After a few years of selling new cars, you managed to get the funding to start y

Question

After a few years of selling new cars, you managed to get the funding to start your own small new car dealership as a sole proprietorship. Your starting staff of 10 employees will be as follows:

You are the owner manager and will oversee everything. You will also be the sales manager and do some selling.

Sales staff: three salespeople report directly to you.

Service and parts manager: you will have one person supervise the mechanics and detailer.

Mechanics: three mechanics will work on the cars.

Detailer: one person will clean the cars, help out the customers, make up the bills and collect money from sales and services, and do other paperwork including bookkeeping. They will report to you.

What type of compensation will each classification of employee receive for their work? will you get them a wage, salary, or incentive pay? (commissions, pieces work or standard hour)

Will you give incentives (reorganization and other nonmonetary incentives, merit pay, bonuses, profits sharing, gainsharing, ESOPs. Stock option and /or stock purchase plans)

As the only executive, what will your compensation package include.

Explanation / Answer

Explanation:

Here the size of the company is relatively low and it’s a start up, the firm would start its business slow and steady and since we cannot expect the rapid success for the firm, it would be better to give salary to employees and commission on every sale. Salary would be lower as per the size and capacity of firm to sustain in business. Commission would be encourage team to perform better and motivate them to achieve their target because of reward being given as commission.

This compensation package would include insurance for employees and leave benefits if they don’t take much day offs. The insurance is to make sure employees do not have to worry of their medical bills.

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