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RMG 200 (57)
Brent Barr (19)


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Ryerson University
Retail Management
RMG 200
Brent Barr

COMPENSATING AND MOTIVATING RETAIL EMPLOYEES Two types of rewards from their work: Extrinsic rewards Intrinsic rewards  Money  Nonmonetary, nontangible  Promotion  Sales people finding job challenging and fun  Recognition Retailers generally use three methods to motivate their employee’s activities Policies and  Most fundamental method of coordination is to: supervision o Prepare written policies that indicate what tasks employees are responsible for o Have supervisors/managers enforce these policies  Strict reliance on written policies can reduce employee motivation Incentives  Some of the criteria that managers and employees could be measured on include: o Customer satisfaction o Average order dollar amount o Market share o Sales growth o Top-of-mind awareness in a market o Promotion from within o Employee development o Ideas and suggestions from staff that are implemented o Revenue per square metre Types of incentive compensation o Commission: compensation based on fixed formula, such as percentage of sales o Bonus: additional compensation awarded periodically, based on a subjective evaluation of employee’s performance o Profit sharing arrangements offered as cash bonus or as grant of stock options o Stock incentives o Incentive compensations plans: a compensations plan that rewards employees on the basis of their productivity o Straight commission: a form of sales person’s compensation in which the amount paid is based on a percentage of sales made minus merchandise returned o Drawing account: a method of sales compensation in which salespeople receive a weekly cheque based on their estimated annual income o Quotas: target level used to motivate and evaluate performance o Quota-bonus plan: compensation plan that has a performance goal or objective established to evaluate employee performance, such as sales per hour for salespeople and maintained margin and turnover for buyers  Disadvantages of incentive compensation plans o Hard to get salespeople who are compensated totally by commission to perform nonselling activities o Discourage people from providing services to customers o Salespeople compensated primarily by incentives don’t develop loyalty to their employer Group Incentives  Encourages people to work together Setting the Commission Percentage  Commission $=Net sales x Commission % Organizational  Organizational culture: a firm’s set of values, traditions, and customs that guide employee culture behaviour  Not written in policies, actually passed down by employees Developing and Maintaining a Culture  Through stories and symbols  Eg. Employees at Disney try out for role rather than apply for job Job Analysis  Job analysis: identifying essential activities and determining qualifications employees need to perform them effectively  Managers obtain information need for job analysis by observing employees presently Job Description  Job description: includes activities the employee needs to perform and the firm’s performance expectations  Guideline for recruiting, selecting,
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