WEEK 5: CASE STUDYDESIGNING A COMPENSATION plan

This case study allows students to summarize the features of sales compensation plan design by applying analytical thinking and application of knowledge. Be sure to read Chapter 8 to prepare for this case study.

• Read the assigned case analysis and answer the questions that follow.
• Research in the university's electronic library to find your references from journals, books, websites, and so forth, and use them in your case study analysis.

A New Sales Representative

This new position is the first outside sales position for United Facilities Inc. and John must carefully design a compensation package to motivate the sales representative to focus his or her efforts on the appropriate activities. John wants to expand his business and sees two distinct opportunities to do so. Expanding the business through adding new customers is one approach, and John also sees an opportunity to expand the business through further development of relationships with current customers. Both of these activities will take a great deal of time without promise of immediate sales, and the compensation structure should recognize that requirement. However, as a small business, the company must closely monitor their salary budget and therefore, connecting at least part of the salary to actual sales will help ensure that the sales representative generates the revenue necessary to support his or her position. Answer the questions below. Each answer must be at one full paragraph of elaboration (at least 7 solid sentences). Provide sources to support your responses.

1. What are the sales objectives for the new sales representative?
2. What role will the compensation design play in motivating the new sales representative?
3. What kind of sales incentive plan do you recommend? Why?