Factors Influencing Salesmen Remuneration Plan

Factors Influencing Salesmen Remuneration Plan

The remuneration plan or scheme adopted by a concern is influenced by a variety of factors. They are as follows.

1. Financial capacity of the firm

The financial capacity of a firm has a great bearing on the remuneration plan. For instance. the remuneration plan of a concern with high financial resources, usually, contains attractive salary and other incentives. On the other hand, the remuneration scheme of a concern with limited financial resources may not provide for very attractive salary and incentives.

2. Nature of the sales job

The nature of the sales job also influences the remuneration plan. If the job calls for hard work and frequent touring, naturally, the remuneration has to be sufficiently high.

3. Nature of the products handled

The nature of the products handled by the salesmen also has a bearing on the remuneration plan. If the products handled are staple commodities for the sales of which much efforts are not needed, naturally, the remuneration will be relatively less for such staple products. On the other hand, if the products handled are articles of luxury or comfort for the sales of which much efforts are needed, then the remuneration must be attractive.

4. Types (class) of salesmen

The types of salesmen also influence the remuneration scheme. Generally, creative salesmen and traveling salemen are required to work hard, and so, their remuneration has to be quite high. On the other hand, dealer-servicing salesmen’s task is easier or of routine type and so, their remuneration is relatively less. This is more so in the case of counter salesman.

5. Conditions prevailing in the market

The conditions prevailing in the market (i.e., the nature and the extent of demand, the degree of competition, etc.) also influence the remuneration plan. If there is wide and regular demand and the competition prevailing in the market is not severe, the salesmen’s task is relatively easy. So, their remuneration also may be relatively less. On the other hand, if the demand for the product is not wide and regular and there is keen competition, naturally, the salesmen are required to put in hard work. So, their remuneration has to be fixed high.

6. Economic conditions

The economic conditions also influence the remuneration of salesmen. For instance, in a period of rising prices, the salesmen must be paid higher remuneration so as to enable them to meet the rising cost of living.

7. Methods and policy of distribution

The method of distribution adopted by a concern also influences the remuneration of salesmen. For instance, if a concern’s distribution policy consists of selling goods to a few large wholesalers, the salesmen will be able to earn more remuneration because of the commission on bulk orders from the few wholesalers. On the other hand, if the distribution policy of concern consisting of selling goods to a large number of retailers or consumers, then, the salesmen of the concern may not be able to earn much because of the relatively small orders.

8. Advertising activities of the firm

The nature and extent of advertising activities carried on by a firm also influence the remuneration of the salesmen. If a firm has extensive and effective advertising campaign, the work of the salesmen will be simplified. So, in such a case, the salesmen’s remuneration need not be very high. On the other hand, if a firm does not undertake an extensive advertising campaign, the salesmen are required to do much work, then they must be sufficiently rewarded.