For example, there is a CEO that I’ve met that likes to hold back 25% of salespeople’s pay to reward it to sellers based on subjective measurements. If two sellers made the exact same amount of sales, but one had to work harder to get those sales, then that seller would get rewarded. This CEO thinks that this makes people work harder, come in earlier, and keep them on their toes so that they can win that extra $5,000 every year.
However, I don’t believe in doing business this way. In fact, this company has a higher than average turnover rate in their industry. Why? When you mess with people’s pay, people automatically assume that the company is out to get them. Salespeople that understand their compensation and can calculate their daily earnings when they win sales or how much they’re going to earn based on where they are in the year are motivated. They work harder, they stay longer, and are more loyal to you as a company and your customers, which is exactly what you want.
Do not keep all or part of your compensation plan a secret. The more transparent you are, the more successful you’ll be.
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[…] have a clear and transparent compensation plan that is easy to understand. Next, have coaching in place. It is true that people leave managers and […]