Many of the business performance standards are measured against a baseline. For the bulk of production and operation performance tools the baseline is net sales. The key to an accurate performance standard is having an exact sales figure.
Incentives are bonuses and other forms of compensation for employees to either increase or maintain a high level of production. With sales: incentives are discounts to get a customer to buy a product including discounts, coupons, campaigns and third party commissions.
The term ‘discounts’ is a broad and varied meaning word when it comes to use in business. It literally has four distinct definitions. Each definition is used within a certain context of business. The first and most dollar expensive use is with original issue discount related to bonds in the market. The second use and most common is as an incentive in business.
I laugh at the definition of labor costs because in my opinion the so called experts only have it half right. Labor costs are more than just gross wages and benefits. It should include the costs of insurance, employer taxation, human resources management and incentives. All of the costs associated with delivering the human element of service should be included. Let’s explore these costs from the most expensive to the least.