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5/13/2018 Compensation of Sales Force - slidepdf.com
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COMPENSATIONCOMPENSATION
OFOF
SALES FORCESALES FORCE
Presented by
Vishal Kapoor
310023
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Compensating Sales ForcesCompensating Sales Forces
Compensating sales forces means giving
monetary and non- monetary benefits in
return for the services rendered by sales
force.
The basic compensation elements are
salary, commission, bonus, fringe benefits, or
any combinations of these.
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According to Cundiff and Still
´Compensation plan is an essential part of total program for motivating sales
personnel.
A sales compensation plan should have
three elements:
i. Provide a living wage
ii. Adjust pay-scales to performance level
iii. Provide a mechanism for attaining
company goals and individual goalsµ
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Compensation plan componentsCompensation plan components
Compensation plan has two basic
components:
1. Fixed
2. Variable
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Characteristics of a GoodCharacteristics of a Good
Compensation PlanCompensation Plan1. Fair wages
2. Motivational
3.Equitable
4. Simple and Understand
5. Flexible
6. Timely Payment7. Linked to nature of job
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Factors Determining CompensationFactors Determining Compensation
PlanPlan
1. Nature of Job
2. Ability of Organization to Pay
3. Level of Competition
4. Economic Condition of the Country
5. New Sales Territory
6. Advertising and Sales Promotion Efforts
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Steps in DesigningA CompensationSteps in DesigningA Compensation
PlanPlan
1. Determine Sales Forces and
Compensation Objectives
2. Determine Major Compensation Issues
3. Implement Long-term and Short-term
Compensation plans
4. Related Rewards to Performance
5. Measurement to Performance
6. Appraise the Compensation Plan
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Type of Compensation PlansType of Compensation Plans
1. Financial Compensation
2. Non-financial Compensation
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Financial CompensationFinancial Compensation
I. Straight Salary Plan
II. Straight Commission Plan
III.Bonus and Incentives
IV. Salary plus Incentive Plan
V. DrawingAccount and Commission Plan
VI. Allied Method
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Straight Salary PlanStraight Salary Plan
This is the simplest compensation plan in
which salesman receive fixed salary at
regular interval of time.
Salary is paid to sales force according to
salary grade approved at the time of
appointment.
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Straight Commission PlanStraight Commission Plan
In this compensation method sales force is
paid according to their performance,
efficiency and productivity.
These plan pays fixed or floating rate of
commission on the sales volume achieved
by salesman.
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Bonus andBonus and IncentivesIncentives
Bonus is defined as one sum supplemental
payment for above average performance.
Incentives are also supplemental
compensation that allows the salesperson
to perform the desire activity to earn
additional income.
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Salary plus Incentive PlanSalary plus Incentive Plan
A combination plan where a part of the
income is given as straight salary and a
variable proportion is given in the form of
incentive.
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DrawingAccount and CommissionDrawingAccount and Commission
PlanPlanThe organization opens a drawing account
in the name of the salesperson and credits
the commission due to him every month.
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Allied MethodAllied Method
In this method, the company shares a part
of the profit with its sales staff and
sometimes distributes the equity holding of
the company in the form of earned share toincrease the stake of the salesperson in the
organization.
Also knows as ́ profit sharing planµ
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NonNon--financial Compensationfinancial Compensation
I. Promotions
II. Recognition Programs
III. Fringe Benefits
IV. ExpensesAccounts
V. Perks
VI. Sales Contests
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PromotionsPromotions
Job enrichment and additional
responsibilities across the departments.
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Recognition ProgramsRecognition Programs
These are programmes designed to honour
individual salespersons· contribution and
recognize the excellent performance.
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Fringe BenefitsFringe Benefits
This is given along with any other
compensation plan.
Fringe benefits includes retirement benefits,
pension plan, paid leave, maternity leave,
study leave, insurance cover, medical
reimbursement, car facility, gratuity, loan
facility, etc.
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ExpensesAccountsExpensesAccounts
Expense accounts are compensation plans
that are designed to compensate sales
personnel for the expenses they incur on
the job.
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PerksPerks
Perks are a special category of
compensation available to employees with
some special status or expertise in the
company.
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Sales ContestsSales Contests
Sales organizations organize sale contests
for the salesperson to stimulate sales.
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