 There are a variety of incentive schemes that can be

implemented in order to help motivate and reward

salespeople. In this exercise you need to first calculate
the total salary/incentive paid in each of the following
payment structures. Then you need to determine which
structure is the best approach.
For all the incentive schemes
below: George, the salesperson,
sells 1,000 toasters in April and
2,000 toasters in May.
•Straight commission only
•George gets paid $3 per toaster

George’s total remuneration = In April? 3000$ In May? 6000$

•Straight commission but with a guaranteed salary
•George gets paid $3 per toaster
•But with a minimum salary of $4,000 per month

George’s total remuneration = In April? 7000$ In May? 10000$

•Salary only
•George gets paid a salary of $5,000pm

George’s total remuneration = In April? 5000$ In May? 5000$

•Straight commission but with a guaranteed salary and a
bonus
•George gets paid $2 per toaster
•But with a minimum salary of $3,000 per month
•And a bonus of $2,000 if he sells 2,000 or more toasters
George’s total remuneration = In April? 5000$ In May? 7000$
•Salary plus commission
•George gets paid a salary of $2,000 pm
•And a commission of $2 per toaster

George’s total remuneration = In April? 4000$ In May? 6000$

 Which scheme would George probably prefer? Why?

•Straight commission but with a guaranteed salary

•George gets paid $3 per toaster
•But with a minimum salary of $4,000 per month
 Because it is a scheme where george is getting more
benefited by the scheme this is why he will choose this
scheme
 Which scheme would the firm probably prefer? Why?

 Salary plus commission

 George gets paid a salary of $2,000 pm
 And a commission of $2 per toaster

•This scheme is something the management would

choose because it has both fixed pay for employees and
also incentives to motivate the employees with minimum
cost to the management as well
 If they would prefer different approaches, how would
you resolve the situation?

 For this kind of different approaches the management

has to resolve this problem by implementing a plan
which benefits both the employees and the
management as well for that the management has to
come up with a scheme which benefits both of them.
 Is it always necessary to use some sort form of
incentive scheme, or is sometimes a straight salary
approach the best option?

 As a management it is important to implement some

sort of incentive scheme in order to keep the
employees engaged in their work
 And also it is a kind of management strategies that the
company follows in order to increase the sales.
•If different, is there another scheme more suitable to
meeting the needs of both parties?

•If different, is there another scheme more suitable to

meeting the needs of both parties? Straight commission
but with a guaranteed salary and a bonus
•George gets paid $2 per toaster
•But with a minimum salary of $3,000 per month
•And a bonus of $2,000 if he sells 2,000 or more toasters
 This scheme is a scheme where both the employee and
the company gets benefited by it and also it motivates
the employees to sell more in order to achieve the
bonus of 2000$