During the planning process for starting a gift shop in a local resort town, you began to question and consider different compensation plans for the...

During the planning process for starting a gift shop in a local resort town, you began to question and consider different compensation plans for the retail clerks. It was fairly standard in the area to pay retail clerks $6.25 an hour. However, as you visited gift shops that were paying these rather low wages you noticed that the clerks simply took orders and did not sell or try to answer any questions for customers. In a visit to a gift shop in Ft. Lauderdale last spring, you struck up a conversation with the owner. She was more than willing to share her experiences about retail clerks. In fact, after a lot of trial and error she decided to pay upper-quartile compensation. This consisted of a base wage of $9.50 an hour and a 3-percent commission on all sales. She mentioned that when she went to this type of system her average transaction size increase by 20 percent and that closure went from 28 percent to 40 percent. More importantly, she found that her bottom-line profit rose by 32 percent. In short, by paying more for retail clerks she increased employee productivity and the profits of her store.