SMO416 Chapter Notes - Chapter 5: Job Performance, Performance Appraisal, Peter Principle

• School: University of Alberta
• Department: Strategic Management and Organization
• Course: SMO416
• Professor: Rick Brick

Document Summary

Straight piece rate: the same specified sum of money is paid for each piece produced or processed, regardless of how many. Differential piece rate: a lower sum of money per piece is paid if employee production does not meet the production standard, and then a higher sum per piece is paid once the production standard is met. Less interdependence among sales employees than production, work output is more distinct. Reduces the need for other types of control mechanisms. Can serve as a source of feedback and as a self-correcting mechanism. Commissions may drop in poor economic conditions. Receive little income as they develop contacts. Salespeople may resist doing work that does not directly contribute to new sales. May encourage overly aggressive sales behaviour; often produces intense competition and lack of cooperation. Apportioning responsibility for making sales can be a major problem. Applicability of sales commissions: degree of independence, degree of persuasive skills required, length of sales cycle.