The careful selection, recruitment and adequate training of the sales force of an organisation has to be followed by a satisfactory compensation plan. A good plan of remuneration motivates the sales force to perform selling activities in the most productive manner and achieve the objectives of the organisation.
In the absence of an adequate compensation plan, the much needed motivation of the sales force of an organisation would hardly be possible. In the present day world, there is a close relation between efficiency and motivation.
Therefore, the compensation plan or the remuneration plan of the sales force is an important decision to be addressed carefully by the sales manager. The remuneration package of the salesmen has to be carefully planned because it is the most important factor influencing the performance of the sales force and motivates them to put their whole-hearted efforts in expanding the sales of the organisation. Any effort to increase the sales volume through sales force depends to a great extent on a contended, efficient and loyal sales force.
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Contentment, efficiency and loyalty of a sales force are closely related to the methods by which the selling efforts of the sales force are compensated. A good plan of payment helps a company attain its organisational objectives and at the same time keeps the sales force contended and motivated.
The major motivating factor in selling is the compensation plan or the payment scheme provided to the sales force. The amount that the sales force receives on increased volume of sales has got a direct impact on the efficient working of the organisation as well as the sales force.
Higher volume of sales results in higher profits for the organisation and ultimately, higher remuneration to the sales force. This, in turn, results in greater selling efforts and higher profits. Thus, it is a continuous circle, one leading to another.
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A good plan of remuneration is a means of securing better control over the activities of the salesmen, incentives for better sales performance, more loyalty, high morale, job satisfaction, greater enthusiasm and interest for the sales force. It should be planned insuch a manner that the organisation achieves increased sales volume and the sales force receives higher income.
A good scheme of remuneration aims at:
1. Attracting sufficient and desirable sales people,
2. Keeping the sales force contented,
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3. Inculcating loyalty of the sales force,
4. Retaining desirable sales people,
5. Correlating sales costs with sales results,
6. Maintain a sound employer-employee relation, and
7. Controlling selling activities.
Talented, hard working and high calibre sales force is of prime importance for an organisation to be successful in the modern competitive business world. Such efficient sales force can be attracted towards the organisation only when the firm has a sound remuneration plan. There are many instances where many selling houses have lost their talented and efficient salesmen because of poor remuneration plans.
In fact, it is advantageous to pay more and retain an efficient and talented sales force in the organisation. Such a policy pays in terms of improved level of performance of the sales force. Otherwise, the threat of losing the salesmen altogether and subsequently spend heavily on recruiting and an altogether new sales force becomes a heavy burden on the organisation.
An adequate remuneration plan, usually, makes the sales force contended or satisfied. It is but natural that a satisfied sales force is always induced to perform well.
A good plan of remuneration evokes a sense of loyalty in the minds of the salesmen towards the firm. The aim of any sales organisation is not only to build a team of competent sales force but also to win their cooperation and belongingness for the organisation. Loyal employees make the organisation successful in every respect by putting their best efforts and hard work. A loyal team of salesforce also helps the organisation to avoid the problem arising out of frequent recruitment, selection, training and consequent dilemma of labour turnover.
A sound compensation or remuneration system also enables an organisation in retaining desirable people. It also helps in eliminating the men who do not fit well in the organisation structure.
A sound payment plan contributes to the increase in the volume of sales and consequently the profit of an organisation. Therefore, a perfect correlation is established between the sales costs and the sales results.
A fair remuneration plan establishes a sound employer-employee relationship. A sound remuneration policy thus avoids the misunderstanding which normally arises due to financial and non-financial matters. It is only natural that sales forces of one company are inclined to compare the remuneration scheme with those of others in the same line.
Usually salesmen expect remuneration equal to what people get in the same, line of profession and any disparity makes them dissatisfied. Handsomely paid, well treated salesmen have little scope for grudge and grumbling and as such the relations would be sound and harmonious. With a good employer-employee relationship, the morale of the salesmen is heightened to a great extent.
A good remuneration scheme helps the organisation in maintaining a good control over the activities of the salesmen and thereby, ensures control over the sales force. Such a system enables the sales manager to censure a salesman who is wasting away his efforts in unremunerative transactions.
It is a universally acceptable fact that better remuneration always results in better work and higher performance, and the same holds good for the sales force also. If the salesmen are paid well, they work for the betterment of the sales volume and the profit of the company.