You are the manager of DDMSS (Door-to-Door Medicare Supplement Sales, Inc

Here, as the manager of Door to Door Vacuum cleaners, my main objective is to not only generate revenue for the Company but also in turn improve the profitability for the company. The more the sales, the more will be the profit generated. So, in order to improve sales, I would propose to increase the percentage of the revenue generated for the salesperson. So, as an example, if earlier they were paid 2%, I will increase the percentage to 4%. This exact actual percentage is to be decided after a full analysis of the present compensation structure. However, in order to maintain the costs of compensation, the Component of base salary will be reduced and the reimbursement for traveling shall be only for the fuel costs and maintenance charges incurred, which will be reimbursed on an actual cost basis. This revised structure will increase the motivation for the salesperson to sell more units in order to make more salary which in turn will be advantageous to the Company by increasing its own profits.

The potential disadvantage of such a compensation structure is that the reduction in base salary may not be appreciated by many workers who have a laid down approach and do not focus much on increasing the sales aggressively and instead achieve a fixed moderate number of sales. This restructuring may cause them to leave the Company and increase the attrition rate of the Company. This attrition of the Company will reduce the number of the salesperson and thus fewer units sold. The hiring of a new salesperson takes time and the new staff will have to be trained which takes both cost and time.