\text{Stanford} & \text{77} & \text{Southern Cal} & \text{67} & \text{10}\\ Hourly roles can often be perceived as less valuable or easier to replace. Which of the following accurately describe per diem expense plans? The independent contractor category is broad and includes everything from lawn services to sales to doctors and lawyers. , a pet-friendly working environment, etc.). The remaining 25% of the sick leave payout Companies looking for long-term growth as opposed to short-term sales may opt for this type of compensation as well. It is a highly attractive model, especially to start-ups who are seeking to penetrate a specific territory. These can range from monetary benefits (like extrapaid time off, holiday pay, and parental leave) to lifestyle benefits (like flexible working hours,the ability to work from home, a pet-friendly working environment, etc.). This type of plan is often found in multi-level marketing (MLM) companies. By creating a feeling of security in the minds of the salesmen, it maintains high morale among the sales force. But straight commission method is based on the sales effected by the salesmen and not on the time spent on the job. Which of the following is an advantage of a straight-commission compensation plan? 100% (2 ratings) FALSE because straight salary can make all sales reps equivalent individuals, which is best when th . This is a very important distinction, as it determines who pays the taxes (the worker, not the employer) and to what standard an employer is held. Building an effective sales force compensation plan boils down to: When establishing goals for the compensation plan, a sales manager must consider: Competitive compensation packages in the marketplace. Compensation rewards might include all of the following except. Leadership Insights System is easy to understand and compute. Is it just monetary? You gain authority, prestige and responsibility. $$ In some organizations, selling is a collaborative effort. 8. Working as a contractor definitely has its benefits. Murray Kiser operates his own catering service. It is often used in direct sales industries and multi-level marketing (MLM) firms that work with independent contractors. a. salaries are a fixed cost to the firm and thus tend to decrease proportionally as sales increase. Accordingly, the information provided should not be relied upon as a substitute for independent research. \text{Kentucky} & \text{71} & \text{Notre Dame} & \text{63} & \text{8}\\ You are the sales manager of a large, multi-product company. 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. Which of the following statements regarding sales contests is true? A salesperson makes the initial contact and sets the stage for the sale, while others such as product experts or management personnel are brought in to help him close the deal. Such a plan is quite common in the services industry as well as in the industrial goods sector. Such positions might include retail sales, restaurant employees, barbers and cosmetologists, and customer service reps. Salary plus commission plans are often used for sales positions or corporate positions when the company wants to encourage leaders to push for substantial growth and high performance. 1. Offer your support. It is critical that companies using this type of system have good metrics in place for tracking sales so they can fairly and accurately calculate commissions. Information Technology Project Management: Providing Measurable Organizational Value, Service Management: Operations, Strategy, and Information Technology, John David Jackson, Patricia Meglich, Robert Mathis, Sean Valentine, Chapter 10 - Motivating and Satisfying Employ. You have a meeting with her to outline the drawback(s) of this type of plan . It does not provide any incentive for hard work. \text{SCCO} & \text{Southern Copper} & \text{29.53} & \text{19.90} & \text{22.06} & \text{-1.79} & \text{1,823,761} & \text{22.07} & \text{22.07}\\ \hline And while some competition in the workplace is good, this kind of motivation to not only succeed but to survive can sometimes breed distrust and a lack of camaraderie. Explore the trend of creative job titles in the job market and how they are reshaping the way we view and define roles in the workforce. They don't want to worry about the inconsistencies associated with a commission-based pay. \underline{\ \ \ \ \ \ \ \ \ \ \ \ \ \ } && \underline{\ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ } && \underline{\ \ \ \ \ \ \ \ \ \ \ \ \ \ } && \underline{\ \ \ \ \ \ \ \ \ \ \ \ \ \ } && \underline{-3,000}\\ 40 Questions to Ask Before You Accept A Job Offer. As a result, she avoids the high degree of stress and uncertainty that comes with pay-for-performance compensation. \hline It could be difficult to attract top performers who know they can make more in a job that rewards their work with a more commission-based pay structure. \underline{\underline{14,800}} && \underline{\underline{\ \ \ 2,500}} && \underline{\underline{90,000}} \\ \\ \\ \\ Currently editor at The HR Digest Magazine. Salespeople are usually paid on a straight salary compensation, in which there is no opportunity to earn incentives. nonfinancial reward: All of the following are steps suggested for facilitating a sense of accomplishment in the salesforce Example: Each rep in your company earns a straight salary of $75,000 a year, or $1,440 a week (gross). Payroll essentials you need to run your business. Straight salary method promotes team-spirit and cooperation among the salesmen in the case of joint sales. 1. Even if the employee no longer does work on the account, so long as the account continues to perform, the employee will receive a cut of the profits. Salary plus commission is a balance of both stability and performance-based income. A straight salary can work well for sales positions for which a high focus on service is required, such as a salesperson who calls on retail stores on a regular basis to take orders and stock merchandise. If theyve just started a family, they may be looking for benefits like parental leave and the chance to work from home. 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. An employee who works only on salary has little external motivation to go above and beyond. \\ Although many customers expect after-sale service on repair parts and delivery, compensation programs based on straight salary are not likely to encourage these important follow-up activities. \begin{array} {rcrcr} \textbf{\textsf{Accounts}} && \textbf{\textsf{Murray Kiser,}} && \textbf{\textsf{Murray Kiser,}} && \textbf{\textsf{Fees}} \hspace{6pt}\\ \end{array} Which, if any, of the following sources available will help you in your task? For employers, hourly employees can be a good option for work that fluctuates seasonally. By clicking Submit, you agree to permit Intuit to contact you regarding QuickBooks and have read and acknowledge our Privacy Statement. Increment is given annually as per the scale of pay, and after a certain number of years of service, salesman is promoted to a higher scale of pay. WinningTeamPointsLosingTeamPointsWinningMarginArizona90Oregon6624Duke85Georgetown6619FloridaState75WakeForest705Kansas78Colorado5721Kentucky71NotreDame638Louisville65Tennessee623OklahomaState72Texas666Purdue76MichiganState706Stanford77SouthernCal6710Wisconsin76Illinois5620\begin{matrix} Since there are no (monetary) incentives to work harder, a non-competitive environment may tempt employees to become complacent, limiting the companys growth. \textbf{\textsf{Payable}} \hspace{4pt} &\bm{+} & \textbf{\textsf{Capital}}\hspace{17pt} & \bm{-} & \textbf{\textsf{Drawing}} \hspace{15pt} & \bm{+} & \textbf{\textsf{Earned}} & \bm{-} & \textbf{\textsf{Expenses}}\\ Uniqlos Bold Move: Addressing Employee Burnout with a 40% Pay Increase, From Boring to Bravo: How to Revamp Your Employee Newsletter and Keep Your Team Interested, From Genius to Digital Nomad: A Look at the Evolution of Creative Job Titles, A Stroke of Luck: Kentucky Woman Wins $175,000 in Office Christmas Party Lottery, HR Technology Trends: Leveraging Technology to Streamline HR Operations, HR Compliance: Staying Compliant with Changing Labor Laws and Regulations, Managing Remote Teams: Best Practices for Leading a Distributed Workforce, Organizational Change Management: Navigating Change with Effective Change Management Strategies, Virtual Happy Hours: Building Team Camaraderie While Working Remotely, Workforce Planning: Anticipating Future Skill Needs and Building a Talent Pipeline, Unlocking the Power of LinkedIn: How to Leverage its Features for a Successful Job Search, Ditch the Monday Morning Commute: How Remote Work Can Benefit Your Employees and Business, Building a Strong Company Culture and Attracting Talent, Leading the Charge for Inclusive and Sustainable Hospitality, Championing Diversity and Inclusion at Bank of America. The net result of setting limits on sales expenses is that salespeople spend their valuable time juggling expenses from one category to another or from one time period to another to make sure they cover their costs. Provide an opinion of which type of compensation plan you would prefer as a professional salesperson. finds the job to be inherently rewarding. Because so many hourly employees work in entry-level positions, education requirements are usually lower than those of salaried positions, which adds to this assumption. Today, January 26, 2004). She loves training, creating processes, and introducing her clientele to new apps and technology. Let's explain the benefits with a clear example of an unpackaged salary versus an FBT exempt salary package. They should be made during recessionary periods. The tools and resources you need to take your business to the next level. \text{Bal. i) Beneficial for industries which prohibits direct sales. Companies are increasing incentives for foreign-based employment. Under a straight commission plan, sales managers usually have less control over their reps. With regard to compensation programs, most firms just use a draw against commission. When it comes to employee compensation, there isnt a one-size-fits-all solution. As it assures a certain minimum income (the living wage) to the salesmen regularly, it creates a feeling of security in the minds of the salesmen. Advantages to Salesperson: The salesperson feels free from financial uncertainties because of stable income inflow. Did your choice agree with Sturges' Rule? This type of compensation plan puts less pressure on individuals and fosters team-building. 2. The only downside with territory volume compensation plan is that it can lead to hostility between co-workers if certain members feel that effort isnt equally divided. Salesmen have the greatest. The goal of the compensation package is to reward employees for their efforts without putting the firm's profitability in jeopardy. Incentives are often seen as effective triggers when the objective is to improve the top line i.e. Focus on Service A straight salary can work well for sales positions for which a high focus on service is required, such as a salesperson who calls on retail stores on a regular basis to take orders and stock merchandise. Although quite popular, salary compensation plans have some disadvantages. Straight salary plans are not popular with salespeople because: They don't provide strong incentives for extra effort. 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. \\ Those who sell below $35,000 will not receive commissions. As a sales manager, you liked the advantages that salary plus bonus plans offer yet you were very concerned about some of the following serious problems associated with it: You have decided to change your commission structure to enhance market penetration. Under this plan, companies compensate its employees entirely on the profits made by the business. Similar to straight salary, this compensation structure offers employees a guaranteed base income annually, but also offers performance-based income in addition, unlike straight salary. How to find funding and capital for your new or growing business. Plan A is to borrow at 6%. What change in the firm's salesforce reward system might be in response to customer's needs? 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. salesperson's total pay that is salary should be relatively low? If its part of their contract, salespeople can continue to receive commissions even after theyve left the company. bell-shaped distribution. Salaried workers who earn more than $23,660 per year are considered exempt under the Fair Labor Standards Act (FLSA). Due to the complexity and compliance issues involved, very few companies offer equity or stock. Bal.1.2.3.4.5.6.7.Bal.AssetsCash+Supplies+Land30,0004,00075,000+35,00026,00015,000+15,000+1,5002,0007,2003,00014,8002,50090,000==Liabilities+OwnersEquityAccountsMurrayKiser,MurrayKiser,FeesPayable+CapitalDrawing+EarnedExpenses8,000101,00035,00026,000+1,5002,0007,2003,0002,300101,0002,00035,00029,000\begin{array}{lccl}
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