Current Compensation Plan Fair To The Salesman Case Study

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Is the current compensation plan fair to the salesman? Does it serve as a motivator?
-The current compensation plan is not fair to the salesman. The compensation/incentive plan is not effective as proven by the company’s flat sales despite a growing market for outdoor sporting products. This is because of several issues. Annual earnings of the company?s salespeople are below industry average. The thresholds for commission pay are too large to motivate salesmen to strive to reach the next level. traveling expenses are drawn against commission which results in a lack of motivation from the salesmen. Sales increase awards award on percentage, which is more motivating to low-volume salesmen than high-volume salesmen. Salespeople also have to
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Sales had no increase appreciably from year to year and many salespeople earned less than $30,000 annually. The current compensation plan relies solely on the one factor of amount of sales and fails to take into account other aspects of the salesperson’s performance. There were incentives for the top five salespeople but not enough for others on the sales force that worked hard as well. The plan did not offer enough incentive for salespeople to stay motivated and continue to increase their sales.
-2. What are the strengths and weaknesses of the controller’s plan for compensation?
-The controller’s plan is one that has a lot of good ideas, but also is a plan that treads on thin ice. The incentive plans currently in existence have several weaknesses. Some of the plans require that the salesman be in the territory the previous year to even be eligible for payment of a bonus. This results in absolutely no incentive for first
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This plan makes it so that if your sales in the current month are higher than last year’s in that month, you get the 10% of the difference. This creates a very strong incentive to want to increase your sales without offering any guaranteed money. I would structure the compensation plan by giving the salespeople a guarantee base amount and in addition they can earn commission on their efforts through selling merchandise. The guaranteed base amount is what is the most important in keeping the salespeople attracted. This way, they will make a certain amount and the commission compensates them for their hard efforts to keep them motivated. I would also offer a compensation package that includes benefits to salespeople. Benefits such as bonuses, insurance, pension plans, and vacations would be included in this package. I would offer new salespeople more training conferences to improve their skills and to understand thoroughly what is expected of them.This is very important because more training would lead to higher skills and better sales. Finally, I would conduct a group based session with different salespeople to see what they would recommend for a good compensation plan and what would help motivate them the best. By hearing what the employees have to say, you can ensure that your employees feel content and they can do the

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