1. What happened at ABC Computers that led to such a disappointing turn of events (e.g., high employee turn over, disengaged employees, etc.)?
The company didn’t seem to make any effort in measuring if their employees are happy, such as opinion survey. They have just sat on the comfortable result and never looked back which consists of. They should have reviewed and analyzed what their successful result had been made of. This would also help them to plan future business and investments.
As Jason mentioned, Tanaka-san also should have taken more proactive role for this issue –such as case analysis of exits, liaising with Western Division Sales Manager. If those managers could have resolved the issue which hold Western Division Sales number, the business result would have been even better.
2. What can you learn from this case study that you can apply to your own organization?
In my organization, the compensation system is not the main reason for leaving the company.
Rather, staffs are disappointed with their managers in various reasons; the lack of management skills is the one of them. This ‘management’ means not only ‘managing the people’ but ‘managing the issue’; in other words, finding the solution and delivering in appropriate manner.
It always is said that employees join the firm and leave the managers.
3. If you are in Tanaka-san's shoes, what would you recommend to the management of ABC Computers?
I agree with Jason about using ‘exit interview analysis’ in order to persuade ABC Company Managements.
I would also conduct employees’ opinion survey; what their employees are satisfied with, what they are not, what they would improve, what they could cut out.
Regarding the compensation system, I would suggest first that bonus pool itself should reflect the each Dept. performance.
Secondly it might work the combined approach of performance base and qualitative (behavioral) base in incentive.
Sales Dept usually consists of revenue creators (A) and Ops & Admin who supports Sales team (B).
The bonus for group A will consist of 70% performance base and 30% qualitative base. The bonus for group B will consist of that percentage vice versa.
This is because any sales dept. has the assistant or operation staffs who usually are not revenue creator. In addition, sales people should be required ‘good employees’ even if s/he earns many.