Remuneration in sales: Performance-related payment

How do you reward your sales staff in line with their performance and benefits?

Sales is an excellent field for performance-based compensation models. However, the performance-based, i.e. variable, compensation component should quickly be reflected in the employee’s bank account so that he or she can feel the direct link to his or her efforts. So consider whether an annual bonus or a quarterly bonus will even have the desired incentive character in the day-to-day business of sales employees. A monthly “payout” can generate immediate and higher extrinsic motivation.

Also, make sure that the criteria for success are not too narrow. Above all, include success components that promote the quality of cooperation in the team and process reliability in the company. Also include in the assessment the extent to which employees participate in the development of sales fundamentals. Personal and relevant professional and academic development can also be usefully included in the assessment.

Some companies cap the variable compensation components. In doing so, they cap the company’s success. Because smart sales people will shift their potential sales performance to the next period. Have the courage to give successful sales employees their rightful share of the company’s success. Let other employees enjoy seeing that potential success, too. This can have a motivating effect.

If possible, include inside sales and support functions that make the success of the “front-line people” possible in performance-based compensation. This will strengthen your teams.

There are definitely voices against a variable compensation component; but keep in mind that you can use incentives to draw attention.

In any case, total compensation should be in line with the market in order to attract good sales personnel and retain them in your company. However, compensation is only one component in how salespeople are perceived. A good working atmosphere and good development prospects are often rated much higher than compensation.

Incidentally, many works councils are well trained in compensation systems and know specialists who can help design balanced compensation systems. In any case, it makes sense to develop compensation systems together with employee representatives.


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