This CareerJournal.com article can only be categorized as good news – More Employers Are Basing Raises, Bonuses on Results. Of course, none of this is surprising for salespeople since the vast majority are compensated based on their successful selling. For other positions, this may be a bit of a surprise:
Employers have turned to tying pay to performance to shore up costs and to try to retain their best workers. “There is a limited amount of money that people have, and they are trying to get a better return on those compensation dollars,” says Steve Gross, Mercer’s global-reward practice leader.
I am a passionate proponent of merit-based pay structures and raises. I was drawn to sales due to the fact that you could increase your pay by simply performing. What a fantastic idea! Of course, the financial guys hit the nail on the head in terms of why companies are drawn to this approach:
For one thing, he says, “companies like to move away from fixed costs to variable costs.”
One caveat we often encounter is financial team members who look at a high-performing salesperson’s commission with a skeptical eye. This approach is reprehensible to me. The assumption becomes that the revenue would be coming in whether the salesperson was on the account or not. That belief then leads to the salesperson being viewed as an expense and their commission plan gets tweaked.
Big mistake. The salesperson will have their resume on the street that evening.