Page 76 - DMGT507_SALES AND PROMOTIONS MANAGEMENT

Sales and Promotions Management

Notes 3.2.5 Use of Bonus

A bonus is an amount paid for accomplishing a specific sales task. Bonuses are paid for reaching
a sales quota, performing promotion activities, obtaining new accounts, following up leads,
setting up displays or carrying out other assigned tasks.
Bonuses are never used alone – they always appear with one of the main sales compensation
methods. If used with the straight salary, the plan resembles the combination plan. If used with
the straight commission plan, the result is a commission plan to which an element of managerial
control and direction has been added. If used with the combination salary and commission plan,
the bonus becomes a portion of the incentive income that is calculated from the commission.

3.2.6 Fringe Benefits

Fringe benefits, which do not bear direct relationships to job performance, range from 25-40 per
cent of the total sales compensation package. Fringe benefits, like monetary compensation, are
not motivating factors. In Maslow's hierarchy, fringe benefits contribute to fulfillment of safety
and security needs, although some (such as payment of country club dues) contribute to fulfillment
of esteem and other higher order needs.
As the variety of fringes has expanded, individual fringes have been added that appeal more to
some groups than others – people with bad teeth are the ones most interested in dental insurance
while those with children are the ones most interested in plans for paying education and tuition
fees for dependents.
An increasing number of companies offer a "cafeteria" approach to fringe benefits.
In this approach, the company offers a core of basic benefits - the benefits required by law plus
other traditional benefits, including paid vacations, medical, disability, and death benefits and
a retirement programme. Employees then use credits (based on age, pay, family status and years
of company service) to obtain optional benefits not included in the core; this lets employees
select those benefits that best fit their needs. Also, because of changing needs employees are
given opportunity to change their choice. Companies using the cafeteria also have "awareness
programmes" aimed at making employees aware of the benefits available.
Fringe benefits are now an important part of every sales persons income. These are dealt as
under:
1. Company Benefits: These constitute 25 to 40% of the basic pay. Fringe benefits differ from
company to company. Insurance, paid vacation, paid leaves, retirement plans and
educational assistance are a part of company benefits.
2. Insurance: Life insurance, health insurance, accident and disability, insurance are provided
by most companies. Sometimes a part of insurance is paid by the salesman. Dental and
vision care are also popular benefits introduced by many companies.
3. Paid Vacations: These are provided to sales persons with a long standing, who have
served the company for a long period of time.
4. Paid Leaves: Includes, sick leave, maternity leave and are enjoyed by confirmed salesman
who have worked for a considerable period of time.
5. Retirement Plans: Many companies contribute to pension plan for its employees. The
sales person also contribute a part of their income through payroll deductions.
6. Educational Assistance: Many sales persons take advantage of company sponsored
educational programmes. They sponsor candidates to courses useful to the company.
Employers also grant release time to employees to attend courses.

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