Question

Based on what you have read about compensating salespeople, do you think salespeople should be compensated using only fixed salary, only commission, or a combination of the two? Please explain your answer. If you choose the combined approach, what would you consider the optimal ratio of fixed salary to commission?

Answer 1

Compensating sales person totally depends on what an individual company can afford, the kind of items to the sold and the entire sales process.

A combination of both Fixed Salary and Commission would be the best for majority of the companies due to the below reasons:

1. The salary should be fixed with a clear set of expectations for the employees. A fixed salary gives a sense of security to the employees and they can work event better and increase the sales of the company.

2. If the salary is fixed and the employees are set with their targets they would ensure the targets are met.

3. The salary should be fixed however companies must ensure that the performance of each employee is evaluated as well. The employees should not take it for granted and not perform at all.

4. Commission should also be a part of the benefits to the high performers that have pitched the maximum customers, this will ensure that the employees are competitive and additionally motivated to perform better and earn more. This would in the end give better sale numbers to the company.

5. Commission since being flexible can anytime be changed by the company as per their sole discretion.