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If theyve just started a family, they may be looking for benefits like parental leave and the chance to work from home. . Example: Each rep in your company earns a straight salary of $75,000 a year, or $1,440 a week (gross). The key to this type of plan is to offer enough stability that employees feel satisfied and secure but to pair that salary with a commission that motivates stellar performance. \textbf{\textsf{Liabilities}} & \bm{+} &&&\textbf{\textsf{Owner's Equity}}\\ The Advantages & Disadvantages of Salary - Career Trend Did your choice agree with Sturges' Rule? Which of the following conditions would indicate to the sales manager that the proportion of the Such a plan is quite common in the services industry as well as in the industrial goods sector. \text{Winning Team} & \text{Points} & \text{Losing Team} & \text{Points} & \text{Winning Margin}\\ Contractors can determine their own fees, working hours, employees, etc. 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. You are the sales manager of a large, multi-product company. Talent poaching occurs when an employee is recruited away from one company by another. \text{ } & \text{ } & \text{52-Week} & \text{52-Week} & \text{ } & \text{ } & \text{Sales} & \text{ } & \text{ }\\ Laws differ by state, so do your research before making any decisions. Tips may be considered part of the employees wages, but the employer must pay no less than $2.13 an hour in direct wages and make sure that the amount of tips received is enough to meet the remainder of the hourly minimum wage. Currently editor at The HR Digest Magazine. 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. The most commonly used definitions of motivation include these three dimensions: Use the table below. Readers should verify statements before relying on them. If your family does not have a complete home inventory, encourage your parents or other adults with whom you live to create one. It is easy to calculate. We provide third-party links as a convenience and for informational purposes only. ____________ is the easiest plan to administer and budget for. Dana Sparks has been a professional writer since 1990. Salaried employees receive an equal portion of their annual compensation every week. If a salesperson earns more commissions than he was paid, he keeps the extra money. On the other hand, TVC can lead to hostility between employees if they dont feel the workload or efforts of all representatives are balanced. their compensation plans to recognize team performance? bonuses for sales target achievement), in others salespersons receive commissions as a percentage of the sales they were involved in. 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. And because there is no financial security that kicks in if sales arent made, those who dont earn enough leave or burn out quickly. Differences between Straight Salary and Straight Commission Method, Business Environment Analysis | Objectives & Process, 5 Important Classification of Business Environment, Localisation of Industries | Meaning, Advantages, Disadvantages, Storage and Warehousing | Meaning, Functions, Advantages, Kinds, Sole Trader Business | Advantages | Disadvantages | Suitability, How do Business Diversification affect performance of, Job Evaluation | Meaning & Definition |, Supervision | Definition | Functions of supervisor, Sole Trader Business | Meaning | Definition, Primary functions of Commercial banks in accepting, RBI | Origin | Objectives | Organization, Concepts of Job Analysis | Meaning, Procedure,, Arguments in favor of Social Responsibility of, Accountlearning | Contents for Management Studies |. \textbf{\textsf{Accounts}} && \textbf{\textsf{Murray Kiser,}} && \textbf{\textsf{Murray Kiser,}} && \textbf{\textsf{Fees}} \hspace{6pt}\\ Straight salary compensation plans are ideal in industries where the normal structure does not involve (and might even prohibit) direct sales. Expert Answer. Once the person has established himself in the area, the company can switch to performance-based salary. -7,200\\ Finding balance and setting boundaries at work. 9. Employees who receive it are considered nonexempt by the FLSA, meaning their compensation is regulated. Solved An advantage of the straight salary plan for | Chegg.com A large direct sales company such as Avon would most likely compensate their salespeople in this Today, January 26, 2004). Certain selling opportunities require collaborative efforts and an incentive-based system may not be suitable because it might be difficult to determine different individuals level of contribution. Some people won't work for anything other than a fixed salary. \underline{\underline{2,300}} && \underline{\underline{101,000}} && \underline{\underline{-2,000}} && \underline{\underline{35,000}} && \underline{\underline{-29,000}}\\ \\ \\ \\ Required fields are marked *. 8. In fields that typically involve commissions, the outside sales exemption and the retail sales exemption may also apply. 30,000 && 4,000 && 75,000\\ Business is going well for Park N Fly , the company that operates remote parking lots near major airports. Employees may be confused as to how pay is calculated, so transparency is important. 9. As a sales manager, you liked the advantages that salary plus bonus plans offer yet you were very concerned about some of the following serious problems associated with it: You have decided to change your commission structure to enhance market penetration. Increment is given annually as per the scale of pay, and after a certain number of years of service, salesman is promoted to a higher scale of pay. ii) There will be no surprise of payroll expenses. Bal.1.2.3.4.5.6.7.Bal.Cash30,000+35,00026,00015,0002,0007,20014,800+AssetsSupplies4,000+1,5003,0002,500+Land75,000+15,00090,000==LiabilitiesAccountsPayable8,000+1,5007,2002,300++MurrayKiser,Capital101,000101,000OwnersEquityMurrayKiser,Drawing2,0002,000+FeesEarned35,00035,000Expenses26,0003,00029,000. Your email address will not be published. +35,000\\ 3. Which of the following is not a guideline recommended in the management of motivation? determine the relative amounts to be paid in salary, commission, and bonus. Some disadvantages of straight salary compensation may include reduced retention and high turnover if employees dont see opportunities to increase their pay. From a morale perspective, they can be more satisfied with their work-life balance since no one is dictating it. Efficiency: Straight salary method does not distinguish between efficient and inefficient salesmen. According to the Customer-Product Matrix, sales positions that focus primarily on new business development require a greater proportion of salary than incentive. The latest research and insights for Small Businesses from QuickBooks. The net result of setting limits on sales expenses is that salespeople spend their valuable time juggling expenses from one category to another or from one time period to another to make sure they cover their costs. It helps the firm to direct the activities and efforts of the salesmen towards the cultivation of markets (i.e., creation of new customers), undertaking of window display, store demonstration, etc. Which, if any, of the following sources available will help you in your task? If you choose this plan, you'll pay your reps using a mix of base salary and performance-based rewards. Although most compensation plans are incentivized, the straight salary plan is a method of compensation in which the salespersons receive a straight-forward fixed salary with no commissions. Employers are also required to pay employees the. Advantages of Straight Salary Method 1. Intuit does not endorse or approve these products and services, or the opinions of these corporations or organizations or individuals. Everything you need to start accepting payments for your business. As the Vice President of Sales for a new startup company, you decide to hire and train your own field sales force. This form of nonfinancial reward is generally considered to be more desirable to younger salespeople Offer your support. This is a primary method for compensating independent sales agents. Everything you need to prepare for and have a successful holiday season. 4. Murray Kiser operates his own catering service. \text{Kansas} & \text{78} & \text{Colorado} & \text{57} & \text{21}\\ The complete guide to employee compensation and benefits - QuickBooks This compensation type tends to attract fewer people since there is no secure base pay. Companies looking for long-term growth as opposed to short-term sales may opt for this type of compensation as well. A change from straight commission to straight salary. 40 Questions to Ask Before You Accept A Job Offer. When the sales effected by the individual salesman cannot be isolated (i.e., when the sales are made collectively by two or more salesmen). \\ You were given the mandate by your boss to change the compensation plan so that the total salesperson compensation (salary plus commission) is lowered. By clicking Submit, you agree to permit Intuit to contact you regarding QuickBooks and have read and acknowledge our Privacy Statement. salesforce include all of the following except. A straight salary can also benefit an experienced salesperson who is transferring to a new territory where the company and its products may be completely unknown. Straight Salary Method of Remuneration | Meaning | Suitability | Merits | Demerits, Salesmanship | Meaning | Features | Objectives, Arguments in favor of Social Responsibility of Business, Business Enterprise Meaning | Public | Private | Joint, 10 Most Important functions of a Group Leader, Factors to be Considered in Planning Factory Building, Reasons for Governments Intervention in Private Business, Factors Influencing Salesmen Remuneration Plan, Organizational Factors Responsible for Resistance to Change, Avoidable and Unavoidable causes of Labour Turnover, 5 Important Classification of Business Environment, Under what circumstances a Pvt company be, Purchase Department | Purchase Officer | Qualification, 7 Arguments against Social Responsibilities of Business, Accountlearning | Contents for Management Studies |. TheDepartment of Laborhas very specific requirements for classifying and paying employees. The compensation plan in which virtually every type of sales activity is rewarded, is called a: Your boss thinks you should implement a salary plus commission plan with an incentive ceiling. Disadvantages of straight hourly compensation, Whos using hourly plus commission compensation, Benefits of hourly plus commission compensation, Disadvantages of hourly plus commission compensation, Disadvantages of commission-only compensation, Whos using territory volume compensation, Benefits of territory volume compensation, Disadvantages of territory volume compensation, 7. \text{Wisconsin} & \text{76} & \text{Illinois} & \text{56} & \text{20}\\ 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.