How to Pay Commissions to Your Sales Staff

Flat commission, sliding scale or progressive scale? If you are overseeing a sales staff, here are some suggestions on how to pay them.

Instructions

Difficulty: Moderate

1. Figure out the going rate and type of commissions for salespeople in your industry.
2. Use Bureau of Labor statistics (especially the compensation surveys), local economic development studies (call your local government office for more information), and trade associations (most of which can be found online through a search engine like Google) to determine the going rate in your industry.
3. Find out what kind of commission structure is used in your industry. Is there a base salary with a commission after a quota is met? Is it a flat scale with fixed-rate commission or a progressive or sliding scale in which the rate of the commission varies depending on the salesperson's overall performance?
4. Set your commission rates at a level that both attracts and retains good employees. Don't be pennywise and pound-foolish. A top salesperson is worth the extra percentage points.
5. Set your commission rates at the time of hire.
6. Consider increasing the rates if the salesperson meets specific goals.

Tips & Warnings

• If you can't add dollars, add convenience. Flexible hours, telecommuting and even little incentives such as picking up dry cleaning will attract potential salespeople.