View Full Version : Sales employee compensation
05-26-2006, 03:37 PM
my current sales employee's current frame of mind is that every maintenance account he sells and or large landscape install that he sells he should get a cut of the profits.
I have him currently set up on straight salary pay no commision. When he started working for us in June of last year me and him agreed upon salary only no commision.
We got into a heated argument today at lunch. He explained to me that he had just set up a 50K commercial landscape install for June and a 5K residential landscape install for Sept. I told him how great that was and asked what was in the install and where. After that he followed up the conversation with " And I think its only fair that I get a cut of the profit from these jobs" not only does he want a cut from those jobs but he wants a 30% pay raise from signing a set of commercial accounts we started last month in the 80-100K gross range. I asked what made him think he would get a pay raise from these new commercial accounts and he said that if it wasent for him the company wouldnt be grossing that extra 80-100K I agreed but followed that up with the fact that you are actually doing what you are paid for.
I dissagree with giving him commision on the new landscape installs. I do agree on giving him a smaller pay raise for the new commercial accounts.
I feel im in a difficult spot! Should I try to decrease his salary and give him a % of commision on all new accounts and projects? or should I increase his salary and not give him commision?
I asked him what made him feel that he all the sudden should get commision on these landscape installs. His reply was " if it wasent for me we wouldnt have these new projects, I had to TALK these people into these projects because they didnt exactly want anything done till I talked to them"
I replied with a "HMMmmm but the funny thing is you were only doing your job when you got those new accounts" " that is the requirment of your job is to bring in new clients and customer service" . He went through a dry spell where he didnt sell a project or an account from Nov-march. I feel the new accounts has made up for the dry spell.
What would you say to him? I need a whitty snappy reply to his " I SHOULD GET A CUT OF THE PROFIT "
05-26-2006, 04:47 PM
sounds to me that you are headed for a train wreck with this guy and that if the pay scale that he hammered out with you in the beginning is not good for him anymore that he will never be satisfied.If it were me i would let him go and bring in somebody new on a minimum salary and comm basis,that way the more money they make the company the more money they make and they should never resent you for it like your current employee.
05-26-2006, 06:49 PM
Adjust his salary and pay a sliding scale commision based on revenue he generates...win/win IMO.
05-26-2006, 06:54 PM
Tell him you want the money you paid him when he didn't sell anything and if he sell 500k of new business this year then that's his bonus.
05-26-2006, 07:12 PM
It sounds like you may have needed to "throw him a bone" so to speak a little while ago. Almost like, he's feeling unappreciated for some reason. It could also be that he's got a bug about what he sees as a lot of money heading straight for your pocket as a direct result of his hard work (which I would assume we all agree is HIS JOB!)
Some of the problems I have seen in business are that the employees (weather salary or hourly) don't understand what the real bottom line of operating a business is. Maybe he sees these big numbers and thinks there is more left at the end of the day (so to speak) than there really is?
I say ask him what he had in mind (percentage wise) remind him that since your original agreement made no mention of sales commission. He needs to fully understand that selling a job is not all that it takes, and not all jobs are completed with the same profitability.
Give him a tiny raise, (5-7%) and negotiate a fair commission with him. Butting heads with someone who is a good earner only makes sense when his is insubordinate.
05-27-2006, 10:37 AM
It sounds like he is producing the numbers needed for you too grow your business. Two things are the numbers he bringing in important too as both the owner, and also as a person. Secound since he is closing the business and its profitable, why would you not give him a commission?
If he walked today and got his own business started what type of an impact would he be too you? He all ready has the skill he needs too survie in this business the equipment is , and every thing else is just secoundary stuff. He is able to add good profitable clients at stanared rate of production.Watch this guys for cast for, he knows what he is doing.
If you do not want him send to orlando, i'll pay commission with a new chevy company truck, and bonus the heck out of him till he can't spend all the monet . Bcause in the end if he makes him self 70k a year the he has put me at 2.5 millon in gross sales.
Trinity Lawn Care, LLC
05-27-2006, 10:48 AM
Adjust his salary and pay a sliding scale commision based on revenue he generates...win/win IMO.
I agree with Rod.
I'd put him on a draw that is less than his current salary and pay him a commission. He get's no commission until he covers his draw and the percentage he makes off his new customers decreases over a period of 3 or 5 years. Let him be rewarded for his hard work but at the same time, make it so that if he goes through a dry spell he's going to take a hit for that as well. If he wants the rewards, he needs to have the risks.
05-28-2006, 06:13 PM
The trend is this. He wanted a job but also wanted a steady pay check you put a investment into him and now he is finally seeing he is able to produce, so now he is wanting more. This guy is what I call a "Cake Eater" he wants the cake all the time and the peice he wants. First, I would never let an employee tell me what he wants. I would be the first one to point out that your investment in him March/Nov is paying you dividends finally. I would play his game and tell him to choose, commision or salary? Period....... I dont see the point in paying a sales person who thinks there intitled to some thing more because they sold a job, Hince the title salesman. I have another saying for my sales team. " Today I am a salesman, that means I sell services, if I fail to sell services then tomorrow I may no longer be a salesman.." I had this come up a time or two, if you negoitate at all I woud tell him. You give me 3 more months and if you continue on your progress, then pay him 5-7% of gross sales. and never change your new policy.. treat all salesmen the same. Give them a base pay for a time period then move them to comission sales.
05-30-2006, 03:56 AM
why in the heck did you hire a salesman on salary in the fall?
switch him to commission. make the commssion based upon net of some sort, and make it based upon moneys received, not orders placed.
a draw? sure. small one.
06-10-2006, 03:37 AM
What do you find works as a good basis for a sales persons pay? set amount vs commissions only vs a combination
I'd like to get a feel for what is a fair offer to an employee vs what is giving away too much too.
I'm trying to grow my Holiday Decor business by 1 crew per year (4-6 employees, 1 truck, 1 trailer) and we start the Pre-Sales and New Sales beginning Aug 1st.
06-10-2006, 11:05 AM
I would recommend commission only. That would really get him motivated to sell! Sell! Sell! While, he will probably want a base + commission.
06-11-2006, 02:49 PM
It sounds to me like your heading for trouble with this guy. He's forgetting that he just had a dry spell for 5 months you said? Now he's seeing all this money coming in and woohoo - I should be getting a piece of that! Now that he's brought in some money he thinks that he can push you around. If you negotiate this and give him what he wants, then in a few months when he hits another dry spell - are you going to be able to afford him at that 30% increase?
If you do any negotiating at all it should be what J Hisch said - either salary or commission - not both. I'm all for rewarding your employees, and yes he should be rewarded for his hard work but he should also take some of the punishment when this are going bad. You could also do salary plus a yearly bonus of a percentage of what he brings in for the year...
06-11-2006, 05:00 PM
Sounds like the relationship has gone sour. Only you know if it's worth saving.
I do think that salespeople are more motivated to sell when on commission.
A small base salary plus commission is good. But consider the following:
1) Commission should be tied directly to your profit, not gross. This probably means that some of the commission needs to be held back until the job is done and the final payments are in. If he sells a job he shouldn't have sold and you get burned, he needs to get burned too.
2) He won't sell much during the winter. Allow him to set up a payment schedule so he can eat then too.
3) No cap on commissions. I worked for a company that had a spectacular sales person. The owner decided she was making too much money and capped her commissions. Guess what happened? She sold right up to the commission cap each month and spent the last two weeks of the month sitting in the office. She lost a couple of thousand in commissions because of the cap each month but the owner lost more than 10x that. Let your sales person make as much as they can possibly make. It's great to pay them a $10K bonus if it means you walked away with an extra $100K in the process.
06-11-2006, 06:15 PM
i would do commision only, but hed ***** about not getting paid anything for driving around for three weeks when he doesnt sell a job.
i would never pay a sales position salary or hourly.
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