What are the benefits of paying salary?A steady salary provides employees with stability and security. A substantial base salary can be used if your sales representatives need technical knowledge to sell your products or services or if they have to establish a long-term relationship with clients. Show
When salary is the main compensation method for your sales team, it is a good idea to establish performance standards for both customer service and sales targets. Quarterly or annual can then be designed so employees will achieve a desired level of sales and quality of services. The other advantage of using mostly base salary as compensation is that it simplifies the budgeting process, as it is relatively easy to forecast fixed salary budget costs. The benefits of commission payStraight commission is a great way to attract aggressive, skilled sales representatives. This group will typically have some basic technical knowledge, but their skill is more focused on finding customers, pitching your products or services and closing the deal. Others in the company will have more in-depth technical skills and provide direct services to the customer. With this type of remuneration, the reward for performance needs to be clear and financially attractive. You must pay the commission on time and regularly. Many organizations tier the sales goals with bonuses given for achieving quarterly or team goals. From a salary budgeting point of view, costing is based on sales projections, and increased commission costs are handled by increased revenues. One word of caution, however—your commission pay should be based on a percentage of revenue or profit. Tying commission to a quantity of goods or services sold can lead to heavy discounting and negatively hurt your margins. Using a mixed compensation modelMost companies pay a base salary that is complemented by commission pay and bonuses. A 70/30 split between base salary and commission plus bonuses is a fairly typical mix according to a 2008 survey from the Canadian Professional Sales Association. From this baseline, it’s a good idea to adjust as needed. For example, an experienced salesperson or manager might ask for a higher base salary, while a new recruit could accept a salary based almost exclusively on commission. Tweaking this split can also encourage different behaviors. For example, you can increase the share of commission pay if you need your sales representatives to be very aggressive. Or you can make base salary a bigger part of the total compensation package to inspire a more consultative sales approach. You might also want to consider a tiered commission structure, where salespeople earn a given percentage of sales up to a target, with the percentage increasing for sales beyond that goal. Review your compensation plan from time to timeYou’ll want to periodically review your compensation plan as your results come in and as the economic environment changes. If sales are falling, for example, it might be because your base salary is too high and your employees aren’t properly motivated. Also, consider raising the value of your compensation package if you are losing team members to your competition. You might also want to discuss your compensation plan as part of an overall HR plan with an outside consultant. 5. What is the main benefit of paying salespeople a combination of salary and commission?A)limiting the firm's risk of overly high commissionsB) aligning employee goals and company strategyC) providing simple salary administrationD) clearly linking pay with performance 6. Upon being hired as a marketing representative at Argo Pharmaceuticals, Shelly agreed toforego 5% of her normal pay if she failed to meet performance goals. In return, Shelly willreceive a 10% bonus if she exceeds her goals. In what type of plan does Shelly most likelyparticipate? Get answer to your question and much more 7. A manager can best control the cost of unemployment insurance by ________. Get answer to your question and much more 8. Supplemental pay benefits provide employees with time off with pay for jury duty, vacations,funerals, and military responsibilities. Get answer to your question and much more 9. All of the following are Social Security benefits EXCEPT ________.A) death benefitsB) disability paymentsC) retirement benefitsD)defined contribution benefits Why would you pay a salesperson a salary and commission combined?Pro: Rewards Performance
A primary reason companies use straight commission or a plus commission pay plan is to motivate employees toward better results and to reward high performers. If you pay salesmen a straight salary, some may have limited motivation to exceed basic expectations.
What is a combination of salary and commission?What Is Salary Plus Commission? When sales organizations opt to pay a combination of salary plus commission, it means salespeople earn a steady, yearly, predetermined salary but can add to that by earning a commission on their sales.
What are the advantages of salary plus commission?Advantages of salary plus commission
With a salary plus commission plan, you still earn a base salary regardless of how many products you sell. Your base pay provides a steady income during seasons where commission may be more difficult to earn.
How a salesperson is to be paid by commission or salary?The standard salary to commission ratio is 60:40 with 60% being the base rate and 40% being commission-driven. The plan best serves as an incentive or motivation for increased sales performance. Example: A salesperson earns $500 a month in salary with 10% commission, or $500, for $5,000 worth in sales.
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What is the main benefit of paying salespeople a combination of salary and commission
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