compensating plan for sales force
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8/7/2019 compensating plan for sales force
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APRESENTATION ON COMPENSATION PLAN
FOR SALES FORCE
Presented By
Anil Pareek
Ankit
Ankur Soni
Amjad
Richpal
Amit kumar
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MEANING OF COMPENSATION
Compensation is the Amount Received by sales
force in exchange of work and service performed
by them as well as monetary and non-monetary
Compensation in the form of salaries or
commission enable the sales people to meet their
needs. And Compensation is a tool of motivation
to the sales People
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OBJECTIVE OF COMPENSATION PLAN BY
COMPANY VIEW POINT
To attract, retain and motivate competent
salespeople
To control sales people activities
To be competitive, yet economical
To be flexible to adapt to new products, changing
markets and differing territory sales potentials
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OBJECTIVE OF COMPENSATION PLAN BY
SALES PERSON VIEW POINT
To have both regular and incentive income
-: Regular income by fixed salary to take care
living expenses
-:Incentive income for above averageperformance
To have a simple plan, for easy understanding.
To have a fair payment plan
Scope of future raise
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TYPES OF COMPENSATION PLAN
Straight salary
method Straight Commission
method
Combination of salary
and commission
Drawing account and
commission plan
Promotions
Recognition Programs Fringe benefits
Travelling Expense
account
Perks Sales contests
Financial Compensation Non- Fin. Compensation
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STRAIGHT SALARY METHOD:-
Salesperson paid a set amount of money based uponhours or days worked and amount is fixed and does not
vary. the amount consists of basic salary ,dearness
allowance etc.
This plan is suitable for sales trainees, missionary
salespeople and when a company wants to introduce a
new products or enter a new territory.
MERITS :-
(a) Control
(b) Security for Salesman
(c ) Simple to understand & easy to Calculate
(d) Logical and justified
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DEMERITS:- (a) Lake of Incentives
(b) Too much Protection (c) Common yardstick
(d) Sales Cost
STRAIGHT COMMISSION METHOD:-
This method is based on the result, and not on the basis oftime i.e. volume of sales made by a salesman is a basis forremuneration
Per unit sales commission
As a percentage to sales
MERITS :-
(a) Performance oriented
(b) Incentive and motivation inbuilt
(c ) Not a burden on organization
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TO CONT..
(d) Freedom of operation (e) Attracts better talents
DEMERITS:-
(a) Uncertainty (b) lack of control
(c ) Fluctuation in market price
(d) Rate of attrition could go up
COMBINATION OF SALARY & COMMISSION
:- Salary plus commission on total sales
:- Salary plus commission over certain quota
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EXAMPLE:- ASALESMAN WHO IS APPOINTED ON A MONTHLY
SALARY OF RS 5000 PLUS COMMISSION, IS ENTITLED AT
(A) 1.5% COMMISSION ON ALL SALES OR
(B) 4% COMM. OVER THE SALES OF RS 50000 AND TOTAL SALES
MADE BY HIM WAS 80000
His total earning would be
(a) Salary 5000
Comm. 1.5% on
Rs 80000 1200
Total 7200
(b)
Salary 5000
Comm. 4% upto
50000 Nil
Com. Above 50000
(4% on 30000) 1200
Total 7200
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MERITS
(a) There is minimum guaranteed income (b) Salesman take more initiative to sell
(c) Control over the salesman activity
(d) Efforts and rewards are well-balance.
DEMERITS
(a) Increase in the office & administration cost
(b) Require more records have to be maintain
DRAWING A/C AND COMMISSION PLAN
Organization open a new a/c in the name of salesman
The salesman draw amount in a limit
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NON FINANCIAL COMPENSATION
(a) Promotion :-By considering abilities and experienceis a stimulation policy, the salesmen are promoted to a
higher post on a higher. There by status increases,self
respect, remuneration increases etc.
(b) Recognition Programs :- These programs are
designed to honor individual salesperson/ Team
performance contributions and recognize the excellent
performance.
In GE capital and other GE companies in india the
salespersons are awarded medallions for their
outstanding contributions
LIC has its CROREPATI AGENT scheme
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FRINGE BENEFITS
These are employment benefits in addition to thesalary and wages paid to the sales staff
These include medical benefits, retirement benefits,
life, paid vacations, sick leave, gratuity and provident
fund ,ESI etc.
TRAVELLING EXPENSE ACCOUNTS:
Fixed daily allowance
Actual Mileage covered
Fixed fuel expense
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PERKS
Perks are special category of compensation
available to employees with some special statusor expertise in the company.
(a) Status perks:- Include office location, job title,
parking space
(b) Financial perks:- Include use of the companyvehicle, drivers, gardeners and club
memberships.
(c ) Personal growth:- Include paying for
additional education or sending the salespeoplefor motivational or training programs.
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SALES CONTESTS
A sales contest is a special selling campaign offeringincentives in the form of prizes or awards beyond
those in the compensation plan
OBJECTIVES:-
(a) To sell more
(b) To sell new customers
(c ) To promote new products
(d) To promote seasonal products
CONTESTS PRIZES
:- Cash
:- Travel or Trip
:- Special honors or privileges
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A GLOBAL EXAMPLE
FedEx gives its employees perquisites like flying free
anywhere in the FedEx aircrafts.
A Bravo Zulu award is given to employees who perform
beyond their call of duty.
A Golden Falcon award for employees going our of their
way to serve customers.
Five Star Award for the best employee in-terms of
customer service and profitability.
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What income does an employee have?What income does an employee have?Wages/salary
Bonus. For example an
employee is givenextra pay because
they worked hard orthe firm is doing well.
Benefit in Kind. Forexample an employeeis given a car that canbe used for personal
use or they are given afree holiday.
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DESIGNING COMPENSATIONSTRATEGY
0% 20% 40% 60% 80% 100%
junior mgt
middle mgt
senior mgt
top mgt
Share of salary components
Fixed Salary
Other Allow ences
Benefits