COMPENSATION OF SALES FORCE

Presented by Vishal Kapoor 310023

Compensating Sales Forces
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. 
Compensating

According to Cundiff and Still ´Compensation plan is an essential part of total program for motivating sales personnel. Adjust pay-scales to performance level iii. Provide a living wage ii. Provide a mechanism for attaining company goals and individual goalsµ . A sales compensation plan should have three elements: i.

Fixed 2.Compensation plan components Compensation plan has two basic components: 1. Variable .

6.Characteristics of a Good Compensation Plan 1. 7. 3. 4. 2. Fair wages Motivational Equitable Simple and Understand Flexible Timely Payment Linked to nature of job . 5.

Nature of Job Ability of Organization to Pay Level of Competition Economic Condition of the Country New Sales Territory Advertising and Sales Promotion Efforts . 5. 3. 6. 4.Factors Determining Compensation Plan 1. 2.

4. 6. 2. 3. Determine Sales Forces and Compensation Objectives Determine Major Compensation Issues Implement Long-term and Short-term Compensation plans Related Rewards to Performance Measurement to Performance Appraise the Compensation Plan . 5.Steps in Designing A Compensation Plan 1.

Type of Compensation Plans 1. Financial Compensation Non-financial Compensation . 2.

V. VI. III. IV.Financial Compensation I. II. Straight Salary Plan Straight Commission Plan Bonus and Incentives Salary plus Incentive Plan Drawing Account and Commission Plan Allied Method .

Salary is paid to sales force according to salary grade approved at the time of appointment.Straight Salary Plan is the simplest compensation plan in which salesman receive fixed salary at regular interval of time. This .

In . efficiency and productivity.Straight Commission Plan this compensation method sales force is paid according to their performance. These plan pays fixed or floating rate of commission on the sales volume achieved by salesman.

Bonus and Incentives 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.

.Salary 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.

.Drawing Account and Commission Plan The organization opens a drawing account in the name of the salesperson and credits the commission due to him every month.

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 to increase the stake of the salesperson in the organization. Also knows as ´profit sharing planµ .Allied Method In this method.

VI. III.NonNon-financial Compensation I. V. IV. II. Promotions Recognition Programs Fringe Benefits Expenses Accounts Perks Sales Contests .

Promotions Job enrichment and additional responsibilities across the departments. .

Recognition Programs These are programmes designed to honour individual salespersons· contribution and recognize the excellent performance. .

gratuity. . maternity leave. Fringe benefits includes retirement benefits. etc. study leave.Fringe Benefits This is given along with any other compensation plan. insurance cover. medical reimbursement. paid leave. pension plan. car facility. loan facility.

.Expenses Accounts Expense accounts are compensation plans that are designed to compensate sales personnel for the expenses they incur on the job.

.Perks Perks are a special category of compensation available to employees with some special status or expertise in the company.

Sales Contests Sales organizations organize sale contests for the salesperson to stimulate sales. .

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