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Sales Compensation--Fair Play, Fair Pay

March 1998
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According to Plutarch, Julius Caesar, passing through a poor village in the Alps, remarked, "I would rather be the first man here than the second in Rome."

Now we all know that Julius was a very ambitious man. He possessed many of the qualities—like ambition—that printing company owners might like to see in sales personnel. However, many printing CEOs lament that even with increased sales volume, margins continue to shrink. So, a salesperson's drive to be the best cannot necessarily be met with the high salaries of the past.

Conversely, sales reps may regard their compensation plans as either fair (as in just) or just fair (as in fairly unjust). Others may feel so content with their salaries and their existing accounts that they have no desire to seek new business. In this instance, how do you compensate the salesperson who would rather be the second man in Rome?

Because each business is different, no formula exists for developing compensation plans. For this article, Printing Impressions interviewed consultants, printers and salespeople to determine what constitutes "fair" sales compensation.

According to Terri Nagi, of Terry A. Nagi Associates, in Washington, salespeople are usually paid on draw against commission, which averages 6.5 percent to 7.5 percent of total sales for a sheetfed salesperson. Additionally, "expenses can amount to another 1 percent of total sales billed, and fringe benefits total another 1 percent," Nagi says.

One might find a salary upwards of $100,000 as more than adequate, but not everyone would agree, especially when profits are down. Therefore, printers and their salespeople who are both screaming, "Show me the money!," may best address their concerns by first asking themselves some strategic questions.

For example, printers should ask themselves: How do we want the business to perform? How much do we want to earn? What market(s) should we maintain/enter? What services will we offer? Does seasonality affect business and how can we best offset its effects? How profitable are our accounts? Can we provide whatever it takes to motivate our sales force and, if so, do we want to provide it?

Without a plan based on these questions (and answers), it is almost impossible to fashion a sales compensation plan that benefits all.

"As a printing company owner or CEO, you should determine what you're trying to accomplish as a corporation and critically think about how your sales remuneration plan does or does not support what you are trying to accomplish," advises Sid Chadwick, president of Chadwick Consulting, in Lewisville, NC.
 

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Most Recent Comments:
sales compensation - Posted on May 05, 2011
Since February, I have been advising my clients to review their comp plans and see where they can increase non-cash incentives. This tends to build have an interesting synergy in the comp plan. -Patti
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Archived Comments:
sales compensation - Posted on May 05, 2011
Since February, I have been advising my clients to review their comp plans and see where they can increase non-cash incentives. This tends to build have an interesting synergy in the comp plan. -Patti