Different Measure for Compensating Sales people

Nov 7 • General • 1246 Views • No Comments on Different Measure for Compensating Sales people

Compensation Strategy

Financial performance of any company basically depends on the achievement gain by Sale People thus motivating them is considered as an important factor for Compensating Sales people. One of the most effective and efficient way of motivating and retention of the of the field salesperson is the method of compensation. Here in this post various methods like Straight Salary, Straight Commission Method, Salary Bonus Method for Compensating Sales people are mentioned. There are different types of the compensation plans that are offered to the employees, these compensation plans are as follows :

Straight Salary: 

This plan involves paying a fixed amount of salary to every employee in each pay period.

Some advantages to this method are as follows : 

  • The top management can maintain more control over the wages offered.
  • There is maximum control on the activities of the sales people.

Some limitations to this method are as follows :

  • There is no extra benefit for extra work
  • Employees require more supervision
  • This method can overpay even the less productive member of the team
Compensating Sales people

Result of Motivation

Application:

  • In competition
  • When team work is important
  • Sale of more complex products
  • Reselling of the products

Straight Commission Method:

 In this method the sales person are paid a specific percentage of the sales or the revenue gained by the firm.

Some advantages to this method are as follows :

  • Creates independence in the action taking by the firm.
  • It gives maximum incentives to the employees.

Some limitations to this method are as follows :

  • Less control over the employees.
  • No earning when the condition of the company gets poor.

This method is used when maximum incentive is needed and with minimum post sales service.

Salary + Bonus Method

In this method a fixed salary is provided to the employees which gives them security along with a bonus is given which is an added incentive to attain the objective of the company. Bonus is a special type of payment that is given to achieve a specific goal of the company.

Some advantages to this method are as follows :

  • Balance the need to control selling expense and provide extra rewards
  •  Yields in higher turnover of the company

Some limitations to this method are as follows :

  • Bonus can be arbitrary in terms of the size of the company
  • Deals with the relation between performance and rewards

Salary +Commission Method

This method is used to facilitate the productivity of the sales people by giving them a push to sell the complex products and services .There are some advantages to this method:

Some advantages to this method are as follows :

  • It is paid on the monthly basis
  • Discourage the sales people to leave the company

Some limitations to this method are as follows :

  • Costly to monitor
  • Increased performance

This method is used in businesses where there is more fluctuations.

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