Sales Force Compensation

Sales Force Compensation.

Flippo(1984)defined compensation as the payment of adequate and equitable remuneration of personnel for their contributions to the organizational goals.

Any type of sales organization can reward sales performance in three fundamental and interrelated ways Direct financial rewards ,Non financial compensation ,Career advancement and personal development opportunities.

PURPOSES OF COMPENSATION.

Connect individual with organization ,Influence work behavior ,Organizational choice / cutting edge of Competition ,Influence satisfaction, Built in Long term vision ,Reinforcement ,Total well being of employers.

FEATURES OF GOOD COMPENSATION PLAN.

Management ,Fairness Motivation ,Flexible ,Competitiveness, Cost .

STEPS IN COMPENSATION .

FIGURE 1

REVIEW COMPENSATION PLAN.

Compensation plan should thoroughly review ( Legal aspect and complexity terms) ,Check Financial resource that facilitate to implement plan and continue in longer run ,Plan should able to absorb the shocks-( Inflation, sales drop and recession and competition) ,Make budgetary provision for accommodate annual increment of salaries, allowance and bonus, Check Sales volume met the ROI of compensation plan ,Plan should met the Sales and profits of the organization.

 IMPLEMENTATION OF THE PLAN.

Make the Crucial decision on what level they go live on plan.( set of group or national ) ,Compensation plan is basically aim welfare of sales people and gain achieved company objective ,Must need to proper plan and control that should never over run the allocated budget.

STRATEGIC COMPENSATION SYSTEM (SCS)

SCS is another tool for effective human resource management, SCS has greater influenced on employee Motivation and Control ,SCS must fit with the resource capability and compensation objective of the firm, Manage compensation equitably ,Design and develop compensation package align with the firm’s objectives ,Drive Performance while boosting Motivation in Salespeople's ,SCS need to analyze/measure performance- act as a control tool.

METHODS OF COMPENSATION.

Straight salary, Straight Commission, Combination (Salary and commission, Salary and Bonus, Salary and bonus/commission).

Many sales organizations use the combination compensation plan to their sales force.(Salary+ Commission+ Bonus).Set sales target to the  Sales force  and the commissions will be paid for the achievements and the Bonus will be paid at the end of year for the cumulative achievements. Sales people can have higher income through achieving  their targets and they will engaged with the Job and highly engaged employee will leads the organizations forward.

REFERENCES.

Flippo, R.F. and Foster, C.R., 1984. Teacher competency testing and its impact on educators. Journal of Teacher Education, 35(2), pp.10-13.

Coughlan, A.T. and Narasimhan, C., 1992. An empirical analysis of sales-force compensation plans. Journal of Business, pp.93-121.

Basu, A.K., Lal, R., Srinivasan, V. and Staelin, R., 1985. Salesforce compensation plans: An agency theoretic perspective. Marketing science, 4(4), pp.267-291.

John, G. and Weitz, B., 1989. Salesforce compensation: an empirical investigation of factors related to use of salary versus incentive compensation. Journal of Marketing Research, 26(1), pp.1-14.

Lal, R. and Srinivasan, V., 1993. Compensation plans for single-and multi-product salesforces: An application of the Holmstrom-Milgrom model. Management Science, 39(7), pp.777-793.

Coughlan, A.T. and Sen, S.K., 1989. Salesforce compensation: Theory and managerial implications. Marketing Science, 8(4), pp.324-342.