Summarize

According to this authors of this article, Christopher J. Shipley and Brian H. Kleiner said that
compensation management of commissioned sales employees can be a difficult aspect of
managing a business or it could be a way for organizations to promote an excellent work
environment that promotes, customer service, team-work, personal growth, and profit.
Although there is no one best method for companies to manage compensation of
commissioned sales employees, organizations can be successful in this area of their business
if they just take the time to research different types of methods and study other
organizations.

Managers need to also find out what motivates their employees. The easiest way is to just
ask them what they want. Managers need to stay up to date on the changes and new ideas
in compensation management. Employees want the latest in compensation management
and will find the organization that will offer it. In order for organizations to keep their
employees happy and motivated, they need to offer the most competitive packages on the
market. Managers can do this if they research what is currently being offered on the
market.

Once a programmer for compensation management is selected and designed, managers

need to take it step by step, make sure that no one group of sales employees is singled out.
Managers need to create a team atmosphere so that sales employees can strive for the good
of the group instead of the good for themselves. Working as a team will decrease individual
competition among sales employees. Sales employees will be working to help one another
achieve their goals. This will benefit new sales employees, seasoned sales employees,
managers and the organization as a whole.

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Finally, management needs to identify the type of employees it has. Some employees may
not need to be motivated as much as others. Managers need to recognize this and reward
and compensate employees specifically. Every sales group or individual should feel like they
are special and that they are not replaceable. Sales employees need to feel comfortable in
their job to be successful. As long as an organization can keep on top of its compensation
programmer and make sure their sales employees are happy with what they are receiving,
any organization should be successful in compensation management.

An effective pay system can be effective if it is properly adapted to the organization.

Additionally, the ultimate goal of utilizing a compensation system is to improve employee
performance, to increase organizational efficiency and profitability. If the cost of
implementing and administering a pay programmer exceeds realized benefits, it then makes
little business sense to use one.

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Article Review

The article has stated the problem statement at the beginning which is “Compensation
management is becoming increasingly more difficult for organizations to control because
sales employees want more and more”. The focuses of the author’s work are to recognize
the different types of compensation programmers for commissioned sales employees and to
establish ways to manage these programmers in an ever changing business environment. It
also compares and contrasts the differences between the company’s different compensation
plans.

The article shows several types of compensation plans for commissioned sales employees.
The central purpose is each compensation plan should be specific to each employee
depending on the organization. However, before an organization can create a compensation
plan, it needs to find out what will motivate employees to perform at higher levels. From
the article, there are three different types of compensation plans:

 The base salary with extra commission coming from attainment of goals.
 The compensation plan that does not offer any type of commissions.
 The sales employees are on a commission only salary.

Let’s go through one by one. On the first plan, the base salary with extra commission
coming from attainment of goals can be define as the sales employee does not receive
commissions on each product sold for the month unless 100% of the goal has been met. The
goal of this plan is to motivate employees to hit 100% of their goal so that they will make
more money.

On the second plan is the compensation plan that does not offer any type of commissions.
For example, each month the sales employee is required to close four deals. When this is
completed, the sales employee receives a raise of pay onto their yearly salary. The
weakness of this plan occurs to the sales employee who only been able to do three deals a
month, they will not get any commissions at all.

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On the third plan, the sales employees are on a commission only salary commonly happens
to the real estate agent. The real estate agents only make money when they sell a house.
When they do sell the house, the organization gets a certain percentage of the sale of the
house. This commission pay scale can be good because it really drives the sales employee to
produce. If there is no production from the sales employee then he/she will not make any
money to live on.

The interesting parts of this article are the three critical requirements of new reward system
on how to compensate sales employees such as:

 Rewards systems need to have a positive impact on behavior.

 Reward systems need to focus efforts on serving the customer.
 Reward systems need to enhance collaboration within the workplace.

Strengths of this article Weaknesses of this article

The implementing of gain-sharing Manager’s capabilities needed to find

plan to the sales employees. out the cost associated with their
current output.

Become more sensitive about the sales What are the pay structure that
employees salary and commissions. company’s might issues?

Motivates the sales employee to A good teamwork needs a good team

working as a team. leader.

Recommendation

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The important thing is to retain the best people. How to retain it? The management needs
to compensate employees that providing customer with high satisfaction because when
employees are rewarded for their performance and they are happy with what they do, they
are more likely to deliver extraordinary service. It is a matter of commitment from the top
management as well as involvement of all employees that a company can bring the best
service quality to the customer. Some of the successful organization believes that success
comes from its people. Thus, it must treat its employees as customers. If they are valued
and respected, they will be more likely to stay with the company and contribute positively to
the company’s overall performance.

References

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http://www.emeraldinsight.com/compensation_management

Kleiner, B. & Peterson, L. 2002. Techniques for an effective subordinate/supervisor relationship.

Readings in organizational behavior and administration.

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