UPENN Employee Compensation Plan Questions Project
ANSWER
Question 1: Pros and Cons of Current and Proposed Compensation Plans
Current Compensation Plan: Pros:
- Simple and easy to understand.
- Encourages teamwork among salespeople.
- Provides job security with a fixed salary.
Cons:
- May not provide sufficient incentives for high-performing salespeople.
- Limited potential for earnings.
Proposed Compensation Plans (Salary + Commission, Salary + Quota Bonus, Salary + Commission + Quota Bonus): Pros:
- Provide strong financial incentives for sales performance.
- Can attract and retain high-caliber sales talent.
- Align salespeople’s interests with company goals.
Cons:
- May lead to internal competition and conflicts among salespeople.
- Complexity in administration and calculation.
- May not be suitable for all types of sales roles.
Question 2: Recommended Compensation Plan and Justification
I would recommend implementing a “Salary + Commission + Quota Bonus” plan. Here’s the justification:
Pros:
- Financial Incentives: This plan combines both fixed and variable components, motivating salespeople to perform well consistently.
- Alignment with Goals: The commission and quota bonus align salespeople’s interests with the company’s goals, driving them to focus on achieving sales targets.
- Competitive Edge: It can attract and retain top-performing sales talent who are more likely to thrive in a performance-driven environment.
- Flexibility: The plan allows for customization based on individual performance, offering higher rewards for higher achievement.
- Fairness: It rewards salespeople fairly based on their performance and efforts, reducing potential conflicts among the team.
While the “Salary + Commission + Quota Bonus” plan may be more complex to administer compared to the others, its potential to drive higher sales performance and align salespeople with company objectives makes it the most suitable choice.
Question 3: Choice Among the Four Plans in Case Exhibit 8
If choosing the “Salary + Commission + Quota Bonus” plan, you should decide on specific commission and bonus structures. Your decision should be based on factors such as market competitiveness, company profitability, and desired sales targets. Be sure to strike a balance between motivating salespeople and ensuring the plan is financially sustainable for the company.
For the PowerPoint presentation and speech, you can structure it as follows:
Slide 1: Title
- Title: “Optimizing Sales Compensation at Roush Performance”
Slide 2: Agenda
- Agenda:
- Introduction
- Pros and Cons of Current and Proposed Compensation Plans
- Recommended Compensation Plan
- Justification
- Choice Among the Four Plans in Case Exhibit 8
Slides 3-5: Pros and Cons
- Slide 3: Pros of Current Compensation Plan
- Slide 4: Pros and Cons of Proposed Plans
- Slide 5: Cons of Current Compensation Plan
Slides 6-8: Recommended Plan
- Slide 6: Recommendation: “Salary + Commission + Quota Bonus”
- Slide 7: Justification for the Recommendation
- Slide 8: Implementation Details
Slides 9-10: Choice Among the Four Plans
- Slide 9: Choosing Among the Four Plans
- Slide 10: Decision-Making Factors
Slide 11: Conclusion
- Conclusion: Summary of key points
Remember to use visuals, graphs, and concise bullet points to enhance your presentation. For the speech draft, you can use the content from your PowerPoint slides as a guide and expand upon each point in your own words, addressing your audience’s interests and concerns.
QUESTION
Description
Case: Roush
Read the case, then answer the following questions in a word-file:
1. What are the pros and cons of the current and proposed compensation plans at Roush Performance? List pros and cons for each plan separately.
2. Would you make a change to the sales compensation plan? Which plan would you choose – 1) current, 2) salary + commission, 3) salary + quota bonus, or 4) salary + commission + quota bonus? Justify your decision by highlighting positive impacts on salespeople’s behavior, ease of implementation, fairness (among salespeople or across departments), achieving company goals, etc.
3. If you were to choose a salary + commission plan, which among the four plans in Case Exhibit 8 would you implement? Justify your decision.
After answering those three questions, please Prepare a PowerPoint for the speech and also conduct a speech draft.
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