TUTORIAL SHEET

Building Pay Structures That Recognize Employee Contributions

SEMESTER $32022-2023$

ACTIVITY $1-$ INSTRUCTION: Match each term with its definition, by indicating the matching number.

$\backslash$table$[[$TERMS$,$DEFINITION$],[\backslash$table$[[1.$ Draw$],[2.$ Salary$-$plus$-$bonus plans$],[3.$ Red circle rates$],[4.$ Pay grades$],[5.$ Pay compression$],[6.$ Midpoint pay value$],[7.$ Merit pay increase$],[8.$ Pay structures$],[9.$ Pay ranges$],[10.$ Salary$-$plus$-$commission plans$],[11.$ Commission$],[12.$ Green circle rates$],[13.$ Salary$-$only plans$],[14.$ Commission$-$plus$-$draw plans$]],\backslash$table$[[$A$.$ Assign different pay rates for jobs of unequal worth and provide the framework for recognizing differences in individual employee contribution$],[$B$.$ Group jobs for pay policy application$],[$C$.$ Represent the vertical dimension $($pay rates$)$ and includes midpoint, minimum, and maximum pay rates$],[$D$.$ The halfway mark between the range minimum and maximum rates$],[$E$.$ The difference between the maximum and minimum pay rates of a given pay grade$],[$F$.$ Occurs whenever a company's pay spread between newly hired or less qualified employees, and more qualified job incumbents is small$],[$G$.$ Below$-$minimum pay range rates$],[$H$.$ When companies pay certain employees greater than maximum rates for their pay ranges$],[$I$.$ Sales professionals receive fixed base compensation, which does not vary with the level of units sold, increase in market share, or any other indicator of sales performance$],[$J$.$ Offer a set salary coupled with a bonus$],[$K$.$ A form of incentive compensation based on a percentage of the selling price of a product or service$],[$L$.$ Spread the risk of selling between the company and the sales professional$],[$M$.$ Award sales professionals with subsistence pay or draws$],[$N$.$ Subsistence pay component awarded as an advance, which is charged against commissions that sales professionals are expected to earn$]]]]$

Activity $2-$ Reconsider your answer for the Auto Dealership scenario.

A$.$ Identify the pay structure offered to the salespersons.

B$.$ Which would be the alternatives that you would offer instead?

C$.$ Discuss your answer to B based on the case information and the information in the lecture notes.

Objectives:

Explain the principles of pay structure design

Prepare merit pay structures

Prepare the structures of sales incentive compensation

Person$-$focused structures