Dr. Pelham11/21/2016Mkt 3701.Is the current compensation plan fair to the salesman? Does it serve as a motivator? The current compensation plan that is offered to the salespeople is unfair and could be causing some serious motivational problems inside the sales force. Furthermore, this compensation plan is unfair because Allen, Duvall, Edwards, Hammond, and Logan were guaranteed $30,000, despite how well their sales were. Another compensation which is unfair is the incentive because to be eligible to get the award the sales people have to have existing sales which has increased during the previous year and Duvall, Edward, and Logan does not have any sales from the previous year so they are not eligible to get the award. Both of the plans have many weaknesses such as requiring that the salesman had to be in the territory for more than a years like the previous years so they can be eligible to get the bonus. Addition to that there will be zero incentive for the new or first year salesmen. 2.What are the strengths and weaknesses of the controller’s plan for compensation?
The strengths of this plan is that it reduce guarantees to $ 250 a week, not drawn against commission, and it would be addition to any commissions earned. Also, it can be a motivator for the salesman to increase sales rapidly, and as their sales increase as would their income. From looking at the “comparison of the earning in current year under existing guarantee plan with earnings under the comptroller’s plan” shows a higher increase in income with the newer comptroller’s plan compared to the existing plan. However, the controller’s plan is a very weak proposal because the guarantee will be reduced to $250 per week from $500 per week. On the $250 per week guarantee plus commission the salesman will have to the earn the same amount they earned in the current year except for Duvall and Edward who had about a 15 percent increase and Logan with a 21 percent increase. So, this plan has no compensation for sales, no incentive, and by cutting the guarantee in half will make it harder for salesmen.