Sales force compensation serves the purpose of determining bonuses, mix salary, and commissions to increase the sales generated by a particular sales force, the revenue, and drive performance within an organization. Salespersons directly interact with customers to market and sell a company’s products, thus they play a vital role in providing customer service. These aspects combined necessitates for the creation of sales force compensation plan that rewards efforts and motivates the sales personnel to attain more goals for the organization or business. A sales force compensation plan can come in different ways so that they align with an organizations’ sales employees’ needs. They are often customized to suit the length of the sales cycle, individual roles within the sales team, representative role of seniority, and the type of sales engagement. Other sales force compensation plans include level of, performance-pay-out relationship, and measure of performance ( Canadian Professional Sales Association, 2017) . However, the formerly mentioned aspects should be presumed as a range because each sales personnel is remunerated based on commissions and bonuses. The objectivity of this essay is to research on a large organization’s sales force, describe features of an effective reward program, sales behaviors that a compensation behavior targets, and assess how to achieve value proposition for future and current employees for the outlined plan.
Apple Inc. is a multinational technology company whose headquarters are in Cupertino, California. The company creates designs, develops and sells computer software, consumer electronics, and other online services. The company is regarded among the top tech companies alongside Google, Amazon, Facebook, and Microsoft. Currently, Apple operates in 25 countries worldwide and has established a loyal customer base through its vigorous marketing strategies as well as the having an almost effective sales force compensation plan. These aspects have made the company accumulate a net worth of approximately $2 trillion as of 2020. The company has incorporated sale force apps that can help improve the customer experience but this essay will focus on sales personnel in evaluating the company’s compensation plan.
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Features of an Effective Reward Program
Employers may find difficulties in motivating individuals because many salespersons behave in diverse ways as they strive to achieve their set goals. However, an engaging and effective organization capitalizes on attracting, retaining, and motivating the most talented employees, and in this case salespersons. A total reward program comes in handy to foster a positive work environment for both employers and employees. Total reward are any valuable benefits that an employee receives for their exemplary performance at the workplace (Hein & Kwon, 2013). If a company considers all the elements of a total reward program, it is most likely to provide a mixture of compensation opportunities that are customized for both personal and professional needs. Below are the six features of an effective reward program.
Transparency – Sales employees should be well-informed about how incentives and compensations are calculated, for mutual understanding. Employees have a right to know how they are protected, how they are rewarded, and what they are required to do to become successful (Agri Marketing, 2013). The best way to actualize this is by availing commission payouts and personalized performance reports which contain detailed reporting of transactions that led to the commission payments and full breakdown of commissions.
A good total reward program should include a mix of flexible benefits –An employee who critical about sales force compensation will provide their employees with benefits that go beyond the legally mandated minimums of Medicare, Social Security Insurance, workers’ compensation insurance, unemployment insurance, and state disability insurance. When an employer includes leave of absence, vacation package, bereavement leave, and sick leave as part of a company’s benefits, more employees are likely to get attracted to the company. The intention of including all these customized benefits in a company is to boost the morale and positive perception of employees about the institution they work for (Chron Contributor, 2020). Employees benefit from such programs by spending on the benefits of their preference.
Work-life balance – A healthy balance between personal time and work should be promoted in a work environment that observes the sales force compensation aspect. If a conducive atmosphere is created to observe employees’ schedules and their need to have some rest or take a break from work, morale among employees is fostered. For example, employees who have elderly dependents should be offered with flexible schedule to attend to their care-giver responsibilities. Besides, employees should be provided with fitness facilities, health screenings, nutritional counselling, and stress-reduction workshops. Employees should also be trained on how to plan for retirement so that they are able cope with life outside employment.
Acknowledging and rewarding good performance – An effective sales force compensation system should offer recognition awards like team recognition and peer recognition. The coworkers of the award’s recipient are required to vote to determine who is eligible for the award to single out exceptional performance and boost their morale. Appreciation luncheons and employee-of-the-month awards can be incorporated to let employees understand that the employer is aware of their good performances.
Open Communication – Positive situation for both sales organization and company is fostered through genuine and transparent interactions which also impacts revenue and growth of the organization positively. Feedback and knowledge is encouraged through open communication. In the present era, companies are posting information about the total reward system on their intranet or online so that it is easily accessible by employees, take action on various total reward programs and give their feedback about the same. By doing this, an organization is always abreast with any reactions about the total reward system and can make changes if need be.
Career development – Through offering professional development to employees, an employer does not only improve the skills of the workforce but also foster employee employment. Employees should be provided with technology training, tuition assistance, mentoring programs, time off for outside seminars so that employees can grow their career skills.
Sales Force Behaviors targeted by the Compensation Plan
An organization’s strategic plan is reinforced by a well-designed compensation plan, which considers the external conditions that influencing the company’s ability to meet its sales goals. Having a competitive mind is the mindset of a sales person, and when an individual lacks this attribute, they are likely to fail in business marketing and sales. Apple’s sales incentive plan, are simple and straightforward but they are selective for particular sales behaviors that suit its plans. These sales behaviors include; informativeness, controllability, quantity, objectivity, completeness, alignment, reliability, clarity, communication, and measurement review (Franco-Santos, 2015). Behaviors often have lower measurability but when performance measurements are being selected, there exists higher measurability for outcome based measures. These outcome based measures include profits, revenue, sales growth from existing customers, and market share. No matter how seemingly intuitive and elegant a design is, a poorly communicated sales compensation plan will be misinterpreted and fail to deliver the intended information. The lack of a clear idea by a sales representative of the compensation plan is likely to make an employee less motivated to work on meeting the set targets of the sales process. The clarity of the compensation plan also plays a vital role in determining whether the sales personnel understand the compensation plan or not. A sales personnel should also be aware of the quantity of sales they are to meet so that they can be remunerated effectively in terms or commissions, rewards, among other morale-boosting aspects of the compensation plan. When Apple is put into perspective of the targeted behaviors of the sales force compensation plan, the company has exhibited clarity among other behaviors. Sales personnel at Apple are well-informed about the milestones they have to attain to earn a particular reward (Matyszczyk, 2019). For example, a sales agent who manages a milestone sales percentage is given a bonus. Consequently, all sales agents are motivated to achieve their set sales targets.
Value Proposition Assessment
Unfortunately, frequent mismatches occur between the value that employees attach to a particular program and the cost of the same program. Apple In., however, majorly concentrates on fundamentals like base pay, job security, time off, healthcare and benefits, and the length of commuting to sales outlets or potential customer sites, to ensure that most employees are attracted and retained within the company. Due to this preference of making the employees (sales persons) sales compensation affairs a priority, the company will always thrive regardless of daunting external conditions like stiff competition, economic recession, and political instability among others. Apple Inc. sales employees feel appreciated and important due to the numerous bonuses set to motivate them and the benefits like health insurance, time off, to mention a few.
Conclusion
In conclusion, sales force compensation plan is a strategy laid by an organization to prepare the commissions, rewards, salaries, and other employee benefits to motivate them to stream more revenue and make more sales. Apple Inc. considers six features of an effective compensation plan which should include transparency, flexibility of benefits, good performance rewarding, open communication, career development, and work-life balance. The behaviors targeted by an effective compensation plan include clarity, completeness, clarity, objectivity, among other aspects highlighted in the body of the essay. Based on the value proposition assessment of Apple, it is evident that the company has complied with most of the expectations of an effective compensation plan, like the rewarding of good performances through bonus payments.
References
Chron Contributor, C. C. (2020, July 28). What Are the Components of a Comprehensive Total Rewards & Motivation System? https://smallbusiness.chron.com/components-comprehensive-total-rewards-motivation-system-36942.html .
Matyszczyk, C. (2019, March 3). The secret tricks Apple store staff use to push certain products . ZDNet. https://www.zdnet.com/article/the-secret-tricks-apple-store-staff-use-to-push-certain-products/.
Hein, P ., Kwon, J (2013). Employee Benefits in a Total Rewards Framework Benefits Quarterly , 29 (1), 32-38. Retrieved on November 3, 2013 from Business Source
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Agri Marketing (2013). Total Rewards. 51 (7), 36-40. Retrieved on November 3, 2013 from
Business Source Complete database.
Canadian Professional Sales Association, C. P. S. A. (2017). What is a Sales Compensation Plan? https://www.cpsa.com/resources/articles/what-is-a-sales-compensation-plan.
