Visionary Design Systems and the Pdm Problem: Case Analysis

Case Analysis: Visionary Design Analysis and the PDM Problem

Submitted To: Professor Hua Wang

Submitted By: Cassandra Ferraro

Date Submitted: Monday June 1st, 2015

Course Code: IRE3615H-F

Visionary Design Systems and the PDM Problem: Case Analysis

Introduction         

Visionary Design Systems (VDS) is a systems integrator and seller of Computer Aided Designs (CAD) systems, along with customization and training services. The company has a philosophy of empowerment, coupled with performance-based pay and decentralization. Furthermore, the company encourages an atmosphere of friendliness where everyone is a partner and works as a team. By aligning employee interests with organizational goals and giving employees the autonomy to make decisions, the company believes that they will be successful and profitable. Although VDS was a market leader in CAD software and hardware, a critical market for it (PDM) was a struggling division within the company. PDM was a relatively new development, and was responsible for storing CAD documents in an organized manner and improving the company’s ability to manage data. The main issue with this division is that progress within the department was slow and unable to support itself financially. The structure of the compensation and incentive plans unsuccessfully aligned employee interests (Fred Butalo and Bill Braxton) with those of the firm. Throughout this analysis, one will analyze the PDM problem, discuss how it should be resolved, and provide recommendations for policy changes.

Assessment of VDS Overall Compensation System

        The compensation plan at VDS may be separated into three categories: base salary, commissions, and bonuses. After thoroughly assessing VDS’s compensation plan, there are many things that may stand out and capture one’s attention. Firstly, it is very clear that commissions at VDS make up a large portion of overall salary. This reflects the company’s underlying belief that ‘if we do well as a company, you will do well as an employee,’ and employees are able to earn more as sales revenue increases. As a result, compensation varies each year, reflecting company sales. This compensation plan attracts employees who are willing to take on risk and understand that their performance level drives their salary. Overall, the compensation plan reflects a sales-based organization, with sales reps earning the highest percent commission, and commission decreasing as one enters into administrative roles. In addition, performance reviews are used as an educational tool to provide employees with feedback regarding their performance. However, performance reviews are not tied to compensation and are instead used by managers to help employees understand the goals and objectives of the organization, and instill within them a sense of empowerment.