Career Development Plan IV: Compensation

Essay by mistoryUniversity, Master'sA, December 2009

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As InterClean embarks on a new strategic direction, upper management is requesting a new compensation plan be created for the new sales team. The new compensation plan will identify benefits for the sales employees and company and components of a total rewards package that will motivate employees to reach their peak performance. InterClean's new sales force compensation plan will include a direct compensation plan, a total rewards package including security and health benefits, payments for time not worked, and employee services.

Compensation PlanInterClean will adopt EnviroTech's compensation plan offering a combination of a base salary plus commission based on attainment of goals. The base salary will provide some stability to incorporate incentives to increase motivation to meet performance goals. Commission will be paid out as a percentage based on both individual and team sales. Individual commissions paid based on a previous month's sales in relation to individual performance goals. Team commission will be paid out quarterly and will be based on attaining quarterly team sales goals which incorporate individual sales figures.

This will allow individual sales representatives to work hard for their commission incentive while also encouraging team performance to receive a team commission payout. Offering a fixed salary with commission will benefit employees by providing secured income to help budget their personal finances and the company will benefit by having a fixed payroll expense in their corporate budgets. Silverstein (2007), stated "A rule of thumb: Commissions motivate employees to sell harder, while salaries create loyal employees" (¶ 4).

Why pay system will workCascio (2005) identifies the most important objective of a pay system is equity. Three equity dimensions were mentioned as: (1) internal equity, (2) external equity, and (3) individual equity (p. 419). Organizations must determine the value of an individual's job to the company and create a pay...