Baxter Surgical Services Incorporation



Baxter Surgical Services Incorporation

Question.1

Advanatges and disadvantages of Straight Salary

Facing numerous challenges such as the constantly changing business environment, swift entrance of competitors, rapid advancement of technology and the ever changing mindset of trends, fragmentation of traditional customer bases; organizations today need to realize the crucial need to develop proper sales management techniques in order to remain profitable and sustainable. Sales management techniques do not plainly include selling products to customers but also consist of adequate leadership and supervision, well-organized recruitment and selection practices, superior sales training programs for employees, motivation for the sales force as well as evaluating their effectiveness. These techniques are interlinked and would affect the effectiveness of the entire organization's sales processes.

Financial compensation

Financial incentives and rewards can motivate because a large portion of the sales force would need the money and therefore want the money as the basic need for survival and security, as well as satisfying self esteem needs and status. According to Boberg (2010), salary or pay is usually the dominating factor in the choice of employer and important consideration when sales people are deciding whether or not to stay with the organisation. However, it may not be the only motivator.

On the other hand, in the case study of Baxter it was doubtful on the effectiveness of money as a motivator because it does not result in lasting satisfaction. A sales person may feel good when they get an increase which is an effective way to make people feel valued but eventually the feeling of euphoria may die away. In addition, different individuals have diverse needs and some will be more motivated than the others; hence it is important that managers cannot assume that money motivates everyone in the same way and to the same extent.

Types of financial compensation; their advantages and disadvantages

Straight Salary

The advantages and disadvantages in the Baxter Surgical Services company of the straight salary as identified in the case are:

Advantages

1. Easy plan with annual adjustments

2.Efficient budgeting and recruitment process of sales force

3.Allow control over non-selling activities

4.Assurance on income stability (salary)

Disadvantages:

1.Reduced pressure on competitive workplace

2.Reduced performance due to minimal financial incentives

3.Inequity perception because of different salary level among qualified sales force

4.Organization has to pay fixed salary even during declining sales

Straight Commission

1.Strong financial incentive provides improved sales performance

2.Reduces organization's expenditure during sluggish periods

3.Requires not as much capital investment

Disadvantages

1. Little or no company loyalty which leads to low commitment of sales force

2.Salespeople may earn more than their sales managers if there is no earnings cap

3.Causing unhappiness and resentment

Question.2

Compensation problems

Selling is one of the most vital aspects in the organization because it generates revenue and profits which in turn enable it to remain competitive in the market and encourages growth. Therefore, the selling team of the organization must be placed in high importance and be constantly motivated in order to drive their efficiency and effectiveness. A successful organization must also realize the significance of goal setting in terms of long and short term sales objectives which must align with their ...