TREX Sales Incentive Plan Design 5

Question 1

Which factor most directly determines the appropriate 'pay mix' for a sales role?

Accepted Answer

The degree to which the individual rep influences the sale outcome

Answer

Pay mix should reflect the rep's ability to influence outcomes — higher influence justifies more pay at risk in the incentive component.

Question 2

A 'ramp plan' for new sales hires typically provides:

Accepted Answer

Reduced quotas and/or draws during the initial period as the rep builds a territory

Answer

Ramp plans acknowledge that new reps need time to build relationships and pipeline, so quotas and income guarantees are adjusted for the initial months.

Question 3

What does 'mix' refer to when a company says a sales rep's pay mix is 60/40?

Accepted Answer

60% base salary and 40% target incentive

Answer

Convention in sales compensation states base first: 60/40 means 60% base salary and 40% target incentive at 100% quota attainment.

Question 4

Which of the following is the best indicator that a sales incentive plan requires redesign?

Accepted Answer

The median attainment of the sales force is consistently above 100%

Answer

If median attainment consistently exceeds 100%, quotas are likely set too low, signaling the plan is not accurately measuring or stretching performance.

Question 5

In a 'MBO (Management by Objectives)' sales incentive component, payout is typically determined by:

Accepted Answer

Manager judgment of goal achievement against pre-set qualitative or quantitative objectives

Answer

MBO components require manager evaluation of whether specific pre-agreed objectives were met, introducing subjectivity not present in formula-based plans.

(TREX) WorldatWork Total Rewards Certification Practice Test

(TREX) WorldatWork Total Rewards Certification Practice Test

TREX Sales Incentive Plan Design 5