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Analyzing Managerial Decisions: Structuring Compensation Plans

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Analyzing Managerial Decisions: Structuring Compensation Plans

by

HCM-540, MBOL5, Health Care Organization
Instructor:
Saint Leo University
Distance Learning

December 8, 2013

Analyzing Managerial Decisions: Structuring Compensation Plans

Ronald J. Sanders

Saint Leo University

MBA540

Analyzing Managerial Decisions: Structuring Compensation Plans

1. Why do you think the compensation plans differ at the two firms? In particular, why do you think Kauffman’s pay commissions to salespeople, while Parkleigh does not? Why does Parkleigh offer employee discounts on purchases, while Kaufmann’s does not?

A number of explanations exist for the difference between compensation plans of the two businesses. First, because Parkleigh’s operation philosophy may be that the sales incentive is the driver of sales rather than the fact that high customer service and friendly staff being the driver of sales, particularly when selling to the high end consumers. They may choose to have the sales staff keep the dressing rooms tidy and the clothes neatly placed. The appearance of displayed items has a favorable impression with patrons of the store which would increase store sales. Parkleigh’s employees may be offered the discount simply because he may think that if employees feel an ownership, the merchandise would be easier to sell to other customers. Because an employee is employed by store does not mean an employee can afford the products. Their products are more upscale and so a discount would make them more affordable. Kaufmann is more of a middle class store, thus more structure would be needed. The employees may be share holders or own the products being sold so a discount is not necessary. Since there are just as many middle income stores available, Kaufman may have created the sales incentive to attempt to push the products and not be as concerned about

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