Company Strategies Vary When it Comes to Compensation

Sales management teams may have different strategies on how to fairly compensate employees in a way that maximizes company revenue, employee satisfaction and worker output. While doing so can be difficult, there are several methods that could be a balance of all three ideas.

The 2008 financial crisis had put a lot of pressure on companies to cut costs in an effort to stay afloat and ride out the storm. Though the recession is not completely over, a business may still want to employ a strategy that calls for a reconsideration of benefits that are given to employees.

Commission is usually the first issue that is addressed when it comes to compensation for salespeople, as many managers see this as the primary motivator to generating more business and lead generation.

Companies that employ 100 percent commission systems will likely see the exodus of their sales staff, as this lack of salary will deter even the most successful representatives due to the lack of security, according to Inc.com.

Another method that a company can use is an across-the-board salary cut, which applies equitable thinking to the idea of compensation. Employees are expected to suffer slightly in order to save everybody, and this system will likely lead to the best representatives leaving, reported the business website.

Sales management teams may also employ a strategy that exists somewhere in the middle of offering only commission and a version of revenue sharing that equates almost all of the employees. The best way to provide compensation can be to incentivize people to where you want them to go, said Barrett Riddleberger, the chief executive officer (CEO) of Resolution Systems, Inc., a sales training and consulting firm.

It may be wise to use a median basis for compensation, but it is necessary to note that each company may need to employ a different strategy. While incentivizing the number of phone calls may work for one business, it could produce a large conception of selling where none actually exists, as outgoing calls do not necessarily equal profit, according to the executive.

“Every company is unique,” noted Riddleberger. “Your products and services, cost of doing business, cost of customer acquisition, resources required for your salespeople all factor into how a comp plan should be structured.”