hLLp//payrollnaukrlhubcom/compensaLlon/

hLLp//dallyblogmacom/markeLlng/salesforcedynamlcslnsLlLuLlngldealcompensaLlonplan/
Direct compensation refers to monetary benefits offered and provided to employees in return of the
services they provide to the organization. The monetary benefits include basic salary, house rent
allowance, conveyance, leave travel allowance, medical reimbursements, special allowances, bonus,
Pf/Gratuity, etc. They are given at a regular interval at a definite time.

Basic Salary

Salary is the amount received by the employee in lieu of the work done by him/her for a certain period
say a day, a week, a month, etc. It is the money an employee receives from his/her employer by
rendering his/her services.
nouse kent a||owance
rganizations either provide accommodations to its employees who are from different state or country
or they provide house rent allowances to its employees. This is done to provide them social security and
motivate them to work.

Conveyance

rganizations provide for cab facilities to their employees. Few organizations also provide vehicles and
petrol allowances to their employees to motivate them
Leave Travel Allowance
These allowances are provided to retain the best talent in the organization. The employees are given
allowances to visit any place they wish with their families. The allowances are scaled as per the position
of employee in the organization.
Medical Reimbursement
rganizations also look after the health conditions of their employees. The employees are provided with
medi-claims for them and their family members. These medi-claims include health-insurances and
treatment bills reimbursements.
Bonus
Bonus is paid to the employees during festive seasons to motivate them and provide them the social
security. The bonus amount usually amounts to one months salary of the employee.
Special Allowance
Special allowance such as overtime, mobile allowances, meals, commissions, travel expenses, reduced
interest loans; insurance, club memberships, etc are provided to employees to provide them social
security and motivate them which improve the organizational productivity.

Indirect compensation refers to non-monetary benefits offered and provided to employees in lieu of
the services provided by them to the organization. They include Leave Policy, vertime Policy, Car
policy, Hospitalization, Insurance, Leave travel Assistance Limits, Retirement Benefits, Holiday Homes.

Leave Policy

It is the right of employee to get adequate number of leave while working with the organization. The
organizations provide for paid leaves such as, casual leaves, medical leaves (sick leave), and maternity
leaves, statutory pay, etc.


ert|me po||cy
Employees should be provided with the adequate allowances and facilities during their overtime, if they
happened to do so, such as transport facilities, overtime pay, etc.

ospitalization

The employees should be provided allowances to get their regular check-ups, say at an interval of one
year. Even their dependents should be eligible for the medi-claims that provide them emotional and
social security.
Insurance
rganizations also provide for accidental insurance and life insurance for employees. This gives them the
emotional security and they feel themselves valued in the organization.
Leave Travel
The employees are provided with leaves and travel allowances to go for holiday with their families. Some
organizations arrange for a tour for the employees of the organization. This is usually done to make the
employees stress free.
Retirement Benefits
rganizations provide for pension plans and other benefits for their employees which benefits them after
they retire from the organization at the prescribed age.
oliday omes
rganizations provide for holiday homes and guest house for their employees at different locations.
These holiday homes are usually located in hill station and other most wanted holiday spots. The
organizations make sure that the employees do not face any kind of difficulties during their stay in the
guest house.
Flexible Timings
rganizations provide for flexible timings to the employees who cannot come to work during normal
shifts due to their personal problems and valid reasons.

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Base saIary, commissions, and saIes prizes make up the buIk of a typicaI saIesperson's compensation package, but the
specifics vary by industry. Stock options grants to saIespeopIe are becoming more widespread too.
n a snapshot Sales compensatIon packages typIcally comprIse one or more of the followIng components:
O ase Salary
O !erIodIc IncentIves tIed to shortterm goals
O nnual ncentIves tIed to longerterm sales actIvItIes
O ommIssIonbased IncentIves
O !erquIsItes to facIlItate sales efforts
O Stock optIons
Base SaIaries
Paying a base salary that assures salespeople a steady income is a good idea. A guaranteed salary provides salespeople the comfort
of knowing that despite good and bad economies, streaks and slumps, they can maintain their current lifestyle.
A salesperson's commission is typically based on either a percentage of sold revenues or profit margins.
Commissions usually account for 30 to 50 percent of a salesperson's cash compensation package, which means that
commissions routinely run between 43 and 100 percent of base pay. The percentage that commissions contribute to a
salesperson's compensation depends on factors such as required technical knowledge, sales cycle time, product
profitability, and whether the sale is dependent on the skill of the salesperson.
Commissions will account for a larger portion of pay when the sales cycle is short, the sales highly profitable, and
sales dependent on the skills of the sales person. Commissions play a smaller role when the sale requires greater
technical knowledge and when the sales cycle is long.
This is not to say that total compensation is necessarily lower for salespeople with greater technical knowledge or
those selling products with slower sales cycles, rather, the mix of pay is weighted more toward base pay and less
toward commissions so that the total cash pay earned is reasonable. Companies don't want to penalize salespeople for
selling products with less commission potential if those products are an important part of the corporate strategy.
Similarly, if a salesperson is responsible for a product that's an easy sell, the company wants to make sure there is the
maximum incentive to sell as much as possible - therefore, less emphasis on base pay and more emphasis on
commissions.
Commissions can vary within a commission plan, reflecting the priorities of the company. If the company wants to
build market share, it may pay larger commissions for selling products to new clients. Commissions are also higher
when new products are introduced., especially if they are more profitable. Clearly, commission plans are constructed
with great care. A poorly designed plan can have unintended results such as rewarding employees for the sale of new
products that cannibalize more profitable ones.
Most commission plans place no limits on what a salesperson can earn. In some instances, if a certain sales threshold
has been met, the commission percentage can increase. Regardless, commissions are one of the simplest and most
direct forms of pay-for-performance. Underlying the commission plan is one of the appeals of a sales position:
unlimited income potential.
The key part is designing this compensation Plan . how does one go about it??