Paul, a salesperson, applied for a job at a technology company; in the last round of interviews, he asks the sales leader the following questions:
“What is the commission plan you have in place for the employees?”
“How much does the plan pay for target realization?”
Payment of incentives to salespeople isn’t a new concept; almost every company that deals with selling products or services and paying employees makes use of this compensation plan. Added to the fixed salary of salespeople is a ‘variable’ payment section, the variable part is not defined and differs with each worker.
For a company to accurately decide on how much each salesperson should be paid based on this variable, there’s a system that can be implemented known as the motivation scheme.
THE INFLUENCE OF PERFORMANCE MEASURES ON A MOTIVATION SCHEME
A friend, who’s a sales manager, once reached out to me for assistance on how much he needed to pay his salespeople. As soon as he requested my help, a series of questions began to race through my mind. Questions like:
“Who should get paid” “How much?”
“Should I add an equal variable to the fixed salary of the salespeople?”
“Should I pay them with a bonus?”
“Should I assign payments based on a commission factor? And should I only pay above a specific minimum performance.”