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Learning Exercise

Material: Salary Calculator
Submitted by: Cathy Swift on Feb 10, 2000
Date Last Modified: May 16, 2000
Title: Determining Salesforce Salaries Using the Salary Calculator
Description: This exercise lets students determine how the cost of living in various cities can impact what salaries are paid to employees
Type of Task: Individual, Student-centered, Supplemental activity, Unsupervised
Time Required 5 minutes for exercise; 60 minutes for paper
Course: Sales Management
Audience: College Upper Div Major
Prerequisites Skills: Should be used after discussing the Equity Theory of Motivation and Salesforce Compensation.
Learning Objectives: 1. To show how salaries can vary depending on territory.2. To show the difficulties faced by sales managers in determining compensation.
Text of Learning Exercise:

As the National Sales Manager for The Swift Company, headquartered in Atlanta, Georgia, you are designing a compensation system that will take into consideration the different cost of living figures for your Regional Dealer Account Managers in 4 cities across the U.S. and Mexico.

Access the Home Buyer's Fair Web site at and click on "The Salary Calculator" (the link is part way down the center of the page).

Initially you will calculate the fixed salary for Peoria, IL that would be equivalent to the $30,000 base salary in Atlanta.

The procedure is:

1. Highlight the names of the "From" state and the "To" state (Georgia and Illinois).

2. Click on "Show Cities".

3. Select the "From City" and the "To City" (Atlanta and Peoria).

4. Enter 30000 in "Salary" box just above "From City".

5. Click "Calculate".

6. The next page should tell you "If you make $30,000 in Atlanta then you would need to make $XX in Peoria." Repeat this procedure to derive the proper adjusted fixed salarycomponent for a person living in each of these locations:

1. Peoria, Illinois
2. Norristown, Pennsylvania,
3. Los Angeles, California
4. Guadalajara, Mexico [Note: this is not in the USA!]

Then write a brief report:

1. What amount would the person be paid in each city?

2. Explain how you would describe the compensation package to acollege student interviewing with your company.

3. Explain how you would respond to that student if they said it doesn'tseem fair that someone should get more money just because theyare starting in a different city.

4. Explain how you would deal with the situation of an employeemoving from the city with the highest cost of living to the city withthe lowest cost of living.


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