Analyzing Managerial Decisions:
Structuring Compensation pg 446
By: Tia Woods
1.) There are numerous ways that explains the difference between two firms dealing with compensation plans. One of the reasons why is how Parkleigh’s may believe the main reason of sales leads to sales incentives, and how having great customer service with nice, outgoing staff helps build a sale, and reflects on the high completion to customers. That’s like making the staff work harder to have a better visualization of the firm, from cleaning the dressing rooms, to making sure all the displays are showed to be impressed by customers so they can buy an item or two. All of these aspects would help raise store sales. Parkleigh’s employees are offered discounts under certain circumstances, meaning in his mind his employees might try to sell the discount products to the customers. Although just because employees are employed within a store, doesn’t necessarily mean each employee have enough money to buy the products within the store. So in the case the store prices maybe a on the pricey side a little higher than normal, which means using a discount would make the items more reasonable. Kaufmann is considered a middle class store, where structuring would need to have more attention. I believe that within this store the employees hold down their own perhaps owning the products that are being sold whereas no discount is needed whatsoever. With multiple middle class stores accessible, its more than only right for Kauffman to generate sale incentives to push sales and not be based on customer service.
2.) In my opinion, Kauffman’s hourly compensation rate can be lower. Mainly because of the larger inventory which can be selected to a lower cost. Kauffman targeting the middle class would lead to more customers meaning more profit. While at Parkleigh’s the employees discount is included within the compensation package. By this employees must still make sales appropriately...