Page 134 - DMGT205_SALES_MANAGEMENT

Sales Management

Notes 9.7 Requirements of a Good Sales Compensation Plan

A good sales compensation plan fulfils seven requirements:
1. It provides a living wage in the form of a secured income.

2. The plan fits with the rest of the motivational programme.
3. The plan is fair-it does not penalise sales personnel because of factors beyond their control.
Within the limits of security and other special circumstances, sales personnel receive
equal pay for equal performance.
4. It is easy for sales personnel to understand-they are able to calculate their own earnings.
5. The plan adjusts pay to changes in performance.

6. It is economical to administer.
7. It helps in attaining the objectives of the sales organisation.

9.8 Designing a Compensation Package

A good compensation plan is built on solid foundation and therefore it requires a systematic
approach to assure that no essential step is overlooked.
Defining a Sales Job

1. Re-examine the nature of the sales job and revise it if it is outdated.
2. Analyse sales department objectives for their effect on the sales person's job.
3. Check out for sales volume objectives, for instance, whether in rupees, units of products,
or number of dealers and distributors and translate them into what is expected of the sales
personnel, as group and individually.
4. The impact of sales related marketing policies are determined (like, credit policies, price
policies, etc.)
5. Consider the current and proposed advertising and sales promotional programmes as
they assist in clarifying the nature of the sales person's goals, duties and activities.

Consider the Company's General Compensation Structure

Most companies use job evaluation systems to determine the relative value of individual jobs.
Its purpose is to arrive at fair compensation relationships among jobs. There are four job evaluation
methods. Two are non-quantitative – simple ranking and classification or grading. Other two
are quantitative – the point system and the factor comparison method.

Simple Ranking

This is an inexpensive job evaluation method. No attempt is made to determine the
critical factors inherent in the job, only overall appraisal of the relative worth of different jobs
is made.

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