The vice-president sales of a Canadian wholesale distributor of hardware products must present his proposal to change the sales force compensation program from straight salary to straight commission and to change the travel expense reimbursement from costs incurred to a flat annual budgeted amount per territory. There would be a three-year phase-in period but not all sales people would benefit nor be able to cope. The teaching objectives are to consider the advantages and disadvantages of different salesforce compensation plans; to address the implementation issues associated with changes in compensation plans; and to appreciate how what appears to be an operating decision can have significant strategic implications.
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