i corporate revitalization tools for a competitive advantage

I

CORPORATE REVITALIZATION

TOOLS FOR A COMPETITIVE ADVANTAGE

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

Corporate Office

Purchasing, Sales, Marketing, A/R and AP, Policies and Procedures, Recruiting, Training, Inventory, Yard Ops etc.






Area A

Area B

Area C

AREA D

Area E

Area F

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 B

Area C

Area D

Area A

DISTINGUISH YOUR CUSTOMERS

Retail/Consumers

Business to Business

Commercial/Government Accounts

Manufacturing / Assembly / Installation Operations

FUNCTIONAL ORGANIZATION CHART

Professional Services Executive CommitteeC om m ittee for

S trategy & Budg ets

AdministrativeAssistant

Systems &In form ationS p ecia list

StaffA ccountant

AccountsP ayab le

A dm in is tra tor

Credit &C ollections

C lerk

Credit &C ollectionsS up ev isor

CommunicationsA ssis tant

Controller

ReceivableC oord inator

Purchasing AgentS p ecial O rder

B uyer

Purchasing &Inv entory C ontrol

A ss is tant

Purchasing &Inventory Control

Manager

Lumber CounterSales Rep

Cashiers

Floor SalesReps

W arehouse &Stock

Cleaning &Maintenance

Assistant StoreManager / Floor

Sales Supervisor

Retail SalesManager

Industrial/Commercial

Sales Manager

Outside SalesReps

Inside SalesReps

Millwork SalesSpecialist

Contractor SalesManager

Loaders/Customer Service

YardForeman

Drivers

Dispatcher

FleetMechanic

Distribution &Logistics Manager

W arehousemen

ProductionEmployees

MilworkForeman

MilworkPurchasing &

Receiving Coord.

MillworkManager

SeniorDesigners

Kitchen &Bath Manager

Ganeral Manager

Board Liaison

Board of Directors

FINANCIAL RESTRUCTURING

Sales

Cost of Goods Sold

Expenses

Profit

By Location

or

By Company

TYPICAL FINANCIAL STRUCTURE

TYPICAL FINANCIAL STRUCTURE

Comparative Income Statement XYZ Company

1997 1996 1995

$ % $ % $ %

Sales 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

General and Administrative ExpensesAutos and Trucks 137,065.00 1.17 121,450.00 1.03 105,308.00 1.02 Advertising 62,016.00 0.53 60,826.00 0.51 55,985.00 0.54 Bad Debts 89,559.00 0.77 46,408.00 0.39 31,344.00 0.30 Bank Charges 13,528.00 0.12 11,508.00 0.10 7,700.00 0.07 Computer Expense 17,542.00 0.15 16,074.00 0.14 19,636.00 0.19 Consulting 75.00 0.00 2,562.00 0.02 745.00 0.01 Contributions 5,240.00 0.04 2,209.00 0.02 2,177.00 0.02 Depreciation 144,891.00 1.24 112,053.00 0.95 72,109.00 0.70 Insurance 133,188.00 1.14 118,424.00 1.00 103,365.00 1.00 Interest 64,632.00 0.55 35,407.00 0.30 24,318.00 0.24

NEW FINANCIAL STRUCTURE

Organize Product Lines by Customer

Organize Expenses Around Profit Centers Customer Group / Manufacturing and/or Assembly = Profit Center

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

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 PLANNINGAND

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)

Analyze Sales, Expenses and Gross Margin (both budget & actual) by Profit Center

INCLUDE IN BUDGET MEETINGS

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

Holds Mgrs. Accountable for Individual Areas

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 EXAMPLECost of Goods Sold

FISCAL BUDGET EXAMPLEIndirect Expenses

FISCAL BUDGET EXAMPLEBottom 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

Company Wide - Store Items

Sales Volume

ABC Lumber & Hardware

-10,00020,00030,00040,00050,00060,00070,000

01 P aints

02 P ower & Hand Tools

03 Electrical

04 P lumbing

06 Housewares

07 Lawn & Garden

08 Sporting

09 Office Supplies

10 Store Building Materials

06 Housewares

09 Office Supplies

08


(5.00)

5.00

15.00

25.00

35.00

45.00

55.00

75,000100,000125,000150,000175,000200,000

Gro

ss M

argi

n

01 P aints

07 Lawn & Garden

04 P lumbing

03 Electrical


CASH COWS

Plywood

DOGS

Power Tools

STARS PROBLEM CHILDREN

Hand Tools

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.

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.

BREAKEVEN & PRICING WORKSHEET INSTRUCTIONS 1

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.


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.


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.


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 11 DESCRIPTION OF ITEM UNIT

2 PRODUCT LINE


3 PURCHASE PRICE PER UNIT 15.84

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 Line 4 / Line 5 0.0080

7 COST OF GOODS SOLD FOR PRODUCT LINE From Fiscal Analy sis for Profit Center 26,219.88

INDIRECT EXPENSE ALLOCATION

8 Total Indirect Ex penses From Fiscal Analy sis for Profit Center 632,657.83

9 Indirect Ex pense Allocation for Product Line Line 8 x Line 6 5,054.24

10 Indirect Ex pense Ratio Line 9 / Line 7 0.1928

GENERAL AND ADMINISTRATIVE EXPENSE ALLOCATION

11 Total G&A Ex pense Allocation for Profit Center From Fiscal Analy sis for Profit Center 153,264.86

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

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

20 Operating Profit Margin Goal for Profit Center Taken from Fiscal Budget for Profit Center 4.84

21 Markup Factor Div isor ( 100 - Line 20 ) / 100 0.9516

22 Price Line 17 / Line 21 20.6311

23 Markup Line 22 / Line 3 1.3025

24 Gross Margin (Line 22 - Line 3) / Line 22 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)

1.0 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 1

3.0 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 2

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 Purchasing / Inventory Control Assistant. 4.3.2 Purchasing Agent / Special Order Buyer (if needed)

JOB DESCRIPTION 3

5.0 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 Overall responsibility for the retail and commodity purchasing and inventory control functions of the company. 1 2 3 4 5

5.2 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. 1 2 3 4 5

5.3 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. 1 2 3 4 5

5.4 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. 1 2 3 4 5

5.5 Responsible for vendor contacts and to negotiate all purchases with the intent of

securing the highest possible return for the company. 1 2 3 4 5

5.6 Strive to achieve balance between high inventory turns and minimal out of stocks. 1 2 3 4 5

JOB DESCRIPTION 4

5.1 Perform special purchasing, pricing research and projects, as directed by the Owner / Chief Executive Officer. 1 2 3 4 5

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. 1 2 3 4 5

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. 1 2 3 4 5

5.4 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. 1 2 3 4 5

JOB DESCRIPTION 5

JOB DESCRIPTION 6

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. 1 2 3 4 5

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. 1 2 3 4 5

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. 1 2 3 4 5

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. 1 2 3 4 5

5.5 Establish Purchasing and Inventory Control policies and procedures to be followed by all departments and functional units. 1 2 3 4 5

5.14 Protect the integrity and image of XYZ Company . 1 2 3 4 5

6.0 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. 1 2 3 4 5

6.1.2 Establish and revise purchasing and inventory goals and targets regularly, seeking to maximize inventory turns while minimizing out of stocks. 1 2 3 4 5

6.1.3 Serve as permanent member of the Committee for Corporate Strategy and Budget and participate in all meetings. 1 2 3 4 5

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. 1 2 3 4 5 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. 1 2 3 4 5

JOB DESCRIPTION 7

6.1.6 Ensure all Contractor Special Order activities and order placements are coordinated with the Contractor Sales Departments and the Distribution – Operations Department. 1 2 3 4 5 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. 1 2 3 4 5

6.1.2 Develop new purchasing and inventory ideas and strategies and implement them upon approval of the Owner / Chief Executive Officer. 1 2 3 4 5

6.2 Organization

6.2.1 Ensure maintenance of the purchasing organization consistent with the goals of the Owner / Chief Executive Officer. 1 2 3 4 5

6.2.2 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. 1 2 3 4 5

JOB DESCRIPTION 8

6.3 Finance 6.3.1 Recommend capital expenditures to the Controller and Owner / Chief Executive Officer as appropriate. 1 2 3 4 5

6.3.2 Understand overhead as percentage of profits and how it affects profits and pricing / breakevens of the products. 1 2 3 4 5

6.4 Preparing a Fiscal and Flexible Purchasing Budget for the Department with the assistance of the Controller. 1 2 3 4 5

JOB DESCRIPTION 9

6.5 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. 1 2 3 4 5

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. 1 2 3 4 5

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. 1 2 3 4 5

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. 1 2 3 4 5

6.5.5 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. 1 2 3 4 5

JOB DESCRIPTION 10

JOB DESCRIPTION 11

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. 1 2 3 4 5 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. 1 2 3 4 5

6.5.8 Establish and achieve or exceed inventory turn goals, and minimize the quantity of obsolete and excessive inventory items. 1 2 3 4 5

6.5.9 Assist in updating product price lists, as necessary and required. 1 2 3 4 5

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. 1 2 3 4 5

6.5.11 Perform new material or vendor sourcing as needed or requested. 1 2 3 4 5

6.5.12 Be familiar with product lines and their prices and sources. 1 2 3 4 5

6.5.13 Maintain and adhere to approved company policies regarding

purchasing. 1 2 3 4 5

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. 1 2 3 4 5

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. 1 2 3 4 5

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. 1 2 3 4 5

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. 1 2 3 4 5

6.5.18 form special analysis and research as requested or directed by the

Owner / Chief Executive Officer or functional managers. 1 2 3 4 5

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 1 2 3 4 5

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. 1 2 3 4 5

6.5.21 Maintain current and prospective odd stock, obsolete and close out reports on a monthly basis. 1 2 3 4 5

JOB DESCRIPTION 12

6.6 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. 1 2 3 4 5

6.7 Perform all other duties on a temporary or permanent basis as assigned or requested

by the Owner / Chief Executive Officer. 1 2 3 4 5

6.8 Enforce compliance with all company written policies and procedures and ensure that all subordinates follow them. 1 2 3 4 5

JOB DESCRIPTION 13

7.0 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. 1 2 3 4 5

7.2 Demonstrated ability managing cost effective Inventory Control Functions. 1 2 3 4 5 7.3 Demonstrated capacity for cost-effective purchasing. 1 2 3 4 5 7.4 Demonstrated ability to take advantage of vendor discounts, as directed. 1 2 3 4 5

7.5 Demonstrated ability in monitoring and increasing inventory turnover and other

inventory control functions. 1 2 3 4 5

7.6 Demonstrated ability to reduce and keep obsolete and excessive inventories to a minimum. 1 2 3 4 5

JOB DESCRIPTION 14

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. 1 2 3 4 5 8.1.2 Completing assigned tasks within estimates. 1 2 3 4 5 8.1.3 Meeting deadlines. 1 2 3 4 5

8.1.4 Meeting budgetary objectives. 1 2 3 4 5

8.1.5 Meeting purchasing requirements. 1 2 3 4 5

JOB DESCRIPTION 15

8.2 Attitude as reflected by:

8.2.1 Willingness to communicate 1 2 3 4 5 8.2.2 Flexibility in adapting to changes. 1 2 3 4 5 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. 1 2 3 4 5 8.2.5 Compatibility with and support of other managers and co-workers. 1 2 3 4 5 8.2.6 Respect for authority and established channels of communication. 1 2 3 4 5 8.2.7 Loyalty to the company, its management and its employees. 1 2 3 4 5 8.2.8 Acceptance of responsibility. 1 2 3 4 5 8.2.9 Commitment to excellence. 1 2 3 4 5 8.2.10 Reflection on company image. 1 2 3 4 5

JOB DESCRIPTION 16

8.3 Effective Use of Time:

8.3.1 Planning and executing tasks effectively. 1 2 3 4 5 8.3.2 Delegating tasks to lowest possible level while maintaining responsibility. 1 2 3 4 5 8.3.3 Minimizing wasted time on the job due to personal business and socializing. 1 2 3 4 5

8.4 Job and Communication Skills:

8.4.1 Problem recognition and prevention. 1 2 3 4 5 8.4.2 Problem solving capability. 1 2 3 4 5 8.4.3 Leadership by example. 1 2 3 4 5

8.5 Accuracy and Effectiveness of Work:

8.5.1 Minimal rejects, reworks and special order returns. 1 2 3 4 5 8.5.2 Frequent quality checks and prompt corrective action. 1 2 3 4 5 8.5.3 Overall cost-effectiveness of assigned areas of responsibility. 1 2 3 4 5

JOB DESCRIPTION 17

8.6 Appearance:

8.6.1 Professionalism in all workmanship and cleanliness and neatness of person and department work areas. 1 2 3 4 5 8.6.2 Professionalism as reflected in personal appearance, personal grooming and hygiene. 1 2 3 4 5

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

JOB DESCRIPTION 18

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: This serves as an overview of the entire evaluation, summarizing all components.

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 1

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.


3.2 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: Rating Factor (RF) as scored by the evaluator using the General Semi-Annual

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. 3.3 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.


3.4 Strengths/Accomplishments:

3.4.1 Summarize the employee’s strengths and any significant results/accomplishments contributing to the organization.

3.5 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.

3.6 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 1GENERAL SEMI-ANNUAL PERFORMANCE EVALUATION WORKSHEET

POSITION: NAME: J OB DESCRIPTION RF: REVIEW DATE: LAST REVIEW DATE:

CHARACTERISTICS For each characteristic below, circle the score for the statement which most closely describes the employee. PERFORMANCEExpected Actual Trend

QUALITY OF WORK Undependable. Does Frequently below standard. Usually meets standards. Work usually exceeds Consistently exceeds

not meet standards. Management constantly Performs work on schedule. management's standards. standard. Work is completedpoints out items to Needs minimum Requires very little correc- on time. Management spotcorrect. management follow-up. tion and follow-up. check maximum of weekly.

30 60 90 120 150CONSISTENCY OF Wastes time. Allows Sometimes does not seem Adequate performance. Steady regular performance Outstanding performance.PERFORMANCE others to waste time. interested in job. Puts forth Performs only those duties of assigned job. Organizes Diligent and dependable.

No organization. Work effort if he/she perceives assigned and directly work time very well. Frequently exceedsis very erratic. owners are watching. stated in job description. Occasionally exceeds performance expectation.

15 Communicates poorly. 30 45 required performance. 60 75J OB Has difficulty with Gets by with present work. Handles his/her job Handles present work Extensive knowledge ofKNOWLEDGE present work. Would Pretty much limited to a satisfactorily. Gives very well. Can cover in job. Can be counted on to

need extensive training/ specific work area. management flexibility in other areas as needed. train others and performfollow-up to do anything. job assignment. any job or responsibility

14 28 42 56 assigned. 70WORK ADJ USTMENTShort attention span. Can handle some pressure Seems reasonably happy Adjusts very well to new Does superior work inAND ADAPTABILITY Frustrated and confused and charge but has large with current job. Does not people and situations. Is current job. Enjoys change

easily. Does not handle swings in mood and volunteer but will usually flexible and enjoys some and variety. Very interestedpressure well. attitude. accept change. variety in job. in personal growth through

15 30 45 60 new assignments. 75COOPERATION Causes friction with Occasionally difficult to Willing to meet others half- Cooperates well with Can be counted on to lead

other employees. Blames work with. Sometimes way. Has a reserved attitude. others. Works well in work groups. Is a positiveothers for mistakes. gossips about others. Sometimes works well in a group. example of teamwork to

a group. new employees30 60 90 120 150

EVALUATION WORKSHEET 2

WORK EFFORT Makes very little effort Requires extra supervision Requires only normal super- Needs some help starting a Takes on and completesAND INITIATIVE to get work done. Needs to complete tasks. Is vision. Does not worry project but then completes jobs on own initiative. Takes

constant supervision. concerned mainly with about comparing volume it with minimal supervision job seriously and looks fordoing as much work as work assigned compared and follow-up ways to improve company.

15 others do. 30 to others. 45 60 75ATTITUDE TOWARDAntagonistic towards Is temperamental and argu- Accepts authority in a Enjoys job. Accepts Knows the value of goodOWNERS, MANAGERSauthority. Holds the mentative. Frequently positive manner. Is neutral authority. Realizes human relations. Goes out ofAND CUSTOMERS company in low regard. causes communication to company, employees customers are important his/her way to cooperate

problems. and customers. to business. with fellow employees15 30 45 60 and customers. 75

SKILL AND INGENUITYLacks coordination. Is Is uneasy about job. Average skills and perfor- Good at seeing what needs Imaginative and resourcefulfrequently confused. Does Requires a great deal mance. Performs routine to be done and doing it. in solving problems. Showsnot seem to have skills for of guidance. duties well. Lacks ingenuity Does work easily and with high skill level in current jobpresent job. in solving problems. confidence.

20 40 60 80 100ATTENTION TO Careless and unobservant. Needs frequent reminders Has average attitude Observes safety procedures. Extremely careful. SuggestsSAFETY Work habits could present to follow safety rules. towards safety. Needs Concentrates on the job procedures and improve-

a danger to fellow employees. some supervision. at hand. Does not take ments in workplace safety.chances.

15 30 45 60 75PUNCTUALITY AND Frequently arrives late. Irregular attendance. Takes Could be more regular. Usually punctual and Is seldom late or absentATTENDANCE Is chronically absent. advantage of opportunities Usually has a good reason if regular attendance. and only when it is

Gives no reason and resents to come in late. Has had absent or late. Usually has Always has a good reason unavoidable. Promptlyquestioning. several questionable a good explanation. for being absent or late. reports reason to company.

8 absences. 16 24 32 40J UDGMENT Not able to see Learns slowly. Not sure of Average learning ability. Able to think through Reasoning is sound, logical

consequences of his/her own judgment, so usually Can arrive at sound actions and still be decisive. and clear. Comes to conclu-decisions. Acts rashly. leaves decisions to others. decisions if given enough Conclusions reflect good sions quickly and acts on

time. Not decisive. reasoning. them.15 30 45 60 75

FUTURE POTENTIALProgress very slow. Shows little desire to grow Average potential to Eager to learn and advance. Outstanding progress.WITH COMPANY Growth limited by lack of beyond present job. advance. Will need extra Wants additional job Shows high potential for

initiative. Little future Limited upward mobility. training to advance beyond training. Shows growth advancement. Shouldpotential. present level. potential. move ahead rapidly.

8 16 24 32 40

TOTAL SCORE

EVALUATION WORKSHEET 3

RATING FACTOR Below 399 Poor = 1 400-600 Fair = 2 601-780 Satisfactory = 3 781-905 Commendable = 4 906-1000 Superior = 5

Work limitations:

Additional Comments:

Extra Training Needed:

Should EmployeeBe Reassigned?:

Rated By:

Signatures:ES-009 Evaluator Date Employee Date

EVALUATION FLOW

EVALUATION MEETING

1. Manager Employee discuss evaluation and develop and action plan.

2. Forms are signed and copies given to Manager, Employee and HR Manager.

CONTROLLER

1. Schedules bi-annual reviews.

2. Ensures all forms given to Manager.

3. Reviews final evaluation and files in personnel records.

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 COMPENSATIONSTRUCTURE

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)

NORMALPercentage of Indiv idual Sales Contribution Margin Variable



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)

NORMALPercentage of Indiv idual Sales Contribution Margin Variable



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

SALESPERSON COMMISSION CALCULATION

1 NAME 9 GROSS MARGIN (4) - (5) 10,500.00

2 Base Salary 2,166.00 10 IC Rate (6) / (8) -

3 Commission (%) 20.00% 11 Indirect Cost (5) x (10) -

4 Sales Volume 50,000.00 12 OH Rate (7) / (8) 0.11

5 COGS 39,500.00 13 Overhead Costs (5) x (12) 4,405.23

CALCULATION FACTORS 14TOTAL COST OF DOING BUSINESS (13) + (11) 4,405.23

6 Indirect Expenses - 15 Contribution Margin (9) - (14) 6,094.77

7 G&A Allocation 16,966.04 16 COMMISSION (15) x (3) / 100 1,218.95

8 Total COGS 152,128.00 17

TOTAL SALARY (16) + (2) 3,384.95

SALES COMMISSION CALCULATION WORKSHEET

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……

SALESAND

MARKETING

SALES & MARKETING

Company Wide - Store Items

Sales Volume

ABC Lumber & Hardware

-10,00020,00030,00040,00050,00060,00070,000

01 P aints


03 Electrical

04 P lumbing

06 Housewares

07 Lawn & Garden

08 Sporting

09 Office Supplies


06 Housewares

09 Office Supplies

08


(5.00)

5.00

15.00

25.00

35.00

45.00

55.00

75,000100,000125,000150,000175,000200,000

Gro

ss M

arg

in

01 P aints

07 Lawn & Garden

04 P lumbing

03 Electrical


CASH COWS

Plywood

DOGS

Power Tools

STARS PROBLEM CHILDREN

Hand Tools

Use Bubble Charts to Show Sales Personnel Product Margin / Volume Matrix

Use Call Reports

SALES & MARKETING

DAY: CALL # NOTES

Company Name: Address: City/State/ZIP: Phone Number: Fax Number: Contacts: TITLE NAME

Call Report:

CALL REPORT SAMPLE

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

SALES & MARKETING

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

i corporate revitalization tools for a competitive advantage

Documents

accountability slide

organizational structure

financial restructuring

income slide

line slide

cfocontroller slide

competitive advantage

answer session slide