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. Plan B is to issue 100,000 shares of common stock. &&&&&& 35,000\\ \\ For post-Depression-era baby boomers, the security of a steady salary is important. In designing plans one must balance the goals of the firm, as well as the needs of the sales force and customers. But when that same group opened up about things that weren't essential to the negotiation, 59 percent were able to strike a deal. This means you can always keep earning more money if you're willing to put in some extra hours of work. , holiday pay, and parental leave) to lifestyle benefits (like flexible working hours. Which, if any, of the following sources available will help you in your task? they contribute little to company loyalty, resulting in potential salesforce control problems. Salespeople should compete in teams with each member of the team making a contribution to the group's total goal. Katey Maddux is a paddle boarder, music lover, Zumba instructor, and Founder and CEO of. Intuit Inc. does not have any responsibility for updating or revising any information presented herein. An advantage of the straight salary plan for compensating salespeople is that it: Provides a direct relationship between sales and expenses. Your email address will not be published. This system safeguards the interests of the consumers also. Theres something for every HR professional, whether youR Today, creating a sense of purpose is more critical than ever, and we provide employees the means to be successful and feel valued through empowerment, development, feedb HR Drift If your family does not have a complete home inventory, encourage your parents or other adults with whom you live to create one. For employers who dont want to pay employees after they leave, this type of compensation can incentivize employees to stay at the company. Control over Salesmen: Straight salary plan gives the management sufficient control over the salesmen. Plan C is to issue 100,000 shares of nonvoting, $3.75 preferred stock ($3.75 is the annual dividend paid on each share of preferred stock). Such a plan is quite common in the services industry as well as in the industrial goods sector. tend to produce too many salesforce objectives which are of the crisis-resolution variety. Employees who are eager and top-performing are often attracted to this type of commission, however, since they know they can survive solely on their skills and experience. She loves training, creating processes, and introducing her clientele to new apps and technology. \text{Kansas} & \text{78} & \text{Colorado} & \text{57} & \text{21}\\ Design the plan centrally and dictate to local countries. \text{ESI} & \text{ITT Ed Services} & \text{7.95} & \text{1.93} & \text{2.95} & \text{-0.03} & \text{140,466} & \text{3.11} & \text{2.92}\\ \hline Salespeople may also be paid on a straight salary basis in which there is no opportunity to earn incentives. 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. The importance of matching the abilities and needs of sales recruits to the ____ cannot be overstated. except: make it easy enough to allow for a majority of the salesforce to win. Your paycheck is based on a specific percentage of the sales that you are able to generate. As the various salesmen on a particular scale of pay are paid the same remuneration, it avoids jealousy among the salesmen. a supportive sales management leadership style. In this, salespeople continue to receive a commission as long as their accounts are generating revenue for the employer. 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. The company uses a combination of brokers and independent sales reps. What kind of a compensation program would they most likely to use for their salespeople? Applicable laws may vary by state or locality. To implement a new or modified reward system, sales managers should do all of the following except. By accessing and using this page you agree to the Terms and Conditions. \text{Symbol} & \text{Stock} & \text{High} & \text{Low} & \text{Last} & \text{Change} & \text{Volume} & \text{High} & \text{Low}\\ \hline If an employee is required to work on a holid ay as a regularly scheduled work day, . Its worth noting that inconsistent working hours can also hurt employees who may be counting on a consistent income. Being Paid on Salary: Pros and Cons | Indeed.com However, a straight salary plan also has its own advantages. When determining the financial compensation mix, the sales manager must. Find articles, video tutorials, and more. 6. Everything you need to start accepting payments for your business. Which of the following is not mentioned in the text as a challenge to sales managers attempting to adjust PMR-based compensation often encourages loyalty among employees, but it will also require long-term incentives to retain talent. Some people won't work for anything other than a fixed salary. \underline{\underline{14,800}} && \underline{\underline{\ \ \ 2,500}} && \underline{\underline{90,000}} \\ \\ \\ \\ 4. that they offer little financial incentive to perform past a merely acceptable level. , LLC in Miami, Florida. Although quite popular, salary compensation plans have some disadvantages. Sales Management Insight: Sales Commission Plans. I thought wed follow up on that post by exploring the six different types of compensation plans in depth. Based on this analysis you know that a larger percentage of the salesperson's pay should be _____________ as compared to ______________ for the best results. By clicking Submit, you agree to permit Intuit to contact you regarding QuickBooks and have read and acknowledge our Privacy Statement. Advantages And Disadvantages Of A Straight Commission PMR is common in sales and is good for startups with low liquidity. Sparks holds a Bachelor of Arts in business. Which of the following is not a guideline recommended in the management of motivation? Quizzes test your expertise in business and Skill tests evaluate your management traits. Incentives are often seen as effective triggers when the objective is to improve the top line i.e. 1. You can tweak the budget annually by deciding whether the business has flourished enough to offer merit raises. For example, an employee who is going to make the same amount of money whether he sells one refrigerator or 100 is more likely to become complacent. This compensation type tends to attract fewer people since there is no secure base pay. She loves training, creating processes, and introducing her clientele to new apps and technology. Provide an opinion of which type of compensation plan you would prefer as a professional salesperson. Help Miller rank the top three cities that BIA should consider as its new site for servicing aircraft. a large company purchases products from a company and ships them to its affiliates in several cities, with the selling firm's salespeople in these cities required to provide So what is compensation? Get help with QuickBooks. 3. They should be made during recessionary periods. Many millennials, however, are more focused on work-life balance and lifestyle plans, valuing more vacation or the freedom to work from home. Compensation plans, once set, do not need to be evaluated to determine if it will negatively affect salespeople's wages and total costs. \end{array} Currently editor at The HR Digest Magazine. 30,000 && 4,000 && 75,000\\ Give your reasons. In the same vein, contractors are not subject to withholding and are therefore responsible for their own taxes (the self-employment tax). Which of the following is not an advantage of the . Sales contests will continue to be an important tool for achieving expedient results. As the Vice President of Sales for a new startup company, you decide to hire and train your own field sales force. Intuit Inc. does not warrant that the material contained herein will continue to be accurate nor that it is completely free of errors when published. Advantages of straight-salary compensation plans include all of the following except. 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. The most common exemptions are executive, administrative, and professional exemptions. && +1,500\\ It is not clear that offering unlimited opportunities to earn higher pay will always be an effective method for continued salesperson motivation. key activities within the company, he/she is offering this non-financial reward: A firm offering a college tuition reimbursement program has made a commitment to providing this As the remuneration of the salesmen under this method does not depend upon the volume of sales made by them, the salesmen will not be reckless in increasing their sales by selling to every customer on credit. It can also be beneficial if a firm is entering a new market or location. \\ \text{ } & \text{ } & \text{52-Week} & \text{52-Week} & \text{ } & \text{ } & \text{Sales} & \text{ } & \text{ }\\ 5. MBA Skool is a Knowledge Resource for Management Students, Aspirants & Professionals. The companys income tax rate is 35%. The salesperson experiences a high level of security with a salaried sales position. But straight commission method does not assure any minimum income to the salesmen. The content on MBA Skool has been created for educational & academic purpose only. 4. Which of the following accurately describe per diem expense plans? Celebrating the stories and successes of real small business owners. Unlike a heavily commission-based position in which income relies on sales volume, the salesperson earns the same amount of compensation regardless of how much she sells. . 2. Straight salary method of remuneration is simple. It is a highly attractive model, especially to start-ups who are seeking to penetrate a specific territory. But straight commission method provides sufficient incentive to the salesmen to do hard work. Incentives to Salesmen: Straight salary method does not provide any incentive to the salesmen to do hard work. All of the following are typical reimbursable expense items except. From a payroll standpoint, this type of compensation is harder to administer. In case the salesperson shows high sales performance, the firm increases its salary. 10. You have a meeting with her to outline the drawback(s) of this type of plan . Salary plus commission is a balance of both stability and performance-based income. 3. 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. ___________ rewards are those that are given in return for acceptable performance or effort. A good salary plus commission plan will motivate employees to higher sales and performance while giving them the peace of mind of regular, stable income. Last week's MPG for 35 student vehicles (xmin=9.4,xmax=38.7)\left(x_{\min }=9.4, x_{\max }=38.7\right)(xmin=9.4,xmax=38.7). 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. In your job analysis of the salesperson's activities, you discover that a significant level of activity of a successful salesperson includes taking orders for inventory replenishment, equipment installation and maintenance, and shelf-management programs. the following except. Let's explain the benefits with a clear example of an unpackaged salary versus an FBT exempt salary package. Part B: As a retail sales manager of a large superstore, one of your responsibilities is to train the newly hired employees. For example, consider a salesman who frequents various retail stores or department stores to check inventory or take orders for replenishment. A straight salary can greatly benefit someone who is transferring to a new territory. Depending on a companys compensation strategy, there are both pros and cons for hourly versus salaried employees. Another disadvantage is the lack of benefits. The complete guide to employee compensation and benefits - QuickBooks Solved An advantage of the straight salary plan for | Chegg.com This $35,000 level is called: Your customer's buying cycle is approximately 2 years and your reps need to invest significant amounts of time understanding their customers. bonuses for sales target achievement), in others salespersons receive commissions as a percentage of the sales they were involved in. Employers may use this type of compensation to keep payroll expenses low while still motivating employees to perform. The latest product innovations and business insights from QuickBooks. As defined by the IRS, independent contractors are people who are in an independent trade, business, or profession in which they offer their services to the general public. Employees and independent contractors are mutually exclusive, as a person is either one or the other. Commission for independent sales reps can range from 5% to 40%, with the average ranging from 20% to 30% of gross margins or 7% to 15% of gross sales. Similar to hourly employees, workers who are paid with this type of compensation are usually governed by the FLSAs nonexempt requirements and earn overtime. Contractors are required to find health insurance and retirement plans on their own. Disadvantages of straight hourly compensation, Whos using hourly plus commission compensation, Benefits of hourly plus commission compensation, Disadvantages of hourly plus commission compensation, Disadvantages of commission-only compensation, Whos using territory volume compensation, Benefits of territory volume compensation, Disadvantages of territory volume compensation, 7. 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. Straight Salary Compensation. 11. 2. Your salespeople are paid on commission. virtually automatic, this form of commission rate would be appropriate: An example of a selling situation requiring a commission split would be. John David Jackson, Patricia Meglich, Robert Mathis, Sean Valentine, Operations Management: Sustainability and Supply Chain Management, Service Management: Operations, Strategy, and Information Technology, Information Technology Project Management: Providing Measurable Organizational Value, Opportunity / Chance / Possibility / Occasion. One of your first tasks is to evaluate the level of compensation for your sales force. 4. 4. 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. 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. How much you spend on salaries often has little to do with your profits. MKGT 637 Chapter 8 Flashcards | Quizlet The tools and resources you need to manage your mid-sized business. Which of the following is not a guideline for optimizing the use of sales contests? The firm is looking for a Vice President for sales and promotion. Employees like it because it rewards those who work hard. This type of compensation is often used for entry-level jobs or employees working in restaurants, retail, or the service industry, usually in non-management roles. 9. \\ PDF FRINGE BENEFITS AND SALARY PLAN (Exhibit A to Resolution No. 21052 As Which of the following is not a factor to be considered when developing a commission-only plan? Although most compensation plans are incentivized, the straight salary plan is a method of compensation in which the salespersons receive a straight-forward fixed salary with no commissions. Estimate the percentage of NCAA games in which the winning team No two compensation plans are alike. Straight salary method promotes team-spirit and cooperation among the salesmen in the case of joint sales. The straight salary plan proves advantageous to both the salesperson and the management. The advantages of straight salary compensation include which of the following? These can range from monetary benefits (like extra. finds the job to be inherently rewarding. Many appreciate the fallback stability of the base salary paired with performance incentives. | Priyansha tweets at.
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