Financial Consequences For A Truck Leasing Company

On the corporate level, a successful sales incentive plan should be a tool to support corporate strategy and objectives for product management. On the individual level, the sales goal should be challenging and realistic, and designed for the job rather than for people. Also, it should entail a simple mechanic, provide rewards that adequately impact the behaviors, and encourage people to overachieve. Since the company's main objective is not only about making the sales volume or gross margin, profit margin is not an effective indicator to calculate salespeople's monetary reward above basic salary. Instead, a point based system is more appropriate to reward the salespeople for conducting behaviors that are aligned to company objectives.

If the cause of the decrease is because of product, the company should work with the implementation of new products or maybe establishing a new image for the product in sale decrease. If the product is still on demand and the decrease is because economy they should establish a new marketing for the offer of the product. This could be discount offers in product or quantity discounts for product bought. Discovering the reason why the product is decreasing in sales is an advantage for both the company and its sales rep. Making loans to sales rep on commissions that haven’t been earned could lead to greater losses for the company, turning the solution into a problem. Why? Simple, the problem could rely on sales reps that are not doing the job as they should. As the questions state, there are some sales rep that still making a good commission, the task must be to find why the other that have lower the sales. If the fact is that the company hasn’t evaluated commissions percentage for their sales rep in a long time to cover the high cost of living is simply, evaluate commissions based on cost of living and increase the percentage for the sales rep. Also they could work with encouraging the sales department with bonuses per sales goal; every sales rep that goes beyond its monthly sales goal will receive a bonus for this. This could encourage the sales rep and thus increase the sales because everyone wants the bonus.

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 case had many issues and the main idea of it was the effectiveness of managing, hiring, and lack of Human Resources management, which lead to many issues. Randy and Beryl faced an administrative and operational issues that decreased employee’s performance and the company its self such as, managers didn’t do what they were told to do, lack of understanding recruiting statuses and training, workers come to

Basically, there are several issues should be taken into account before pursuing the outcome of the decision proposed by Deatherage, the General Manager. The imbalanced residual earning returns had extensively occurred in the cooperative as they retuned average annual profits’ payments to the patrons

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

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

*This case was prepared by Professor Roger A. Kerin of the Edwin L. Cox School of Business, Southern Methodist University, as a basis for class discussion and is not designed to illustrate effective or ineffective handling of an administrative situation. All names and the company data have been disguised. Copyright © 2005 by Roger A. Kerin. No part of this case may be reproduced without written permission of the copyright holder.

The Company’s managing directors; Jodee Rich and Richard Keeling made wrong strategies and failed to exercise their duties properly, in accordance to the section 180 of Corporation Act 2001. They failed to manage company effectively and thus did not succeed

Straight commission pay for salespeople has its advantages and disadvantages. In a fully commission-based pay system, one hundred percent of the salesperson income comes from their sales which are based on their performance (Harrison, Virick & William, 1996). Advantages to this type of pay structure are the maximum incentive, by increasing commission rates. Additionally, direct motivation is the advantage since a clear and direct link exists between how much a sales representative sells and their pay. This factor motivates the sales representative to improve their sales productivity to increase their compensation. Commissions additionally have some advantage with sales management, due to the fact they are easy to compute and administer. In

Such decisions may affect the company’s profitability today but judging from the fact that high risk means low stock price and vice-versa, high return waits in the future.

Now let’s take some time to conclude some major issues: first of all can straight commission actually motivate salespeople and is it the best incentive plan. Secondly, Mr. McDonald should also consider is

Poorly drafted Vision and Mission Statement of the company which depicted no interest in the profitability of the company and the goodwill of its employees and stakeholders.

By initiating the half/half sales plan the company will see increased sales and the employees still will have payment security just not as much as they are used to.

In 2005, I was working as Manager of International Investments in Valores Bancolombia and we started selling the first hedge fund in the country. Colombian financial sector was starting to develop, and investors and Financial Advisors had none or few knowledge about international markets and they mainly invested in local fixed income and stocks. The launch of the products was a big success, in the first 3 months we increased the revenue of the area by 300% and the assets under management by 400%. But then we started to have some issues with clients that where not happy with the investment, the issue began to affect the company image and the performance of the division.