Posts belonging to Category Black Business Owners



The Color of Money! – Know How You Get Paid!

The most important aspect of a sales job is getting paid.  In the end it is about that paper! I am not talking about the money type of paper; I am talking about the written remuneration or compensation plan.  That is the most important paper out there.  Getting paid is important; as it is one way to keep score, yet it is also the way we eat and keep our families happy.

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The objective of this post is to give those who need to know a basis to understand the basic remuneration systems in an easy, no nonsense way.  What is more important is that you learn your company’s system and “work the hell” out of it.

Remember, it is your right to work the system, yet also, it is good policy on your part to keep your activities in the spirit of the system as well.  Working the system is not cheating, and if you are within the spirit of the system, and you will still get your reward.

An important note for all remuneration/compensation stakeholders is that whenever commissions are involved, care must be taken to realize the volatility that can exist.  Sometimes this uncertainty is beneficial (higher earnings), and sometimes it can be detrimental.  In the end, as I said, it’s about the paper, but also the confidence you have in the company’s products and your own abilities.

7 Major Types of Compensation Methods

Companies have the right to do whatever is legal and makes sales happen.  They can put together a variety of different types of plans that stimulate gross sales, retain sales professionals, promote particular products, develops territories, etc.  There are significant numbers of Black sales professionals in each of these type of arrangements with many prospering.  Your ability to take downside risk will determine how you feel about these.

Having been involved in the design and approval of compensation plans from a company standpoint, much thought goes into them, as once they are out there, they you are stuck with them for the prescribed term.

Here are examples of the most popular and widely used plans:

Salary – You have a simple formula to operate under, yet no incentive to excel other than a performance review.  Salary is safe and secure with no upside.

Straight Commission – No base salary, no upside limit, and the downside can be “$0 dollars”.  The risk is with you, yet if you excel, and you must to work under this system, the “force” is with you.

Draw Against Commission - In this one, you have some subsistence in the form of a ‘draw’ providing an advance of commissions with an agreement to pay it back if you do not ‘earn’ it.  The employer is essentially loaning you money against your commission income.  You get the benefit of some subsistence but still have the risk of an downside and the benefit of an upside.

Salary Plus Bonus – A pay system sought after by many professionals as it provides a solid floor, while providing significant upside earnings paid periodically, often quarterly as a bonus.  Often using the components of a straight commission system to help determine the bonus amount.

Base Plus Commission – Similar to above, this is a popular method, tried and proven.  Fixed base salary with commissions paid on the system quarterly or more often.  Commissions are usually based on percentages of dollars sold.

Variable Commission – These are straight commission schemes that have percentages that vary with product, size of the sale, attainment of goals, etc.  Much depends on what the company is trying to promote.

Residual Commission – Commissions that are paid based on customer longevity once initiated.  Aggregate residual commissions can form a solid ‘base’ which provides a good income, and some stability.

There may be other methods of compensation, but usually it is based on some variation of one of these arrangements.  In almost all cases the compensation plan is in writing, and available to all sales professionals for study.  Don’t forget to study this item and even have discussion with some of the more experienced sales professionals in your sales unit.  You will want to know the nuances of this plan that makes for higher earnings.

How Much Guts Do You Have?

Obviously these different arrangements involve different risks.  Hands down the straight commission set-up involves the most risk and highest instability.  It is sales compensation in its purest sense.  You sell and you get paid! I never worked nor managed in a system like this, and recognize that many of you do.

There are combinations of these elements that make for remuneration systems that need the ability to emphasize particular objectives.

Example 1. A salary + bonus system that wants to reward customer longevity attaches a component which uses residual commissions to strengthen the bonus.

Example 2. A variable commission changes your percentage on sales of a certain product based on reaching a certain level of sales.  Let’s say you receive 8% commission on the first $100,000 of sales of widgets, which increases to 12% for all sales thereafter.  Once you reach the 100,000, you are rewarded with more from your great work.

Yes, It’s About that Paper!

I would make the suggestion that you get your organization’s sales compensation plan in front of you and study it.  Do the brief interview with your sales comrades to determine how to maximize it.

There are times that the organization’s objectives, and the compensation or remuneration plan are not in concert.  Rewarding the sales of products that are not profitable, or are in low supply are examples.

Know the plan and formulate your objectives and you can work efficiently and effectively by maximizing your efforts and your income.

Be effective! Your comments are welcome. You can meet me at michael.parker@blacksalesjournal.com.

When You Feel Screwed: 3 Steps to Get Help!

Difficult Times

If you are like many of us, there will be a time in your career that things will go wrong.  You will feel aggrieved that it does not appear that you get equal or fair treatment, including important resources like preferred territories, distribution of prized or house accounts, or even issues regarding salary increases or promotions as compared to your peers.

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This problem can be vexing in the sales workplace.  You might feel embarrassed, emasculated, and even paralyzed, yet need to have answers.  Your job is important to you and your family, so you must take care to do this correctly.  It is also difficult because you feel powerless to affect outcomes when you believe management is working against you.

Yes, you feel your options are limited as you are working hard to insure that you keep your job, yet your results don’t always put you in a position of strength.  Frankly, I have been there.

What Are Your Options?

There are some things you can do; yet you need to do them correctly.  I am going to give you an example:

Problem -Distribution of orphaned accounts and prospects to favored sales representatives.

As a sales professional you know how refreshing it is to get customers and prospects that you do not have to prospect for.  Customers who get the introduction to you as their new representative  feel instant credibility based on the organization that you work for and will give you a chance to consummate the relationship by your actions.  That credibility can be very important to a Black sales professional.   I also talk about “the spoils of sales” and how the distribution of business and prospects can help, or hinder.  I made references to situations like this in Black Sales Journal December Post of Preference, Perceptions, Prejudice and Your Employer.  Feel free to take another look at it.

When you are seeing these accounts distributed to other sales executives who have less experience, less product or service knowledge, and less tenure than you have, it can be disheartening.  This happened to me years ago when I was a sales representative.  You may feel powerless, but you should not feel voiceless.

I was pretty good at selling commercial insurance products to medium and large businesses in the Chicago metropolitan area many years ago.  I was also proud of the organization that I worked for 5 years (eventually I retired from virtually the same organization with 32 years).  You can imagine what I felt like when in the midst of various situations where there were several distributions of prospects and accounts and I received literally nothing.

What I did was simple.  If faced with the problem, you should do it as well:

STEP # 1 – Research your sales record and your effort and be brutally honest

Be honest with yourself about your record, which will buttress you case, as well as the situation.  Did you handle a previous situation like this poorly?  Take an honest account.

  • Seek Counsel - Find someone (a sales colleague or another sales professional) who is objective that you can seek honest counsel with and really listen to his or her response.
  • Review Your Activities - Take positive account regarding what you have received in terms of “call-ins”, and other business, and any other failures.
  • Take account - Know what you have done with this type of business, and be prepared to show the facts.
  • Know Your Total Performance -Note your total performance, activity and production, and be ready to account for why it should have come to you.
  • Be Ready to Prove Up! - Note that speculation and conjecture do not count, it is “not what you know, but what you can prove”!

STEP #2 – Have a frank but professional discussion with the sales manager or principal.

I went to my manager and advised of my concerns.  I was one of two Black sales professionals in a staff of over thirty-five.  I talked clearly, and unemotionally, and stated my concerns.  We reached agreement that I did deserve more.  The facts should speak for themselves, yet you still may not reach an agreement.

You may find that it is still an issue.  I met with the manager again four months later, yet felt the need to hedge my actions and set up a meeting with Human Resources as well.  In my discussion with my manager, I had to make the inevitable statement that I was still bothered and that my concerns were being ignored.

Here is the part where you have to put your self “out there”.  Do not be afraid of the conflict generated from it.  Conflict can be healthy if done correctly.  If you believe in the situation, and your right to be there,  it is what you have to do!

This meeting might seem fruitless to some, yet it is the meeting that gives you the opportunity to say that you may need to look for some satisfaction or discussion elsewhere.  The manager should not be surprised at that point when HR calls to get his rendition of the facts.

STEP #3 – Make Your Case with the Human Resource Manager

Let’s be clear here, you need a party that can be fair and is also interested.  I am not telling you that the HR manager or generalist is an ally, but I am telling you that this individual has a tendency to be fair, and has knowledge about how the company will handle such a concern.

The reason that you had the conversation with the manager first is because that would be the first request of HR, or anyone else called in to help.  It just makes sense.

For HR you want to do the following:

  • Define the problem.
  • Summarize the conversations with the manager
  • Be clear about the disparate treatment or inequities, and be ready to prove up.
  • Open yourself up to asking for help.  That help might be having a discussion with the manager, getting clarifications, or even having discussion with the manager’s manager.

What you should not do is:

  • Lose emotional control
  • Play the “race card”
  • Talk about confrontation

In Summary

Whether it is distribution of favors, salary, or other issues regarding equitable treatment, Human Resources is not the end-all, yet they can be objective and provide perspective to both parties regarding equitable treatment. If you believe that it is because of racial discrimination you should be prepared to enunciate it clearly and succinctly with as much evidence as possible.

Always note that your previous record with HR, and your current sales record are all in play in this discussion.  But…if you are being treated unfairly, you should find comfort in discussing it without a focus on race as the possibilities of discrimination, if any is obvious, will be on the mind of a good HR manager or generalist anyway.

This is a sensitive subject with a heavy impact on the lives of sales professionals.

I look forward to your comments. You can reach me at michael.parker@blacksalesjournal.com.