Chapter 10
Compensating the Sales Force

Compensation of the Sales Force

*   Basic source of salesperson's compensation is split of commissions earned

*   Incentive plans reward good producers with larger commission shares

Non-monetary Compensation

*   Referrals

*   Company listings

*   Support services from firm

*   Training programs

New Personnel

*   Can be compensated as employees during training

*   As employees, their actions can be controlled directly by the firm

*   Draws against future commissions are allowed

*   Must pay FICA, etc.

Commission Sharing

*   Listings

*   Sales

*   Selling company listings

*   100% commission shops

*   Salesperson keeps the entire commission earned

*   Salesperson pays a flat fee for use of firm's services

*   May be good strategy to keep great producer

Incentive Plans

*   Commission plans use "tax bracket" increases during the fiscal year reflecting increased productivity

*   Contests

*   Delayed incentive programs

*   Bonus paid after delay

*   Only paid if salesperson is still with firm

Loans to Newly Started

*   Used for very promising entrants

*   May not be a draw against future commissions

*   Must be paid back even if person leaves company