chapter 13 compensation for high performance.ppt

7/23/2019 Chapter 13 Compensation for High Performance.ppt

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Copyright 2001 by Harcourt, Inc. All rights reserved.

CHAPTER13

COMPENSATIONFORHIGH

PERFORMANCE


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Why compensation is so important or establishing an eective

sales orce.Ho! to design, implement, and evaluate a compensation program."he advantages and disadvantages involved in the three types o

compensation plans# straight salary, straight commission, and

combination salary."he dierent types o sales orce e$penses and transportation."he total compensation pac%age and ho! to develop a proper

compensation mi$.What is involved in designing a ne! compensation plan.

&'A()I)* +-'C"I'/

/uitable compensation is a must or companies striving

or a satisied and highuality sales orce. "his chaptershould help you understand#


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/ales is one o the e! obs !here you

earn your money 3 every day.


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Any type o sales organi4ation can re!ard sales

perormance in three undamental and interrelated!ays#

1. 5irect inancial re!ards.

2. Career advancement and personal developmentopportunities.

6. )oninancial compensation.

C+78')/A"I+) I/ 7+('

"HA) 7+)'9


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A sales re!ard system is not the only means

o motivating salespeople, but it is the most

important.

7easuring sales perormance but not

properly re!arding it severely limits the

achievement level or salespeople.


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8:(8+/'/ +; C+78')/A"I+)


7/46Copyright 2001 by Harcourt, Inc. All rights reserved.

FIGURE 13.1 EFFECTS OF PAY DISSATISFACTION

P a y

D i s s a t i s f a c t i o n

D e s i r e f o r

M o r e P a y

J o b

Absenteeism

Grievances

JobDissatisfa

ction

Turnover

Performance

S t r e s s ,A n x i e t y

P o o r M e n t a lH e a l t h

P s y c h o l o g i c a lW i t h r a ! a l



Individuals are satisied !ith the re!ards

they receive in the ollo!ing terms#



FIGURE 13.2 FORMAL COMPENSATION PROCESS

E s t a b l i s h S a l e s F o r c eO b j e c t i v e s a n d P l a n s

D e t e r m i n e C o m p e n s a t i o nO b j e c t i v e s , S t r a t e g i e s ,a n d T a c t i c s

D e t e r m i n e M a j o rC o m p e n s a t i o nF a c t o r s

I m p l e m e n tL o n g a n d S h o r t ! a n g e P r o g r a m s

C o m m " n i c a t e

C o m p e n s a t i o nP o l i c #

! e l a t e ! e $ a r d s

t o P e r % o r m a n c e

M e a s " r e I n d i v i d " a l ,

& r o " p , a n d O r g a n i ' a t i o n a lP e r % o r m a n c e

( p p r a i s a la n d! e c # c l i n g



5'/I*)I)* AC+78')/A"I+)

8(+*(A7

Compensation plans should have general

and speciic obectives#.

.

.



Compensation plans should have general

and speciic obectives# continued

.

.



5'"'(7I)' 7A-+( C+78')/A"I+)

;AC"+(/



I78&'7')" &+)* A)5 /H+("(A)*'C+78')/A"I+) 8(+*(A7/

Communicate compensation policy.



1. "he salesperson needs to %no! !hat part the

sales orce is e$pected to ta%e in attaining

the organi4ation?s goals.

2. "he salesperson?s role in achieving sales

obectives should be thoroughly discussed.

6. "he limitations and !ea%nesses o thecompensation program should not be hidden

rom the salesperson.

"he compensation message should contain

several elements#



('&A"' ('WA(5/ "+ 8'(;+(7A)C'

(e!ards and promotions should be tied directly to

the salesperson?s individual contributions to sales

orce obectives.



7'A/:('7')" +;8'(;+(7A)C'

Companies need to regularly measure individual,

sales group, and organi4ational perormance to

determine !hether the compensation program?s

obectives are being met.



A88(AI/A& A)5 ('C9C&I)*

@ey uestions in terms o the success o a plan#



8'(;+(7A)C'A/'5 8A9#

8('('B:I/I"'/ A)5+/"AC&'/

I pay is going to inluence salespeople?s

perormance, the ollo!ing actors are

important#



I pay is going to inluence salespeople?s

perormance, the ollo!ing actors areimportant# continued



;or these conditions to e$ist, the organi4ation

must do its part, !hich means#



;or these conditions to e$ist, the organi4ation

must do its part, !hich means# continued



FIGURE 13.3 TYPICAL COMPENSATION PLANS


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/"(AI*H"

/A&A(9

"98'/ +; C+78')/A"I+)

8&A)/

+ all the compensation plans, the straight salary

plan is the simplest# "he salesperson is paid a

speciic dollar amount at regular intervals.


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TABLE 13.1 PROFILE OF A STRAIGHT SALARY COMPANY


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/"(AI*H" C+77I//I+) 8&A)/

"!o basic types o commission plans e$ist#

1. /traight commission.

2. 5ra! against commission.

"he straight commission plan is a complete

incentive plan. I salespeople do not sell

anything, they do not earn anything.


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5ra!ing Accounts

5ra!ing accounts combine the incentive o a

commission plan !ith the security o a i$ed

income.


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/ituations !here commission plans can be

used#


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TABLE 13.2 PROFILE OF A COMMISSION PLAN COMPANY


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H+W "+ CA&C:&A"' I)C')"I'/

;actors on !hich to base uotas#


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Consider 8roitable 8roducts


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Who /hould 8articipate


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1. )onproductivity bonus2. 8roductivity bonus

onus# Individual or *roup


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/ales contests are special sales programs

oering salespeople incentives to achieveshortterm !or% goals.


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TABLE 13.3 PROFILE OF A COMBINATION-PAY PLAN COMPANY


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1. "o motivate the sales orce.

2. "o attract and hold good people.

6. "o direct the sales orce eorts in a

proitable direction.

When to :se a Combination /alary 8lan


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/A&'/ ;+(C' '8')/'/

'$pense plans have the same basic obectives as a

compensation system, that is, to motivate thesalesperson?s behavior in terms o membership,

perormance, and attendance.


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1. ;air or the salesperson.

2. ;air or the company.

6. Cost eective.

D. :nderstandable.

E. Convenient.

/everal criteria or an eective e$penseplan#


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1. eneits that are reuired legally

2. 8ension and retirement programs

6. )on!or%ing timeD. Insurance

E. 7iscellaneous services

;(I)*' ')';I"/;ive basic classiications o salespeople?s beneits

and services are#


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;AC"+(/ "+ C+)/I5'( WH')

5''&+8I)* A)'W 8&A)

1. Companies !ith a sales orce on a straight

salary may ind it highly advantageous tomove to a salaryplusincentive plan.

2. Companies !ith a sales orce on straight

commission may sometimes adopt a salaryplusincentive plan to gain more control

over the sales orce.


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Inormation to Collect


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TABLE 13.5 KEY INDICATORS FOR POSSIBLE SALES COMPENSATION

PROBLEMS

1. 5eclining revenues

2. 5eclining mar%et share

6. 5eclining proitability

D. Insuicient premier accounts

E. High sales orce turnover

F. :neven sales orce perormance

G. Inadeuate servicing o customers

. Concentrating on easytosell and unproitable products


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8retest the 8lan


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"H' +""+7 &I)'

Compensation given or certain behaviors have maor

inluences on a sales orce?s culture.

Compensation is one part o the salesperson?s behavioral

model.7oney can be an e$tremely po!erul perormance

motivator i used !ith the right compensation program.

:nder a combination salary plan, a proportion o the

salesperson?s total pay is guaranteed, and the rest isincentive pay.

5aily e$penses o ield salespeople are a maor part o the

sales orce budget.


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When developing a ne! pay plan, managers must consider

the nature o the ob, the mar%et, channels o distribution,

the caliber o the salespeople, a company?s inancial

condition, and suggestions made by sales personnel.

"he sales manager can better sellJ the ob to prospective

salespeople by determining the dollar value o ringe

beneits and presenting pay and beneits as a total

compensation pac%age.

"H' +""+7 &I)'

chapter 13 compensation for high performance.ppt

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