I am in running an IT company in UAE dealing in IT Supplies, Hardware, Network & Security Solutions.
I have appointed few sales executive for generating few sales for the company. So i am looking forward to set a target and pay them incentive for achieving the targets.
I had made a sample target plan for my employee but it was not motivating them to achieve the sales.
Could you please guide me how can i calculate the sales targets for my sales executive with the calculation of the incentives which can motivate them.
There are many ways of chalking out sales targets. I an going to enlist two popular ones
1. In this method, the incentive is calculated on the basis of revenue target achieved. The revenue target is normally 4-5 times of salary( 4-5 times in case of junior employees such as sales ex.). Revenue is cumulative receipt from new and existing accounts. The incentive is around 10% of the revenue target achieved and payable either at the end of month or at the end of quarter.
Example: The salary of sales ex. is Rs.10,000. His target would be Rs. 50,000. If he achieves revenue of Rs.55,000, his take home will be Rs. 15,500. If his achievement is , say, Rs. 44,000, there would be no incentive and his take home will be Rs.10,000.
This is good for smaller organization. Since the monetary incentive is paid without much delay, not much reliance on non monetary incentives.
2. In second type, everything remains same but incentive is paid at the end of year. In some organisations which use this method, revenue target is given but that is not taken into account while calculating incentive. Incentive is based on the grading that an employee achieves which, in turn, depends on revenue but there are other factors, as well.
This is suitable for bigger organisations and requires lot of non monetary incentives in the transit period.
Hope , it gives you some clues.
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