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Tuesday, November 06, 2007

Sales: Salary Vs Commission

Here is the classic Inc. Magazine article, Street Smarts: The Sales Commission Dilemma, by Norm Brodsky (his business when he isn't writing magazine articles is CitiStorage) who advocates a salary rather than commission-based approach for working with his salespeople.

In his approach, new reps are indeed put on a salary plus commission model, but after two years, the ones he wishes to retain are invited to work on a salary-only basis, with performance/compensation reviews annually. His argument is this model ensures the reps are fully embers of the team and are working for the best interests of the business, rather their individual objectives.

His mind-set makes me think of Alfie Kohn's thinking process -- coupled with some good-old-fashioned capitalism. I don't have any employees with us longer than two years (as we rebuilding) but will apply Brodsky's approach when we get to that stage; that is, unless someone can convince me that his thinking is wrong.

Note: I think conventional commissions and incentives are in fact essential for a company or business without solid internal harmony. But if you have a healthy working environment, connected to a strong and effective brand, the selling exercise becomes softer and more client-centric; less push, more pull. Virtually all great businesses are fortunate to create this dynamic culture. I can't say we are there yet, but we will be, soon.

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