Essence of the Compensation Plan in the Process of Motivation in Multi-Level Marketing (MLM). A Case Study

Abstract

The objective of the article is to present the compensation plan and the possibilities resulting from cooperation with FM World. The study provides the characteristics of the market economy compensation system, especially the functions, goals and traditional compensation forms as well as the essence of the key motivation theories for organization management and the characteristics of the most important ones. The term Multi-Level Marketing (network marketing) is discussed, especially the nature of that sector, controversies and possibilities. The company, FM World, is covered, especially the information on the products distributed and services. The compensation plan and the incentive programme offer applied in the company are provided in detail. The study involved the use of a diagnostic survey. The group of respondents included 107 FM World distributors and cooperants with the Rentierzy.FM structure. The level of satisfaction of the respondents with the cooperation and the compensation plan offered are investigated; satisfaction with the incentive programmes available and the perspectives of further cooperation with the company were determined.

Direct Selling a Controversial Business Model: Recent Development and Future Research Agenda

“…Individuals may even join multiple DSOs at the same time or at different points in time (DeLiema et al, 2021). By doing so, DSOs can substantially reduce marketing costs (Lee & Dastane, 2019) and use the savings to reward distributors through compensation plans and incentive programmes (Roman et al, 2021). These marketing costs are necessary for a traditional marketing model but not in the direct selling model because it leverages distributors to reach end consumers.…”

“…The compensation plan is the core economic engine of the direct selling model. In certain counties, there are laws that limit the pay-out percentage of the compensation plan, such as in Korea, Poland (Roman et al, 2021), and China (Tian, 2008). A good compensation plan needs to make economic sense to the DSO while appearing attractive to the distributors (Roman et al, 2021).…”

“…In certain counties, there are laws that limit the pay-out percentage of the compensation plan, such as in Korea, Poland (Roman et al, 2021), and China (Tian, 2008). A good compensation plan needs to make economic sense to the DSO while appearing attractive to the distributors (Roman et al, 2021). Roman et al (2021) submit that the motivation effect of compensation plans on distributors is well explained in the motivation theories.…”

“…A good compensation plan needs to make economic sense to the DSO while appearing attractive to the distributors (Roman et al, 2021). Roman et al (2021) submit that the motivation effect of compensation plans on distributors is well explained in the motivation theories. Commission or bonus is earned when there is a sales transaction and not merely on recruitment.…”

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“…Even though the Ever Given was released by the Egyptian authorities on 7 July 2021, SKK must work together with the UK P&I Club to prevent damages (due to delays in delivery and the occurrence of a G/A) from being incurred by global shippers. In addition, as an ocean carrier, Evergreen must establish an advanced, sustainable cargo compensation system to protect shippers' trust in the company and to prevent the damages from being transferred to shippers [78].…”