Background
Outdoor sporting productions manufactured and distributed sporting equipment, clothing, and accessories nationwide. The company has annual sales volume between $6.2 million to $6.8million with approximately 700 items in its catalog. Those items can be group into three segments: fishing supplies, hunting supplies and accessories.
Sales Force & Issue Sales forced played an important role in the company, since the company doesn’t use any magazine, newspaper, radio or other media advertising. Outdoor has 11 full time sales peoples in total, ranging from 23-67 years old, and each salesperson is required training to learn the product before they take over a territory. Each salesperson is responsible for their own territory, they
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Commission can be withdrawn each week from the salesperson’s guarantee, and salespeople get paid for their traveling expenses as well. They also get a $70 bonus if they are willing work on Saturday and Sunday night. Letting salespeople withdraw their commissions is an absolutely drawback because salespeople feel discouraged when they see their commission account reach zero balance. They feel all the effort and work has not paid off. Paying additional $70 just for those salespeople work on Saturday and Sunday is ineffective; if the sales staff is responsible for their own schedule they should receive close to the same amount on a Saturday or Sunday as any other day. Salespeople can earn cash rewards under two incentive plans: the first one is a total $10,400 paid to five salespeople that had significantly increased in sales volume over previous year. The second plan is a weekly sales increase award for each week in which their sales volume compare than previous year. The company’s comptroller and production manager submit a new compensation plan proposals. The new proposal will discontinue these current incentive plans in effect. 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
Lump sum bonuses are a form of performance pay bonus. Defined as “bonuses … earned at the end of a specified time period, such as monthly, quarterly, or annually, when a salesperson achieves a specific level of sales or sales quota” (Quast), they are utilized frequently in the sales industry. The dilemma, in this case, is that quality and productivity is not based only on sales. The molders are contributing to the issues that impact How 2 Ski. The lump sum bonuses
Managers in many cases are presented with sales incentives in a retail environment. These incentives may range from free products, to cash prizes, to trips, bonuses, etc.
Elimination of sales commision would affect the break-even volume to decrease, since the selling staff would have a lower incentive to sell due to having a cut of their commision salary. Eventually, this process would see a decrease in profit, since there would be no longer same selling jewellery incentive as before when the staff was paid in commissions. Therefore we strongly recommend to management to maintain selling commissions to to allow for an increased motivation, which would see an increased in the profit.
To respect better the sales objective, there is in the new incentive plan a commission which is paid on the sales forecast accuracy . So this new commission is something really good to improve the operating process buisnessand not only the potential sales objective. And also with this new rule salesperson will forecast the minimum target in order to reach their target.
All of the competitors examined in this case have distribution networks for their products that include on course pro shops, off course pro shops, and online golf retailers(Gamble 2011, p 289). As a part of the process, custom fittings and advice are offered to the end users. This tends to make for a very well informed buyer who is a relatively small segment of the overall population. These “core golfers” account for 87% of the industry equipment sales(Gamble 2011, p.285). Sales of golf equipment are predicted to decline 15% to 20% in 2009 due to reductions in discretionary spending(Gamble 2011, p.280). Due to these market conditions it would seem that the buyer pressures being exerted on the marketplace going in to 2009 would be a strong driving force for the manufacturers.
Higher Margins – I would measure the sales results on a weekly basis to ascertain whether the incentive is effective.
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
4. Initiate year round sales force: This will allow for a more even flow of sales revenue. Presently, we have four geographic regions across the U.S. We will recruit a total of 500 commissioned based sales people across the country. Our recruiting efforts will continue via the web sites already being used. Each Vice President and Director will have final word on hiring for his or her district. The Vice President or Director will execute all training efforts.
The latter has further been exacerbated by a lack of incentives for Metro branches, the main sales and marketing agents for the product, to sell Due Bills.
The process of rewarding employees is usually a key factor in an organization's success; thus it adds value to not only the name of the company; but as well to its succession planning. Therefore, employees and individuals looking to join the company weigh these and other benefits closely. Noticeably, Parkleigh is a small department store and Kaufmann is a much bigger interstate department store. Though both of them are in business to increase their profits. Nevertheless, minimal costs and benefits are small costs associated with a specific decision. So, there are a number of reasons for paying a commission, however, the decision by both of these companies - one to pay and the other not paying. Well, it has a lot to do with the success and customers that visit the stores. Kaufmann’s has a much larger size
My incentive program involves restructuring PacSun’s program to include the game theory and create a group and individual hybrid incentive program that would solve the problems stated above. With this incentive program, I propose that every store gives their own compensation opportunity for sales associates to earn rather than companywide to eliminate the unfair advantage that differentiated stores may face. In this theory, it would focus more on the group rather than the individuals by creating a group monthly goal that has to be met by every sales associate in order for all to receive compensation of $50. The monthly goal for each individual to meet would be based on the stores monthly sales goal (which is allotted by corporate) divided by the quantity of sales associates so that it creates a fair average for each sales associate to meet. With this group incentive program, it requires every sales associate to acquire the
Incentive compensation is a form of compensation that is based solely on the performance of an employee. Payment is usually contingent upon performance of the company, the employee's department, the employee, or combinations thereof, hence the term “incentive”. What this means is the employee has an incentive to perform at a high level, and be rewarded for the effort. In most cases, incentive compensation plans are designed in such a way as to attract and retain key employees, identify with shareholders, and align interests of employees and the company. For example, in the United States, executives and employees are given incentive bonuses based on multiple performance measures. A typical plan for a executive employee can include: a base salary, annual bonus plan, stock options, and additional compensation such as long term incentive plans, retirement plans and restricted stock. Compensation plans often follow the net income and stock prices of the company.
This is exactly as it sounds like. You get paid if you make any sales and nothing if you do not reach the target. There is no guarantee of an income. This type of compensation is easier to administer and it provides better value for your money as it is based on sales achieved only. Another thing is they attracts fewer candidates who are top performing and hardworking, who knows how to sell. On the other hand, this type of plan can cause conflict amongst your sales team which can lead to a high turnover, leaving your sales rep burnout from
The essay is based on case that is titled “marketing sports equipment”. Outlined within the essay are three target markets, the consumer sales promotion that should be offered for each, most effective and non-effective media platforms for the target market, and the recommended partners.