Chapter 8

A firm offering a college tuition reimbursement program has made a commitment to providing this nonfinancial reward: a. opportunity for personal growth. b. recognition for achievement. c. sense of accomplishment. d. opportunity for promotion. e. job redesign.

A

According to the text, which of the following is not one of the reward categories typically offered to salespeople? a. social interaction opportunities b. recognition c. sense of accomplishment d. pay e. promotion

A

If the nonselling administrative duties of the salesperson are of major importance, this compensation plan is recommended: a. straight salary. b. salary plus bonuses. c. straight commission. d. salary plus commission. e. straight commission plus bonuses.

A

Reward system management involves the selection and utilization of organizational rewards to a. direct salespeople's behavior toward the attainment of organizational objectives. b. reward salespeople for outstanding sales achievements. c. direct effort toward the attainment of short-term goals (e.g., a sales contest during a seasonal slump). d. compensate salespeople, with either financial or nonfinancial rewards, depending on those desired most by the individual salesperson. e. compensate salespeople according to the profitability of their total sales to customers.

A

When it is difficult for the salesperson to secure the first order from the customer, but reorders are virtually automatic, this form of commission rate would be appropriate: a. regressive. b. incremental. c. a combination of constant and progressive rates. d. constant. e. progressive.

A

Which of the following is an advantage of a straight-commission compensation plan? a. Operating costs are minimized during slack selling periods. b. They are highly flexible, allowing frequent changes in compensation practices to achieve short-term objectives. c. They are attractive to college graduates desiring an opportunity to earn while they train. d. The salesforce's loyalty to the company is enhanced. e. Salespeople often adopt high-pressure, non-customer-oriented sales techniques which increase total sales.

A

Advantages of straight-salary compensation plans include all of the following except a. salaries can provide control over salespeople's activities, especially nonselling activities. b. the working capital requirements are lessened with the straight-salary compensation plan. c. reassigning salespeople and changing sales territories is less of a problem than with other financial compensation plans. d. they are the simplest plans to administer, with adjustments usually occurring only once a year. e. planned earnings for the salesforce are easy to project, which facilitates the salesforce budgeting process.

B

Formal recognition programs have a better chance of success if sales managers do all of the following except: a. publicize the program before it is implemented. b. make it easy enough to allow for a majority of the salesforce to win. c. ensure that the celebration for winners is well-conceived and executed. d. arrange for individual salespeople or sales teams to acknowledge the support of others who helped them win the award. e. remember that the program should make sense from a return-on-investment perspective.

B

Perhaps the most serious shortcoming of straight-commission plans is that a. salespeople may earn more than their managers. b. they contribute little to company loyalty, resulting in potential salesforce control problems. c. the firm suffers financially if the market declines or stagnates. d. they link compensation to actual sales. e. they are difficult to administer.

B

The motivation task is incomplete unless salespeople's efforts are a. aimed at improving overall salesforce sales. b. channeled in directions consistent with the overall strategic role of the salesforce within the firm. c. channeled into profitable activities. d. concentrated on sales quotas and ineffective activities are eliminated. e. motivated towards activities that improve the company's bottom line as well as the corporate image.

B

The reward system practiced by the majority of consumer and industrial firms is a. straight salary. b. salary plus incentives. c. straight commission plus bonuses. d. straight salary plus expenses. e. straight commission.

B

The salesperson's choice to expend effort over a period of time, especially when faced with adverse conditions is referred to as a. intensity. b. persistence. c. tenacity. d. determination. e. degree.

B

This form of nonfinancial reward is generally considered to be more desirable to younger salespeople than to older salespeople: a. opportunity for personal growth. b. opportunity for promotion. c. job security. d. sense of accomplishment. e. recognition for achievement.

B

What change in the firm's salesforce reward system might be in response to customers' needs? a. A pay freeze b. A change from straight commission to straight salary c. The introduction of a sales contest d. A change from straight salary to straight commission e. A pay raise

B

Which of the following conditions would indicate to the sales manager that the proportion of the salesperson's total pay that is salary should be relatively high? a. The reputation of the salesperson's company is little known. b. The importance of the salesperson's personal skills in making sales is slight. c. The company's reliance on advertising and other sales promotion activities is little. d. The importance of factors beyond the control of the salesperson which influence sales is slight. e. The importance of providing customer service is slight.

B

Which of the following conditions would indicate to the sales manager that the proportion of the salesperson's total pay that is salary should be relatively low? a. The reputation of the salesperson's company is well known. b. The importance of the salesperson's personal skills in making sales is considerable. c. The incidence of technical or team selling is high. d. The importance of factors beyond the control of the salesperson which influence sales is considerable. e. The competitive advantage of the product in terms of price, quality, etc., is high.

B

Which of the following is not a form of nonfinancial compensation? a. Career advancement through promotion b. Job redesign c. Job security d. Recognition of achievement e. A sense of accomplishment on the job

B

Which of the following is not an advantage of combination plans? a. They are flexible. b. They are fairly simple to administer. c. Sales behavior can be rewarded frequently. d. Specific sales behaviors can be reinforced or stimulated quickly. e. They are attractive to high-potential, but unproven, candidates for sales jobs.

B

Which of the following is not one of the desired outcomes of an optimal reward system? a. Encourage specific activities which are consistent with the firm's overall marketing and salesforce objectives and strategies. b. Provide a mix of both compensation and noncompensation rewards comparable to other firms. c. Attract and retain competent salespeople, thereby enhancing long-term customer relationships. d. Be clear and flexible enough to allow the kind of adjustments that facilitate administration of the reward system. e. Provide an acceptable ratio of costs and salesforce output in volume, profit, or other objectives.

B

With regards to determining appropriate financial compensation levels, all of the following are true except a. In general, sales positions that are more complicated and require more skills are compensated at a higher level. b. Salespeople with the most experience should always receive the highest wages. c. Information about competitive salaries and the requirements for attracting and keeping qualified salespeople is necessary. d. Information on competitive salaries can be obtained by benchmarking earnings levels of salespeople through a variety of methods. e. Determining the appropriate financial compensation level depends upon an understanding of the duties expected for a particular sales position.

B

pgs. 235-236Flexibility has been cited as both an advantage and a disadvantage of this compensation pay plan: a. straight salary. b. combination pay plans. c. straight commission. d. straight commission with bonuses. e. straight salary with bonuses.

B

A common criticism of combination pay plans is that they a. cost the firm more in total pay to salespeople. b. do not provide equitable treatment of high-performing salespeople. c. tend to produce too many salesforce objectives which are of the crisis-resolution variety. d. are unattractive to high-potential, but unproven college graduates. e. may often lead to salespeople earning more than their managers, which leads to resentment and other managerial problems.

C

A large direct sales company such as Avon would most likely compensate their salespeople in this manner a. straight salary. b. salary plus bonuses. c. straight commission. d. salary plus commission. e. straight commission plus bonuses.

C

A salesperson who is intrinsically motivated a. is motivated by the rewards that the job provides. b. is motivated by the need for love and belongingness. c. finds the job to be inherently rewarding. d. finds that the job's fringe benefits, pay, and generous vacation policy provide motivation. e. works for the feeling of security offered by the job.

C

According to the text, controls typically used by companies to ensure judicious spending by the salesforce include all of the following except a. the use of allowances for certain expenditures. b. the requirement of documentation for expenses to be reimbursed. c. the requirement that expenses be charged and the bills sent directly to the company for payment by the accounting department. d. a definition of which expenses are reimbursable. e. the establishment of expense budgets.

C

All of the following are typical reimbursable expense items except a. automobile. b. mileage allowance. c. home. d. telephone. e. entertainment.

C

An example of a selling situation requiring a commission split would be a. a field salesperson sells a computer to a customer and some time after this it requires a service call from a company service technician. b. a salesperson needs help from a salaried technical expert in order to provide a potential customer with certain information. c. a large company purchases products from a company and ships them to its affiliates in several cities, with the selling firm's salespeople in these cities required to provide follow-up and service. d. a salesperson provides a list of referrals that are not in his/her territory to the salesperson covering that territory. e. a sales manager is in the process of training a new recruit and accompanies him/her on sales calls.

C

Current spendable income includes a. salaries and commissions, but not bonuses. b. salaries only. c. salaries, commissions, and bonuses. d. any cash award, but not bonuses such as merchandise or free trips. e. weekly or monthly income, but not rewards made only annually.

C

Expense account padding a. is an expected activity and is generally ignored unless it is very blatant. b. occurs very rarely as most salespeople are quite honest. c. is considered a serious offense, which, if detected, often leads to termination of employment. d. is so difficult to uncover that most companies simply do not try. e. is viewed as a fringe benefit by most salespeople.

C

The most commonly used definitions of motivation include these three dimensions: a. intensity, degree, persistence. b. severity, direction, perseverance. c. persistence, intensity, direction. d. instruction, degree, tenacity. e. tenacity, persistence, direction.

C

The most serious disadvantage of a straight-salary compensation plan is a. that it builds little in the way of salesforce loyalty or commitment to the company. b. that differences in salary levels among salespeople are often a function of seniority on the job instead of true merit. c. that they offer little financial incentive to perform past a merely acceptable level. d. the financial burden the firm suffers if the market declines or stagnates. e. that high-pressure, non-customer-oriented sales techniques are often used to boost total sales.

C

When a sales manager assures salespeople that they fulfill a critical role in revenue production and other key activities within the company, he/she is offering this non-financial reward: a. opportunity for personal growth. b. recognition for achievement. c. sense of accomplishment. d. job security. e. job redesign.

C

When determining the financial compensation mix, the sales manager must a. decide what the commission payout event will be. b. determine what percentage in commission is to be paid to salespeople. c. determine the relative amounts to be paid in salary, commission, and bonus. d. decide on what type of benefits package to offer. e. review the compensation plans offered by other firms in the industry.

C

Which of the following is not a factor to be considered when developing a commission-only plan? a. Commission base b. Commission rate c. Commission margin d. Commission splits e. Commission payout event

C

According to a survey of sales executives reported in the text, the most popular sales incentive is a. plaques/rewards. b. merchandise/gifts. c. recognition dinners. d. cash. e. leisure trips/travel.

D

Compensation rewards might include all of the following except a. recognition. b. bonus. c. promotion. d. task significance. e. opportunity for personal growth.

D

Formal recognition programs can provide all of the following benefits to a salesforce except a. providing for public recognition for accomplishments in the presence of peers and superiors in the organization. b. making the winners feel special. c. enthusiasm inspired by the program carrying over into any related business or training sessions. d. costing little and reinforcing desirable behavior immediately after it occurs. e. providing the recipient with a symbolic award of lasting psychological value.

D

The Million Dollar Roundtable designation in the insurance industry is an example of this type of nonfinancial reward: a. opportunity for promotion. b. sense of accomplishment. c. personal growth. d. recognition for achievement. e. job security.

D

The amount of mental and physical effort put forth by the salesperson is referring to a. degree. b. persistence. c. tenacity. d. intensity. e. direction.

D

Which of the following conditions is not typically associated with higher pay levels? a. Job experience. b. The importance of personal selling in the overall marketing effort. c. Higher skill levels. d. The extent to which there is an expectation that salespeople will service current customers. e. Highly competitive markets where an intense personal selling effort is important for customer retention and growth.

D

Which of the following statements regarding sales contests is true? a. A sales contest is a temporary program that is used to accomplish a specified long-term objective. b. The optimum duration for a sales contest has been determined to include this range--longer than three months but less than six months. c. The most effective sales contest prize is a cash award. d. Sales contests will continue to be an important tool for achieving expedient results. e. Researchers have not yet been able to find any positive relationship between sales contests and sales and profitability.

D

A salesperson who is extrinsically motivated a. would work for the pure pleasure of working. b. doesn't need or desire formal recognition for outstanding achievements. c. is motivated by personal growth needs. d. finds the job to be inherently rewarding. e. is motivated by the rewards that the job provides.

E

All of the following are steps suggested for facilitating a sense of accomplishment in the salesforce except a. ensure that salespeople know the critical role they play in sales revenue production. b. personalize the causes and effects of salesperson performance. c. consider the practice of management by objectives. d. reinforce feeling of worthwhile accomplishment in communication with the salesforce. e. provide salespeople with trips and other rewards.

E

Industries that have traditionally used a straight-commission-based compensation pay plan include all of the following except a. real estate. b. securities. c. automobiles. d. wholesalers. e. computers.

E

Noncompensation rewards include a. opportunities for promotion. b. those rewards given for acceptable performance or effort. c. any current spendable income. d. insurance polices and/or retirement programs. e. a supportive sales management leadership style.

E

This form of commission rate may actually result in overselling and higher selling costs to the company: a. regressive. b. incremental. c. a combination of constant and regressive rates. d. constant. e. progressive.

E

Which of the following does not help deter expense account abuse? a. Tight financial controls. b. Well-publicized and enforce requirements for documentation of expenditures. c. An anonymous tip program. d. Periodic visits by highly trained financial auditors. e. All of the above help deter expense account abuse.

E

Which of the following is not a guideline for optimizing the use of sales contests? a. Recognize that contests will concentrate efforts in specific areas, often at the temporary neglect of other areas so plan accordingly. b. Consider the positive effects of including nonselling personnel in sales contests. c. Use variety as a basic element of sales contests by varying timing, duration, themes, and rewards. d. Ensure that sales contest objectives are clear, realistically attainable, and quantifiable to allow performance assessment. e. Salespeople should compete in teams with each member of the team making a contribution to the group's total goal.

E

Which of the following is not an advantage of the commission compensation plan? a. Income is linked to results. b. There is a strong financial incentive to improve results. c. Costs are reduced during slow sales periods. d. Less operating capital is required. e. Customer loyalty is enhanced.

E

__________ implies that salespeople choose where their effort will be spent among various job activities. a. Degree. b. Persistence. c. Tenacity. d. Intensity. e. Direction.

E

___________ rewards are those that are given in return for acceptable performance or effort. a. Sales b. Intrinsic c. Noncompensation d. Compensatory e. Compensation

E

A comprehensive study of salesforce financial compensation practices found that the salary-only plan and the salary-plus-bonus plan were equally popular.

F

A constant commission rate changes incrementally as salespeople reach prespecified target levels of sales.

F

A progressive commission rate declines at some predetermined point of sales.

F

A salesperson's overall motivation is either a function of extrinsic or intrinsic motivation, but cannot be both.

F

A straight-commission compensation plan is appropriate for sales trainees who are involved in learning about the job rather than producing on the job.

F

A straight-commission compensation plan is suggested for salespeople such as missionaries and detailers.

F

As compared to a straight-salary or combination plan, the straight-commission compensation plan is more complex and difficult to administer.

F

Combination pay plans usually feature commission as the major source of salesperson income.

F

Employees typically find verbal or written praise to be of little importance.

F

If the company relies heavily on advertising and other sales promotion activities, the salespeople's total pay should have an emphasis on commissions.

F

It is relatively easy to design a sales contest that will maximally motivate every member of the salesforce.

F

Job design factors such as skill variety and feedback are forms of nonfinancial compensation rewards.

F

Most recognition programs are simply popularity contests and leave salespeople feeling let down and deceived.

F

Most salespeople prefer some stability in their reward system and care little about incentive rewards.

F

One disadvantage of the performance bonus is that sales emphasis must be changed from period to period.

F

Opportunities for promotion are easily varied in the short run.

F

Organizational rewards are classified as compensation rewards and reimbursement rewards.

F

Salespersons' choices of which activities warrant action are less important than how hard they work or how well they persist in their efforts.

F

There is general agreement that salesforce loyalty to the company may be greater with straight-commission plans.

F

A good combination compensation plan offers a balance of incentive, control, and enough flexibility to reward important salesforce activities.

T

A guideline for managing salesforce motivation would be to attempt to incorporate individual needs of salespeople into motivational programs.

T

A salesforce reward system is one of the most important determinants of both short-and long-term sales performance.

T

An advantage of the performance bonus is that sales emphasis can be changed from period to period.

T

Any major change in financial compensation practices is likely to produce widespread concern among the salesforce that their earnings will decline.

T

Bonuses are typically used to direct effort toward relatively short-term objectives.

T

Commission plans may attract competent results-oriented salespeople and eliminate incompetent reps.

T

Determining the appropriate financial compensation level depends upon an understanding of the duties expected for a particular sales position.

T

Encourage the winners to share their winning strategies with the salesforce.

T

Expense budgets may be used to maintain expenses as a specified percentage of overall sales volume or profit.

T

Formal recognition programs have a better chance of succeeding if sales managers publicize the program before it is implemented.

T

From the organization's perspective, the reward system should attract and retain competent salespeople.

T

From the organization's perspective, the reward system should reward salesperson performance based on measurable criteria that are easy to comprehend.

T

If the provision of customer service is crucial, then a combination plan with emphasis on the salary dimension is recommended.

T

Industries that have traditionally paid salespeople by straight commission include insurance and securities.

T

Informal recognition awards are easy to administer and cost practically nothing.

T

Investing more time in recruiting and selection will pay off later in terms of fewer motivational and other managerial problems.

T

It is a good idea to reward both individual and team performance.

T

It is generally believed that sales contests have some positive effects on salesforce performance.

T

Management should consider how any change in compensation will affect the company's top performers and attempt to avoid a change that would hurt them.

T

Many companies believe that money spent on recognition programs is a good investment.

T

Many sales contests are held to correct bad planning and poor sales performance.

T

Noncompensation rewards include factors related to the work situation and well-being of each salesperson.

T

One disadvantage of a combination compensation plan is that mediocre salespeople are eliminated less rapidly than they would be under a straight commission plan.

T

One disadvantage of commission plans is that salespeople may neglect cultivating potentially profitable long-run customers in favor of easy sales.

T

One disadvantage of commission plans is that when they are based on sales volume, salespeople may be encouraged to discount unnecessarily, resulting in lower profitability.

T

Performance bonuses may be offered in the form of cash or income equivalents such as merchandise or free travel.

T

Practicing a supportive leadership style is an example of a noncompensation reward.

T

Sales managers should be committed to uncovering potential problems in motivation and eliminating them before they develop.

T

Sales managers should minimize potential motivation and morale problems in sales contests by allowing multiple winners.

T

Salespeople appear to be fond of being recognized by their peers.

T

The chosen compensation system often depends on the organization's strategy, competitive offerings, and products or services sold.

T

The majority of sales organizations offer full reimbursement to their salespeople for legitimate sales expenses such as travel, lodging, and meals.

T

The most popular commission base appears to be sales volume.

T

The most productive salespeople have the best opportunities to leave the firm for more attractive work situations.

T

The motivational power of various rewards is dependent on individual salesperson preferences.

T

The optimal reward system would balance the needs of the organization, its salespeople, and its customers.

T

The primary advantage of combination pay plans is the flexibility they offer.

T

The sales job itself can be a powerful motivator.

T

The value of nonfinancial compensation is illustrated by the considerable number of salespeople who knowingly take cuts in financial compensation to become sales managers.

T

With a straight-salary compensation plan, the least productive members of the salesforce tend to be the most rewarded salespeople.

T

With straight-salary compensation plans, there is less chance that high-pressure, non-customer-oriented sales techniques will be used.

T