Which of the following statements about straight commission compensation plans is true?
A) Compensation cost per unit is always lower under a straight commission plan
B) Many firms, especially those engaged in relationship selling have abandoned straight commission plans
C) Straight commission plans increase management's control over the sales force
D) Companies operating with straight commission plans tend to have lower turnover rates when business conditions are poor than do companies with a straight salary plan
E) Firms that are short on working capital should never use the straight commission plan

Question

Quizplus · Accepted Answer

Many firms, especially those engaged in relationship selling have abandoned straight commission plans because they believe that a commission-based system often leads to short term thinking rather than long-term customer relationships. Additionally, straight commission plans can lead to high turnover rates, and may create a lack of motivation for salespeople during slow economic periods.

Which of the Following Statements About Straight Commission Compensation Plans