D099 Module 9

D099 Module 9 Leave the first rating Students also studied Terms in this set (24) Western Governors UniversityD 099 Save D099 Module 10 18 terms cvda00Preview D099 Module 12 22 terms cvda00Preview D099 Module 11 29 terms cvda00Preview

D099 S

60 terms lian Discuss the importance of compensation packages in attracting and retaining top sales talent.Business-to-business (B2B) salespeople would earn more salary and less commission given the long sales cycle and infrequent and high-value sales.Business-to-customer (B2C) salespeople are usually compensated with higher commission and incentives, as opposed to higher salaries, due to their shorter sales cycle and high volume of sales.Analyze the role of compensation in motivating employees, improving morale, and increasing loyalty to the organization.Compensation can be used to improve morale, motivation, and satisfaction among employees. If employees are not satisfied, this can result in higher turnover and poor quality of work for those employees who do stay. A proper compensation plan can also increase loyalty to the organization.Describe the three typical types of compensation for salespeople.

Salary: employees paid a salary do not get paid hourly; they work however many

hours are necessary to accomplish organizational goals and objectives. Most managers are paid a salary that is calculated in terms of annual, monthly, or weekly earnings instead of an hourly pay

Commission: rewards for performance must be clear, and they must be paid

regularly and on time. In comparison with salaries, budget costs are based on sales projections, and increased revenues compensate for increased commission costs.Explain the concepts of recoverable draw and nonrecoverable draw. How does a nonrecoverable draw differ from a salary?A recoverable draw is a payout the company expects to get back, while a nonrecoverable draw is a payout that the company doesn't really expect to get back.Explain the advantages and disadvantages of a salary. Advantages: provides stability/security and easy for managers to forecast budget costs.

Disadvantages: Doesn't offer much motivation or incentive to perform.

Explain the advantages and disadvantages of commissions.

Advantages: encourages a high level of selling effort, easy to administer,

financially attractive and leads to improved performance, and helps attract skilled and top-performing salespeople.Disadvantages: can result in substantial discounting to promote sales, can lead to salespeople to make high-pressure sales, aggression can develop within a sales team leading to stress and burnout, and low-income security.Explain the advantages and disadvantages of a salary + commissions.Advantages: sense of stability as people are still paid even when training, reduces the necessity for high-pressure sales tactics, adjusting the mix can result in different behaviors of salespeople.

Disadvantages: complexity of readministering.

Describe the five key aspects of reward systems in organizations.

• Functions served by reward systems
• Basis for reward distribution
• Intrinsic versus extrinsic rewards
• The relationship between money and motivation
• Pay secrecy

Describe the areas influenced by reward systems. - Job effort and performance

• Attendance and retention
• Employee commitment to the organization
• Job satisfaction
• Occupational and organizational choice
• Basis for reward distribution

What are the four methods used to distribute the available rewards?Power- rewards are distributed based on job title or status among stakeholders in the company.Equality- rewards are distributed to ensure that employees with the same job classification receive similar compensation.Distributive Justice- rewards are distributed to ensure that employees receive compensation that is commensurate with their contribution.Performance Appraisal- rewards are distributed based on the results of employee evaluations Is money a primary motivator? Explain why or why not.What are the four conditions that must be present for pay to be a string motivator?One must recognize that money can have important motivational consequences for many people in many situations & that it serves several important functions in work settings.

Conditions: trust levels between managers and subordinates must be high,

individual performance must be able to be accurately measured, pay rewards to high performers must be substantially higher than those to poor performers, and negative consequences for good performance must be perceived.Explain the concept of incentive programs and their significance in motivating performance.They provide employees, consumers, or providers with financial rewards as a way of motivating better performance. Various behavioral factors might be considered prior to establishing an incentive program, including the target audience's motivation, skills, recognition, understanding of the goals, and ability to measure progress.

Discuss the factors to consider when designing an effective incentive program, including the target audience's motivation, skills, recognition, understanding of goals, and measurement of progress.Communicated, attainable but challenging, easily understandable, tied to company goals.Explain the elements of a total compensation package for a typical salesperson.Salary is beginning to be seen as part of a total compensation package, which includes bonuses, incentive pay (sales contests, travel, and entertainment tickets, etc.), commissions, benefits, perks (company car, mileage reimbursement), and various other tools that help organizations link rewards to a salesperson's measured performance.Explain some differences between rewards and incentives and provide examples from each category.Rewards serve several functions, including stimulating job effort and performance, reducing absenteeism and turnover, enhancing employee commitment, facilitating job satisfaction, and facilitating occupational and organizational choice.Incentive programs provide employees, consumers, or providers with financial rewards as a way of motivating better performance. Several types of incentive programs include commissions, bonuses, profit sharing, stock options, team pay, merit pay, contests, and SPIFs.Discuss the concept of Sales Performance Incentive Funds (SPIFs) and their role in driving sales for specific objectives.A SPIF is a financial incentive that encourages sales for a specific item or group of items.Incentives can be cash bonuses or non-monetary benefits such as a vacation or a car. The sales team is led to focus its efforts on reaching this short-term goal.List and describe at least five non-cash benefits. - Flexible work schedules

• Social activities (annual golf tournament, children's Christmas party, movie

nights)

• Transit passes
• Free or discounted meals
• Spot rewards (gift certificates, store discounts)

Discuss the concept of fringe benefits and perks provided by companies to employees, and their significance in attracting and retaining talent.Fringe benefits are various indirect benefits, often of a more discretionary nature than standard benefits.Perks are often given to employees who are doing notably well or have seniority: hotel stays, free refreshments, leisure activities on work time, stationery, allowances for lunch, and take-home vehicles.Discuss the different approaches within individual incentive plans, such as merit-based compensation, piece-rate incentive programs, bonus systems, and commissions, and their direct linkage to individual performance.

Merit-based compensation: links compensation to how well the employee

performs within the job, and it is normally tied to performance appraisals.Piece-rate incentive program: the employee is paid for each unit of production at a fixed rate.These programs may at times lead to employee competition, with undesirable results. Second, these plans are typically resisted by unions, which prefer compensation to be based on seniority or job classification. Third, where quality control systems are lax, individual incentives such as piece rates may lead employees to maximize units of output while sacrificing quality.

Describe the guidelines for increasing the effectiveness of incentive programs.

• Does the plan capture attention?
• Do employees discuss the plan and take pride in their early successes?
• Do employees understand the plan?
• Can employees explain how the plan works, and do they understand what they

must do to earn the incentive?

• Does the plan improve communication?
• As a result of the plan, do employees understand more about corporate

mission,goals, and objectives?

• Does the plan payout when it should?
• Are incentives being paid for desired results, and are they withheld for

undesirable results?

• Is the company performing better because of the plan?
• Are profits or market share up or down?
• Have any gains resulted in part from the incentive plan?

Discuss the factors that make sales compensation planning a complicated process, including the various components that need to be accounted for.

• Sales compensation salespeople drive an organization's service to its customers

and partners, so organizations need to ensure they reward them fairly for their efforts.

• Sales compensation planning is composed of many components, making it a

complicated process. Compensation must account for employee benefits, performance-based raises, incentives, the sales organization structure, and other factors, which in turn must align with the budget.Explain the trade-offs and decisions that sales managers may face in order to control costs.Laying off employees or providing incentives to leave, increasing overtime instead of hiring additional employees, reducing benefits, reducing or stopping pay raises.List the key points to understand when building an effective compensation plan.

• Keep quotas, metrics, and other calculations simple to understand.
• Integrate the plan into the sales administration team's system and constraints,

reducing future errors in paying salespeople.

• Limit the risk of nonpayment by a customer by basing payout on revenue

received instead of on a contract signed by customers.

• Break up the sales quota into key metrics that are simple to calculate, such as

sales of a specific product.

• Determine who is authorized to make exceptions, if they arise, to the

compensation plan.

• Consider including an additional incentive program that recognizes top

salespeople.A canned goods company has found that its current individual incentive program is not helping drive sales. As a result, the owners have decided to switch to a group incentive program instead.What is one reason an individual incentive plan can be less effective?Individual plans can lead to less aggressive sales tactics.