According to Dale Yoder, incentive wages relate earnings to productivity and may use premiums, bonuses or a variety of rates to reward for superior performance. The incentive programs involve an attraction of extra payment for efficiency. An efficient program must provide for minimum guaranteed wage based on hourly rate and extra remuneration for increased output. In other words, an incentive program contains the characteristics of time based and output based systems of wage payment.

Sound incentive program must be easily understood. It should be acceptable to the employees. It must benefit employees as well as employer. It should not be costly to operate. It should stimulate the interest among the workers. It should assist in supervision.

There are two types of incentive programs: Halsey premium bonus plan and Bedeaux point premium plan. In Halsey premium bonus plan, a minimum time wage is guaranteed. The time allowed for completing the job is set from the records of previous performance rather than by time and motion studies. The amount of time saved multiplied by the hourly rate forms the sum that is shared between the worker and the owners according to the ratio agreed upon equally. Because of this fixed proportion of sharing bonus, Hasley’s plan can be called a constant bonus-sharing plan. The standard length of time for doing a job, not being derived through the use of time and motion study is usually greater than would be the case under more scientifically measured procedure.

Under Bedeaux’s point premium plan, the standard time for each job is fixed after undertaking time and motion study. The workers who are not able to or just able to complete the program within standard time are paid at the normal time rate. Those who are able to complete their work earlier are paid bonus equal to the wages for time saved. Generally, the bonus paid to the worker is 75 per cent of the wages for time saved. The remaining 25 per cent goes to the foreman.

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As more and more markets became buyer markets and the entrepreneurial problem became one of solving the shortage of customers rather than that of goods, the sales concept became the dominant idea guiding marketing. The sales concept maintains that a company cannot expect its products to get picked up automatically by customers. That’s where the role of sales incentive programs comes in. The company has to consciously push its products. Aggressive advertising, high-power personal selling, large scale sales promotion, heavy price discounts and strong publicity and public relations are the normal tools used by organizations that rely on this concept. In actual practice, these organizations do not enjoy the best customer patronage.

For sales incentive programs to be effective, it is very important to design sales territories. A sales territory is a geographical grouping of customers and prospects. Accordingly, designing sales territories in effect means the division of the total marketing area into a number of territories with the objective of servicing the territory effectively, economically and profitably. Two methods are commonly employed in designing sales territories: the equal workload method and the equal potential method.

Equal workload method aims at equalizing the workload of all salesmen. The territories are formulated so that they are equal in workload rather than in potential. The workload is considered in terms of the time required for the salesman to service all the accounts in his territory. On the other hand, equal potential method starts on the basis that the productivity of a salesman varies depending on the potential of the territory.

Proper designing of sales territories brings several benefits to the firm. It facilitates effective planning, as well as control of marketing operations since a properly designed sales territory is a more homogeneous area. Market data is more meaningful when collected and applied at the territory level. Moreover, when the total area is broken up into a number of well-designed territories, control of the marketing effort and evaluation of performance become easier.

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[tags]Incentive Programs, Employee Incentive Programs, Corporate Incentive Programs, Safety Incentive Prog[/tags]