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SubmlLLed Lo SubmlLLed by
rof Anand k Sapre Avl[lL Slngh 1hakur(lM2k814)
Shashank ShrlvasLava(lM2k884)
M8A(MS) 7
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SLM

1he |nev|tab|e change |s requ|red |n compensat|on
package of sa|es force
Sa|es force Lvery LhaL employee or workmen who performs hls duLles
under Lhe sales deparLmenL or performs any acLlvlLles relaLed Lo sales
ls consldered Lo be a parL of Lhe sales force 1he sales force or sales
personnel conslsLs of a loL of hlerarchlcal level llkes sales execuLlves
sales represenLaLlves area sales manager reglonal sales manager
dlvlslonal sales manager and so on
Sa|es Compensat|on |an
1he sales compensaLlon plan ls an essenLlal parL of Lhe overall program
of moLlvaLlng sales personnel Lo keep performlng upLo Lhe sLandards A
properly deslgned sales compensaLlon plan provldes Lhese baslc
moLlvaLlonal roles
1)rovlde a llvlng wage
2)Ad[usL pay levels Lo performance relaLlng [ob performance and
rewards
3)rovlde a mechanlsm for aLLalnmenL of organlzaLlonal goals and
lndlvldual goals as well
A well deslgned sales compensaLlon plan ensures LhaL sales goals are
reached aL a lower cosL and proflLs are generaLed saLlsfacLorlly as well
as Lhe employee morale Lends Lo be hlgher
Ma[or changes ln an exlsLlng sales compensaLlon plan are lesser llkely
Lo happen as Lhe sales force ls hablLual Lo Lhe exlsLlng compensaLlon
plan and mlghL noL reacL poslLlvely Lowards Lhe newer one 8uL Lhere
are cerLaln cases when Lhe compensaLlon plan has Lo be changed
overall ln order Lo ensure beLLer resulLs ln Lhe fuLure Such cases are
1)When Lhe employee morale ln Lhe sales force ls low lL mlghL be
due Lo Lhe exlsLlng sales compensaLlon plan
2)When company ls anLlclpaLlng Lhe culLlvaLlon of new and dlfferenL
markeLs
A good and well deslgned sales compensaLlon package fulfllls
followlng baslc requlremenLs
1)Llvlng wage secure lncome
2)lL ls moLlvaLlonal Lo Lhe sales force
3)lL ls falr conslders facLors beyond conLrol
4)lL ls easy Lo undersLand
3)ay accordlng Lo Lhe performance
6)Lconomlc Lo manage
7)Almed aL aLLalnlng ob[ecLlves of organlzaLlons
1ypes of Compensat|on |ans
CompensaLlon has four baslc elemenLs
l) a flxed elemenL salary
ll) a varlable elemenL commlsslon lncenLlve eLc
lll) frlnge beneflLs plus facLors pald vacaLlons eLc
lv)relmbursemenLs paymenL of expenses expense allowance

All of Lhe above four elemenLs are comblned lnLo varlous paLLerns Lo
make dlfferenL Lypes of compensaLlon plans 1he ma[orly used sales
compensaLlon plans are
I)Stra|ght Sa|ary |an
Pere Lhe personnel ls provlded a predeclded baslc pay whlch has
been calculaLed and sLaLed earller for Lhe [ob poslLlon Such Lypes of
compensaLlon plans are sulLable for Lhose [obs whlch lnvolve slmllar
work over Lhe course of employmenL
II)Stra|ght Comm|ss|on |an
1hls plan suggesLs LhaL lndlvldual personnel should be pald accordlng
Lo Lhe ouLpuL or producLlvlLy lL assumes LhaL Lhe sales volume ls Lhe
besL producLlvlLy measure for performance evaluaLlon and hence
can be used for decldlng Lhe level of pay
III) Comb|nat|on Sa|aryandIncent|ve p|an
nowadays Lhe mosLly used compensaLlon plan ls salary plus
commlsslon plan Pere Lhe employee geL a parLlcular flxed salary
plus a varlable commlsslon whlch depends on hls performance 1hus
Lhls plan ls sulLable boLh ways Lo Lhe employees as Lhe flnanclal
securlLy ls kepL by provldlng a baslc flxed salary as well as challenge
ls sLlll kepL ln Lhe [ob by provldlng Lhe exLra lncenLlve on
performance basls

1he compensaLlon plan wonL be able Lo cover everyLhlng lssues are
golng Lo be ralsed wheLher lLs whaL consLlLuLes a new accounL or
whaL happens when several dlfferenL people clalm credlL for a sale
1here are golng Lo be Lhlngs LhaL come up durlng Lhe course of Lhe
year LhaL are noL covered or are a maLLer of lnLerpreLaLlon ?ou need
Lo spell ouL Lhe way Lhose are golng Lo be resolved lL may be a
commlLLee or a chaln of command When a sales person brlngs a
quesLlon Lo Lhe sales manager nlne Llmes ouL of 10 Lhey wlll be able
Lo resolve Lhe slLuaLlon buL when Lheyre noL Lhere needs Lo be
some means of resolvlng Lhe lssue A commlLLee mlghL have
represenLaLlves from sales human resource and flnance Lo
arblLraLe
Whlle a hlgh rlsk/reward lncenLlve program may be necessary Lo
aLLracL your ldeal sales person you need Lo Lhlnk Lhrough Lhe
posslble (and someLlmes unlnLended) consequences CusLomers who
enLer a car dealershlp or a cloLhlng sLore can have very dlfferenL
experlences based on a salespersons lncenLlve plan A salesperson
wlLh Loo llLLle lncenLlve may noL geL up from behlnd Lhe counLer or
make a compelllng sales call Conversely a salesperson wlLh a
dlsproporLlonaLely hlgh aLrlsk earnlngs opporLunlLy may be Loo
aggresslve abouL closlng Lhe sale a LacLlc LhaL ofLen backflres and
Lurns off your cusLomers

1nL INLV1IA8LL CnANGLS WnICn AkL kLUIkLD IN 1nL
CCMLNSA1ICN ACkAGLS ICk 1nL SALLS ICkCL
1he Lerm 'lnevlLable' means unavoldable whlch sLaLes Lhe evenLs
whlch are golng Lo happen and cannoL be sLopped 8uL such
unavoldable clrcumsLances need noL Lo be sLopped buL Lo be
managed Pere we are deallng wlLh Lhose unavoldable changes
whlch are requlred by Lhe exlsLlng compensaLlon package for sales
force ln Lhe presenL condlLlons ln lndla
1he basls of changes requlred ln Lhe Sales lorce are as Lhe
followlng
)Lva|uat|on based on cond|t|ons
lf youre drlvlng new accounL sales you may also conslder belng
more aggresslve ln your pay mlx and baslng more on commlsslon
lf youre Lrylng Lo encourage a sales person Lo go afLer brand new
accounLs you wanL Lhem beaLlng Lhe bush ?ou wanL Lhem Lo
generaLe leads and follow up on Lhem AL Lhe same Llme you may
wanL Lo use a more conservaLlve pay mlx for growlng sales Lo
exlsLlng accounLs ln addlLlon lf your buslness has puL a loL of
focus on selllng new producLs you may also wanL Lo award hlgher
commlsslon for selllng Lhose new producLs Lhan you do for selllng
older producLs 1hus Lhe flnal resulL should noL only be measured
quanLlLaLlvely buL also based on Lhe condlLlons under whlch Lhe
resulLs have been obLalned

)Lmp|oyee Ia|thfu|ness
ln lndla lL ls a general problem LhaL Lhe employees produce false
sales Lo achleve Lhe sales LargeL And Lhey produce false recelpLs
Lo avall Lhe expense allowances Lravelllng allowances eLc Such
small losses Lo Lhe company Lake a much blgger shape when lL
happens on a counLry wlde span 1here ls no parLlcular soluLlon
for Lhls problem buL cerLaln sLeps can be Laken Lo change Lhe
Lhlnklng of Lhe employees whlch mlghL lessen Lhe lmpacL of such
lmpulses Whlle conducLlng Lhe 1ralnlng and uevelopmenL
programs for employees Lhey can be LaughL or some values can
be lnsLllled ln Lhelr mlnds abouL conformlng Lo Lhe prlnclples
values and eLhlcs of Lhe organlzaLlons

)Customer ke|at|onsh|p over Sa|es max|m|zat|on
ln Loday's world sales maxlmlzaLlon has become a ma[or
ob[ecLlve of Lhe orgnlsaLlons even lL ls consldered more
lmporLanL Lhan proflL maxlmlzaLlons lL ls because sales
maxlmlzaLlon assures Lhe markeL share of Lhe oranlsaLlon 8uL
Sales personnel should focus more on Lhe creaLlng saLlsfacLory
long Lerm relaLlonshlps wlLh cusLomer whlch does noL ends wlLh
sales only ln facL lL sLarLs before Lhe sale and ls conLlnued even
afLer Lhe sale has Laken place Such efforLs from Lhe sales force
ensures brand preference brand loyalLy falLhfulness from Lhe
cusLomers Lowards Lhe organlzaLlon lL should be undersLood LhaL
[usL selllng Lhe producL ls Lhe evenL happenlng ln presenL whlch
Lells noLhlng abouL Lhe happenlngs ln fuLure 8uL creaLlng good
relaLlonshlps wlLh cusLomers shows LhaL sales are golng Lo
happen ln fuLure Loo Pence Lhe crlLerla for calculaLlon
compensaLlon should also lnclude Lhe number of new cusLomers
broughL ln Lhe number of exlsLlng cusLomers reLalned by a
cerLaln sales person

)Lncourag|ng var|ab|e e|ements ||ke comm|ss|on and bonus |n
form of future |nvestments
1here are cerLaln whlch already follow Lhls procedure of awardlng
Lhelr employee wlLh shares of Lhelr own company ln Lhe form of
commlsslons or bonus or lncenLlve lLs maln moLLo ls Lo Lell Lhe
employees LhaL Lhe company moves forward Laklng Lhe
employees alongwlLh lL Such klnd of lncenLlves mlghL noL prove
worLh for Lhe employee aL Lhe presenL Llme buL when a parLlcular
Llme has passed Lhe lnvesLmenL shows lLs reLurn and lLs value wll
Lhen be reallzed lL ls because maklng such lnvesLmenL wonL be ln
Lhe prlorlLles of Lhe employees before buL here lnvesLmenLs are
already made on Lhelr behalf lL mlghL noL be accepLable for some
employees buL conslderlng Lhe dynamlc envlronmenL of
economy Lhe safe fuLure lnvesLmenLs are approprlaLe