COACH'S CORNER
By Barry Knepper
As Seen In Queensborough - The Magazine of the Queens Chamber of Commerce

Salespersons Compensation

Tab Member's Question:
I have a solid salesperson whose performance has increased dramatically during her two year tenure—both in successful sales and commitment to success. Before her, I was responsible for most sales, but the sales woman has now surpassed me (she brings in 75 percent of all sales) and I have been able to shift my attention to being the true CEO. The problem is her high rate of commission (15 percent up to quota and 30 percent above) combined with my higher cost of business (a recent move and increased payroll) is pushing against the ceiling of what I feel comfortable paying, yet I want to keep her happy, motivated and productive. I have thought of offering her some small ownership in the business and rejected that idea. Any ideas on maintaining her loyally and productivity with continued reward(s) that doesn't eat into my salary?

Tab Coach:
The worst thing a business owner can do is screw around with his/her high performing salespeople‘s commissions. It's not the salesperson‘s problem that the business owner has taken on additional overhead. That should come out of your salary. Besides, if you are thinking in terms of his salary, you are thinking like an employee and not an owner. You should be thinking long-term and of the additional value (equity) being generated in your business by this salesperson.

Every time you sign her commission check, the bigger it is, the happier you should be. Allow the salesperson to make more money than you while the salesperson helps to build the business and allows you to take more time off. In the end the you will reap the benefits—short-term pain for long-term gain. Another way of looking at it would be to place a dollar value on the time she allows you to spend on running the company, reducing expenses and expanding opportunities.

Find out what really motivates her. Although dollars are probably a good motivator, you might find being looked up to, continuous learning, etc. maybe equal motivators. Time off, opportunity to coach or pursuing some charitable interests may serve to also motivate her.

Ask yourself what happens to your salary if you lose her altogether? Is this a question of not eating into your salary or her making more than you do? I would suggest that you frequently team sell with her so you meet her customers and has some type of relationship with them.