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Piece work, particularly when done from home, may have no set time frame for completion, but some jobs may have hourly or daily quotas. Piece work has been used in manufacturing goods but can also be used in jobs with non-tangible work outputs, such as data entry.The concept of piece work has been around a long time--long before Internet, online jobs and data entry. It has been used in garment factories and other manufacturing jobs to pay workers based on production since the time of the Industrial Revolution. In today’s economy, it is still used that way, especially in developing nations. However, piece work is also used in fields such as data entry, translation, writing,
58 editing and call centers. In these lines of work, the “pieces” may be clearly defined and incorporated in the rate, such as per-minute talk time, per call, per word, per page or on a project basis.However, it is very important to note that only employees are protected by minimum wage laws, not independent contractors, and per-piece pay structures are very often used as pay rates for freelancers, or independent contractors.2.3. Sales compensationBoth bonus and commission plans are common sales incentive compensation approaches to attract, motivate and retain salespeople, but how should firms decide which is the most suitable? Several aspects of a firm’s selling process and environment influence the plan structure – bonus, commission or mixed – that is appropriate.2.3.1. Bonus PlansWith a bonus plan, each salesperson is typically given a quota for a territory, and incentive payments are tied to performance relative to defined quota gates, targets or thresholds. For example, the salesperson might receive a first bonus payment at 90% of quota, a second payment at 100% attainment, and a third at 110%. Bonus plans typically include a sizeable salary component, so that if salespeople do not sell enough to earn the bonus, they can still earn a decent living.Because most bonus plans have a large salary component, such plans are often attractive to salespeople with a longer-term focus who want to stay with a firm and build a career. They also attract salespeople who in addition to selling, are interested in problem solving, consulting and servicing customers.2.3.2. Commission PlansCommission plans pay continuously for every sale. A commission rate is multiplied by a performance measure, such as sales or gross profits, to determine payout. Sometimes the commission rate varies by product or customer. Often, the rate varies depending upon the level of performance attained by the salesperson. For example, a salesperson might earn 3% on sales up to a territory goal and 5% on sales beyond the goal. Many commission plans include a salary component, but usually the variable component is larger than it is in a bonus plan. With most commission plans, a salesperson relies on commission earnings, in addition to salary, as an important part of income.