Sales force and compensation plan consist of the salary, commission and incentives that are provided to employees as a source of motivation to increase performance and sales within a company. Küster & Canales (2011), affirms that a sales compensation plan is the individual plan designed by the sales department in an organization for a sales representative. The sales plan consists of specific strategies and components that define the sales representative’s role in controlling the sales activities. Each sales team within an organization is provided with a unique plan that is tailored according to the role of the sales representatives. Thus, the sales force and compensation plan is designed to ensure that the strategies and components of the organization are managed and aligned to drive performance and meet the organizational objectives.
Features of a Total Reward System
Sales representatives are compensated for their performance through the total reward system utilized within an organization. Organizations implement reward systems that focus on retaining, motivating and attracting the most talented workers in the market. Through the total reward system, organizations are able to create a positive and productive work environment for its employees. Serfgio et al. (2005) affirm that total rewards are factors that an employee receives and appreciates as being valuable or gratifying. Sales representatives are rewarded using various compensation methods that are designed according to their personal and professional needs. The following features describe the reward systems that should be utilized within an organization.
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Illustrates the sales and compensation plan
The total reward system should be able to allow the management to explain to the employees how their actions, performance and role in the organization are relevant to the organization. Similarly, the employees must be informed on how their efforts are aligned with the strategic objectives of the company. An effective reward system must be able to integrate the organizational strategy, culture and business objectives (Hulkko-Nyman et al., 2011). This will allow the managers and the sales representatives to utilize the available strategic tools to increase sales as well as motivate them to be productive and meet the organization’s objectives.
Transparency
An organization must inform their employees how the reward system works and how it is applicable to them. Thus, the compensation plan should be clear and elaborate as employees want to understand how the organization calculates their compensation and incentives. When employees are aware of how the reward system works and what they need to do in order to be successful in their existing positions, they are motivated to be productive and perform (Murphy et al., 2004). This can be achieved by ensuring that the workers have access to their performance charts and compensation commission. The human resource manager can organize a meeting to discuss with the employees about their detailed commission breakdown.
Flexible
The total reward system must include a variety of benefits that provide employees with both short-term and long-term compensation plans. Short-term benefits may include incentives, recognition or gifts; whereas long-term benefits may include sponsoring an employee’s career growth and development plans, health insurance plans or promotion opportunities within the organization.
Importance
Employees should be able to feel that the reward is important for them and the organization. Thus, the organization must attach meaning to its reward system, by showing that they appreciate the employees’ efforts and investment in the organization. An efficient reward system recognizes and appreciates employees in different ways by supporting them to work efficiently and motivating them.
Equitable
The total reward system must demonstrate fairness when rewarding employees for their efforts. Therefore, to promote fairness through the reward system, the organization must commend employees for positive behavior as well as reward each employee adequately based on their performance and behaviors. The system must clearly define the standards of compensation in regards to the commissions, bonuses and other incentives that are issued
Effective communication
Open communication channels create a positive working environment as the employees and the managers have the opportunity to discuss factors that impact the revenue income. Through communication, managers are able to provide feedback to the sales representatives about the value of the reward system and how it impacts them (Sergio et al., 2005). On the other hand, the human resource department provides employees with substantial information and tools that enable them to monitor their performance and reward programs.
Assessment of how Value Proposition is achieved for current and future employees
The sales compensation plan aims at providing incentives to individuals for exceptional performance and motivates them to remain loyal and committed to the organization’s objectives. Thus, the sales team will be awarded with a commission for every sale they make. Additionally, there is a 401(k) savings plan designed for the employees which is aligned with their contributions; corporate discounts are issued to major vendors; healthcare and dependent medical benefits for employees and their families; commuter spending accounts and leave for those going to the military.
Verizon’s total reward system is flexible and provides the employees with both long-term and short-term benefits ranging from opportunities, incentives and discounts. The compensation plan encourages employees to remain committed and invest their talents in achieving the organization’s objectives and business goals. The plan is designed based on the work ethic, performance and contributions of the employees towards the company’s success. The aim of the plan is to improve employee retention and articulate the organization’s culture structure and objectives. The development of the reward system iss based on the motivating individual and teams to be productive.
Based upon the type of plan you have created, indicate how attracted you think future salespeople may be to this plan
The total reward system includes tools and resources that enables an organization to attract, retain and motivate its employees. Employees analyze the total reward system used within an organization to determine whether an organization is a good fit for them or not. DelVecchio & Wagner (2011) affirm that organizations strive to create a strategic compensation plan that allows them to balance its business needs and employee needs. Future sales people are attracted by a compensation plan that is motivating, rewarding and attractive. Thus, future sales professional will be attracted to the compensation plan due to the following reasons.
The Verizon sales force and compensation plan provides employees with a flexible commission plan and bonuses that are aligned with their interests and the organization’s revenue margin. Thus, employees will be attracted to this plan as it encourages them to sell more as each compensation is designed based on the sales made by; each employee and it grows as the sales person becomes successful and increases performance. Furthermore, the compensation provides employees with the opportunity for career growth and development. For an organization to attract top talent in the market it must be willing to invest in their skills and knowledge; the Verizon plan reimburses its employees tuition fees and also invests its resources in training programs that prepare them for promotions. This increases productivity and motivation among the employees as they are driven to succeed and grow in their existing careers.
Organizations that encourage its employees to promote their emotional, physical and mental well-being attract the attention of potential employees. When employees recognize that an organization is concerned about their health well-being their morale and productivity is increased. Verizon compensation plan provides its employees with health benefits for themselves and their families, commuter spending and discounts for major vendors. Such benefits are likely to attract future sales personnel to work in the organization.
References
DelVecchio, S., and Wagner, J. (2011). Motivation and monetary incentives: A closer look. Journal of Management and Marketing Research , 7 (1) 1-13.
Hulkko-Nyman, K., Sarti, D., Hakonen, A., & Sweins, C. (2012). Total rewards perceptions and work engagement in elder-care organizations. International. Studies of Management & Organization, 42 (1), 24–49. http://dx.doi.org/10.2753/ IMO0020-8825420102
Küster, I. and Canales, P. (2011), "Compensation and control sales policies, and sales performance: the field sales manager's points of view", Journal of Business & Industrial Marketing , Vol. 26 No. 4, pp. 273-285. https://doi.org/10.1108/08858621111127018
Murphy, W. H., Dacin, P. A., & Ford, N. M. (2004). Sales contest effectiveness: an examination of sales contest design preferences of field sales forces. Journal of the Academy of Marketing Science , 32(2), 127-143.
Sergio, R., Ruiz, S., and Munuera, J. L. (2005). The Influence of the Compensation System and Personal Variables on a Salesperson's Effective Listening Behavior. Journal of Marketing Management , 21 (1-2), 205-230
