- What is the compensation package for full-time sales force at the stores? Classify by kind of compensation.
The average compensation given to employees at Mr. Paulson’s store is considerably lower than those earned by other employees in the region. A full-time employee at his store received a salary of $500 per week including benefits such as dental coverage and full medical cover. However, there is no sick or personal days’ compensation at the store. Holidays are also not paid for. Additionally, he offers commission of 2.5% to the sales persons on full-time employment if they make sales above $7,000 every week.
- According to the expectancy theory of motivation, an employee’s motivation is a result of how much the employee wishes to be rewarded. Mr. Paulson also makes use of this theory in his rational for compensation. According to him, sales persons would be willing to get more money, therefore, he provides for a commission of 2.5% on sales exceeding $7000 per week for full-time employees and equal percentage for sales exceeding $1,000 per day by part time employees. He believes that the employees would strive to sell more in order to get more compensation.
- According to the equity theory, motivation at work is not only determined by the amount of pay received by an individual or the conditions at work. A balance in the input and the output in the business achieve a fair balance. In the case of Mr. Paulson’s store, the employees put many efforts in their work as input while they receive a limited pay. This could be one of the reasons for the former employees deeming it as inequitable. Secondly, the amounts of pay received by both the full-time and part-time employees have an imbalance. The full-time employees get a higher pay than the par-time employees do. This applies when it is calculated according the amount received per day by both employees, this could have scared away some part time employees who were not pleased with this inequity.
- At Mr. Paulson’s store, the compensation philosophy that is practiced is in relation to the expectancy theory. He gives compensation in relation to the work done by an employee. Where lazy workers do not get proper compensation compared to those that make higher sales. In his store, however, it is not realistic to make weekly sales that amount commission compensation. The weekly sales that attract a compensation is $7,000 per week, while from the above case, the weekly sales only reach $6,500, which implies that for this week, the sales personnel who were on duty would not receive the commission. It is not certain how often this occurs since it is not indicated above. But, the obvious thing is that at times, the employees only labor for Mr. Paulson’s advantage, since reaching the commissionable amount of sales is unrealistic.
- Considering the effectiveness of this philosophy by Mr. Paulson, there would be two possibilities. For Mr. Paulson, he is sure there are always jobless people who are willing to take up jobs at the rates that he provides. Therefore, the philosophy that he uses is effective since he would always replace dissatisfied employees with new ones and his business would continue. However, in my position, the employees would not work for this sales store for a long time since the conditions for work are unfavorable. The compensation philosophy adopted by Mr. Paulson is not effective since he would eventually loose workforce and spend a lot of resources in recruiting new ones than maintaining the ones that he already have at his store.
- The best compensation strategy is that, which attract people to work for the organization, retain these employees after acquiring them, and motivate them in their operations with the organization. For the case of Mr. Paulson’s store, the continuous training he offers to his employees fascinates me. The best compensation practice that he should adopt is to compensate the person and not the position. Since his employees gain more knowledge at work, he should reward them on basis of the experience they have gained, the period of service they have been with the store and the type of employment. He should also provide for personal, sick and holidays with half pay so that the individuals do not have to overwork themselves in order to increase the compensation they receive.