{"id":1340,"date":"2014-05-29T11:00:02","date_gmt":"2014-05-29T11:00:02","guid":{"rendered":"https:\/\/www.peaksalesrecruiting.comblog\/how-to-avoid-overpaying-sales-reps\/"},"modified":"2015-05-04T19:41:59","modified_gmt":"2015-05-04T19:41:59","slug":"how-to-avoid-overpaying-sales-reps","status":"publish","type":"post","link":"https:\/\/www.peaksalesrecruiting.com\/blog\/how-to-avoid-overpaying-sales-reps\/","title":{"rendered":"How to Avoid Overpaying Sales Reps"},"content":{"rendered":"
\"Overpaying<\/p>\n

sales-compensation1-e1401398784710-600\u00d7400<\/p>\n<\/div>\n

Company leaders and business owners\u00a0are often worried about overpaying sales reps. This is \u00a0especially true for the CEO\u2019s who\u00a0didn\u2019t ascend to their leadership position through the sales ranks and who are not overly sensitive to how sales compensation is earned. The concern is legitimate if one were to look simply at the outgoing commission cheques on some sales teams, but\u00a0chopping sales compensation based on\u00a0number crunching is risky business since\u00a0it enhances the possibility\u00a0that sales morale will be affected and sales output will be disrupted. A bigger picture view on sales investment versus return is always more prudent, but there are also several ways for employers to approach sales compensation to ensure that sales reps are paid fairly for their contributions but not overpaid.<\/p>\n

If a company\u2019s\u00a0sales reps can afford to drive Porsches,\u00a0then the company\u2019s leaders should be ecstatic\u2026if the sales comp plans have been set up properly<\/em><\/strong><\/p>\n

Attracting the best sales talent in the business will require that an employer offers not only great career opportunities but also market or better compensation to its sales team. However, there are several important ways to mitigate overpaying sales reps.<\/p>\n

1. Don\u2019t employ reps who can\u2019t sell<\/strong> \u2013 The notion of sales people who can\u2019t sell sounds silly, but there are lot of them and many companies employ them. One of the key ways to ensure the return on your sales team far outweighs the investment is to employ people who\u00a0actually meet or exceed sales targets. This is not the case on many sales teams where reps that consistently under perform and are effectively paid a salary for attendance rather than performance.\u00a0\u00a0Under-performing sales staff\u00a0are expensive on many levels including lost opportunity, management time, damage to company reputation \u2013 they need to be replaced with sales professionals who can and will contribute to company success.<\/p>\n

2.\u00a0Tie compensation to the right results<\/strong>\u00a0\u2013 If the sales people are earning high commissions, it should be because they delivered on their goals which in turn should be explicitly tied to overall sales, profit and company goals. Then if the sales reps are happily cashing their commission checks, the company\u00a0has also enjoyed strong results and the sales compensation will\u00a0have a positive ROI.<\/p>\n

3. High rewards for high performance\u00a0<\/strong>\u2013 Top\u00a0performing sales people should receive (and will expect to receive) superior compensation for their superior results. Compensating them in-line with their expectations can often be challenging, but since profits are\u00a0often not linear as revenues and sales increase, the value of an high\u00a0producing sales person cannot be understated. To ensure the top sales reps are highly motivated by compensation plans that don\u2019t create problems for the finance department, employers can leverage\u00a0accelerator mechanisms whereby the sales rep earns increasingly\u00a0higher commissions on incremental sales above certain thresholds.<\/p>\n

4. Put in Place Reasonable Parameters<\/strong>\u00a0\u2013 We are not talking mechanisms that cap commissions here \u2013 these don\u2019t help a company become an employer of choice and attract top sales talent \u2013 we are talking about managing the risk that reps will take advantage of\u00a0their compensation plan by manipulating the time timing of contracts or chasing windfall deals. These are easily managed if the compensation plans include clauses that allow the sales manager to review unusually large deals or quarterly numbers that weren\u2019t entirely a result of the sales reps efforts and adjust the compensation\u00a0to a rate that is fair for both the company and the rep \u2013 but tread carefully here \u2013 the rep will feel entitled to earn full commissions on the deals they have closed and you never want to lose a top seller.<\/p>\n

To your success!<\/p>\n

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