Question

Retailing Management: chapter 15 question 6 DQP

What are the advantages and disadvantages of the different forms of compensation programs described in this chapter? Considering the disadvantages only, how can department managers lessen the effects of the disadvantages?

Answer 1

Benefits and drawbacks of different remuneration approaches:

1. Hourly Wage: Payment per hour is appropriate because a fixed amount of hours are scheduled for completion of the job. It gives you discretion as a boss to determine how many hours you will pay for depending on the schedule. The only downside is that you will have to spend more on overtime to work on holidays. Expenses are one and a half times the regular working wage because you allow the workers to work overtime and up to double that for a leave day.
2. Salary: Salary, with or without wage any issues, is a fair incentive mechanism in which employee risk takes need not be recompensed-other than by salary increases and job advancement One of the benefits of offering a salary is that an employer wouldn't have to compensate the overtime amount. Employees would have to complete tasks irrespective of the period you have put out for their salaries within the budget. Your workers will also be happy if they have good salary coverage and can have manageable company expenses. The employee is unable to understand objectively how they can affect efficiency in order to know the incentive. To make the pay and job more appealing, such as health care, pensions, and flexible working hours, you would need to provide additional incentives. As a manager, this will entail further preparation.
3. Bonus: Giving an incentive inspires staff to achieve excellent results. Group commitment is emphasized, too. For starters, if a team does well as a whole, it increases the amount of incentive that everybody receives. Bonuses can also promote workplace loyalty. It can be difficult to decide who will earn a bonus if a collaborative initiative has achieved success. If it is clear whether either an incentive will be paid or not a few months before the payment duration expires, there is also a propensity towards commitment and output level all-out.

4. Commission: Paying a commission helps to inspire sales staff, particularly if the commission rate is enticing, to make more revenue for the company. When the contract system is well planned, it will function well without impacting the profitability of the company. Personal work is emphasized, allowing fewer sales department oversight. A low commission fee would not be appealing to an employee. As an employee will be more likely to quit if a rival pays a higher incentive fee, this will also result in a loss of loyalty.