Disadvantages Of Commission Based Compensation

1. When it is difficult to determine the effect of a salesperson’s effort son sales rather than pay any incentive through commission it is better to use a bonus with salary as part of the compensation package

The right compensation program will depend on the organization’s business strategy and goals. To achieve these, an organization must recruit and select the best possible employees. To attract such employees, there must be an attractive compensation plan. Competitors will be offering different payment options, this may be based on pay rate or special perks, and a company’s stock options. Organizations must be aggressive yet reasonable to compete with competitors. Retaining and encouraging employees to perform at their best may be achieved through an immediate incentive award

Summary: Commission based employment can appear to be a transparent reward structure based on success and is a common way to reward top performers. “Commission based pay can make the employee feels they are sharing in the organizations success which motivates the individual to maximize their success” (Clark, Robert, and Sylvester Schieber Fourth Quarter 2000). This compensation strategy allows employees to work hard and get further. The theory with harder work more pay will occur. The employee is paid based on how they perform or how much they sale. If they sale or make more the more they will be

In the same context above, a question that would guide pure research is: “What influence does commission based compensation plans have on employee motivation?”

Summary: Commission based employment can appear to be a transparent reward structure based on success and is a common way to reward top performers. “Commission based pay can make the employee feels they are sharing in the organizations success which motivates the individual to maximize their success” (Clark, Robert, and Sylvester Schieber Fourth Quarter 2000). This compensation strategy allows employees to work hard and get further. The theory with harder work more pay will occur. The employee is paid based on how they perform or how much they sale. If they sale

Acquiring a visa entails fees along with medical examination fess which overseas’ companies have to incorporate into an effective financial plan if choosing to hire expatriates. To avoid high expenditures in visa fees and medical fees Mary may consider hiring qualified nationals for labor.

Kishore, S., Rao, R. S., Narasimhan, O., & John, G. (2013). Bonuses Versus Commissions: A Field Study. Journal Of Marketing Research (JMR), 50(3), 317-333. doi:10.1509/jmr.11.0485

In a commission based plan, you pay representatives a rate of what they sell. Managers utilize straight commission, which means sales numbers decide each dollar an employee receives. A commission-based incentive program sometimes means that employees receive a pay, however, commissions serve as an incentive for good productivity.

Compensation strategies within a company are very important. Companies need to invest in offering compensation benefits to their employees because they enhance an employee’s wiliness to stay long term with the company. They also provide a positive foundation between the employee and employer. If an employee is happy and content with the company they work for then this will benefit the company and the employee. The employee will be motivated to do a good job for the company and in the long run the extra money and work that the employer puts in for the added benefits will pay off. In this report you will see how Paid Time off (PTO) , bonuses and merit pay increases will benefit not only the employee but the business.

In analyzing the second reason listed for why outsourcing is used; ‘inability to attract the highest caliber of employees to job functions that may be peripheral to the organization’s core discipline’, companies employ a different kind of outsourcing tactic. This reason leads to offshore outsourcing solutions. If a company cannot attract high caliber domestic employees to job functions secondary to their main function then they seek help where labor may be less expensive and more efficient.

The compensation plan differs between the two mainly due to the fact that Parkleigh is a small store, while Kaufmann’s is a large chain company. Kaufmann’s is a large chain company and by ensuring that all salespeople are provided a commission is a way of incentive pay within the company. Furthermore, commissions ensure each salesperson will be motivated to work harder to ensure the overall performance of the company. Moreover, with Parkleigh being a small department store that sells higher priced items, they would not be able to provide the same incentives as Kaufmann’s without a negative impact on marginal costs, benefits and the staff. Parkleigh is able to provide a competitive pay for individuals that will retain and attract qualified employees without having to pay commission like Kaufmann’s. If a firm pays too little, it will have

In summary, the home culture of an expatriate predisposes them to certain behaviors and situations. It allows them to operate efficiently in that environment. However, moving to the host-culture changes that operating environment and makes their 'mental software ' less efficient and effective. Culture is clearly a relevant variable when expatriating employees and their families for international business assignments. Training can be applied to ameliorate these effects. Also, training provides insight into the procedural, substantive and informational aspects of their work and personal life in the host location.

In today’s competitive workforce, compensation and benefit packages plays a crucial role on recruitment and retention for both the organization and the employee. Bumpbie finds itself in a situation where it could positively affect its employee’s morale, turnover rate and longevity; by making a strategic decision to implement compensation and benefit packages that will encourage current workers to stay and entice new applicants. Money is not always the inherent reason businesses experience high turnover rate, the constant shifting in the job market will always be a contributing factor as well as employee’s moral. Mayhew, R. (2016), explains that an “employee compensation plan” refers to all the components offered as well as the way in which they are paid, and the reason behind the employees getting the compensation case bonuses, salary increases and incentives. The fact that there are voluntary and mandatory benefits that organization provides to their employees give employees the freedom of choice, as well as the option to make the whether to stay with or leave an organization based on the benefits it provides. Variable Pay is also an option that some employers offer their employee which is performance based or results oriented. Whether it is profit sharing, merit based programs or incentive bonuses; it all comes down to which organization can provide employees with the compensation or benefits packages that best satisfy their needs.

Face to those options and wide resource, the managers in global enterprises have particular concern about the employees’ ability to disseminate knowledge and innovation throughout their global operations . The use of expatriates has seemed to be a logical choice for staffing, while the use of parent-country nations seems to be most appropriate in some specific situation . Some other global enterprises also prefer integrate the expatriates and local human resource. Nevertheless, each procedure has both advantage and disadvantage.

One I got recently the most common problem is that people who are unemployed or lost their jobs due to downsizing and are now facing the Commission decided to employ a straight salary + commission's work was due to a steady decline in the number.