advantages of straight salary plan

John David Jackson, Patricia Meglich, Robert Mathis, Sean Valentine, Operations Management: Sustainability and Supply Chain Management, Service Management: Operations, Strategy, and Information Technology, Information Technology Project Management: Providing Measurable Organizational Value, Opportunity / Chance / Possibility / Occasion. According to your text, what would you do next? The introduction of HR technology has revolutionized the way HR departments operate. Advantages of straight-salary compensation plans include all of the following except. Hourly roles can often be perceived as less valuable or easier to replace. According to the Customer-Product Matrix, sales positions which focus primarily on New Business Development require a greater proportion of __________ in the compensation plan than those sales jobs in the lower left-hand quadrant (Account Management). Part A: Compare the advantages and disadvantages of straight salary and straight commission compensation plans. It could reduce retention and increase turnover. , a pet-friendly working environment, etc.). \\ Salary plus commission plans are often used for sales positions or corporate positions when the company wants to encourage leaders to push for substantial growth and high performance. Overall compensation and rewards increase with the use of team selling. 6. Your paycheck is based on a specific percentage of the sales that you are able to generate. Straight salary refers to the basic salaries and wage given to the worker. And because there is no financial security that kicks in if sales arent made, those who dont earn enough leave or burn out quickly. Which of the following is/are most likely to be among them? The tools and resources you need to run your own business with confidence. Following are the advantages of the straight commission plan: Pay relates directly to performance and results achieved. nonfinancial reward: All of the following are steps suggested for facilitating a sense of accomplishment in the salesforce It could be difficult to attract top performers who know they can make more in a job that rewards their work with a more commission-based pay structure. The salespersons perfect plan, a residual commission compensation (RCC) plan pays employees a commission as long as the accounts are producing revenue. This $35,000 level is called: Your customer's buying cycle is approximately 2 years and your reps need to invest significant amounts of time understanding their customers. Salaried employees receive an equal portion of their annual compensation every week. The commission can include (but is not limited to) a percentage of personal sales, a percentage of team sales, bonuses, or overtime pay. Salaried workers who earn more than $23,660 per year are considered exempt under the Fair Labor Standards Act (FLSA). Because there is no incentive to push products, the salesperson can be more concerned with meeting the needs of the customer and building a long-term relationship, which is important in a situation in which repeat visits are part of the job. 8. For post-Depression-era baby boomers, the security of a steady salary is important. 3. Your ultimate goal is to control selling expense and provide extra rewards for added results. The tools and resources you need to get your new business idea off the ground. Employees who like to work on teams and dont want their compensation to be judged on individual performance may be attracted to this kind of plan as well. Talent poaching occurs when an employee is recruited away from one company by another. Under a straight commission plan, sales managers usually have less control over their reps. With regard to compensation programs, most firms just use a draw against commission. The advantages of straight salary compensation include which of the following? \hline\\ The economy has entered a period of recession, and even the Administration's economists predict that it will remain so for at least three more quarters. Which of the following is not mentioned in the text as a challenge to sales managers attempting to adjust This is a very important distinction, as it determines who pays the taxes (the worker, not the employer) and to what standard an employer is held. \end{array} Because so many hourly employees work in entry-level positions, education requirements are usually lower than those of salaried positions, which adds to this assumption. 6. Further, the straight commission motivates poor performers to become more productive since it rewards good performers (Johnston and Marshall, p. 329). provide salespeople with trips and other rewards. The least valued nonfinancial reward by salespeople, other than those nearing retirement, is, According to the text, controls typically used by companies to ensure judicious spending by the Is it just monetary? It looks like its raining raises in corporate Japan as more and more companies are following in the footsteps of Uniqlo and announci Human Resources (HR) departments have evolved significantly over the past few years. \text{Arizona} & \text{90} & \text{Oregon} & \text{66} & \text{24}\\ Some people won't work for anything other than a fixed salary. There are many people who would simply prefer to work with the relative security of a salary position. The high level of uncertainty associated with performance-based pay often leads to extreme competition among the salespersons; leading to lack of cooperation that can harm the companys goals at times. She helps HR professionals identify issues with their talent management and employment law. Which of the following accurately describe per diem expense plans? Payroll essentials you need to run your business. A per diem expense plan pays the salesperson for all reported expenses. Each is then rated on 12 factors, as shown in the table below. Plan C is to issue 100,000 shares of nonvoting, $3.75 preferred stock ($3.75 is the annual dividend paid on each share of preferred stock). Basis: Straight salary method is based on the time spent on the job, and not on the volume of sales effected by the salesmen. Changing from a straight salary plan to a combination salary plus commission plan provides a number of benefits. Therefore, employers are not required to pay overtime if employees work more than 40 hours per week. When determining the financial compensation mix, the sales manager must. It is a very useful system of remunerating newly-appointed salesmen who are new to the job. Travel and entertainment costs are a relatively insignificant portion of a salesperson's compensation package. You also decide to pay your salespeople with the most common type of compensation plan among companies. Efficiency: Straight salary method does not distinguish between efficient and inefficient salesmen. The advantages of straight salary compensation include which of the following? From a payroll standpoint, this type of compensation is harder to administer. Defined by the FLSA, tipped employees are those who receive more than $30 per month in tips. On the other hand, TVC can lead to hostility between employees if they dont feel the workload or efforts of all representatives are balanced. \end{array} Are you ready for a pay raise? The sales numbers are added up and all commissions are split equally among all sales professionals. , holiday pay, and parental leave) to lifestyle benefits (like flexible working hours. Offer your support. 9. These plans often include a straight salary income for training periods or during low seasons. Formal recognition programs have a better chance of success if sales managers do all of the following In territory value compensation (TVC), payment is calculated based on the territory volume at the end of a period. From a morale perspective, they can be more satisfied with their work-life balance since no one is dictating it. Under this system, rewards are not matched with efforts. their compensation plans to recognize team performance? A salaried compensation plan can help promote a sense of teamwork needed to close these more complex transactions. On the other hand, when you pay commission, you pay when an employee does something to cause your business to see a profit. After initial investigations by Holmes Miller, head of the Operations Department, BIA has narrowed the list to 9 cities. Employees who receive it are considered nonexempt by the FLSA, meaning their compensation is regulated. 5. Part B: As a retail sales manager of a large superstore, one of your responsibilities is to train the newly hired employees. One of the advantages of the gross margin commission plan is the firm and salesperson share the same pool of money so both are interested in maximizing that amount. . Additionally, they have full control over benefits like insurance and retirement management. Which of the following statements regarding sales contests is true? Tax and bookkeeping basics you need to run and grow your business. issue a press release detailing the company's changes. Part B: As a retail sales manager of a large superstore, one of your responsibilities is to train the newly hired employees. The most serious disadvantage of a straight-salary compensation plan is. \\ When more than one individual works together to make a sale, the selling process is described as: You have just been promoted to the position of sales manager. \hline\\ Per the IRS website, the general rule is that an individual is an independent contractor if the payer has the right to control or direct only the result of the work and not what will be done and how it will be done. \text{Stanford} & \text{77} & \text{Southern Cal} & \text{67} & \text{10}\\ Although quite popular, salary compensation plans have some disadvantages. total sales. Is your team struggling with burnout and a lack of fulfillment at work? __ A mutual fund that purchases Working as a contractor definitely has its benefits. Employees may be confused as to how pay is calculated, so transparency is important. Employees are guaranteed to receive at least base salary to pay the bills, even during a time period when their sales are low. 40 Questions to Ask Before You Accept A Job Offer. Employers are often hesitant to use this type of compensation, as payroll expenses can be high or unpredictable. Increase sales and revenues. A salesperson makes the initial contact and sets the stage for the sale, while others such as product experts or management personnel are brought in to help him close the deal. Before making any decisions, consider what type of compensation you can offer potential employees and what the stipulations of that compensation plan are. Due to the complexity of the plan and its many compliance issues, few companies offer equity or stock in the short-term. . Salesmen Reward: Under the straight salary method, salesmens rewards are not matched with their efforts. 7. 4. To ensure proper classification, employers should begin with the assumption that their commissioned employees are nonexempt, and then review the potential exemptions to determine whether they apply. . The straight salary plan is one of the simplest compensation plans that companies offer to their employees, particularly sales representatives. Security and collaboration: The straight salary plan provides a more stress-free working environment for the salespersons. However, a straight salary plan also has its own advantages. 1. This content is for information purposes only and should not be considered legal, accounting, or tax advice, or a substitute for obtaining such advice specific to your business. Help Miller rank the top three cities that BIA should consider as its new site for servicing aircraft. \end{matrix} Intuit Inc. does not warrant that the material contained herein will continue to be accurate nor that it is completely free of errors when published. Straight salary plan can help promote a sense of equality among sales people who work as teams or small groups, for everyone is paid equally and the contribution of each team member is also expected to be equal. The different types of compensation include . Operating costs are minimized during slack selling periods. Salary plus Commission This is one of the most reliable types of compensation plans. Salespeople are usually paid on a straight salary compensation, in which there is no opportunity to earn incentives. This system safeguards the interests of the consumers also. \begin{array} {rcrcrcrcr} When the salesmen are required to create markets for a product. Murray Kiser operates his own catering service. \\ && +1,500\\ According to a survey of sales executives reported in the text, the most popular sales incentive is. has very specific requirements for classifying and paying employees. This can either be done through direct contact with t Are you ready for a pay raise? Transcribed image text: QUESTION 17 An advantage of using a straight salary plan to compensate sales employees is that employees can be paid for performing only sales effort. plan is recommended: Advantages of straight-salary compensation plans include all of the following except. . Match the terms with the definitions. A salesperson who is intrinsically motivated. It does not distinguish between efficient and inefficient salesmen, as the same remuneration is paid to both efficient and inefficient salesmen. Person A receives a salary of $80,000. 2. No two compensation plans are alike. It assures a steady minimum income to the salesmen. 4. Hence, this concludes the definition of Straight Salary Plan along with its overview. This article has been researched & authored by the Business Concepts Team. A fixed dollar amount is paid for each day or week in the field. Security and collaboration: The straight salary plan provides a more stress-free working environment for the salespersons. the requirement that expenses be charged and the bills sent directly to the company for payment by the accounting department. 11. Some terms may not be used. Straight Salary Compensation. System is easy to understand and compute. Straight salary plans often do not provide strong incentive for extra effort. Disadvantages of straight salary compensation. 2. The sales teams support each other to reach a common goal. 5 Park N Fly presently has net income of $3.5 million and 1 million shares of common stock outstanding. Everything you need to start accepting payments for your business. The most common exemptions are executive, administrative, and professional exemptions. This compensation type tends to attract fewer people since there is no secure base pay. They don't want to worry about the inconsistencies associated with a commission-based pay. Contractors are required to find health insurance and retirement plans on their own. A straight salary can work well for sales positions for which a high focus on service is required, such as a salesperson who calls on retail stores on a regular basis to take orders and stock merchandise. PMR is common in sales and is good for startups with low liquidity. Base salary + sales commission-based pay.

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