance. 6 0
Handles present work
very well. Can cover in
other areas as needed.
LAST REVIEW DATE:
PERFORM ANCE
Expected Actual Trend
Consistently exceeds
standard. Work is completed
on time. M anagement spot
check maximum of weekly.
150
Outstanding performance.
Diligent and dependable.
Frequently exceeds
performance expectation.
75
Extensive knowledge of
job. Can be counted on to
train others and perform
any job or responsibility
56 assigned.
70
Adjusts very well to new
Does superior work in
people and situations. Is
current job. Enjoys change
flexible and enjoys some
and variety. Very interested
variety in job.
in personal growth through
6 0 new assignments.
75
Cooperates well with
Can be counted on to lead
others. Works well in
work groups. Is a positive
a group.
example of teamwork to
new employees
12 0
150
EVALUATION WORKSHEET
WORK EFFORT
AND INITIATIVE
M akes very little effort
to get work done. Needs
constant supervision.
Requires extra supervision
to complete tasks. Is
concerned mainly with
doing as much work as
15 others do.
30
ATTITUDE TOWARD Antagonistic towards
Is temperamental and arguOWNERS, M ANAGERS
authority. Holds the
mentative. Frequently
AND CUSTOM ERS company in low regard.
causes communication
problems.
15
30
SKILL AND INGENUITY
Lacks coordination. Is
Is uneasy about job.
frequently confused. Does Requires a great deal
not seem to have skills for
of guidance.
present job.
20
40
ATTENTION TO
Careless and unobservant. Needs frequent reminders
SAFETY
Work habits could present
to follow safety rules.
a danger to fellow employees.
15
PUNCTUALITY AND Frequently arrives late.
ATTENDANCE
Is chronically absent.
Gives no reason and resents
questioning.
8
JUDGM ENT
Not able to see
consequences of his/her
decisions. Acts rashly.
45
Could be more regular.
Usually has a good reason if
absent or late. Usually has
a good explanation.
24
Average learning ability.
Can arrive at sound
decisions if given enough
time. Not decisive.
15
30
45
FUTURE POTENTIALProgress very slow.
Shows little desire to grow Average potential to
WITH COM PANY
Growth limited by lack of
beyond present job.
advance. Will need extra
initiative. Little future
Limited upward mobility.
training to advance beyond
potential.
present level.
8
16
24
TOTAL SCORE
30
Irregular attendance. Takes
advantage of opportunities
to come in late. Has had
several questionable
absences.
16
Learns slowly. Not sure of
own judgment, so usually
leaves decisions to others.
Requires only normal supervision. Does not worry
about comparing volume
work assigned compared
to others.
45
Accepts authority in a
positive manner. Is neutral
to company, employees
and customers.
45
Average skills and performance. Performs routine
duties well. Lacks ingenuity
in solving problems.
60
Has average attitude
towards safety. Needs
some supervision.
Needs some help starting a
project but then completes
it with minimal supervision
and follow-up
60
Enjoys job. Accepts
authority. Realizes
customers are important
to business.
60
Good at seeing what needs
to be done and doing it.
Does work easily and with
confidence.
80
Observes safety procedures.
Concentrates on the job
at hand. Does not take
chances.
60
Usually punctual and
regular attendance.
Always has a good reason
for being absent or late.
32
Able to think through
actions and still be decisive.
Conclusions reflect good
reasoning.
60
Eager to learn and advance.
Wants additional job
training. Shows growth
potential.
32
Takes on and completes
jobs on own initiative. Takes
job seriously and looks for
ways to improve company.
75
Knows the value of good
human relations. Goes out of
his/her way to cooperate
with fellow employees
and customers.
75
Imaginative and resourceful
in solving problems. Shows
high skill level in current job
10 0
Extremely careful. Suggests
procedures and improvements in workplace safety.
75
Is seldom late or absent
and only when it is
unavoidable. Promptly
reports reason to company.
40
Reasoning is sound, logical
and clear. Comes to conclusions quickly and acts on
them.
75
Outstanding progress.
Shows high potential for
advancement. Should
move ahead rapidly.
40
2
EVALUATION WORKSHEET
RATING FACTOR
Below 399 Poor
=1
400-600 Fair
= 2 601-780 Satisfactory
= 3 781-905 Commendable
=4
3
906-1000 Superior
=5
Work limitations:
Additional Comments:
Extra Training Needed:
Should Employee
Be Reassigned?:
Rated By:
Signatures:
ES-009
Evaluator
Date
Employee
Date
EVALUATION FLOW
CONTROLLER
1.
Schedules bi-annual reviews.
2.
Ensures all forms given to Manager.
3.
Reviews final evaluation and files in
personnel records.
EVALUATION MEETING
1.
2.
MANAGER
Manager Employee discuss evaluation and
develop and action plan.
Forms are signed and copies given to
Manager, Employee and HR Manager.
1.
Schedules Employee review meeting.
2.
Gives self-evaluation form to employee
(48 hrs. to complete).
3.
Performs evaluation.
EMPLOYEE
1.
Completes self-evaluation form.
2.
Returns form to manager prior to
scheduled evaluation meeting.
INCENTIVE COMPENSATION
STRUCTURE
PROFIT CENTER

Sales

Costs

Indirect Expenses

G&A and Purchasing Allocation

= Contribution Margin of Profit Center
WAREHOUSE OPERATIONS
HOW TO CHANGE A COST CENTER TO
PROFIT CENTER
Sale of Warehouse Items
- Cost of Warehouse Items
- Warehouse Expenses
- G&A Allocation
- Purchasing Allocation
= Contribution Margin of
Warehouse Operations
RULES OF THE ROAD

Never Pay Incentive if Bottom Line of
Company is Not 1%

Pay Out Incentive Quarterly – Each Quarter is
a New Compensation Base

All Employees in Profit Center Benefit When
Profit Center is Profitable.
PAYMENT

Calculate Incentive Payment by Paying Out a
Percentage of Central Pool, or Individual Pool
Example:
Retail/Consumer Sales Manager 4% Straight
Inside Sales Support
4% Pooled
Counter Representative

2% Pooled
If Profit Center Loses Money, Don’t Pay
SALES COMMISSION
SALES COMMISSION MYTHS

Incentive Calculations Based on Gross
Sales Increase Overall Company Sales

Tying an Incentive to Gross Margin
Dollars Increases Gross Margin
Percentages
SALES COMMISSION MYTHS

Calculations Based on Gross Margin
Percentages Eliminate Problems
Associated with Myths 1 & 2 Above.

Profit Sharing Schemes Eliminate
Worries About Product Break-evens
Because Rewards are Based on the
Company’s Bottom Line.
THE RIGHT WAY…

Pay on Profits and
Return on Assets
COMMISSION SCHEDULE
1
ACCOUNT EXECUTIVE COMMISSION SCHEDULE (ANNUAL)
NORMAL
Percentage of Indiv idual Sales Contribution Margin
Variable
Base Salary (Monthly )
-
Breakev en Markup
1.359181
20.00%
20.50%
21.00%
21.50%
22.00%
22.50%
23.00%
23.50%
24.00%
24.50%
25.00%
-
50,000.00
60,000.00
70,000.00
80,000.00
90,000.00
100,000.00
110,000.00
120,000.00
130,000.00
140,000.00
150,000.00
15.00
-
(18,636.48)
(22,922.87)
(27,395.63)
(32,054.75)
(36,900.23)
(41,932.08)
(47,150.30)
(52,554.88)
(58,145.82)
(63,923.13)
(69,886.81)
15.50
-
(17,820.97)
(21,919.80)
(26,196.83)
(30,652.07)
(35,285.53)
(40,097.19)
(45,087.06)
(50,255.14)
(55,601.44)
(61,125.94)
(66,828.65)
16.00
-
(17,005.46)
(20,916.72)
(24,998.03)
(29,249.40)
(33,670.82)
(38,262.29)
(43,023.82)
(47,955.41)
(53,057.05)
(58,328.74)
(63,770.49)
16.50
-
(16,189.96)
(19,913.65)
(23,799.23)
(27,846.72)
(32,056.11)
(36,427.40)
(40,960.59)
(45,655.67)
(50,512.66)
(55,531.55)
(60,712.33)
17.00
-
(15,374.45)
(18,910.57)
(22,600.44)
(26,444.05)
(30,441.40)
(34,592.51)
(38,897.35)
(43,355.94)
(47,968.27)
(52,734.35)
(57,654.18)
17.50
-
(14,558.94)
(17,907.49)
(21,401.64)
(25,041.37)
(28,826.70)
(32,757.61)
(36,834.11)
(41,056.21)
(45,423.89)
(49,937.16)
(54,596.02)
18.00
-
(13,743.43)
(16,904.42)
(20,202.84)
(23,638.70)
(27,211.99)
(30,922.72)
(34,770.88)
(38,756.47)
(42,879.50)
(47,139.96)
(51,537.86)
18.50
-
(12,927.92)
(15,901.34)
(19,004.04)
(22,236.02)
(25,597.28)
(29,087.82)
(32,707.64)
(36,456.74)
(40,335.11)
(44,342.77)
(48,479.70)
19.00
-
(12,112.41)
(14,898.27)
(17,805.25)
(20,833.35)
(23,982.58)
(27,252.93)
(30,644.40)
(34,157.00)
(37,790.73)
(41,545.57)
(45,421.54)
19.50
-
(11,296.90)
(13,895.19)
(16,606.45)
(19,430.67)
(22,367.87)
(25,418.03)
(28,581.16)
(31,857.27)
(35,246.34)
(38,748.38)
(42,363.39)
COMMISSION SCHEDULE
2
ACCOUNT EXECUTIVE COMMISSION SCHEDULE (ANNUAL)
NORMAL
Percentage of Indiv idual Sales Contribution Margin
Variable
Base Salary (Monthly )
-
Breakev en Markup
1.359181
20.00%
20.50%
21.00%
21.50%
22.00%
22.50%
23.00%
23.50%
24.00%
24.50%
25.00%
-
50,000.00
60,000.00
70,000.00
80,000.00
90,000.00
100,000.00
110,000.00
120,000.00
130,000.00
140,000.00
150,000.00
20.00
-
(10,481.39)
(12,892.12)
(15,407.65)
(18,028.00)
(20,753.16)
(23,583.14)
(26,517.93)
(29,557.53)
(32,701.95)
(35,951.18)
(39,305.23)
20.50
-
(9,665.89)
(11,889.04)
(14,208.85)
(16,625.32)
(19,138.45)
(21,748.24)
(24,454.69)
(27,257.80)
(30,157.56)
(33,153.99)
(36,247.07)
21.00
-
(8,850.38)
(10,885.96)
(13,010.05)
(15,222.65)
(17,523.75)
(19,913.35)
(22,391.45)
(24,958.06)
(27,613.18)
(30,356.79)
(33,188.91)
21.50
-
(8,034.87)
(9,882.89)
(11,811.26)
(13,819.97)
(15,909.04)
(18,078.45)
(20,328.22)
(22,658.33)
(25,068.79)
(27,559.60)
(30,130.76)
22.00
-
(7,219.36)
(8,879.81)
(10,612.46)
(12,417.30)
(14,294.33)
(16,243.56)
(18,264.98)
(20,358.59)
(22,524.40)
(24,762.40)
(27,072.60)
22.50
-
(6,403.85)
(7,876.74)
(9,413.66)
(11,014.62)
(12,679.62)
(14,408.66)
(16,201.74)
(18,058.86)
(19,980.01)
(21,965.21)
(24,014.44)
23.00
-
(5,588.34)
(6,873.66)
(8,214.86)
(9,611.95)
(11,064.92)
(12,573.77)
(14,138.51)
(15,759.12)
(17,435.63)
(19,168.01)
(20,956.28)
23.50
-
(4,772.83)
(5,870.59)
(7,016.07)
(8,209.27)
(9,450.21)
(10,738.88)
(12,075.27)
(13,459.39)
(14,891.24)
(16,370.82)
(17,898.13)
24.00
-
(3,957.32)
(4,867.51)
(5,817.27)
(6,806.60)
(7,835.50)
(8,903.98)
(10,012.03)
(11,159.66)
(12,346.85)
(13,573.62)
(14,839.97)
24.50
-
(3,141.82)
(3,864.43)
(4,618.47)
(5,403.92)
(6,220.80)
(7,069.09)
(7,948.79)
(8,859.92)
(9,802.47)
(10,776.43)
(11,781.81)
25.00
-
(2,326.31)
(2,861.36)
(3,419.67)
(4,001.25)
(4,606.09)
(5,234.19)
(5,885.56)
(6,560.19)
(7,258.08)
(7,979.23)
(8,723.65)
25.50
-
(1,510.80)
(1,858.28)
(2,220.87)
(2,598.57)
(2,991.38)
(3,399.30)
(3,822.32)
(4,260.45)
(4,713.69)
(5,182.04)
(5,665.49)
26.00
-
(695.29)
(855.21)
(1,022.08)
(1,195.90)
(1,376.67)
(1,564.40)
(1,759.08)
(1,960.72)
(2,169.30)
(2,384.84)
(2,607.34)
26.50
-
120.22
147.87
176.72
206.78
238.03
270.49
304.15
339.02
375.08
412.35
450.82
27.00
-
935.73
1,150.94
1,375.52
1,609.45
1,852.74
2,105.39
2,367.39
2,638.75
2,919.47
3,209.55
3,508.98
27.50
-
1,751.24
2,154.02
2,574.32
3,012.13
3,467.45
3,940.28
4,430.63
4,938.49
5,463.86
6,006.74
6,567.14
28.00
-
2,566.75
3,157.10
3,773.12
4,414.80
5,082.16
5,775.18
6,493.86
7,238.22
8,008.24
8,803.94
9,625.29
28.50
-
3,382.25
4,160.17
4,971.91
5,817.48
6,696.86
7,610.07
8,557.10
9,537.96
10,552.63
11,601.13
12,683.45
COMMISSION SCHEDULE
3
ACCOUNT EXECUTIVE COMMISSION SCHEDULE (ANNUAL)
NORMAL
Percentage of Indiv idual Sales Contribution Margin
Variable
Base Salary (Monthly )
-
Breakev en Markup
1.359181
20.00%
20.50%
21.00%
21.50%
22.00%
22.50%
23.00%
23.50%
24.00%
24.50%
25.00%
-
50,000.00
60,000.00
70,000.00
80,000.00
90,000.00
100,000.00
110,000.00
120,000.00
130,000.00
140,000.00
150,000.00
29.00
-
4,197.76
5,163.25
6,170.71
7,220.15
8,311.57
9,444.97
10,620.34
11,837.69
13,097.02
14,398.33
15,741.61
29.50
-
5,013.27
6,166.32
7,369.51
8,622.83
9,926.28
11,279.86
12,683.58
14,137.42
15,641.41
17,195.52
18,799.77
30.00
-
5,828.78
7,169.40
8,568.31
10,025.50
11,540.98
13,114.75
14,746.81
16,437.16
18,185.79
19,992.71
21,857.92
30.50
-
6,644.29
8,172.47
9,767.10
11,428.18
13,155.69
14,949.65
16,810.05
18,736.89
20,730.18
22,789.91
24,916.08
31.00
-
7,459.80
9,175.55
10,965.90
12,830.85
14,770.40
16,784.54
18,873.29
21,036.63
23,274.57
25,587.10
27,974.24
31.50
-
8,275.31
10,178.63
12,164.70
14,233.53
16,385.11
18,619.44
20,936.52
23,336.36
25,818.95
28,384.30
31,032.40
32.00
-
9,090.81
11,181.70
13,363.50
15,636.20
17,999.81
20,454.33
22,999.76
25,636.10
28,363.34
31,181.49
34,090.56
32.50
-
9,906.32
12,184.78
14,562.30
17,038.88
19,614.52
22,289.23
25,063.00
27,935.83
30,907.73
33,978.69
37,148.71
33.00
-
10,721.83
13,187.85
15,761.09
18,441.55
21,229.23
24,124.12
27,126.24
30,235.57
33,452.12
36,775.88
40,206.87
33.50
-
11,537.34
14,190.93
16,959.89
19,844.23
22,843.93
25,959.02
29,189.47
32,535.30
35,996.50
39,573.08
43,265.03
34.00
-
12,352.85
15,194.00
18,158.69
21,246.90
24,458.64
27,793.91
31,252.71
34,835.04
38,540.89
42,370.27
46,323.19
34.50
-
13,168.36
16,197.08
19,357.49
22,649.58
26,073.35
29,628.81
33,315.95
37,134.77
41,085.28
45,167.47
49,381.34
35.00
-
13,983.87
17,200.16
20,556.28
24,052.25
27,688.06
31,463.70
35,379.18
39,434.50
43,629.67
47,964.66
52,439.50
SALES COMMISSION WORKSHEET
SALES COMMISSION CALCULATION WORKSHEET
SALESPERSON
COMMISSION CALCULATION
1
NAME
2
Base Salary
3
Commission (%)
4
Sales Volume
50,000.00
12 OH Rate
5
COGS
39,500.00
13 Overhead Costs
9
2,166.00
20.00%
CALCULATION FACTORS
6
Indirect Expenses
7
G&A Allocation
8
Total COGS
-
16,966.04
152,128.00
GROSS MARGIN
10 IC Rate
11 Indirect Cost
(4) - (5)
10,500.00
(6) / (8)
-
(5) x (10)
-
(7) / (8)
0.11
(5) x (12)
4,405.23
14 DOING BUSINESS
(13) + (11)
4,405.23
15 Contribution Margin
(9) - (14)
6,094.77
(15) x (3) / 100
1,218.95
(16) + (2)
3,384.95
TOTAL COST OF
16 COMMISSION
17
TOTAL
SALARY
INVENTORY
MANAGEMENT
INVENTORY MANAGEMENT

Knowledge of Anticipated Sales

Knowledge of Present Sales Transactions

Purchase Only Items That Sell

Discounts on Purchasing Never Outweigh
the Disadvantages of Carrying Costs

Carrying High Margin Items for Long
Periods Reduces Cash Flows……
SALES
AND
MARKETING
SALES & MARKETING
Use Bubble Charts to Show Sales Personnel
Product Margin / Volume Matrix
ABC Lumber & Hardware
Company Wide - Store Items
Sales Volume
55. 00
09 Office Supplies
STARS
PROBLEM CHILDREN
04 P lumbing
45. 00
01P aints
03 Electrical
02 P o wer & Hand
Hand
ToTools
o ls
08
35. 00
10 Sto re B uilding M aterials
0 7 La wn & G a rde n
Gross Margin

06 Ho usewares
25. 00
CASH COWS
DOGS
15. 00
Plywood
Power Tools
5. 00
200,000
(5. 00)
175,000
150,000
125,000
100,000
75,000
70,000
60,000
50,000
40,000
30,000
20,000
10,000
-
SALES & MARKETING

Use Call Reports
DAY:
CALL #
NOTES
Company Name:
Address:
City/State/ZIP:
Phone Number:
Fax Number:
Contacts:
Call Report:
TITLE
NAME
CALL REPORT SAMPLE
SALES & MARKETING

Set Up Both Outside Sales and Inside Sales
Personnel Departments

Insist on Sales Personnel Submitting Sales
Forecasts by Product Line

Hold Sales Personnel Accountable to
Projections and to Management Objectives

Have Meetings to Work to Establish Objectives

Only Advertise Those Products and Services
That Sell
IMPLEMENTATION
IMPLEMENTATION
“It must be remembered that there is nothing
more difficult to plan, more doubtful of
success, nor more dangerous to manage
than the creation of a new system. For the
initiator has the enmity of all who would
profit by the preservation of the old
institutions and merely lukewarm defenders
in those who would gain by the new one.”
The Prince
Machiavelli
WRAP UP
QUESTION AND ANSWER
SESSION
SIX KEYS TO SUCCESS

Determine Who Your Customers Are

Format Financials By Product Line and Profit
Center

Centralize Purchasing

Develop an Interactive Budget Process

Strategically Merchandise Your Products

Link Employee Evaluations to Job Descriptions