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Evaluate whether or not the compensation system at Collegiate Promotions is effective. I think that the compensation system at Collegiate Promotions is not effective. The system that they currently have at hand only rewards the employee if he/she sells an item. It’s stated that the individual can raise the price of the wholesale product to 30-50% above wholesale price. The compensation package that Collegiate Promotions have could be seen as being an at-risk program. This type of reward system fluctuates, and can even result in an employee not receiving any compensation if he/she does not sell any products for the week. If the employee becomes sick, the company doesn’t have any programs that will pay the employee for their sick time. The company doesn’t also have any type of paid vacation. A company that offer incentives based only on sales, gives their employees nothing to look for in the long run. “Compensation practices are strategic when they encourage employees to put forth their best effort and perform in ways that help the company produce its particular goods and services”. The company should introduce a system that have a short and long term incentive for an employees’ performance. This will ensure that the customer stay motivated to continue sealing sales. An incentive that gives the employee an extra $500 with the highest sales would push the agents beyond their comfort selling zone. I also think that Collegiate Promotions should try to implement a 70/30 plan, which gives their employees a base rate of 70% and the next 30% from sales. This will ensure that the employee gets a check even if they don’t sell anything, but also keeps them motivated wanting to meet the target in order to get the additional 30%. This type of system doesn’t punish the employee when they don’t sell items, but motivate

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