What is the most effective method for the HR manager to evaluate the efficacy of the new compensation model to increase sales?

A car sales company has approximately 700 sales employees and 200 administrative employees who perform the tasks of checking stock availability, processing deliveries, sending out invoices, and maintaining records and databases. During and after the pandemic, the company has suffered a 45% loss of profit and revenue due to poor sales. In a bid to stay afloat, the sales manager has laid off the entire administrative team and 100 sales employees who were the least performers last quarter. The remaining 600 sales employees are required to take on administrative tasks, as well as a 20% reduction in base pay and a 20% increase in commissions from car sales.

The HR manager has been told by an employee in the sales department that he is leaving because of the additional workload which has distracted him from making sales and has reduced his commission-based pay. The HR manager is concerned that employee satisfaction levels have fallen drastically due to the increased tasks and unfavorable compensation model. She believes several sales employees are planning to leave the organization which will further reduce the organization’s revenue.

The HR manager decides to share these apprehensions with the sales manager. The HR manager shares that there is a real possibility of high turnover amongst the sales employees which will result in loss of trained talent, corporate know-how and revenue. The sales manager refutes this claim and states that there is a necessity to weed out employees who do not pull their weight and have been relying on the certainty of their base pay as opposed to generating sales. The sales manager notes that the worst performing employees are those who complain and are welcome to leave.

Furthermore, the sales manager shares that laying off the administrative employees and increasing

commission-based percentage of pay has improved the company’s financial condition and encouraged the sales employees to have a line of sight between their tasks and the company’ productivity. The sales manager states that the HR manager should not bother about baseless complaints but revise the job descriptions of the sales position to include the administrative tasks so as to recruit new employees who are comfortable with the workload of the role.

What is the most effective method for the HR manager to evaluate the efficacy of the new compensation model to increase sales?
A . Recommend that the new compensation model be utilized for at least a year before its effectiveness in increasing sales can be measured and analyzed.
B . Analyze and research documents and information on best practices to determine if the compensation model has been effective in similar organizations.
C . Carry out an employee satisfaction survey of the sales employees to determine their views about the compensation model and its efficacy in driving sales.
D . Benchmark the compensation model against that of notable competitors in the car sales industry.

View Answer

Answer: B

Explanation:

Because the compensation model is relatively new, HR has to determine its efficacy based on research conducted in other organizations. Note that employee satisfaction survey does not correlate with effectiveness of the compensation model. Benchmarking will provide a comparison but not necessarily the effectiveness in terms of sales. Rather than advocate for a one-year delay, existing research and documents can be analyzed to determine the efficacy of the compensation model.