Compensation Plan Proposal for InterClean??™s Sales Staff Nimmi Tewani
May 30th, 2010
Pat Murray

Compensation Plan Proposal for InterClean??™s Sales Staff Employers who want to succeed in this increasingly competitive environment must have a well-designed compensation plan that motivates employees, controls compensation costs, and ensures equity. To ensure both internal and external equity, employers must establish an effective compensation administration program. To do this, employers must conduct:
* Job analysis (thoroughly analyze and define each job)
* Job evaluation?  (determine what jobs are worth on an absolute basis and relative to other jobs in the organization)
* Job pricing (establish rate ranges; that is, minimum, midpoint, and maximum dollar values for each job)
An effective employee incentive program is mandatory for any business in these days of high attrition rates and a serious dearth of talent. Companies spend sizable sums on their retention strategies, which may focus on a combination of ways to inculcate loyalty among employees – compensation, training and career growth being a few.
A growing number of employers are incorporating performance-based compensation plans to boost productivity and maximize their return on investment (ROI) in compensation. These types of plans are designed to reward employees who produce. For past few years, because of hiring freezes and a larger supply of sales force, many organizations did not have to raise salaries much to recruit and retain top talent. Now that the economy and job market are gaining steam, firms are once again assessing their compensation and benefits packages more frequently to avoid losing current and prospective employees to competition.
Most employees leave their company for reasons other than pay, such as a lack of career development or unhappiness with management. I am proposing a compensation philosophy that will develop an attraction and retention of our Outside Sales Representatives; a development philosophy that discusses pay policy within a broader array of tools. Pay is one investment in the companys people, but it is one investment of many.
Benefits in the forms of value, other than payment, would be provided to the employees in return for their contribution to the organization, that is, for doing their job. Employee benefits here refer to retirement plans, health life insurance, dental insurance, life insurance, disability insurance, vacation pay, holiday pay, maternity leave, etc. While the company will pay for most types of benefits (holiday pay, vacation pay, etc.), some benefits, such as medical insurance, will be paid, at least in part, by employees because of the high costs of medical insurance. Hence, the plan is contributory in nature.
Some fringe benefits proposed are:
* Appreciation from the management
* Promotion
* Nice office
* Company matching funds for college tuition
* Subsidies for child care or eldercare
* Group discount on auto and home insurance
* Financial planning advice
* Legal services
* Tuition reimbursement
* Career planning and professional development opportunities
Compensation at InterClean will become part of the employment value proposition. A compensation plan that fails to motivate employees can stagnate a company as fast as any other factor. The proposed compensation plan includes profit sharing (10% of the pre-tax profits will be distributed to employees), employee stock ownership plans, and performance bonuses. The plan aspires to retain and motivate sales staff to achieve business goals by allocating salary and incentive to retain top performers and ensure their compensation is competitive to reduce flight risk. Unemployment and workers compensation is really a workers right, rather than a benefit.
Performance Bonus
A well thought out performance-based bonus plan will be tied directly to the results InterClean sees as valuable. Bonus is “money in excess of what is normally received. It is given in consideration of superior achievement.” However, it is important to note that a bonus is not an entitlement. It must be earned. Those who have bonus plans in place should not take for granted that they will automatically earn the full amount of that bonus. InterClean will reward salespeople for their product-mix decisions not just to increase profit, but also to ensure that new products are effectively launched and that all products get appropriate focus.
Companies that find effective ways to reward salespeople who impact the bottom line should get what they pay for. There is money on the table for companies that find ways large and small to reward salespeople for incrementally increasing profit (Elliot, 2009).
Performance reviews will reflect two ratings: a growth-in-skills rating that is tied to base pay and a results-rating that is tied to incentives. Base pay increases are long-term rewards and will be tied to long-term accomplishments, such as improving skills, competencies, and responsibilities. A bonus payment will reward short-term accomplishments, such as having a good year, exceeding targets etc. Incentive pay will compensate employees for performance above expectations, whereas the base pay will compensate for base performance expectations. The standards of performance would be based on quantifiable assignments, tasks, and objectives.
Advantages of Salary/Commission/Incentive Plan
* Allows management to attract high-performers willing to share the risks of the business and forces non-performers to leave
* Attracts and retain people who have skills beyond that of pure selling
* Create enthusiasm, hopefully resulting in extra effort
* Give winners a psychological boost
* Inexpensive relative to the return
* Encourages maximum sales effort, making it very useful in penetrating new and familiar markets
* Easy to understand and administer
* Minimizes the need for supervision
* Provides flexibility in balancing short-and long-term objectives Conclusion
The well-treated employees will enjoy a high quality of work life (QWL) that will translate into InterClean achieving the goal of domestic market domination in sanitation industry. The empowered cross-functional sales team will help in improving productivity. With the expertise of the new team combined with InterClean??™s resources the company fully expects to reach the sales goals and increase profitability by 40% which is a huge incentive for the sales staff.

Cascio, W. F. (2005). Dimensions of Human Resource Management. The McGraw-Hill Companies.
Cascio, W. F. (2005). Managing Human Resources, The diversity at Work. The McCraw-Hill Companies.
Elliot, S. (2009). Sales Compensation: Pay for Profit……..and get what you pay for.
Stephen F. Hallam, T. A. (2009). Prepardness for Mid-Career transitions: Examining curent Practices in Management Education. Academy of Educational Leadership Jounal , 13 (4), 81-91.

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