Develop a Sales Incentive Plan for your Successful Small but Growing Firm Your c
ID: 461930 • Letter: D
Question
Develop a Sales Incentive Plan for your Successful Small but Growing Firm
Your company designs, manufactures and sells many lines of small high strength molded plastic with steel accessory products for the home, office, workshop, etc. Design themes include sports, camping, hunting, gardening, mechanical, abstract art designs, utility (steel), etc. Products include kitchen, office, garage and garden gadgets and tools. The lines are becoming popular among a variety of small to large retailers with favorable reviews from customers.
Sales forecasts based on recent growth suggest expansion to all 50 states within three to five years. The company is signing up sales reps beyond the upper Midwest region. Use the information on the following pages as a resource to develop an incentive plan for your growing and increasingly successful sales force. (Health and other Benefits are not part of the exercise; strictly pay.)
Metrics (employee performance criteria) – One or Several to rate sales reps? For example incentive based on - revenue growth, sales or product volume, customer satisfaction, increased market share, new customers, growth in sales to current customers, new lines shown, others?
Describe metric(s) and explain reason selected:
Incentive Strategy: Individual, Group or Organizational, two levels or all levels?
Describe incentive(s) strategy and explain
Commission, Relative, Goal Based Plan or Hybrid of these? See Exhibit 1 below. Explain___
Estimate Total Income on % of each component to explain the plan to a new hire. What might their pay results look like with your Sales Incentive? The %’s must total to 100%:
Base Wage _________ Individual Incentive________ Group ________ Organizational_________
Explain why?
Summary: Prepare a sample of Sales Results and related Pay Results in $ amounts to explain the Incentive Plan to candidates for a sales rep job – to convince them to accept the job:
This question is based on the subject of HR Management.
Explanation / Answer
The manufactures and sells many lines of small high strength molded plastic with steel accessory products for the home, office, workshop, etc. Design themes include sports, camping, hunting, gardening, mechanical, abstract art designs, utility (steel), etc. Products include kitchen, office, garage and garden gadgets and tools.
Since the firm has many product lines and products, their demand and pricing policies are different , a uniform incentive policy is not possible . First let us talk about the Basic pay to the employees.
The basic pay is normally set to the 1/4 or 1/5 of the net profit income which an employee generated by the employee. But there is leagal intervention and industry standards for the above. At this time it is easy for us. For example , if law says that the basic pay of an employee is $5000, then he has to generate a net profit of $20000 to $25000 to the firm , If the total profit margin of the firm is 15% , then his basic sales target will be $20,000/0.15 = $133333.33.
The variable invcentive plan should be motivating to the employees, A firm can give more benefits to her employee through variable incentive once he reached the basic target given to him, because the firm is gaining on the same employee without paying the other requirements like, house renting allowances, other statutory allowances, visa allowances etc.
The group incentives are to be given when the works are cordinated by groups. There are many problems on group incentive programmes, even unperformed employees are getting benefits while best performers are getting for what they did. Hence groups incentives major portions are given to co ordinaters and are allotted according to the performance of the team members.
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