Compensation Design And Human Resource Management Strategies Essay

Compensation Design And Human Resource Management Strategies Essay

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Martocchio (2013) states that compensation design boils down to the organizational goals, the organization’s competitive strategy, and how the organization aligns its marketing and human resource management strategies (p. 190). In addition, managers tweak fixed and variable incentive pay to properly motivate employees to perform based on the employee’s influence on the sale, nonsales duties, and the industry’s competitive pay standards (Martocchio, 2013, p. 193). Martocchio (2013) states that employees who have greater influence on the sale would be more likely to have more incentive pay than those who have less influence on the final decision to buy, while employees who have more nonsales duties would likely have more of a fixed salary than those who had less (p. 193). Ryals and Rogers (2005) concur with the idea that compensation plans, referring to a compensation plan as a balance of control and motivation, where the salary represents the organization’s control of the employee and the variable incentive represents the motivation (p. 357). Finally, the pay standards within the industry would weigh heavily on the incentive pay plan that an organization would implement (Martocchio, 2013, p. 193).

According to Martocchio (2013), there are five commonly used sales compensation plans: salary only plans, salary with bonus plans, salary with commission plans, commission only plans, and commission with draw plans (p. 191). Under a salary only plan, an employee earns a fixed rate of compensation that does not vary with sales performance (Martocchio, 2013, p. 191). Martocchio (2013) suggests that salary only plans may be taxing on the organization since employees get paid whether they produce or not (p. 191). Thus, the salary onl...


... middle of paper ...


...red (p. 192). Abratt and Klein (1999) posits that commission only plans work well for organizations that seek to increase its sales volume and profitability (p. 66). Martocchio (2013) states that if organizations fail to be realistic about its sales goals and employee performance standards, the consequences may include decreased employee motivation, loss of profits, and unprofessional behavior (p. 192).


References
Abratt, R., & Klein, M. (1999). Sales force compensation and incentive schemes: practices in the South African .. South African Journal Of Business Management, 30(3), 65.

Martocchio, J. J. (2013). Strategic compensation: A human resource management approach (7th ed.). Boston, MA: Pearson.

Ryals, L. J., & Rogers, B. (2005). Sales compensation plans -- One size does not fit all. Journal Of Targeting, Measurement & Analysis For Marketing, 13(4), 354-362.

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