Compensating Salespeople

Written by Drew Cameron    Comment & Respond    Print Article

Over the years of working for different companies and managing salespeople, I’ve been exposed to many different philosophies on how to compensate individuals who sell for a living from a draw to a guaranteed base to 100% commission to various combinations of all of the above.

Is there one particular best way?

From my perspective, there is no one best way to compensate salespeople nor is one way more right than another.

My belief is that sales compensation must be in alignment with company objectives for revenues, profits, product mix desired to be sold, performance objectives, etc.

The compensation structure should also be congruent with the job description and expectations placed on salespeople including the running of leads, self-generation of leads, completing job paperwork and sales reports, attending meetings, etc.  If a salesperson also acts as the project manager once they sell a job and must order the job components and schedule the crews, this must be accounted for in the compensation plan as well.

As a result the varied job descriptions and expectations accompanying sales positions around the country, this can result in compensation plans from basic to very complex and everything in between.

I prefer a dynamic and “incentivising” compensation program that drives salespeople to perform yet is simple to understand and easy on management and personnel to execute.

My standard answer when I get asked the above question is: “It depends”.  Beyond that I tell people we need to have a conversation to discuss the particulars before I can make the proper recommendations.

Since many readers may not be happy with an answer that is almost not an answer, I welcome your direct calls and emails and will consult you at no charge to respond to your specific questions and scenarios about sales compensation and I will be happy to direct you accordingly.

Lastly, as is the case with all human resource matters I suggest you reference your state laws and consult an attorney before implementing any compensation program for any position within your company.

EXTRA: ACCA members after logging in at www.acca.org may access the article co-authored by Drew Cameron and Adams Hudson entitled "What's the best way to pay salespeople?" 

Published: November 9, 2007 8:00 AM by Drew Cameron