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Sales Commission
Benefits & Compensation
Sales Commission
Exchange ideas about health plans, retirement, work/life benefits, and employee assistance.
We are in the process of adding a Sales staff to our staffing company and arent quite sure how to structure the commission. We are going to offer a base salary+commission and want it to be fair and st
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Sales Commission
posted at 6/7/2011 3:47 AM EDT
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Posts: 1
First: 6/7/2011 Last: 6/7/2011 |
We are in the process of adding a Sales staff to our staffing company and arent quite sure how to structure the commission. We are going to offer a base salary+commission and want it to be fair and still allow everyone to make money |
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Sales Commission
posted at 6/7/2011 8:07 AM EDT
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Posts: 2146
First: 2/15/2006 Last: 9/14/2011 |
Some brainstorming...not knowing your industry/location/size/etc. Not technical, but all good things to consider....
You need to structure it so that the payoff incentivizes your company's goals. The higher the payout on any one aspect, the more that will be sold usually. We have consistently found this to be true. We tend to stay away from "draws". We tend to pay minimum wage/OT as a basis and then the rest as earned commission. That way we never have to go back and worry about whether Joe got paid minimum wage/OT. There are ways to finagle the system but you ALWAYS have to make sure the employee is earning at least minimum wage/overtime for all hours worked. The only expection is "outside sales" and MANY companies do not follow the rules on that one. Outside sales rules/laws are specifically written..if you are thinking about using them, I would review them again. It is best to put the commission plan in writing and check with your state wage laws to see what is deemed earned and when. Allow the company the right to change it going forward though with a short amount of notice (ex. one week's). We always make changes to the written commission plan at the beginning of a calculation period (month). Another thing to consider is how will you deal with "chargebacks"....that is product/services sold that are later refunded? Also how will you deal with terminated employees? Will they be due final commissions? Again this one may be dependent on your state's wage laws. Under federal wage laws, if you plan is in writing and the employee understands this, you can withhold anything not paid before termination. However what this can lead to is the employee hanging on through the end of the earnings cycle and making wages, but not really working hard. We prefer to pay out the commission to avoid that scenario. If I think of more later, I will post. If you normally handle compensation issues, I strongly suggest the CEBS courses on Compensation. While in depth, they will give you some background that will be very helpful in making these types of decisions. |
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Sales Commission
posted at 6/7/2011 2:37 PM EDT
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Posts: 562
First: 11/12/2009 Last: 9/14/2011 |
This is not typically a DIY project if you haven't any real experience with sales compensation.
You need to carefully evaluate what you want your sales comp program to do. How flexible will it be in incentivizing the sales force behaviors (this is ridiculously easy if there's money involved, but you have to do it right). What is your sales cycle - short, long and is there a customer service post sales aspect to it? Can you afford an uncapped plan? How do you incentivize the sales force beyond the level of income they feel comfortable with? Any major accounts involved? Are your sales reps "farmers" or "prospectors"? If so, how are you going to differentiate the reward (hint: it's way easier to be a farmer of an existing account than it is to prospect for new business). Retail sales or outside sales? You will do yourself a very great favor by finding a good sales comp consultant and paying to have a solid plan put together. It's something you should only have to pay for once (hopefully you learn a lot from the process so you can DIY subsequent plans and changes), but it will pay off immensely as your business grows. |
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