Fair vs Optimal Salesmen's Compensation Plans |
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Authors: | René Y Darmon |
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Institution: | 1.Faculty of Management, McGill University,Montreal,Canada |
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Abstract: | This paper suggests that a "fair" compensation plan (i.e. a compensation plan which remunerates salesmen proportionally to their efforts and competence) should include commissions on sales and bonuses pending on sales increases over a reference period. It also shows that under general conditions, a straight commission plan is not a fair compensation structure to the salesmen. Finally, it discusses the conditions under which the proposed fair compensation structure can lead to a jointly optimal allocation of a salesman's time among selling activities. |
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