Medicetra Medtech Company, Inc.
Medicetra MedTech Company is a dental equipment distributor and senior management is deciding whether to implement a new incentive compensation program for the sales force. For many years, Medicetra had paid salespeople only a fixed salary. Although the current plan of a straight salary seemed to be working favorably towards sales force retention salespeople had limited monetary incentives to sell more, as increased sales did not directly relate to increased pay. Management is leaning towards a change to a variable compensation plan that links performance with pay and is considering three options: 1) commission; 2) quota-bonus; and 3) commission plus quota-bonus plans. Which compensation plan would induce behavioral changes that would lead to better sales force performance but, at the same time, would appear fair to other employees?