What is the most effective sales force compensation method for Zappos?
In reviewing the sales force compensation method at Zappos, Olivia, the manager of Human Resources, has found that the Salary plus bonus compensation method is the most effective. This method is easy to administer, yields more predictable selling expenses, and provides sales managers with a large degree of control over salespeople.
The Salary plus bonus compensation plan is used by companies where employees receive a basic salary along with bonuses that are given at the discretion of the employer. Bonuses are often used as a way to reward outstanding employees for their performance. This compensation method allows sales managers to have more control over their employees by using special bonuses to incentivize higher sales.
By utilizing the Salary plus bonus compensation method, Zappos can effectively manage their sales force compensation and drive performance among their salespeople. This approach not only provides a solid base salary for employees but also gives them the opportunity to earn additional income through bonuses based on their sales performance.
Benefits of Salary plus bonus compensation method:
1. Motivation: The bonus component serves as a motivator for salespeople to achieve their targets and exceed expectations.
2. Control: Sales managers have more control over their team by incorporating bonuses as rewards for meeting sales goals.
3. Predictable expenses: With a set salary and bonus structure, Zappos can predict their selling expenses more accurately.
4. Employee retention: Offering bonuses as rewards can help in retaining talented salespeople and reducing turnover.
Overall, the Salary plus bonus compensation method is a well-rounded approach for Zappos to effectively manage their sales force compensation and drive performance. By providing a base salary along with bonuses, Zappos can motivate their sales team, maintain control over sales activities, and achieve predictable expenses.