Question 1

A bonus is a financial reward given in addition to what is usually earned over an extended period of time.

Accepted Answer

A bonus is indeed a financial reward given in addition to what is usually earned over an extended period of time.

Question 2

Praise, recognition, and challenging work assignments are classified as non-financial rewards.

Accepted Answer

Praise, recognition, and challenging work assignments are examples of non-financial rewards because they are not related to money or financial compensation.

Question 3

Although it is difficult to administer the straight commission plan, many organizations prefer to use this plan because selling costs are kept in proportion to sales.

Accepted Answer

Many organizations prefer to use the commission plan because it is simple to administer and selling costs are kept in proportion to sales.

Question 4

Under the straight salary compensation plan, salary is distributed in proportion to the sales made.

Accepted Answer

Under the straight salary compensation plan, the salary is fixed and does not vary with the sales made.

Question 5

Under the straight salary compensation plan, a salesperson's pay is directly related to sales performance.

Accepted Answer

With the straight salary plan, a salesperson is paid a specific dollar amount at regular intervals, which ensures a consistent income. In theory, pay is independent of sales performance in the short run (a month, three months). However, if performance is low for a prolonged period, the company can take corrective action to improve sales or replace the salesperson.

Question 6

A straight salary compensation plan tends to increase work norms within the sales group.

Accepted Answer

A straight salary compensation plan may not provide motivation for sales representatives to increase their sales performance since their pay is not directly tied to their performance. This can lead to a decrease in work norms rather than an increase. A commission or bonus-based compensation plan may be more effective in increasing work norms and sales performance.

Question 7

A drawback of the straight salary compensation plan is the lack of direct monetary incentive.

Accepted Answer

The straight salary compensation plan provides a fixed salary regardless of performance, which means there is no direct monetary incentive.

Question 8

According to the text, it is critical that sales managers be driven by integrity, trust, and morality because they have a significant impact on the compensation and careers of salespeople.

Accepted Answer

The text states, "Sales managers need to be driven by integrity, trust, and morality because their decisions impact not only the bottom line but also the compensation and careers of their salespeople."

Question 9

With a regressive commission plan, commission rates decrease as total sales increase.

Accepted Answer

In a regressive commission plan, commissions decrease as total sales increase, meaning that sellers earn a smaller percentage of each sale as they sell more.

Question 10

A straight salary compensation plan can be effectively used to curtail salespeople from concentrating on easy-to-sell products.

Accepted Answer

A straight salary compensation plan does not provide any additional incentives for salespeople to sell more difficult or complex products, so it is unlikely to discourage them from focusing on easy-to-sell items. In fact, without any performance-based rewards or commissions, salespeople may have little motivation to push themselves to sell more challenging products or to exceed their sales quotas. Other types of compensation plans, such as commission-based or performance-based plans, may be more effective in encouraging salespeople to sell a wider range of products and to go above and beyond their basic job responsibilities.

Question 11

Salespeople under a straight commission plan are frequently reluctant to split territories after building rapport with customers.

Accepted Answer

Salespeople often invest time and effort into cultivating relationships with customers in a specific territory, and dividing that territory may mean losing potential sales or bonuses. Therefore, they may be hesitant to split territories under a straight commission plan.

Question 12

A salesperson working under a combination salary plan receives both a base salary and a commission or bonus.

Accepted Answer

A combination salary plan includes both a base salary and a commission or bonus component, so the statement is true.

Question 13

The use of regressive compensation plans would discourage top performing salespeople from accepting management positions.

Accepted Answer

The regressive system is used to help place an upper limit on a salesperson's earnings to encourage top producers to accept management positions if they want to increase their earnings beyond the level attainable in a sales job.

Question 14

Achievement awards are special financial incentives used to motivate salespeople.

Accepted Answer

Achievement awards are nonfinancial incentives used to motivate salespeople. Special financial incentives include contests, bonuses, and trips.

Question 15

Handling returned goods and bad debts is a greater administrative problem for firms that pay salespeople using a commission plan than for firms that pay straight salaries.

Accepted Answer

When salespeople are paid on commission, they have a greater incentive to make sales, which may lead to more returns and bad debts. Therefore, handling returned goods and bad debts becomes a greater administrative problem for firms that pay salespeople using a commission plan.

Question 16

A major disadvantage associated with drawing accounts is that the amount given to salespeople is not based on the individual needs of the salesperson.

Accepted Answer

Drawing accounts are usually a fixed amount given to salespeople on a regular basis, regardless of their individual needs or performance. Therefore, the statement is false.

Question 17

Under the straight salary compensation plan, management is able to project compensation expenses several years in advance.

Accepted Answer

Under the straight salary compensation plan, employees are paid a fixed salary regardless of their performance or productivity. As a result, management can easily forecast how much they will need to pay their employees in the future, making it easier to project compensation expenses several years in advance.

Question 18

The two levels of motivation that sales managers are concerned with are the motivation of the individual salesperson and the motivation of the entire sales force.

Accepted Answer

Sales managers are concerned with both individual salesperson motivation and motivation of the entire sales force. These two levels of motivation are interrelated and impact each other.

Question 19

Under the progressive commission plan, commission rates increase as the sales increase.

Accepted Answer

The statement is true. Under the progressive commission plan, the commission rates increase as the sales increase. This is used to incentivize salespeople to sell more and typically results in higher earnings for those who achieve higher sales volumes.

Question 20

A straight salary plan can increase sales expenses because the salary does not vary directly with the sales.

Accepted Answer

A straight salary plan guarantees a fixed salary for the salesperson regardless of their performance, thus there is no direct incentive to increase sales volume. This can lead to increased expenses for the company without necessarily increasing revenue.

Quiz 17: Motivation, Compensation, Leadership, and Evaluation of Salespeople