A company provides wages to its employees based on the amount workers produce. the more employees produce, the more they earn. this type of plan is called:

The type of business plan according to the example above is called a commission plan. Commission plan refers to an arrangement that pays employees based on performance.

Further explanation

A commission plan is the best strategy in motivating the employees with an incentive instrument. It is generally payable to an employee to sell some products or services. A commission can be paid a percentage or a flat sum depending on the volume of sales. To calculate commission, you may multiply the relevant commission rate by the basis for a given period.

There are 3 types of commission paid to employees, such as:

• Straight commission

It means the entire commission of the worker is paid based on a proportion of their total sales. For extremely skilled and motivated employees, this can be a very profitable agreement.

• Base salary plus commission

The employee guaranteed base salary, plus a proportion of their revenues in a specified period, it is preferred by many employees. Because it brings benefit to the worker that during slower sales periods they can depend on their basic salary.

• Residual commission

This is prevalent in insurance companies where the employee would still receive a proportion of payments from his/her customers as long as the customer remains with the company.

Learn more

If you’re interested in learning more about this topic, we recommend you to also take a look at the following questions:

• Formula for calculating commission: https://brainly.com/question/6615293

Keyword: Business plan, business strategy, commission plan

Subject: Business

Class: 10-12

Sub-chapter: Management