Question

What is a specific role in which commissions would reward employees for past performance, incentivize future performance, and align employee compensation with company goals? How would you design a commission-based compensation plan for that specific role?

Answer 1

The specific role in which commissions would reward employees for their past performance or incentivize future performance and align the employees compensation with company goals would be the role of a sales personnel.

The role of a sales personnel is to achieve certain sales target for a particular period of time. Thus a sales personnel will be paid commission in accordance to his past performance, i.e on achieving a particular sales targets in a given sales territory and will be offered certain incentives based on his future performance of attaining new or higher sales targets. This inturn enables the company to align the company goals with respect to its sales with the employee compensation by motivating sales personnel to work to achieve them.

In order to design a commission based compensation plan for the role of a sales personnel, it is important to align the performance outputs of sales executives with the commission to be paid to them. Therefore the compensation plan will involve formulating certain levels of commissions which will be directly associated with certain performance targets , so that each level of commission is achieved on attaining the specific sales targets required to attain them. So that sales personnel will be self motivated and driven towards surpassing such targets to attain higher level of commission pay by utilising their full potential to achieve higher sales targets.

.

.

Thanks dear student.. Hope this will help.. Good luck... Rate if satisfied :)