Motivating the Sales Force with Compensation Plan

Motivatingthe Sales Force with Compensation Plan


Motivatingthe Sales Force with Compensation Plan

Featuresof an effective total reward program

Employeesare the most valuable resource in organizations today. Organizationshave realized that labor productivity is an important source ofcompetitive advantage because employees contribute directly to thesuccess of the business. Therefore, to enhance productivity andorganizational performance, it is integral that an organizationretains an efficient and effective employee base. Compensation andbenefits are one of the major approaches that employers can use tomotivate their staff and enhance job satisfaction as well asperformance (Musse, 2012). Most people think of compensation in termssalary but the reward system is broader. The reward system includesmany forms of rewards and benefits, both direct and indirect, whichenables the organization to maintain competitiveness andsustainability in the modern labor market. The following are featuresof an effective total rewards system:

  1. Salaries and wages. These are the basic remunerations that the organization pays to its employees for all work performed or services provided. Salaries and wages are paid periodically and it could either be fixed or vary depending on certain set conditions such as number of hours that an employee worked.

  2. Benefits. Benefits are economic values, other than salary and wages payment, that the organization provides to the employees for doing their job (Biswas, 2014). Employee benefits should include things like life insurance, health insurance, retirement plans, stock ownership plans, disability insurance, vacation, and sick leave among others.

  3. Training and development. Everyone wants to progress and prosper as the days go by. To attract and retain top quality talent, organizations should show that they value their employees and are committed to ensuring constant career growth for each and every one of them. This could take the form of training on new technology, tuition assistance for educational programs, on the job training, seminars, and conferences. Career development enhances the skills of the employees and promotes loyalty.

  4. Performance recognition. Performance recognition includes individual, peer and team awards. These awards are given to employees who have performed exceptionally or accomplished specific job-related goals. Recognition boosts morale and encourages the staff to do even more.

  5. Work-life balance. This involves the creation of an atmosphere that allows the employees to balance between personal time and work. Individuals face conflict between personal life and work as they aim to improve their quality of life (Kyoung, 2014). Such flexibility fosters heightened morale as it allows the employees to get enough rest. Also, new health, wellness, and nutritional programs could be provided.

  6. Bonuses. These include sales commission, random pays, contracted bonuses, and performances bonuses used by organizations as a means of saying thank you to the employees for their hard work.

Salesforcebehaviors targeted by compensation plans

Theaim of the various forms of compensation is to elicit certain desiredbehaviors (Dogbe, 2011). The bottom line in any organization isdirectly dependent upon the competency and efficiency of the salesforce which dictates profit levels by controlling how much and howoften the sales team sells. Compensation can also affect the level ofsales and the bottom line in a similar manner. Hence, to maximize thepotential of the sales team, organizations should identifycompensation plans that incentivize positive behavior among the salesteam. A well-formulated compensation plan for the sales team willreinforce and facilitate the strategic plans of the organization andtake into consideration external factors that affect organizationalsales.

Membersof the sales team are ambitious individuals with incessant desires towin, and they will always strive to deliver when provided withappropriate direction and guidance. Therefore, the compensation planshould be designed in such a way that it provides clear guidance ofwhat the organization expects from the sales team. This involvesincentivizing sales behavior that positively influences theperformances and productivity of the sales team and discouragingunwanted behavior. The reward and compensation plan can target thefollowing behaviors in the sales team: objectivity, completeness,quantity, time consciousness, politeness, communication, fairness,reliability, agreement, clarity, performance review, positivecompetition among sales team members, proper ethics and morality. Anemployee who feels satisfied with the compensation plan will becomeloyal and double their efforts.

Howvalue proposition for current and future employees is achieved

Increasedcompetitiveness in the job market means that employees always havemany lucrative job opportunities to consider before making a decisionon which organization best suits their profile. Most organizationswant to have the best talent within their ranks, but few actuallymanage to do that. The biggest challenge that these organizationsface is attracting and retaining highly qualified staff. For theseorganizations to be able to attract and retain top talent, it isimperative that the job offers carry value propositions that quicklyand easily captures the attention of prospective employees. Valuepropositions stem from the adoption of a people-centered approach andbalancing the performance of the staff with recognition,compensation, and rewards.

However,many organizations have failed in this regard leading to regularmismatches between performance and the value that employees get aswell as the cost of implementing the compensation and benefits plan.The creation of a value proposition for current and future customersrequires the development of an employer brand with unique employeerewards, compensation, policies, and benefits that are superior thatof rival brands regarding the value offered to the staff. Brand nameshave significant influence on the decision of employees to join andstay in a particular organization (Sokro, 2012).

Inclusionof the following elements in the compensation and benefits plan willcreate a competitive employee value proposition: Base salary, 10%commission on all sales that surpass the minimum sales level and 15%bonuses for exemplary performance. A comprehensive benefits packagethat includes health and life insurance, social security, paidvacations, retirement savings, and community support programs.Rewards and recognition based on year-end performance appraisal,introduction of home working and flexible schedules to ensurework-life balance, and training and career development opportunitiesincluding partnerships with learning institutions to facilitateemployees who want to pursue additional degrees or diplomas, coachingprograms and regular seminars and workshops to hone the skills of theemployees.

Howattracted future sales people will be

Thecompensation plan outlined above clearly shows that the organizationhighly values its sales staff and has taken the necessary steps toensure that they are provided with a conducive working environmentthat enhances their motivation and encourages them to make showcasedesired behavior. The individual goals and objectives of the salesstaff team members have been adequately aligned with the generalorganizational targets and objectives to ensure that the employeesderive maximum happiness and satisfaction in their jobs. This willreduce turnover by making current employee more loyal and attractpotential employees.

Thecompensation and benefits plan outlined is one of the best and isbound to attract, motivate and retain a highly qualified andcompetent sales force. However, the business world is highly dynamic,and, therefore it is important that the organization continues toincorporate changes and update the plan to meet the changing needsand demands of the employees. The key to ensuring sustainability,keeping employees motivated, attracting sufficient new talent, andreducing turnover rates is to offer attractive rewards like the onecurrently being offered. Also, it is equally important to conductregular organizational and market review and analysis and update theplan to ensure that it is not obsolete, but abreast of new trends andinnovative compensation and benefits techniques as they trickle in.


Biswas,B. D. (2014) EmployeeBenefits Design and Compensation.FT Press.

Dogbe,D. O. Performance Based Pay as a Motivational Tool for AchievingOrganizational Performance: An Exploratory Case Study. InternationalJournal of Business and Management,Vol. 6, No. 12. pp 270-285. doi:10.5539/ijbm. v6n12p270

Kyoung,K. H. (2014). Work Life Balance and Employee Performance: TheMediating Role of Affective Commitment. GlobalBusiness and Management research: An International Journal.

Musse,A. (2012).The Influence of Reward and Satisfaction on Employees’ Performancein Organization: Rewards and Employee Performance.GRIN Verlag

Sokro,E. (2012). Impact of Employer Branding of Employee Attraction andRetention. EuropeanJournal of Business and Management,Vol. 4, No. 18. 164-173.