Term
| What is the nature of compensation? |
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Definition
| Compensation is the payment given to employees for the work they provide an employer. |
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Term
| What is the purpose of compensation? |
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Definition
| Effective compensation policies and practices enable an organization to utilize it's human resourses more productivly in 3 major ways...! to attract qualified applicants...2 Retain good employees and 3... To motivate employees. |
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Term
| What are external factors influencing compensation? |
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Definition
| Government legislation..ie Human rights act , Employment standards act and the Income Tax Act..the Labour market and labour unions are factors that influence compensation. |
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Term
| Discuss the various performance based pay plans. |
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Definition
In many organizations, employees are simply paid on the basis of the number of hours they work. In such a situation, pay is not dependent on employee performance. To motivate their performance, organiztions need to rely upon the recruitment and selection of internally driven individuals and the use of a variety of motivational techniques to stimulate effort.
A highly effective alternative is to have the pay system on employee performance. There are two major types of performance based pay systems or plans: merit pay plans and incentive pay plans.
Merit Pay Plans:
The most common method of linking pay and performance is through a merit pay plan. Indeed a survey of major companies revealed that 87% use some form of merit plan for their salaried employees. Under such plans, employers make appraisals of their employees' performance and these subjective appraisals are used to determine the size of employee pay increases.
Incentive Pay Plans:
All incentive plans link pay to objective measures of job performance such as number of sales or the sales volume. Incentive plans can be categorized according to the level at which performance is measured. These include individual level, group level, and organization level pay plans. |
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Term
| What is the job evaluation process? |
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Definition
| The purpose of a job evaluation is to determine the relative contribution each job makes to the success of an organization and to compensate each accordingly. This helps to create equity or fairness in the compenstion system. Perceived equity determines satisfaction with pay, and such satisfaction has a major impact on your ability to retain and motivate employees. |
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Term
| Discuss the use of commission compensation systems in the real estate industry. |
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Definition
Straight Salary:
With this plan, the sales staff receive a fixed sum at regular intervals, in payment for services. They may also be reimbursed for part or all of the expenses incurred in performing their duties.
Straight Commission:
The vast majority of real estate offices use some form of the straight commission structure. The straight commission plan offers a number of advantages. The most obvious advantage is that it provides the maximum financial incentive for the representative to work to capacity.
The Split Office:
Traditionally the standard office stucture was to arrange a straight split that was meant to reflect the cost of training and supporting a representative. The company had the responsibility of fronting the initial cost of taking on a new representative whih would have included the costs of licensing, training, providing desk space, telephone service, signs, secretarial support and all the other costs associated with a real estate representative. The representative only contributed a share of the expenses when he or she atually mnade a sale and of course only when the sale resulted in the actual transfer of title. In this type of structure the manager had a direct interest in the success of the representative and in the beginning it was unlikely that the representative contributed more than the company earned on their sales (it usually takes months, if not years, for a representative to master the skills necessary to earn a steady income). In this structure it was important for the manager to screen applicants carefully and at the same time it was necessary to periodically cull those individuals who were not producing a reasonable level of sales. |
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Term
| Discuss the use of quotas in motivating sales performance. |
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Definition
Purpose and Importance of Sales Quotas:
Sales quotas help coordinate the selling effort with marketing and corporate strategies in a number of ways, as follows:
Guidance and direction:
Sales quotas provide clear performance targets and direction as to what level of sales performance mnanagement expects, help guide the representative's efforts, and communicate to the representative what management considers to be important.
Motivation:
Salespeople tend to perform better when their activities are guided by standards and goals. Challenge is created by quotas as targets to be reached.
Planning:
The development of company, branch, and individual sales objectives and quotas requires an in-depth analysis of market conditions, identification of the firm's and salesforce's strengths and weaknesses, and the development of a sales forecast.
Evaluation:
Quotas provide a standard against which sales staff performance can be evaluated, and enable management and the representative to pinpoint areas requiring attention.
Control:
Sales quotas help management obtain feedback and control, and direct the selling effort more effectively. Sales quotas also clearly indicate what mnanagement considers important.
Improving the effectiveness of compensation plans:
Developing a Sales Quota System:
The ingredients for an effective sales quota program include the following:
Clear purpose:
Since a wide variety of sales quotas can be used, the quotas selected must be chosen with a clear purpose in mind. Sales quotas can be broken down into two major categories: sales volume quotas and sales activity quotas. Sales volume quotas refer to monthly and yearly sales volumes expressed in dollar terms, or the number of listings sold. Sales activity quotas refer to specific activities which are considered important in selling, and aim at encouraging the representative to aggressively carry out these activities.
Individually developed:
Accurate:
Realistic, attainable, and challenging sales quotas:
Acceptance by the sales force:
Integrated with the reward compensation system:
Assist the sales force: |
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Term
| Explain the use of sales contests in motivating sales contests. |
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Definition
| Sales contest can be used as a team contest or individual contest. Teams help to bring team spirit while encouraging one another also providing an atmosphere for experienced persons to assist junior sales people.The team concept assumes that all members will be willing to help out however some busy realtors may be spending too much time engaged in contests and not focasing on selling which may not be to their advantage. |
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Term
| What are some rewards that can be used in contests? |
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Definition
Typical contest rewards are cash, merchandise, travel and recognition.
Prizes work best for most salespeople as the prize remains long after the contest compared to cash that can be spent and forgotton quicker... trophies, plaques or memberships in million dollar clubs . Most people will do more for recognitrion than just about anything else. Headlines in newspapers are also a great reward. |
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Term
| What are some criticisms of sales contests? |
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Definition
| A major criticism of sales contests are that it emphasizes short term results rather than long term. Representatives may resort to highly persuasive and manipualtive sales tactics. The contest may generate internal conflicts between representitives as they battle against each other to win. This will reflect negatively on the firm. Secondly the contests may be expensive and if it does not produce more listings and sales in a short time the the exersise may not be deemed to be a success. Also there may be a sales slump after the contest is over. |
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Term
| Financial rewards are only a part of the the rewards that should be available in an organizations. What are some other types of rewards? |
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Definition
| Praise, public recognition, involvement in decision making, and job autonomy. |
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Term
| In order to align its compensation structure with external conditions in the labour market, an organization must have accurate information about salary and wage rates for relevant jobs in other organizations. How would you find this information? |
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Definition
| Information about the 'going rate' for various jobs may be obtained through a wage survey. Both the federal and provincial government publish comprehensive surveys of wage and salaries in the private sector. |
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Term
| What is the purpose of a job evaluation? |
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Definition
| A job evaluation is to determine the relative contribution each job makes to the success of an organization and to compensate each accordingly. This helps to create equity or fairness in the compensation system. Perceived equity determines satisfaction with pay, and such satisfaction has a major impact on your ability to retain and motivate employees. |
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Term
| What is the 'Equity Theory'? |
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Definition
| Equity Theory is concerned with an individual's beliefs of how fairly he or she has been treated in comparison with other people. It also proposes that individuals compare their own situation to that of others to determine the equity or fairness of their situation. |
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Term
| What is more effective in motivating employees than just a good compensation system in the work place? |
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Definition
| Effective communication and leadership in the relationship between managers and subordinates. |
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Term
| The establishment of a particular level of pay for an employee is a function of what two factors? |
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Definition
| The value of the job to the organization and the performace of the employee holding the job. |
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Term
| The process of developing a compensation structure follows 4 general steps. What are they? |
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Definition
| * conduct a job analysis, *determine what a job involves (job description) * determine what qualifications are necessary to perform the job (job specifications) * undertake job evaluation. |
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Term
| Major laws affecting compensation are from two acts. What are they? |
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Definition
| The Human Rights Act and The Employment Standards Act. |
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Term
| How is compensation determined in an unionized environment? |
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Definition
| Through direct bargaining between the union and the management of an organization. |
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Term
| Briefly describe Equity Theory? |
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Definition
| Equity theory is concerned with an indivudual's beliefs of how fairly they are been treated in comparison with other people. |
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Term
| One of the 6 possible behaviors an employee can engage in to reduce perceived inequity and the tension that accompanies it is to 'Change Inputs'. Briefly describe. |
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Definition
| An employee can alter their inputs upwards or downwards as a means of reducing inequity. For example, when workers are underpaid on an hourly basis, they restore equity by producing less. This brings their inputs inline with their low outcomes. |
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Term
| One of the 6 possible behaviors an employee can engage in to reduce perceived inequity and the tension that accompanies it is to 'Change Outcomes' Briefly describe. |
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Definition
| Empoyees can change their outcomes as a means of restoring equity. A common response to underpayment is for the employees to join together and take collective action to raise wages. eg form a union or go on stike. |
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Term
| One of the 6 possible behaviors an employee can engage in to reduce perceived inequity and the tension that accompanies it is to 'Distort one's own inputs and outcomes. Breifly describe. |
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Definition
| Instead of actually altering inputs or outcomes, individuals change their perceptions to reach the same end. eg. if an individual is underpaid, he could mentally lower his inputs such as " I really don't work as hard as most people think I do??" or raise outcomes such as "eg I work with a great bunch of people. |
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Term
| What are the 5 basic methods of Job evaluation ? |
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Definition
| The first is Simple ranking involving ordering jobs in an organization from least vallued to most valued . A group of managers study job descriptions [ if they are availabe] and rank jobs according to their overall value to the organization. This criteria to be used in assessing value is left up to each manager. The weakness is that the ratings of job values can be very subjective. As a result the , employees may percieve the results as inequitable. |
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Term
| Classification in job evaluation entails: |
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Definition
| Classification establishes classes of jobs, such as managerial, professional, techinal, or clerical and then creats a series of job grades within each of these classes Job grades are general descriptions of job types. |
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Term
| Weakness of Classification.. |
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Definition
| The grade description must be very general since they encompass different types of jobs, often leading to disagreement as to where a job should be placed. In addition, since this method considers the job as a whole, no weighing can be applied to various compensable factors. |
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Term
| Factor camparison job evaluation method involves... |
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Definition
| Factor comparison involves a series of steps and is primarily used for evaluating blue collar jobs in industry. Its strengyh is that it is easy to use sinse evaluators rate jobs in terms of well known key jobs in an organization. |
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Term
| Weaknesses for factor comparison evaluation method... |
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Definition
| It assumes that key jobs are being properly compensated at the given time. Also it is a complex method compared to others and and may be difficult for to understand the process. |
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Term
| The sales quota feedback system has several components. What are they? |
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Definition
| 1) Regular reports and graphs which compare the current period's results with the quota, as well as cumulative year to date results and comparisons. 2)Regular, timely meetings with each memeber of the sales force to discuss the results, indentify areas requiring attention, and develop plans of actions. 3) A system for promptly recognizing and rewarding progress.. This could inlcude reporting the results at weekly sales meetings, posting them on display boards, giving out rewards such as certificates... |
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Term
| What is the best way to measure the effectiveness of sales activity quotas? |
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Definition
| To develop activity conversion ratios. |
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Term
| What does sales activity conversion measures focus on? |
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Definition
| The desired results, rather than on the activity. The activities lead to results, but it is the results that count, not the magnitude of the activities. |
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Term
| What are the 5 steps in developoing a successful sales contest? |
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Definition
| 1) Develop clearly defined, specifici objectives for the sales contest. 2)Select an existig, highly promotable theme. 3)Construct a reward system which is challenging but provides a reasonable opportunity for everyone to win. 4)Provide attractive rewards. 5)Effectively promote the contest so as to generate interest and enthusiasm. |
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Term
| What type of non-financial rewards do sales contests offer representatives? |
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Definition
| Rewards in the form of recognition and a sense of achievement. |
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Term
| Successful sales contests provide a reasonable opportunity for each particiapt to win. What are the three popular formats? |
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Definition
| 1) Only 1 or 2 prizes and representatives complete against each other to win the prize, 1 or 2 representatives win and the rest lose. 2)Winning is based on the individual's performance in attaining some acceptable level of improvement in a specific area. 3) The sales force is organized into teams, which compete against each other for prizes. |
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Term
| What percentage of the sales force should be enabled to win to be considered satisfactory? |
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Definition
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Term
| What are 2 advantages of teams competing against each other in a sales contest? |
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Definition
| 1) It helps build team spirit, whereby members of the same team hopefully encourage each other to increase the chance of winning. 2)It provides an opportunity for the experienced representatives to assist and motivate new or less successful representativs. This works best if the teams are selected so that they are roughly of equal strength. |
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Term
| What are 4 disadvantages to team competition, particularly in a real estate sals office? |
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Definition
| 1) The team concept assumes that most of the team members are wililng to help and support each other. But representatives tend to be individualy motivated, entrepreneurial, and independent. Thus they may not be willing to expend effort which benefits others. 2) A highly motivated representative may see no benefit in helping a rookie. 3) And experienced representative my spend to much time helping others while his or hers sales performace may drop off and the company will be worse off in its overall sales. 4) Some representatives may respond positively to a team contest while others may not. |
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Term
| What is simple ranking in job evaluation? Strengths and weaknesses |
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Definition
| Simple ranking involves ordering jobs in an organizationfrom least valued to most valued. Its strength is that it can be done quickly and inexpensively. The major weakness is that rating of jobs values are quite subjective. As a consequence , the employees may percieve the results as inequitable. |
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Term
| Classifacation in job evaluation means...Strenghts and weaknesses... |
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Definition
| Classification means establishing classes of jobs, such as managerial, professional, technical or clerical and then creates a series of grade jobs within each of these classesJob grades are general descriptions of types of jobs... Its strenghts are that this method is straightforward, inexpensive, and flexable to cover a large number of jobs. Weaknesses are...The grade description must be very general since they encompas different types of jobs, often leading to disagreement as to where a job should be placed and since this method considers this job as a whole , no weighting can be applied to various compensable factors. |
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Term
| Describe The point method of job evaluation. |
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Definition
| The point method is the most wildly used method of job evaluation., Quite similar to the factor comparison method in that it uses seperate scales for evaluating jobs on each of the compensable factors.The primrary diffefence between the two methods is that the factor comparison method is based on the key jobs in an organization whereas the point method is independent of the particular jobs in the organization. |
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Term
| What are the strengths of the point method of job evaluation. |
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Definition
| Strengths are that it is relatively easy to understand and as a consequence , employee asseptance tends to be high. Its other strength is that its accuracy and precison rate is high in evaluating jobs.. This results from careful specification of the compensable factors and the various grades or levels of each factor. |
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Term
| Define market pricing in job evaluation. |
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Definition
| Market pricing is quite different than other methods of job evaluation. It relies completly on the labour market to determine compensation.. It determines pay by referring to the going rate for various jobs in the labour market. |
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Term
| What are the strenghts and weaknesses of market pricing. |
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Definition
The strength of market pricing is that it is very easy to find out what other employers are paying their employees.
The weaknesses are.. labour market prices fluctuate for jobs and this makes for an unstable compensation structure if the market pricing method is the sole basis for determining compensation. Secondly, this method may create feelings of inequity for people holding jobs that are poorly compensated in relationship to others, because of weak market conditions. |
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Term
| What are the 2 performance based pay systems? |
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Definition
| Merit pay plans and Incentive pay plans. |
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Term
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Definition
| Merit pay plans is the most common pay plan linking pay and performance . 87% of of companies surveyed used some form of merit plan for salaried employees. Under such plans, employers make apprasials of their employees performance and these subjective appraisals are used to determine the size of employee pay increases. |
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Term
| What is incentive pay plans. |
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Definition
| Incentive pay plans link pay to objective measures of job performance such as number of sales or sales volume. |
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Term
| What are some types of incetive sales plans. |
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Definition
| Incentive pay plans include individule level, group level and organizational level pay plans. page 9.9 |
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Term
| How do sales quotas help coordinate the selling effort with marketing and corporate strategies. |
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Definition
1..Gives guidence and direction providing clear performance targets.
2..Motivation..Quotas motivate salespersons by having targets to be reached.
3...Planning..Sales quotas help in the implemenataion of corporate plans and provide standards for monitoring , evaluating and controlling the selling effort.
4...Evaluation..Quotas provide a standard against which sales staff performance can be evaluatedand enable management and representative to pinpoint areas requiring attention.
5 Control...Sales quotas help management obtain feedback and controll, and direct the selling effort more effectively .
6... Improving effectiveness of compensation plans... Page 9.17 |
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Term
| What are the 7 ingrdients for effective sales program? |
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Definition
The ingredience for an effective sales quota program include...1.. Clear purpose.
2 .. Individually developed
3...Accurate
4...Realistic, attainableand challenging sales quotas.
5...Acceptance by sales force.
6...Integrated buy the reward compensation system.
7...Assist the sales force. |
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Term
| The sales quota feedback system has several components...some of them are... |
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Definition
| Regular repoirts and graphs comparing current results with the quota.....Regular timely meetings....A system for promply recognizing and rewarding progress...Page 9.`19 |
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