A good incentive compensation scheme?

Expert Solution

Incentive compensation is a type of variable compensation where the earnings of salesperson or others are toed to the how they perform or how many products they sell. It is a strategy to get better results and achieve goals of the organisation. For a good incentive compensation plan, the strategies below will help in optimizing the scheme and achieve the goals:

1. Review the business scheme to be sure that they drive maximum business objectives- Many organisations develop incentive plans focusing on an individual problems whereas they should look at the bigger picture and formulate a plan that motivates the employees in sales force.

2.Pay for improving performance- Many times employees as well as employers need an incentive to achieve that highest goal set and to keep them motivated paying managers for achieving the target number will incentivize them to focus on the target number.Paying them for, for example, minimized no decisions, decreased rep turnover will also encourage them to meet their target and improve their performance.

3. Use programmed softwares that are available to expand the capabilities of your scheme- The advanced technology can provide myriad of options to build robust compensation schemes and can plan according to the requirements. It can give compensation schemes for different level of sales performance, behavior of organisation in different regions,etc.

Rahul Sunny answered 1 month ago

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