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Structuring Compensation Plans

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Running head: STRUCTURING COMPENSATION PLANS 1
Structuring Compensation Plans
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STRUCTURING COMPENSATION PLANS 2
Structuring Compensation Plans
Compensation plans are an important component of a business as they can potentially
spell its success or failure. Importantly, compensation plans in terms of wages, salaries,
commissions, bonuses, and discounts play a part in the role of facilitating the workforce morale
is energized. To a large extent, productivity in the workplace increase with the increase in the
level of employee morale (Brickley, Smith, & Zimmerman, 2016).
Discussion
Ideally, there are many factors which may result in firms structuring their compensation
plans differently. Specifically, the scenario under study in this paper may be attributed to the
different customer market which the businesses target. For example, Parkleigh Pharmacy eyes
the high-end and upscale customer base while Kaufmann has its target on the middle-income
consumers. Therefore, this is a situation where one sells limited and highly priced commodities
while the other deals in averagely priced goods with a wide selection of them.
Since the products from Kaufmann are of average affordability, they require human
personalized effort to sell them. On the other hand, Parkleigh products are high-end and that in
itself makes them stand out. As a result, there is no need for sales representatives in this business.
Additionally, it is prudent to offer commissions to Kaufmann’s staff due to their lower hourly
wage when compared to those in Parkleigh’s. Further, these two businesses may have two
differing ideologies on what leads to increased sales for the business. Kaufmann’s compensation
team may be the philosophy that offering incentives to the sales persons drives up sales. In
retrospect, Parkleigh may hold onto the thought that improved customer service is what leads to
more sales especially when dealing with the high-end clients.

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Running head: STRUCTURING COMPENSATION PLANS Structuring Compensation Plans Student’s Name Institution Affiliation 1 STRUCTURING COMPENSATION PLANS 2 Structuring Compensation Plans Compensation plans are an important component of a business as they can potentially spell its success or failure. Importantly, compensation plans in terms of wages, salaries, commissions, bonuses, and discounts play a part in the role of facilitating the workforce morale is energized. To a large extent, productivity in the workplace increase with the increase in the level of employee morale (Brickley, Smith, & Zimmerman, 2016). Discussion Ideally, there are many factors which may result in firms structuring their compensation plans differently. Specifically, the scenario under study in this paper may be attributed to the different customer market which the businesses target. For example, Parkleigh Pharmacy eyes the high-end and upscale customer base while Kaufmann has its target on the middle-income consumers. Therefore, this is a situation where one sells limited and highly priced commodities while the other deals in averagely priced goods with a wide selection of them. Since the products from K ...
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