Whether it is before you start a new job, or if a known situation ever changes, you need to know how you get paid!  You cannot master the situation if you don’t understand it.  There is not mystery as to how sales professionals get paid, it is all about that ‘paper’.

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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 ofpaper; 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.

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!

This is always one of my most popular post, probably not because it is a question that many want to ask.  In a world of tattoos, hair styles, and social media, so many want to be ‘individuals’.  I rerun it because I want you to be yourself, but also be employed.  Sales may not be unique in its level of internal and eternal visibility, but it is special.  Check it out!

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This is an interesting topic, and that is why we would like to cover it here.  God has given us the gift of being different.  We come from so many backgrounds that it is difficult to point them all out.  There are as many variations in our culture as there are reasons to rejoice about it.

I am going to give a definition of your culture that is slightly shortened from Webster’s Online Dictionary (Definition of Culture):

The integrated pattern of human knowledge, belief, and behavior that depends upon the capacity for learning and transmitting knowledge to succeeding generations.  Additionally, the customary beliefs, social forms, and material traits of a racial, religious, or social groups.

In other words, that which is part of you because of your surroundings and your past including that which is learned and absorbed, and that which you will be passing on to others.

This is a broad interpretation.  I think you will agree that it is interesting that culture, in the form of one’s diverse background can actually be a lightening rod for criticism or even a reason for exclusion in the world of corporate employment.  Comfort, likeability, even preference is affected by one’s background, color, and certainly culture.  Now these are not synonymous at all, they just blend to make a concoction that many employers avoid drinking.

Decisions on hiring, promotion, and even things as simple as who gets referrals and redistributions are done on the basis of how you are perceived.  Is it always fair?  I am more than certain that it is not!

What Are You Suppressing?

It is always wise to be yourself while in the office or work environment, as it is easier that way.  But…the self you need to be is the one that not only got you hired, but the one that can sustain your employment.  I am not saying you should be a chameleon.  You need to know how to be you, the business professional during the hours that you are selling the services and products that provide your living.

The workplace is a vessel of many principles and traditions.  You don’t have to conform to all of them, yet need to know which ones are important enough to follow so that you don’t damage your chances of success.

Suppress your culture?  Suppress it only if your culture runs afoul of the principles and traditions of your customers and your employer, and then, you only need to suppress it at work.  Should you wear your culture on your sleeve while you are at work?  I think you will agree that the answer is a resounding NO!

Let’s be Practical

Here is a brief look at some of the situations that commonly occur just to give some practical perspective.

Promotion - Your interview for a promotion is much anticipated.  You are working, in a conservative industry (commercial banking), for a conservative bank.  What do they expect from you in terms of your delivery, your approach to customers, your educational background, and your appearance?

Job Interview - You are in search of a position fitting your years of experience and your success in the past.  You are known as a solid sales professional and you want to move up in position by taking a sales manager role.  In addition to all else, your results have indicated that you are the likely candidate.  What will get you hired in this coveted position?

Reduction in Force - You are a solid performer, yet you recognize that they are considering layoffs in your sales department.  You feel you are a key performer, yet realize that there are others who have done a good job as well.  Your numbers are solid, and your product and industry knowledge are exemplary.  How are they going to make that decision as to who stays and who goes?

In each of these examples, there are two common denominators.  One is the fact that you are competing against others.  The other is that you still have a customer who has expectations from a business standpoint.

In each of the above, you could have problems if you stray from being race neutral in your approach.  Also note that you still deal with the forces of the 3P’s, Perceptions, Preference and Prejudice. Cultural diversity can and will sensitize this.  Whether you are black, brown, tan, yellow, or white, you need to recognize that if you are race neutral in your professional manner, you have a better chance of professional success.

I don’t care whether you are white or brown, if your organization has a policy against dreadlocks, braids, and Mohawks, you may want to avoid fighting it, and consider a profession or employer who does not care.  Keep your individuality, and exercise it when you are on your own time.

If tattoos and piercings are part of your culture or appearance, you should consider a sales career where those things don’t matter.  Most sales careers are not the place to be too different as there is a customer out there who will make the decision on degree of difference.

There is no doubt that you need to be the image of the consummate professional in the customer’s eyes.

Is this selling out?

This is a good question.  What I am actually saying is that you must play the professional role in this theater.  Be as different as you want during your off hours.  Your alternatives to conforming are self-employment and other careers.  You are not selling out by being the professional.

One Last Word

You can be an activist in the street, a militant about social issues, or a pacifist about conflict.  I am advocating that when it comes to professional sales, be the consummate professional (while at work) who is also an activist in the street, a militant about social issues, or a pacifist about conflict.

It can be done.  It is done in sports and in many other arenas.

Be the best!

Your comments are welcome.