IntroductionTo know whether or not Mr. Gonzales should implement the new compensation plan, we will begin with an evaluation of the proposed bonus plan he is considering. This evaluation will include an analysis of key decisions and the people responsible for the decision, as well as a discussion of the proposed plan. After this analysis we will conclude whether it is a good idea to implement it and provide our suggestions for a modification of the plan. Evaluation of the proposed bonus plan The new bonus plan includes store managers (SM), regional managers (RM) and store managers company personnel (CM). The CEO (Mr. Gonzalez) and COO are not included; their bonuses would be decided by the board's compensation committee. Additionally, all other employees not included in the plan would continue as before with a bonus of between 2% and 5% of base salary. Each of the company's 82 stores is managed by an SM, who has a lot of autonomy. The 82 stores are organized into 9 geographic regions. RMs are responsible for providing supervision and advice to SMs, who have little formal education. At the top of these two management levels are the CMs, who are responsible for a number of centralized functions including purchasing, human resources, marketing, real estate and investor relations. The proposed bonus plan consists of 4 million pesos plus 8% of company income before bonuses and taxes exceeding 120 million pesos. The total bonus pool will be split between managers as follows: SM – 70%, RM – 15% and CM – 15%. This year, the bonus pool will amount to 8,498,400 million pesos (all calculations: see calculations for the Whiz Kids questions at... middle of paper......8,498,400 The bonus pool is then divided between the different groups:Store managers: 70%*8,498,400 = 5,948,880.00Regional managers: 15%*8,498,400 = 1,274,760.00 Company managers: 15%*8,498,400 = 1,274,760.00 To find the average amount per manager we divide the pools by the number of managers in the specific group Store managers: 5,948,880 /82 = 72,547.32Regional Managers: 1,274,760/9 = 141,640.00 Corporate Managers: 1,274,760/5 = 254,952.00 The bonus pool for the best performing store managers: Total units of the bonus plan 6*1+9*2+ 11*3+20*4+15 *5+8*6+4*6+3*6 = 302.00 Average salary per unit: 5,948,880/302 = 19,698.28 Top performing store managers (6 units) = 118,189,68