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The right plan will not only motivate your workforce, but it will also align with your business goals and profitability. Help Miller rank the top three cities that BIA should consider as its new site for servicing aircraft. For each frequency distribution, suggest "nice" bins. Applicable laws may vary by state or locality. Accordingly, the information provided should not be relied upon as a substitute for independent research. Unlike a heavily commission-based position in which income relies on sales volume, the salesperson earns the same amount of compensation regardless of how much she sells. Employers are also required to pay employees the. In these situations, it can be difficult to determine who contributed most to attaining the sale, making a commission plan difficult to administer. It is critical that companies using this type of system have good metrics in place for tracking sales so they can fairly and accurately calculate commissions. Each increase and decrease in owners equity, except transaction (5)\left(5\right)(5), affects net income. Check to see how the salespeople would fare under the new plan by using sales figures from the previous year and calculating expecting compensation. As defined by the IRS, independent contractors are people who are in an independent trade, business, or profession in which they offer their services to the general public. Employees and independent contractors are mutually exclusive, as a person is either one or the other. WinningTeamArizonaDukeFloridaStateKansasKentuckyLouisvilleOklahomaStatePurdueStanfordWisconsinPoints90857578716572767776LosingTeamOregonGeorgetownWakeForestColoradoNotreDameTennesseeTexasMichiganStateSouthernCalIllinoisPoints66667057636266706756WinningMargin241952183661020. }\\ That means, there will not be much bad debts. Service focus: Such a plan works well for sales positions where pushing a product may not be necessary and customer service is of utmost importance. Accounting and bookkeeping basics you need to run and grow your business. elect to receive regular straight time pay or bank compensatory time at their straight time rate. Straight Salary Method of Remuneration | Meaning | Suitability | Merits Salespeople are usually paid on a straight salary compensation, in which there is no opportunity to earn incentives. Match the terms with the definitions. As a business owner it can be a challenge to figure out how to compensate employees. bonuses for sales target achievement), in others salespersons receive commissions as a percentage of the sales they were involved in. Part B: As a retail sales manager of a large superstore, one of your responsibilities is to train the newly hired employees. . Once the person has established himself in the area, the company can switch to performance-based salary. In order to "weather the storm," the best course of action among those presented below is to: Raise commission rates on higher margin products in all regions in order to boost sales. Under a straight commission plan, sales managers usually have less control over their reps. With regard to compensation programs, most firms just use a draw against commission. The company uses a combination of brokers and independent sales reps. What kind of a compensation program would they most likely to use for their salespeople? Under this plan, companies compensate its employees entirely on the profits made by the business. The advantages of straight salary compensation include which of the following? The most commonly used definitions of motivation include these three dimensions: Use the table below. Employees are guaranteed to receive at least base salary to pay the bills, even during a time period when their sales are low. As the Vice President of Sales for a new startup company, you decide to hire and train your own field sales force. Straight Salary Plan - Meaning & Definition | MBA Skool Offers considerable incentive for the salespeople. As the name suggests, straight salary compensation is just what you would expect. You have a meeting with her to outline the drawback(s) of this type of plan. As an hourly employee, once you work over 40 hours in a week, your employer must pay you time and a half for these hours. A straight salary plan can be advantageous in certain situations. What change in the firm's salesforce reward system might be in response to customer's needs? \begin{array}{l} Employers who pay by the hour should focus on increasing morale and showing employees they are valued in order to avoid turnover. Readers should verify statements before relying on them. 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. From a payroll standpoint, this type of compensation is harder to administer. This can either be done through direct contact with t Are you ready for a pay raise? Finding what compensation plan works best for the company, involves accessing its strengths and weaknesses, making a decision based on the long-term goals, and carefully negotiating the contract with the employee in a way that it works best for the company and its needs. What is salary pay? According to the Customer-Product Matrix, sales positions which focus primarily on New Business Development require a greater proportion of __________ in the compensation plan than those sales jobs in the lower left-hand quadrant (Account Management). Straight salary compensation is typically used in industries where: Missionary selling (i.e. 4. Total sales for the territory are then split among the sales reps in that territory. \text{Stanford} & \text{77} & \text{Southern Cal} & \text{67} & \text{10}\\ \underline{\ \ \ \ \ \ \ \ \ \ \ \ \ \ } && \underline{\ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ } && \underline{\ \ \ \ \ \ \ \ \ \ \ \ \ \ } && \underline{\ \ \ \ \ \ \ \ \ \ \ \ \ \ } && \underline{-3,000}\\ Sales contests will continue to be an important tool for achieving expedient results. tend to produce too many salesforce objectives which are of the crisis-resolution variety. Which of the following is not true regarding the design of a global salesforce compensation system? We dont want you to miss anything. The board of directors of this family-owned company believes that Park N Fly could earn an additional $1.5 million income before interest and taxes by expanding into new markets. Disadvantages of straight hourly compensation, Whos using hourly plus commission compensation, Benefits of hourly plus commission compensation, Disadvantages of hourly plus commission compensation, Disadvantages of commission-only compensation, Whos using territory volume compensation, Benefits of territory volume compensation, Disadvantages of territory volume compensation, 7. The compensation is usually calculated by finding out territory volume. One benefit, from the employers perspective, is the company only pays commissions when the top line improves, so its beneficial from a profitability standpoint. \text{Kansas} & \text{78} & \text{Colorado} & \text{57} & \text{21}\\ As a staff reporter, she has written hundreds of newspaper and magazine articles, and she is also the author of two published novels. A salaried compensation plan can help promote a sense of teamwork needed to close these more complex transactions. This compensation type tends to attract fewer people since there is no secure base pay. \\ The Science Behind Salary Negotiations: A Game Plan for Employers That A good salary plus commission plan will motivate employees to higher sales and performance while giving them the peace of mind of regular, stable income. . Further, the straight commission motivates poor performers to become more productive since it rewards good performers (Johnston and Marshall, p. 329). Companies looking for long-term growth as opposed to short-term sales may opt for this type of compensation as well. Get the definitive guide to employee compensation packages and benefits in this comprehensive QuickBooks resource written by payroll expert Katey Maddux. 5. This content is for information purposes only and should not be considered legal, accounting, or tax advice, or a substitute for obtaining such advice specific to your business. Straight salary plan can help promote a sense of equality among sales people who work as teams or small groups, for everyone is paid equally and the contribution of each team member is also expected to be equal. Certain selling opportunities require collaborative efforts and an incentive-based system may not be suitable because it might be difficult to determine different individuals level of contribution. According to your text, which benefit is offered by the greatest percentage of companies? At the end of the pay period, this prepayment is drawn from how much the salesperson earned in commissions. -15,000 &&&& +15,000\\ This can lead to high turnover, a need for more recruitment resources, and higher training costsall of which cuts into potential bottom-line savings. An in-depth guide for business owners, Financial statements: What business owners should know, Small business grants: 20+ grants and resources to fund your future without debt, How to choose the best payment method for small businesses. costing little and reinforcing desirable behavior immediately after it occurs. From big jobs to small tasks, we've got your business covered. According to compensation surveys, ales managers typically earn less than the top reps in their district when sales reps are on an incentive-based plan. Some terms may not be used. This type of compensation plan puts less pressure on individuals and fosters team-building. So, it does not encourage salesmen to do hard work. One regulation is employers are required to, at a rate of time and a half if an employee works over 40 hours in one week (this is a U.S. standard and differs by country). 1. \end{array} Travel and entertainment costs are a relatively insignificant portion of a salesperson's compensation package. \text{JPM} & \text{JP Morgan Chase & Co.} & \text{70.61} & \text{57.07} & \text{57.45} & \text{$+1.11$} & \text{20,987,678} & \text{58.11} & \text{57.14}\\ \hline Focus on Service A straight salary can work well for sales positions for which a high focus on service is required, such as a salesperson who calls on retail stores on a regular basis to take orders and stock merchandise. \end{array} You now require the sales force to sell $35,000 worth of product each month to make a commission. bell-shaped distribution. It assures a steady minimum income to the salesmen. Laws differ by state, so do your research before making any decisions. Plan C is to issue 100,000 shares of nonvoting, $3.75 preferred stock ($3.75 is the annual dividend paid on each share of preferred stock). Cost of Administration: The cost of administration of straight salary plan is less than that of straight commission plan. This is a very important distinction, as it determines who pays the taxes (the worker, not the employer) and to what standard an employer is held. Transcribed image text: QUESTION 17 An advantage of using a straight salary plan to compensate sales employees is that employees can be paid for performing only sales effort. Startup companies using profit margin/revenue based compensation plan can also incorporate long-term incentives such as stock to build loyalty and a valuable sales base. Tax and bookkeeping basics you need to run and grow your business. If its part of their contract, salespeople can continue to receive commissions even after theyve left the company. Contractors are required to find health insurance and retirement plans on their own. 4. Did your choice agree with Sturges' Rule? 7. She loves training, creating processes, and introducing her clientele to new apps and technology. PMR is common in sales and is good for startups with low liquidity. 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As the remuneration of the salesmen under this method does not depend upon the volume of sales made by them, the salesmen will not be reckless in increasing their sales by selling to every customer on credit. Per the IRS website, the general rule is that an individual is an independent contractor if the payer has the right to control or direct only the result of the work and not what will be done and how it will be done. In addition, employers also enjoy the flexibility of being able to increase or decrease employee hours seasonally or to reflect sales growth.a. 8. The advantages of straight salary compensation include which of the following? &&\textbf{\textsf{Assets}}\\ Grant cites a Stanford and Kellogg study that found when a group of people only shared their email and names during negotiations, they struck up agreements 40 percent of the time. Salesperson compensation has been an issued marked by trial and error to discover the right formula. 8 Pros and Cons of Straight Commission - BrandonGaille.com By creating a feeling of security in the minds of the salesmen, it maintains high morale among the sales force. So, it can be easily understood by all salesmen. The latest product innovations and business insights from QuickBooks. 2. How much do employees cost beyond their standard wages? Of course, there are exceptions to every rule. With this type of structure, you'd pay your sales people a straightalbeit competitivesalary like all of your other employees, and nothing else. Compare the advantages and disadvantages of straight salary and Solved An advantage of the straight salary plan for | Chegg.com Which of the following is an advantage of a straight-commission compensation plan? All of the following are typical reimbursable expense items except. A straight salary can work well for sales positions for which a high focus on service is required, such as a salesperson who calls on retail stores on a regular basis to take orders and stock merchandise. 3. How much investment capital should you accept? Commission-only compensation can be valuable for employers because top performers get the most money. When the sales effected by the individual salesman cannot be isolated (i.e., when the sales are made collectively by two or more salesmen). Management can direct Salesforceinto various activities more easily. How to find funding and capital for your new or growing business. The net result of setting limits on sales expenses is that salespeople spend their valuable time juggling expenses from one category to another or from one time period to another to make sure they cover their costs. Explore the trend of creative job titles in the job market and how they are reshaping the way we view and define roles in the workforce. MKGT 637 Chapter 8 Flashcards | Quizlet 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 But straight commission method distinguishes between efficient and inefficient salesmen. Benefits of salary plus commission compensation, Disadvantages of salary plus commission compensation, This type of compensation refers to a set hourly amount without additional performance-based income. As a result, salaried workers often dont track hours worked. Salespeople can be compensated in a number of different ways. \\ Straight salary might not be tempting to top-performing sales reps who want to make as much money as they can through hard work and dedication. A fixed dollar amount is paid for each day or week in the field. \text{Symbol} & \text{Stock} & \text{High} & \text{Low} & \text{Last} & \text{Change} & \text{Volume} & \text{High} & \text{Low}\\ \hline

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