Question

You are the human resources manager for a famous retailer, and you are trying to convince the president of the company to change the structure of employee compensations. Currently, the company’s retail sales staff is paid a flat hourly wages of \(20 per hour for each eight-hour shift worked. You propose a new pay structure whereby each salesperson in a store would be compensated \)10 per hour, plus 1 percent of that store’s daily profits. Assume that, when run efficiently, each store’s maximum daily profits are $25,000. Outline the arguments that support your proposed plan.

Short answer

The most important argument for changing pay structure by introducing new pay structure which depends on store profit is that salespersons will give their best to sale products because their wage depends on their success.

Step-by-step solution

Introduction

A human resources manager is a person responsible for managing the employee life cycle and administering employee benefits if there is a better way for wage compensation, a human resources manager should identify it.

After identifying the benefits of introducing a new way of employee compensation, a human resources manager must convince the president of the company to change rules concerning employee compensation.

Outlining the arguments

In this case, the sale staff is currently paid hourly, and its wage is $20. On the other hand each store’s maximum daily profits are $25,000.

A human resource manager proposes a new pay structure under the following condition:

(a) Each salesperson in a store would be compensated $10 per hour.

(b) Each salesperson gets 1 percent of that store’s daily profits.

If a company director wants to increase profits and motivate workers to do their best, the best way is by using their salary. A worker’s salary is one of the most important things at work, and reducing or increasing a salary is one of the best ways to motivate a worker.

However, in sales, it is very important to have motivated workers and workers who are ready at any time to offer customers products, all to benefit the company where they work. If workers are paid hourly without any goals, there is a risk that, after some time, they will not be motivated anymore.

The most important argument for changing the pay structure by introducing a new pay structure that depends on store benefits is that salespersons will give their best to sell products because their wage depends on their success.