Question

Which of the following is a major disadvantage associated with a combination compensation plan?

A.Its inability to be used as a motivation tool
B.Its complexity
C.Its inability to include a draw
D.Its lack of flexibility in the context of motivating salespeople
E.
Its lack of flexibility in the context of controlling the activities of salespeople

Answer 1

A major disadvantage of a combination compensation plan is its complexity, due to the various elements like base salary and performance-based commissions that need to be balanced and managed.

Step-by-step explanation:

The question asks about the major disadvantage associated with a combination compensation plan. Among the options provided, the major disadvantage of a combination compensation plan is B. Its complexity. This is because combination plans often incorporate various elements of both fixed and variable compensation, such as base salary and commissions or bonuses based on performance metrics. The complexity arises in managing and calculating these various components while ensuring they are balanced and motivating salespeople effectively. It can make the system difficult to understand for employees and cumbersome for managers to administer.