bonuses for sales target achievement), in others salespersons receive commissions as a percentage of the sales they were involved in. The introduction of HR technology has revolutionized the way HR departments operate. The Management Dictionary covers over 2000 business concepts from 5 categories. One regulation is employers are required to, at a rate of time and a half if an employee works over 40 hours in one week (this is a U.S. standard and differs by country). No two compensation plans are alike. \underline{\ \ \ \ \ \ \ \ \ \ \ \ \ \ } && \underline{\ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ } && \underline{\ \ \ \ \ \ \ \ \ \ \ \ \ \ } && \underline{\ \ \ \ \ \ \ \ \ \ \ \ \ \ } && \underline{-3,000}\\ Terms and conditions, features, support, pricing, and service options subject to change without notice. 6. except: make it easy enough to allow for a majority of the salesforce to win. Profit margin/revenue-based compensation, Whos using profit margin/revenue-based compensation, Benefits of profit margin/revenue-based compensation, Disadvantages of profit margin/revenue-based compensation, Whos using residual commission compensation, Benefits of residual commission compensation, Disadvantages of residual commission compensation, Pros and cons of salaried versus hourly compensation, Pros of hourly compensation for employees, The freedom to change work schedules in accordance with other schedules, The opportunity to work more hours to make more money, Its often easier to get a new job if the current one isnt a good fit, Cons of hourly compensation for employees, Pros of hourly compensation for employers, Employers can increase or decrease hours based on heavy or slow seasons, Depending on how many employees are on the payroll, employers may not be required to provide benefits, including health insurance or, Cons of hourly compensation for employers, Payroll can be more complex and difficult to calculate if using multiple rates, Increased training and hiring expenses (as a result of high turnover), Pros of salary compensation for employees, Consistent hours and income create more security, Cons of salary compensation for employees, If working for a straight salary, better performance doesnt constitute higher pay, Switching between jobs can be more difficult, as theres often a more intense hiring process, Pros of salary compensation for employers, Salaried employees can be more loyal than hourly employees, Often a higher level of talent or education, Cons of salary compensation for employers, Payroll expenses are fixed, even if profitability decreases, It can be more expensive to attract top talent, Why employee classification is so important. Your salespeople are paid on commission. Salesmen have the greatest. After initial investigations by Holmes Miller, head of the Operations Department, BIA has narrowed the list to 9 cities. Commission-only compensation can be valuable for employers because top performers get the most money. Formal recognition programs have a better chance of success if sales managers do all of the following To ensure proper classification, employers should begin with the assumption that their commissioned employees are nonexempt, and then review the potential exemptions to determine whether they apply. If a salesperson earns more commissions than he was paid, he keeps the extra money. In this compensation structure, the employee receives a set hourly rate, plus a percentage of their sales. However, a straight salary plan also has its own advantages. How much investment capital should you accept? By accessing and using this page you agree to the Terms and Conditions. You have a meeting with her to outline the drawback(s) of this type of plan. 2. For employers who dont want to pay employees after they leave, this type of compensation can incentivize employees to stay at the company. Employees need not be scheduled for the same number of hours each week. A salesperson who is extrinsically motivated, is motivated by the rewards that the job provides, Reward system management involves the selection and utilization of organizational rewards to. The commission can include (but is not limited to) a percentage of personal sales, a percentage of team sales, bonuses, or overtime pay. In this type of compensation, income is solely based on sales made. ___________ rewards are those that are given in return for acceptable performance or effort. She loves training, creating processes, and introducing her clientele to new apps and technology. Offer your support. advantages and disadvantages of straight salary and straight commission \end{array} They may have less vacation time or even zero paid vacation time. &&&&&& 35,000\\ \\ Which of the following conditions would indicate to the sales manager that the proportion of the bell-shaped distribution. Straight Salary Method of Remuneration | Meaning | Suitability | Merits | Demerits, Salesmanship | Meaning | Features | Objectives, Arguments in favor of Social Responsibility of Business, Business Enterprise Meaning | Public | Private | Joint, 10 Most Important functions of a Group Leader, Factors to be Considered in Planning Factory Building, Reasons for Governments Intervention in Private Business, Factors Influencing Salesmen Remuneration Plan, Organizational Factors Responsible for Resistance to Change, Avoidable and Unavoidable causes of Labour Turnover, 5 Important Classification of Business Environment, Under what circumstances a Pvt company be, Purchase Department | Purchase Officer | Qualification, 7 Arguments against Social Responsibilities of Business, Accountlearning | Contents for Management Studies |. determine the relative amounts to be paid in salary, commission, and bonus. i) Beneficial for industries which prohibits direct sales. 1. Efficiency: Straight salary method does not distinguish between efficient and inefficient salesmen. 6. Check to see how the salespeople would fare under the new plan by using sales figures from the previous year and calculating expecting compensation. a. costing little and reinforcing desirable behavior immediately after it occurs. Transcribed image text: QUESTION 17 An advantage of using a straight salary plan to compensate sales employees is that employees can be paid for performing only sales effort. Incentives to Salesmen: Straight salary method does not provide any incentive to the salesmen to do hard work. 8. Companies looking for long-term growth as opposed to short-term sales may opt for this type of compensation as well. Overall compensation and rewards increase with the use of team selling. Advantage: Straight-Forward Budgeting For you as a business owner, paying fixed salaries allows you to precisely know how much you're going to pay out each month in labor costs and to budget accordingly. Each time a commission check is cut you have the satisfaction of knowing that it's due to something positive. international stocks and bonds \text{Duke} & \text{85} & \text{Georgetown} & \text{66} & \text{19}\\ Which of the following is not a factor to be considered when developing a commission-only plan? It does not provide any incentive for hard work. This is a very broad category of compensation. Employers are also required to pay employees the. All of the above. Based on this analysis you know that a larger percentage of the salesperson's pay should be _____________ as compared to ______________ for the best results. PDF FRINGE BENEFITS AND SALARY PLAN (Exhibit A to Resolution No. 21052 As This compensation type tends to attract fewer people since there is no secure base pay. \end{array} Being Paid on Salary: Pros and Cons | Indeed.com 40 Questions to Ask Before You Accept A Job Offer. \text{T} & \text{AT&T} & \text{37.50} & \text{30.97} & \text{37.12} & \text{-0.01} & \text{22,009,008} & \text{37.50} & \text{37.06}\\ \hline One regulation is employers are required topay overtimeat a rate of time and a half if an employee works over 40 hours in one week (this is a U.S. standard and differs by country). As the Vice President of Sales for a new startup company, you decide to hire and train your own field sales force. This compensation category also includes restaurant employees paid mostly in tips. According to your text, what would you do next? Grant cites a Stanford and Kellogg study that found when a group of people only shared their email and names during negotiations, they struck up agreements 40 percent of the time. Which, if any, of the following sources available will help you in your task? 8 Pros and Cons of Straight Commission - BrandonGaille.com View the full answer. Sales Costs: Under the straight salary method, sales costs are not matched with the sales. Intuit, QuickBooks, QB, TurboTax, Mint, Credit Karma, and Mailchimp are registered trademarks of Intuit Inc. This type of compensation plan is every salespersons dream. they contribute little to company loyalty, resulting in potential salesforce control problems. An employee who agrees to this type of compensation will receive a base salary along with an additional bonus if performance hits or exceeds earning goals. Part A: Compare the advantages and disadvantages of straight salary and straight commission compensation plans. Chapter 12 Flashcards | Quizlet A straight salary plan can be advantageous in certain situations. An advantage of the straight salary plan for compensating salespeople is that it: Provides a direct relationship between sales and expenses. . Fresh business resources are headed your way! By creating a feeling of security in the minds of the salesmen, it maintains high morale among the sales force. The Science Behind Salary Negotiations: A Game Plan for Employers That 2. , which can vary depending on their states minimum wage. Solved QUESTION 17 An advantage of using a straight salary - Chegg If theyve just started a family, they may be looking for benefits like parental leave and the chance to work from home. \begin{array}{|l|l|c|c|c|c|c|c|c|} \hline They receive fixed sums of money at regular intervals (usually each month). While there are no real downsides to this type of plan, organizations should be mindful of several things: This requires a solution that benefits both employee and employer. \text{Stanford} & \text{77} & \text{Southern Cal} & \text{67} & \text{10}\\ She loves training, creating processes, and introducing her clientele to new apps and technology. the requirement that expenses be charged and the bills sent directly to the company for payment by the accounting department. Benefit packages amount to a negligible portion of the cost of keeping a salesperson in the field. Plan B is to issue 100,000 shares of common stock. Advantages of salary plus commission The benefits of a salary plus commission plan include: 1. You also decide to pay your salespeople with the most common type of compensation plan among companies. Under this method, there is no direct relationship between sales revenue and selling costs. Such a plan is quite common in the services industry as well as in the industrial goods sector. Employees who like to work on teams and dont want their compensation to be judged on individual performance may be attracted to this kind of plan as well. But straight commission method provides sufficient incentive to the salesmen to do hard work. Tips may be considered part of the employees wages, but the employer must pay no less than $2.13 an hour in direct wages and make sure that the amount of tips received is enough to meet the remainder of the hourly minimum wage. Part B: As a retail sales manager of a large superstore, one of your responsibilities is to train the newly hired employees. 5 Different Types of Sales Compensation Plans

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