Question

Decision Point: How Can You Help the Sales Team Better Understand the Commission Plan? You remember from your discussion with Sean that, "Many members of the sales team don’t seem to understand the commission system, and many see it as unfair." You study the existing commission plan and don’t see anything as inherently unfair, but you have your suspicions as to who might think it unfair. You speak to a number of sales personnel and discover that it is the newer salespeople who see the commission plan as unfair. Commission rates for sales personnel who have been employed by Swazzi for less than two years are lower than for employees who have been at Swazzi for longer than two years. Newer employees believe they put as much effort into each sale as longer-tenured employees and should be rewarded the same. Using expectancy theory, what would you do to address this problem? Select an option from the choices below and click Submit.

Answer 1

Question Completion with Options:

*Re-evaluate the existing commission plan to determine whether you can eliminate the perception of unfairness. Re-evaluate the base salaries by comparing them to other upscale clothing stores.

*Put all salespeople on the same commission plan regardless of tenure. This will clearly establish a strong relationship between performance and reward for all sales personnel. Increase the base salaries of longer-tenured salespeople who have worked for Swazzi more than two years to reinforce the relationship between their experience/loyalty and their rewards.

*Travel to the stores and explain the system in detail to the sales teams. Tell them you will try to clear up any perceived unfairness once you see whether they are serious about selling

Answer:

*Put all salespeople on the same commission plan regardless of tenure. This will clearly establish a strong relationship between performance and reward for all sales personnel.  Increase the base salaries of longer-tenured salespeople who have worked for Swazzi more than two years to reinforce the relationship between their experience/loyalty and their rewards.

Explanation:

Longer-term sales personnel should be rewarded differently from newer personnel.  But, this differential reward should not be based on the sales commission.  The base salary will be more ideal for this tenure reward.  This will be in line with the Expectancy Theory which states that employees base their individual levels of effort on what is necessary to perform well and earn rewards within the workplace.   The theory also requires that the reward structure is clear with well-defined goals and routine evaluations.  The Expectancy Theory helps workers to put in their best because they are looking forward to some well-defined and clear rewards.