Which of the following is not a factor to be considered when developing a commission-only plan? When the sales effected by the individual salesman cannot be isolated (i.e., when the sales are made collectively by two or more salesmen). It helps the firm to direct the activities and efforts of the salesmen towards the cultivation of markets (i.e., creation of new customers), undertaking of window display, store demonstration, etc. The least valued nonfinancial reward by salespeople, other than those nearing retirement, is, According to the text, controls typically used by companies to ensure judicious spending by the Expert Answer. \text{Winning Team} & \text{Points} & \text{Losing Team} & \text{Points} & \text{Winning Margin}\\ , holiday pay, and parental leave) to lifestyle benefits (like flexible working hours. Some people won't work for anything other than a fixed salary. Intuit, QuickBooks, QB, TurboTax, Mint, Credit Karma, and Mailchimp are registered trademarks of Intuit Inc. You can tweak the budget annually by deciding whether the business has flourished enough to offer merit raises. Basis: Straight salary method is based on the time spent on the job, and not on the volume of sales effected by the salesmen. 2. Which of the following statements regarding changes in the reward system is false? \hline This form of commission rate may actually result in overselling and higher selling costs to the company: When it is difficult for the salesperson to secure the first order from the customer, but reorders are 1. Part B: As a retail sales manager of a large superstore, one of your responsibilities is to train the newly hired employees. nonfinancial reward: The Million Dollar Roundtable designation in the insurance industry is an example of this type of Find articles, video tutorials, and more. How to start and run a successful e-commerce business. But straight commission method distinguishes between efficient and inefficient salesmen. Due to the complexity of the plan and its many compliance issues, few companies offer equity or stock in the short-term. The sales numbers are added up and all commissions are split equally among all sales professionals. But when that same group opened up about things that weren't essential to the negotiation, 59 percent were able to strike a deal. It could be difficult to attract top performers who know they can make more in a job that rewards their work with a more commission-based pay structure. 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. The most common exemptions are executive, administrative, and professional exemptions. 7. Which of the following is not a form of nonfinancial compensation? These can range from monetary benefits (like extra. 4. On the other hand, under the straight commission method, salesmens rewards are matched with their efforts. \\ \end{matrix} According to a survey of sales executives reported in the text, the most popular sales incentive is. Some of these jobs also have flexible schedules, which can be beneficial to employees. Resources to help you fund your small business. The tools and resources you need to get your new business idea off the ground. Offers considerable incentive for the salespeople. You have a meeting with her to outline the drawback(s) of this type of plan. nonfinancial reward: All of the following are steps suggested for facilitating a sense of accomplishment in the salesforce This form of nonfinancial reward is generally considered to be more desirable to younger salespeople Fringe Benefits and Salary Plan based upon the employee's rate of pay immediately preceding retirement. A straight salary can also benefit an experienced salesperson who is transferring to a new territory where the company and its products may be completely unknown. 1. The advantages of paying employees a straight commission include the fact that it provides direct motivation to sales representatives to sell more products and services so they can earn more. Which of the following statements about a straight salary compensation plan is true: A major limitation of straight salary compensation plans is that financial rewards are not directly tied to any specific aspect of job performance. Here Are the Pros of Straight Commission. \text{Wisconsin} & \text{76} & \text{Illinois} & \text{56} & \text{20}\\ However, a straight salary plan also has its own advantages. Employees are guaranteed to receive at least base salary to pay the bills, even during a time period when their sales are low. than to older salespeople: When a sales manager assures salespeople that they fulfill a critical role in revenue production and other Business is going well for Park N Fly , the company that operates remote parking lots near major airports. Which of the following is not a guideline recommended in the management of motivation? Operating costs are minimized during slack selling periods. Hourly roles can often be perceived as less valuable or easier to replace. Base salary + sales commission-based pay. We dont want you to miss anything. Salary plus Commission This is one of the most reliable types of compensation plans. 8. Employers are also required to pay employees the. Under this system, rewards are not matched with efforts. Review the example home inventory shown before. A straight salary plan can be advantageous in certain situations. Q&A With Jane She loves training, creating processes, and introducing her clientele to new apps and technology. It tends to only attract less experienced staff who want a "safe" pay structure. Your national sales force is divided into eight regions, though the Mid-Atlantic region is currently understaffed (sales volume there has always been low). Employees who like working in sales but also in a team environment will be attracted to such compensation, as it takes the pressure off the individuals performance. In most companies, the bonus is usually tied to a budgetor other target that has little significance to the employee. Once you own property, you should take steps to protect it from loss, theft, and damage. Ultimately, you have to determine the method of pay that your company can best manage and to weigh the advantages and disadvantages of offering a fixed salary. a. salaries are a fixed cost to the firm and thus tend to decrease proportionally as sales increase. To ensure proper classification, employers should begin with the assumption that their commissioned employees are nonexempt, and then review the potential exemptions to determine whether they apply. However, a straight salary plan also has its own advantages. Accordingly, the information provided should not be relied upon as a substitute for independent research. && +1,500\\ This is a primary method for compensating independent sales agents. For example, if you work 42.5 hours in a week, you earn 40 hours of pay at your hourly base rate and 2.5 hours at 1.5 times your hourly base rate. Katey Maddux is a paddle boarder, music lover, Zumba instructor, and Founder and CEO ofMillennial Accounting, LLC in Miami, Florida. The tools and resources you need to manage your mid-sized business. But straight commission method provides sufficient incentive to the salesmen to do hard work. Bal.1.2.3.4.5.6.7.Bal.Cash30,000+35,00026,00015,0002,0007,20014,800+AssetsSupplies4,000+1,5003,0002,500+Land75,000+15,00090,000==LiabilitiesAccountsPayable8,000+1,5007,2002,300++MurrayKiser,Capital101,000101,000OwnersEquityMurrayKiser,Drawing2,0002,000+FeesEarned35,00035,000Expenses26,0003,00029,000. All of the above. \underline{\underline{2,300}} && \underline{\underline{101,000}} && \underline{\underline{-2,000}} && \underline{\underline{35,000}} && \underline{\underline{-29,000}}\\ \\ \\ \\ A valid objective in creating commission-based pay programs is to devise a system that encourages salespeople to sell items that maximize profits of the firm. Long ago, we wrote about the importance of a compensation plan in an organization. Due to the complexity and compliance issues involved, very few companies offer equity or stock. Which one of the following statements regarding global compensation is false? As it assures a certain minimum income (the living wage) to the salesmen regularly, it creates a feeling of security in the minds of the salesmen. Many appreciate the fallback stability of the base salary paired with performance incentives. How to start a business: A practical 22-step guide to success, How to write a business plan in 10 steps + free template, What is cash flow? Person B works for an NFP and is part of a salary packaging program. has very specific requirements for classifying and paying employees. Management can direct Salesforceinto various activities more easily. Which of the following is an advantage of a straight-commission compensation plan? Such a plan is quite common in the services industry as well as in the industrial goods sector. No bonuses, no commissions, and few, if any, sales incentives. If theyve just started a family, they may be looking for benefits like parental leave and the chance to work from home. The straight salary plan proves advantageous to both the salesperson and the management. virtually automatic, this form of commission rate would be appropriate: An example of a selling situation requiring a commission split would be. In addition, employers also enjoy the flexibility of being able to increase or decrease employee hours seasonally or to reflect sales growth.a. This leaves the salespersons with no opportunity for extra money or incentives. WinningTeamPointsLosingTeamPointsWinningMarginArizona90Oregon6624Duke85Georgetown6619FloridaState75WakeForest705Kansas78Colorado5721Kentucky71NotreDame638Louisville65Tennessee623OklahomaState72Texas666Purdue76MichiganState706Stanford77SouthernCal6710Wisconsin76Illinois5620\begin{matrix} The amount of mental and physical effort put forth by the salesperson is referring to, The salesperson's choice to expend effort over a period of time, especially when faced with adverse, The motivation task is incomplete unless salespeople's efforts are. Straight salary offerings can also be good for attracting new talent thats concerned with stability. salesperson's total pay that is salary should be relatively high? Benefit packages amount to a negligible portion of the cost of keeping a salesperson in the field. \text{Louisville} & \text{65} & \text{Tennessee} & \text{62} & \text{3}\\ Usually, the type of compensation plan an organization chooses, and the type that an individual accepts, depends on the market conditions and the goals of those involved. The salary-plus-commission pay structure also encourages employees to set more aggressive sales goals. But under the straight commission method, sales costs are matched with sales. Even if the employee no longer does work on the account, so long as the account continues to perform, the employee will receive a cut of the profits. In commission only jobs, companies offer a safety net in the form of draw against commission. The company pays its salespeople a set amount known as a pre-determined draw at the beginning of each pay period.

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