Evaluating Sales Compensation Strategies

Companies may struggle with the notion of compensation, and how to best provide a fair and economically feasible payment plan to their representatives. Sales management teams can help to ease the decision-making process by adjusting their packages to the individual employees.

Certain employers may choose to adopt an all-encompassing system for compensation, as they believe that the success of the company should provide a significant motivation for every worker.

A business can set a salary for each employee, and pay the salespeople the same salary as other workers. They may create a living wage and an annual bonus that is based on three factors, the success of the individual, the team and the company, according to Inc.com.

The same-salary system may be implemented as a way to have the salesperson feel more like the rest of the company. This method can help the other employees see the representatives as teammates, and could work to eliminate the jealousy that arises due to an awarding of commission, the business website reported.

Companies that have an equal pay scale may see the competition between different departments disappear, allowing for a more communal atmosphere that fosters a team effort in obtaining sales and leads, reported Inc.

While eliminating compensation may seem to level the playing field for a company, this act could get rid of the economic driver that motivates salespeople to attain high numbers. Tiered compensation based on the specific role of the individual may work as a method to provide fair pay to employees, and at the same time providing fiscal incentives for those who go above and beyond, said Barrett Riddleberger, the chief executive officer (CEO) of Resolution Systems, Inc., a sales training and consulting firm.

“You can’t put someone who has an extremely high economic driver into a compensation plan where most of their compensation comes from their base salary,” Riddleberger noted. “They can sell and sell and sell, but it won’t add much to their overall compensation.”

The executive also explained that the ideal compensation plan would involve a baseline and quota that would be set as the basic levels that representatives would reach in order to keep their jobs. Riddleberger went on to say that any business that is sold above that number would be applied to an exponential commission system.