The job which i currently perform at my organization is a salesman who is responsible

for dealing with customers, giving them full information about the product and
negotiating with the clients. The compensation approach that i consider the most
appropriate for this job is a basic salary plus fringe benefits for meeting targets .This
compensation approach is aligned with the reinforcement, expectancy and agency
theory.

The major advantage of this compensation approach is that as certain fringe benefits
like health insurance, travel insurance will be provided to the employee on additional
sales the employee will feel motivated as he has been rewarded for his efforts. As a
result the employee will be motivated to sell more and more products which will
ultimately lead to higher sales and ultimately higher profit margins.. This is inline with
the expectancy theory in which the employee favourable performance will result in a
reward.More over the basic pay given to the employee will make the employee
accountable for the relationship with all the stakeholders. This pay will provoke the
employees to put the interests of the organization in the driving seat and make sure that
the customers who visit the shops are treated in a politefull manner and are given full
information about the product.. This is inline with the agency theory which states that to
explain and resolve issues in the relationship between business principles and their
stakeholders. More over the advantage of using this approach is that the employee will
be given a basic salary and if the employees are not present at work their salary will be
deducted.This is inline with the reinforcement theory. This will help the organization to
reduce its absenteeism rate which will ultimately increase the efficiency of the
organization.

The major dis-advantage of this approach is that this might put additional pressure on
employees as they will provoke themselves to work hard to achieve additional rewards.
This additional stress can affect the efficiency of the organization as the employee may
lose their temper in front of customers which leads to bad publicity for the organization.
Moreover this can also create resentment amongst the employees as some employees
are able to sell less products than other employees. As result this may create an
unhealthy environment within the organization and the reputation of the organization
may be affected.

Administering this type of compensation approach within the organization is extremely

difficult. It is because every individual has different capabilities and skills and setting
targets accordingly can be difficult for managers. Moreover it is very difficult to shortlist
employees who deserve fringe benefits as every manager has its own point of view
about the employee and this can also create resentment amongst the managers.
Moreover, those employees who are not able to meet the targets will feel demotivated
and then managing those employees can be very difficult for the organization.