Question 1 – Provide recommendations regarding the split between base pay and output related pay at this organization? Would the split be the same for all groups of employees? If not, what should be the split? Explain your recommendation. Fit Stop is a new firm whose aim is to sell all kinds of fitness, training, exercise and conditioning equipment. Its core value is to provide customized and personalized assistance to all its customers. This is based on a high quality advice system where they will use specialists and professionals in these equipments to advice their customers on the choices they make based on their specific needs. The sales people have to undergo in work training in order to learn on how to give customers the personalized advice they require. This paper provides recommendation about a suitable compensation system for the organization that can help it achieve its core values as well as its objectives. A split between base pay and output related pay is recommended to design the compensation plan to capture the advantages of both while minimizing the disadvantages. An important consideration to make when determining a compensation system is the objectives of the organization and how they can be achieved. There is an urgent need to motivate employees at work and one of the crucial components that determines their motivation is their compensation. Base pay is the portion of an individuals compensation that is based on time worked and output related pay is based on output produced or the results achieved. We would recommend 80% base pay and 20% output pay for the employees in this organization. However, for the sales staff salaries should be based on the amount of sales. They should have a basic constant salary and a bonus expressed as a percentage of sales to motivate the employee and work harder to win more customers. So, I would recommend a split of 60% base pay and 40% output pay for the sales staff. As the store plans to operate on a seven-day-a-week basis, the base pay provides flexibility in terms of time. Within certain limits, this time may be directed in many ways and redirected as need arises. Base pay demonstrates a commitment on the part of the employer to the employee, creating a greater likelihood of employee commitment to the employer. Fit Stop Ltd. is a start up firm and employee commitment is important for the firm to succeed and achieve its objectives. Base pay allows the employer to recognize and encourage important job behaviors such as skill development. The firm expects the sales staff to learn in depth about all the different pieces of equipment, to help customers diagnose their needs accurately, and to be able to explain proper use of the equipment. Thus base pay is very important part of the compensation system in this firm
