CFO Lessons - From the Office of the Chief Financial...

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From the Office of the Chief Financial Officer As the CFO of G-BioSport North, I would like to share with you some possible new implementations into our company. After examining the operations of NeverFail, I have noticed some hot topic issues that we should be cautious of in our own company. Compensation Strategies NeverFail had two types of compensation: a 10% commission for sales representatives and a 1.15% bonus for increase in sales each year to the division director. After further examination into both of these types, they both do not seem to be ethical or for the best interest of the company. First, the director will be putting more pressure on the employees to continually outperform their previous work. Also, the director will only be concerned with the financial success of their division and not the company as a whole. Second, with a combination of pressure from the director and own personal benefits, sales representatives may be enticed to perform unethical measures to make a sale. That being said, I believe we need to reanalyze our compensation procedures. I still believe that our sales representatives should receive some form of sales based commission. With a flat salary they will become stagnant and not perform as high. I am proposing that we install a mix of base salary and sales commission for our product sales representatives. We do not want sales reps to pressure someone into buying our male performance products if we do not ethically think it would benefit them or be bad for their health. As of now, I am proposing a base salary of $30,000 a year with a 10% sales compensation for all new hires. As for the issue of director compensation, I do not believe that a bonus should be given based on the increase in sales from
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the previous year. The director should be motivated enough to have high sales based on a flat
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This note was uploaded on 11/23/2011 for the course BLS 465 taught by Professor Herron during the Fall '11 term at Miami University.

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CFO Lessons - From the Office of the Chief Financial...

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