ENT 630 - Module B

ENT 630 Module B – Compensation and Evaluating

Module B

Compensation and Evaluating – Mackensie Jimison

Sales Incentive Compensation Plan:

There are different compensation plans for sales and non-sales. Sales compensation plans have a direct and immediate impact on revenue which will require incentives to retain sales people to perform better. The plan goal should be to benefit both the employee and the company if not this may result in high turnover rate and lack of motivation for the sales team. Within this system the top salesperson gets paid the highest showing the sales team that your incentives and pay are directly related to your performance.

Sales compensation incentives should include a mix of pay. The best scenario is to provide a base salary plus commission. It will be easier to obtain salespeople while also providing incentives for their sales. Cap or no cap based on incentives need to be considered based on the affordability of the company. You don’t want to stunt people in their will to succeed by putting a cap on incentives but you need to consider how it will affect your finances if there is no cap. To keep incentives up consider timing payout in smaller portions more frequently. If employees have to wait for a large payout it may decrease their incentive.

“An effective sales force can provide a huge competitive advantage to almost any business. A fair, competitive, cost-effective, motivating and routinely monitored sales incentive compensation plan is a major factor in ensuring the effectiveness of your sales force.” – Eliza Polly

http://www.payscale.com/compensation-today/2010/06/sales-incentive-compensation-plan

 

Non-sales Compensation Plan:

The goal is to retain key employees and lessen the turnover rate by offering a competitive salary where you don’t pay too much or too little. Also employees work to the market and the value of the work to the market. Employees need to be satisfied enough that they can focus on their work without being distracted of underpay. W. Edwards Deming said “pay people well, so they forget about pay.” High turnover rates can cost companies much more money than using a higher pay rate or merit based raises in order to retain employees.

“Frederick Herzberg made this point, and I’m not sure it’s ever been improved upon: compensation does not act as a “satisfier”, or motivator. But it sure can act as a dissatisfier if someone believes they’re underpaid.” – Stuart Jennings

 

References:

Polly, Eliza. 2010, June 16. Sales Incentive Compensation Plan. http://www.payscale.com/compensation-today/2010/06/sales-incentive-compensation-plan

Jennings, Stuart. 2009, February 26. How to Write a Compensation Plan. http://www.payscale.com/compensation-today/2009/02/how-to-write-a-compensation-plan

PayScale. 2010, April 23. How to Use an Employee Performance Matrix. http://www.payscale.com/compensation-today/2010/04/employee-performance-matrix

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