27 Sep 2022


How to Structure Compensation Plans to Attract and Retain Top Talent

Format: APA

Academic level: College

Paper type: Case Study

Words: 530

Pages: 1

Downloads: 0

Question 1 

Parkleigh Pharmacy and Kaufmann’s have different sales business objective. Parkleigh Pharmacy deals with high-end accessories and home decorations at a premium price according to the statement given. Therefore their target market is limited, and their primary objective is to retain the existing customer base rather than to increase the sales. Given the location and the size of the store, it would be hard to increase the number of clients than to acquire new ones. Kaufmann’s, on the other hand, is a big department store chain, located in Pennsylvania, with several shops along the Rochester area. Their target market is the middle-income earners. Given their size and location, Kaufmann’s can enjoy the economies of scale, and their objective is to increase sales as much as possible because that’s the only way they can boost their profits. The competition among department stores in Pennsylvania is high, and the best way that the business can increase its sales is to motivate their employees ( Sihua, Yongjun, & Mei, 2013) .

A payment package ought to be sustainable by a company (Dai, 2016). If the firm pts to pay a commission on sales, then the level of sales must be high enough to support this benefit for the workers. Parkleigh Pharmacy deal with expensive products that might not attract as strong sales as Kaufmann’s would do. Therefore, their profit margin can only be boosted by high pricing, and that is why they can offer a sales discount. The sales discount is significant enough to entice the workers into buying more products from the shop. If the store can allow the employees to convert their sales discounts into sales commission, then the shop can be able to attract more sales.

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Question 2 

If neither store pays sales commissions, but Parkleigh Pharmacy gives the employee discount, the hourly wage for Kaufmann’s employees will go up. The higher compensation by Parkleigh Pharmacy than Kaufmann’s pay is because the workers hardly enjoy the employee discount. The probability that employees will buy products from their workplaces is insignificant. In most cases, the products that are sold in such places are unaffordable to the employees. Kaufmann’s can increase the wages and still compensate for the increased expense with the high sales. It is also likely that Kaufmann’s will not feel the effect of the increased wage because they already enjoy economies of scale ( Sihua, Yongjun, & Mei, 2013) .

The adoption of a payment plan for workers depends on the business objectives of a company. For professional services such as medicine and engineering, the extent of a particular job and the market rate are a great determinant of the amount of money that the employee will earn. For a sales job, the objectives of business also matter. For instance, a departmental store such as Kaufmann’s, profitability in a middle-income market can best be realized through competitive pricing and high sales ( Goswami, 2016) . Boosting sales, on the other hand, is largely dependent on the motivation of the salespersons. The motivation can be increased not only through high hourly wages but also through sales commissions. In fact, the company should focus more on high sales commissions while offering standard hourly wages. For the middle-income focused business like Parkleigh Pharmacy, the objective is to increase profitability. Profitability, in this case, can be realized even when there is no growth in sales given the fact that they have an established client base (Dai, 2016).


Dai, T. Z. (2016). Research of Grid Reactive Power Compensation Planning. In    Energy, Environmental & Sustainable Ecosystem Development: International Conference on Energy, Environmental & Sustainable Ecosystem Development (EESED2015)

Goswami, J. (2016). Human resource development a case study on compensation planning in few select organisations. 

Sihua, P. E. N. G., Yongjun, Z. H. A. N. G., & Mei, H. (2013). A reactive compensation planning method of distribution network based on the base-state analysis.    Power System Technology ,    37 (9), 2646-2652. 

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